Market Roundup
- Australia's central bank holds rates, sees low for longer
- U.S. services sector slows; orders hit three-year low
- Oil prices rise amid escalating U.S.-China trade war
Economic Data Ahead
- (0200 ET/0600 GMT) Germany Factory Orders s.a. MoM June
- (0200 ET/0600 GMT) Germany Factory Orders n,s.a. MoM June
Key Events Ahead
- No significant events scheduled
FX Beat
DXY: The dollar index rebounded from a 2-week low hit earlier in the day after U.S. Treasury Secretary Steven Mnuchin stated that the government had determined that China is manipulating its currency and that Washington would engage the International Monetary Fund to eliminate unfair competition from Beijing. The greenback against a basket of currencies traded 0.2 percent up at 97.60, having touched a low of 97.21 earlier, its lowest since July 22.
EUR/USD: The euro declined, retreating from an over 2-week peak as the greenback rebounded from recent lows. The European currency traded 0.05 percent down at 1.1145, having touched a low of 1.1026 on Thursday, its lowest since May 2017. Investors’ attention will remain on German factory orders, ahead of the U.S. JOLTS Job Openings data and Fed Bullard's speech. Immediate resistance is located at 1.1282 (July 19 High), a break above targets 1.1322 (July 2 High). On the downside, support is seen at 1.1164 (38.2% retracement of 1.1026 and 1.1249), a break below could drag it below 1.1133 (10-DMA).
USD/JPY: The dollar rebounded from a 7-month low on the back of some aggressive short-covering move amid fading safe-haven demand. Investor risk sentiment improved following a modest rebound in the U.S. Treasury bond yields, however, the recovery appears fragile amid renewed U.S.-China trade war fears. The major was trading 0.7 percent up at 106.66, having hit a low of 105.52 earlier, its lowest since Jan 3. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. JOLTS Job Openings data and Fed Bullard's speech. Immediate resistance is located at 107.41 (50.0% retracement of 109.31 and 105.52), a break above targets 107.86 (61.8% retracement). On the downside, support is seen at 104.65 (Jan. 3 Low), a break below could take it lower at 104.00.
GBP/USD: Sterling consolidated within narrow ranges near 31-month low as investors remained on the sidelines due to the summer recess in the British Parliament. The UK Prime Minister Boris Johnson’s no-deal Brexit preparations have triggered an ire from the opposition as the Labour party leader vows to call a no-confidence motion once the Parliament reconvenes at September-start. The major traded 0.2 percent up at 1.2165, having hit a low of 1.2079 on Thursday, it’s lowest since Jan. 2017. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2253 (38.2% retracement of 1.2522 and 1.2079), a break above could take it near 1.2305 (61.8% retracement). On the downside, support is seen at 1.2079 (Aug. 1 Low), a break below targets 1.2017 (Jan 17, 2017, Low). Against the euro, the pound was trading 0.2 percent up at 92.10 pence, having hit a low of 92.49 earlier, it’s lowest since Sept 2017.
AUD/USD: The Australian dollar rose, halting a 12-day losing streak, after the Reserve Bank of Australia’s decision to leave the cash rate unchanged at 1.00 percent at its meeting today. On Monday, the major slumped to a 7-month low after Beijing vowed to retaliate against U.S. President Donald Trump’s decision to impose 10 percent tariffs on $300 billion of Chinese imports. The Aussie trades 0.4 percent up at 0.6779, having hit a low of 0.6748 the day before, it’s lowest since Jan. 3. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6744 (Jan 3 Low), a break below targets 0.6700. On the upside, resistance is located at 0.6827 (23.6% retracement of 0.7082 and 0.6748), a break above could take it near 0.6876 (38.2% retracement).
NZD/USD: The New Zealand dollar trimmed gains after rising to a 6-day peak earlier in the session as the greenback rebounded from recent lows. The Kiwi trades 0.05 percent up at 0.6515, having touched a low of 0.6488 on Monday, its lowest level June 14. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6559 (23.6% retracement of 0.6790 and 0.6488), a break above could take it near 0.6603 (38.2% retracement). On the downside, support is seen at 0.6474 (Oct. 4 Low), a break below could drag it below 0.6442 (Oct. 10 Low).
Equities Recap
Asian shares plunged after Washington designated Beijing a currency manipulator, further escalating the U.S.-China trade war.
MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.9 percent.
Tokyo's Nikkei plunged 0.7 percent to 20,579.16 points, Australia's S&P/ASX 200 index fell 2.5 percent to 6,478.90 points and South Korea's KOSPI slumped 0.7 percent to 1,934.07 points.
Shanghai composite index eased 1.4 percent to 2,781.11 points, while CSI 300 index traded 0.9 percent down at 3,641.94 points.
Hong Kong’s Hang Seng traded 0.9 percent lower at 25,896.24 points. Taiwan shares shed 0.3 percent to 10,394.75 points.
Commodities Recap
Crude oil prices rose after falling to its lowest since January earlier in the session, as traders betting on declining prices bought back contracts to lock in profits from recent declines caused by the escalating trade dispute between the U.S. and China. International benchmark Brent crude was trading 0.7 percent higher at $60.44 per barrel by 0428 GMT, having hit a low of $59.08 earlier, its lowest since January. U.S. West Texas Intermediate was trading 0.6 percent up at $55.32 a barrel, after falling as low as $53.58 on Thursday, its lowest since the June 19.
Gold surged to its highest level in more than six 6-years as a worsening U.S.-China trade conflict prompted investors to dump riskier assets for safe havens. Spot gold rose 0.1 percent to $1,468.50 per ounce by 0436 GMT, having touched a high of $1,474.80 earlier, its highest since April 2013.
Treasuries Recap
The Japanese government bond yields rose at the long end of the curve. The benchmark 10-year JGB futures were little changed, up 0.03 point to 154.24. The 10-year JGB yield rose 0.5 basis point to minus 0.195 percent. The 30-year JGB yield rose 0.5 basis point to 0.290 percent. At the short end of the curve, the two-year JGB yield fell 1 basis point to minus 0.230 percent, while the five-year JGB yield fell 0.5 basis point to minus 0.285 percent.
