Market Roundup
- Australia's central bank stays upbeat, flags risks in household debt
- China says it will defend interests if U.S. harms trade ties
- Japan's Aso: Q2 GDP mainly driven by brisk housing investment
- Dudley tells skeptical markets he sees Fed rate hike -AP
- Britain asks for interim customs deal with EU, new trade deals post-Brexit
- N. Korea's Kim holds off on Guam missile plan; Seoul says will prevent war
Economic Data Ahead
- (0430 ET/0830 GMT) Great Britain Jul CPI, 0.0% m/m, 2.7% y/y eyed; 0.0%, 2.60%
- (0430 ET/0830 GMT) Great Britain Jul RPI, 0.1% m/m, 3.5% y/y eyed; 0.2%, 3.50%
- (0430 ET/0830 GMT) Great Britain Jul Core CPI, 0.0% m/m, 2.5% y/y eyed: 0.0%, 2.40%
Key Events Ahead
- N/A - Germany's Schauble speaks in Berlin.
FX Beat
DXY: The dollar rebounded across the board on the back of easing concerns over tensions between the United States and North Korea and renewed expectations of another Fed interest rate hike this year following New York Fed President William Dudley's remarks. The greenback against a basket of currencies traded 0.1 percent up at 93.57, having touched a high of 93.89 on Wednesday, it’s highest since July 28. FxWirePro's Hourly Dollar Strength Index stood at 79.89 (Slightly Bullish) by 0500 GMT.
EUR/USD: The euro consolidated within a narrow range, as investors refrained from placing big bets ahead of U.S. retail sales data. The upside in the major remains limited as expectations of a rebound in the U.S. retail sales combined with renewed optimism surrounding the Trump administration, supported the U.S. dollar bulls sentiments. The European currency traded flat at 1.1780, having touched a high of 1.1846 on Friday, its highest since Aug. 4. FxWirePro's Hourly Euro Strength Index stood at 94.46 (Slightly Bullish) by 0400 GMT. Investors’ will continue to digest German prelim Q2 GDP figures, ahead of the U.S. retail sales, export/import price index and NAHB housing market index. Immediate resistance is located at 1.1845 (July 31 High), a break above targets 1.1900. On the downside, support is seen at 1.1720 (61.8% retracement 1.1370 and 1.1909), a break below could drag it near 1.1638 (50.0% retracement 1.1370 and 1.1909).
USD/JPY: The dollar rose to a near 1-week high as concerns over tensions between the United States and North Korea eased following latest headlines reported by the WSJ: North Korea has decided not to launch a threatened missile attack on Guam. Moreover, New York Fed President William Dudley's remarks, citing that he would be in favour of another interest rate hike this year if the economy evolved in line with his expectations, boosted the bid tone around the greenback. The major was trading 0.6 percent up at 110.26, having hit a low of 108.72 on Friday, its lowest since Apr 20. FxWirePro's Hourly Yen Strength Index stood at -105.30 (Highly Bearish) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of the U.S. retail sales, export/import price index and NAHB housing market index for further momentum. Immediate resistance is located at 110.46 (50.0% retracement of 112.19 and 108.90), a break above targets 110.88 (38.2% retracement of 112.19 and 108.90). On the downside, support is seen at 109.15 (Aug 10 Low), a break below could take it near 108.72 (Aug 11 Low).
GBP/USD: Sterling traded within a narrow range as investors were reluctant to take big positions ahead of UK inflation data. The economy's consumer price index is seen rising 2.7 percent y/y versus previous month’s print of 2.6 percent, while the core inflation is expected to rise 2.5 percent y/y. Sterling traded flat at 1.2968, having hit a low of 1.2939 on Friday, its lowest since July 20. FxWirePro's Hourly Sterling Strength Index stood at -47.33 (Neutral) by 0400 GMT. Investors’ focus will remain on UK CPI data, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3058 (21-DMA), a break above could take it near 1.3100. On the downside, support is seen at 1.2932 (July 20 Low), a break below targets 1.2893 (July 5 Low). Against the euro, the pound was trading flat at 90.80 pence, having hit a 10-month low of 91.18 on Friday.
