Market Roundup
- Eyeing extra budget to aid farm industry - Japan FinMin Aso
- BOJ may concede delay in hitting price goal, but hold off on easing
- Fitch affirms China's A+ rating with stable outlook
- U.S. prepares new sanctions on Chinese firms over North Korea ties -officials
- New Zealand mfg activity falls in June after May high -survey
- U.S.-based stock funds net first cash in four weeks -Lipper
- Foreign CB US debt holdings +$6.5 bln to $3.3 tln July 5 week
- Treasuries $6.3 bln to $3.0 tln, agencies +$11 mln to $260.8 bln
Economic Data Ahead
- (0500 ET/0900 GMT) Eurozone Trade Balance
Key Events Ahead
- (0400 ET/0800 GMT) ECB's Nowotny holds news conference in Vienna
FX Beat
DXY: The dollar eased across the board as Fed Chair Janet Yellen's dovish testimony indicated the Federal Reserve will pursue a gradual rate tightening path this year. The greenback against a basket of currencies traded flat at 95.71, having touched a low of 95.46 the day before, it’s lowest since Oct. 3. FxWirePro's Hourly Dollar Strength Index stood at -13.96 (Neutral) by 0500 GMT.
EUR/USD: The euro steadied after falling to a 1-week low in the previous session as the greenback eased as investors remained cautious ahead of U.S. inflation data due later in the day. The European currency traded 0.1 percent up at 1.1406, having touched a high of 1.1489 on Wednesday, its highest since May 5, 2016. FxWirePro's Hourly Euro Strength Index stood at -65.04 (Bearish) by 0400 GMT. Investors’ attention will remain on Eurozone Trade Balance, ahead of the U.S. retail sales, consumer price index, industrial production, and capacity utilization. Immediate resistance is located at 1.1445, a break above targets 1.1500. On the downside, support is seen at 1.1370 (Previous Session Low), a break below could drag it near 1.1350.
USD/JPY: The dollar rose, extending previous session’s gains, as investors awaited the U.S. inflation data due later in the session, which is likely to set the greenback's near-term direction. Markets expect a slight pickup in U.S. inflation that could reinforce views that the Fed would hike interest rates again sooner rather than later this year. The major traded 0.1 percent up at 113.43, having hit a high of 114.49 on Tuesday, its highest since Mar 15. FxWirePro's Hourly Yen Strength Index stood at 19.69 (Neutral) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of the U.S. retail sales, consumer price index, capacity utilization, and industrial production figures. Immediate resistance is located at 113.66 (5-DMA), a break above targets 114.00. On the downside, support is seen at 112.86 (Previous Session Low), a break below could take it near 112.43 (21-DMA).
GBP/USD: Sterling rallied to a fresh 1-week high earlier as the greenback continued to remain largely subdued amid mixed remarks from the Fed Chair Janet Yellen. Moreover, comments by Bank of England policymaker Ian McCafferty, citing that the central bank should consider unwinding its 435 billion pound quantitative easing programme earlier than planned supported the major. Sterling traded 0.2 percent up at 1.2958, having hit a high of 1.2960 earlier, its highest since Jul. 7. FxWirePro's Hourly Sterling Strength Index stood at 78.46 (Slightly Bullish) by 0400 GMT. Investors’ focus will remain on the U.S. fundamental drivers, amid a lack of economic data from the UK docket. Immediate resistance is located at 1.2983 (July 6 High), a break above could take it near 1.3047 (May 18 High). On the downside, support is seen at 1.2922 (10-DMA), a break below targets 1.2886 (5-DMA). Against the euro, the pound traded 0.1 percent up at 88.02 pence, having hit a 1-week high of 87.99 earlier.
AUD/USD: The Australian dollar advanced to a fresh 4-month high as risk-on market sentiment, coupled with greenback weakness following less hawkish comments by U.S. Federal Reserve Chair Janet Yellen strengthened the bid tone around the major. The Aussie trades 0.2 percent up at 0.7742, having hit a high of 0.7746 earlier, it’s highest since Mar. 21. FxWirePro's Hourly Aussie Strength Index stood at 141.52 (Highly Bullish) by 0500 GMT. Investors will continue to track broad based market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7709 (78.6% retracement of 0.7571 and 0.7749), a break below targets 0.7680 (61.8% retrace). On the upside, resistance is located at 0.7759, a break above could take it near 0.7800.
NZD/USD: The New Zealand dollar consolidated near 5-month highs despite the recent Business PMI that came in at 56.2 versus prior 58.5. Moreover, Yellen's dovish testimony has set back U.S. rate hike expectations, which supported the upside in the major. The Kiwi trades 0.05 percent up at 0.7323, having touched a high of 0.7368 earlier, its highest level since Feb. 2. FxWirePro's Hourly Kiwi Strength Index was at 41.08 (Neutral) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7346 (June 30 High), a break above could take it near 0.7370. On the downside, support is seen at 0.7300, a break below could drag it lower 0.7291 (June 30 Low).
Equities Recap
Asian shares extended gains for the fifth straight session, while the dollar eased across the board on signs that the Federal Reserve will pursue a gradual rate tightening path.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 percent to its highest since May 2015 and on track for a 3.3 percent gain for the week, its biggest since mid-March.
Tokyo's Nikkei edged up 0.2 percent to 20,144.11 points, Australia's S&P/ASX 200 index rallied 0.2 percent to 5,750.40 points and South Korea's KOSPI advanced 0.1 percent to 2,412.77 points.
Shanghai composite index lost 0.1 percent to 3,214.68 points, while CSI300 index was trading 0.1 percent down at 3,689.60 points.
Hong Kong’s Hang Seng was trading 0.05 percent higher at 26,353.82 points. Taiwan shares shed 0.2 percent to 10,443.91 points.
Commodities Recap
Crude oil prices edged down, weighed down by increasing fuel inventories and improving industry efficiency, however, were still on track for a solid weekly gain. International benchmark Brent crude was trading 0.05 percent down at $48.33 per barrel by 0424 GMT, having hit a low of $46.09 on Monday, its weakest since Jun. 27. U.S. West Texas Intermediate traded 0.2 percent down at $45.97 a barrel, after falling as low as $43.63 on Monday, its weakest since Jun 27.
Gold prices climbed after snapping three days of gains in the previous session and was poised for its first weekly rise in three weeks as the equity markets steadied. Spot gold rose 0.05 percent to $1,216.39 per ounce at 0426 GMT, having hit a low of $1,204.69 on Monday, the lowest since March 15 and was up 0.3 percent for the week so far. U.S. gold futures for August delivery fell 0.2 percent to $1,214.80 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.344 percent lower by 0.004 bps, while 5-year yield was 0.001 down at 1.891 percent.
The Australian government bond futures slipped, with the three-year bond contract down 3 ticks at 97.990. The 10-year contract was off 3.5 ticks at 97.28.
The New Zealand government bonds eased, sending yields about 4-4.5 basis points higher at the long end of the curve.
The Canadian government bond prices were lower across the yield curve, with the two-year down 3.5 Canadian cents to yield 1.214 percent and the 10-year falling 30 Canadian cents to yield 1.912 percent. The 2-year yield touched its highest intraday level since September 2013 at 1.257, while the 10-year touched 1.948 percent, a level not reached since December 2014.