AUD/USD: The Australian dollar recovered some ground after minutes of the Reserve Bank of Australia's August policy meeting underlined the bank's generally upbeat view of the economy, forecasting growth would run around 3 percent for 2018 and 2019. Moreover, the easing of US-North Korea tensions also supported investor sentiment. The Aussie trades 0.1 percent up at 0.7859 having hit a low of 0.7839 on Friday, it’s weakest since July 18. FxWirePro's Hourly Aussie Strength Index stood at -123.09 (Highly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7839 (Aug 11 Low), a break below targets 0.7800. On the upside, resistance is located at 0.7928 (21-DMA), a break above could take it near 0.7950.
NZD/USD: The New Zealand dollar rose, reversing most of its previous session losses, ahead of the GDT dairy auction. The Kiwi trades 0.2 percent up at 0.7300, having touched a low of 0.7251 on Thursday, its lowest level since July 13. FxWirePro's Hourly Kiwi Strength Index was at -113.31 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7369 (61.8% retracement of 0.7558 and 0.7251), a break above could take it near 0.7401 (21-DMA). On the downside, support is seen at 0.7250, a break below could drag it till 0.7200.
Equities Recap
Asian shares extended gains on the back of easing geopolitical tensions after North Korea's leader signalled that he would delay plans to fire a missile near Guam.
MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.4 percent.
S. Korean markets were closed for a holiday.
Tokyo's Nikkei rallied 1.3 percent to 19,799.60 points, Australia's S&P/ASX 200 index gained 0.5 percent to 5,758.00 points.
Shanghai composite index rose 0.4 percent to 3,249.79 points, while CSI300 index was trading 0.2 percent up at 3,703.02 points.
Hong Kong’s Hang Seng was trading 0.3 percent higher at 27,317.65 points. Taiwan shares added 0.8 percent to 10,311.16 points.
Commodities Recap
Crude oil prices steadied after witnessing a sharp fall to the lowest in about three weeks in the session before as a stronger U.S. dollar and a drop in Chinese refining runs hit the market. International benchmark Brent crude was trading 0.4 percent up at $50.81 per barrel by 0434 GMT, having hit a low of $50.53 on Monday, its weakest since Jul. 27. U.S. West Texas Intermediate was trading 0.3 percent up at $47.63 a barrel, after falling as low as $47.42 the prior day, its weakest since July 25.
Gold prices declined, weighed down by a steady U.S. dollar and firmer global stocks as geopolitical tensions between the United States and North Korea appeared to ease. Spot gold tumbled 0.5 percent to $1,275.09 per ounce by 0438 GMT, having touched a high of $1,288.86 an ounce on Friday, it highest level since June 7. U.S. gold futures for December delivery fell 0.4 percent to $1,285.00 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.250 percent higher by 0.032 bps, while 5-year yield was 0.028 bps up at 1.798 percent.
The Japanese government bonds traded flat after the country’s industrial production for the month of June, released today, came in higher than what markets had initially anticipated. The yield on the benchmark 10-year Treasury note hovered around 0.05 percent, the yield on long-term 30-year note traded flat at 0.85 percent and the yield on short-term 2-year also remained steady at -0.11 percent.
The Australian bonds plunged after the Reserve Bank of Australia (RBA) maintained optimism in its August monetary policy meeting minutes, released today. The yield on the benchmark 10-year Treasury note rose 3 basis points to 2.65 percent, the yield on 15-year note also jumped nearly 3 basis points to 2.95 percent and the yield on short-term 2-year traded nearly 1 basis point higher at 1.80 percent.
The Canadian government bond prices were lower across the maturity curve, with the two-year price down 3 Canadian cents to yield 1.227 percent and the benchmark 10-year falling 23 Canadian cents to yield 1.879 percent.
