Market Roundup
- Growth worries see NZ central bank turn 'blatantly dovish', kiwi slides
- New Zealand c. bank chief sensitive to growth risks, vows policy support
- Chinese state media accuse U.S. of "mobster mentality", vow to fight tariffs
- U.S. imposes sanctions on Russia for nerve agent attack in UK
- Japan Jun Machinery Orders MM, -8.8%, -1.3% f'cast, -3.7% prev
- Japan Jun Machinery Orders YY, 0.3%, 9.5% f'cast, 16.5% prev
- China Jul PPI YY, 4.6%, 4.4% f'cast, 4.7% prev
- China Jul CPI YY, 2.1%, 1.9% f'cast, 1.9% prev
Economic Data Ahead
- (0600 ET/1000 GMT) Germany Aug TR IPSOS PCSI, 57.67 prev
- (0600 ET/1000 GMT) France Aug TR IPSOS PCSI, 42.23 prev
- (0600 ET/1000 GMT) Great Britain Aug TR IPSOS PCSI, 50.62 prev
Key Events Ahead
- No significant event scheduled.
FX Beat
DXY: The dollar index steadied after the United States imposed fresh sanctions on Russia. The greenback against a basket of currencies trades 0.1 percent up at 95.18, having touched a high of 95.52 on Monday, its highest since July 19. FxWirePro's Hourly Dollar Strength Index stood at 41.09 (Neutral) by 0500 GMT.
EUR/USD: The euro edged down after rising to a 6-day high in the previous session, as the greenback steadied amid brewing trade war between the United States and China. The European currency traded 0.05 percent down at 1.1607, having touched a high of 1.1628, its highest since August 2. FxWirePro's Hourly Euro Strength Index stood at 12.04 (Neutral) by 0500 GMT. Investors’ attention will remain on Eurozone Economic Bulletin report, ahead of the U.S. producer price index, unemployment benefit claims, and wholesale inventories. Immediate resistance is located at 1.1626 (10-DMA), a break above targets 1.1655 (21-DMA). On the downside, support is seen at 1.1540 (August 6 Low), a break below could drag it till 1.1508 (June 21 Low).
USD/JPY: The dollar rebounded after falling to a 2-week low, ahead of trade talks between the United States and Japan, where Japan will seek to avert steep tariffs on its car exports and fend off U.S. demands for a bilateral free trade agreement. The major was trading 0.05 percent up at 110.98, having hit a low of 110.70 earlier, its lowest since July 26. FxWirePro's Hourly Yen Strength Index stood at 62.10 (Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. producer price index, unemployment benefit claims, and wholesale inventories. Immediate resistance is located at 111.32 (5-DMA), a break above targets 111.43 (21-DMA). On the downside, support is seen at 110.59 (July 26 Low), a break below could take it lower 110.28 (July 5 Low).
GBP/USD: Sterling steadied after falling to a 1-year low earlier in the session on concerns over Britain's exit from the European Union without a deal on trade with Brussels. The major traded 0.05 percent up at 1.2884, having hit a low of 1.2851 earlier; it’s lowest since Aug. 2017. FxWirePro's Hourly Sterling Strength Index stood at -82.28 (Slightly Bearish) 0500 GMT. Investors’ attention will remain on the U.S. fundamental drivers, amid a lack of economic data from the UK docket. Immediate resistance is located at 1.2995 (5-DMA), a break above could take it near 1.3037 (21-DMA). On the downside, support is seen at 1.2820, a break below targets 1.2800. Against the euro, the pound was trading flat at 90.13 pence, having hit a low of 90.30 earlier, it’s lowest since Oct. 2017.
AUD/USD: The Australian dollar rallied to a 2-week peak after China producer price index (PPI) and consumer price index (CPI) bettered estimates. The Chinese PPI for July came in at 4.6 percent year-on-year, beating expectations of 4.3 percent, while, the CPI rose 2.1 percent year-on-year, beating the estimates of 1.9 percent. The Aussie trades 0.2 percent up at 0.7445, having hit a high of 0.7453 earlier; it’s highest since July 26. FxWirePro's Hourly Aussie Strength Index stood at 66.38 (Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7402 (21-DMA), a break below targets 0.7370 (July 27 Low). On the upside, resistance is located at 0.7464 (July 25 High), a break above could take it near 0.7483 (July 10 High).
NZD/USD: The New Zealand dollars slumped to an over 2-year low below the 0.6700 handle after the Reserve Bank of New Zealand said it will keep rates at 1.75 percent through 2019 and into 2020 as it cut next year's economic growth forecast to 2.6 percent from 3.1 percent. The Kiwi trades 1.01 percent down at 0.6675, having touched a low of 0.6664, its lowest level since March 2016. FxWirePro's Hourly Kiwi Strength Index was at -81.18 (Slightly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6720, a break above could take it near 0.6797 (July 5 High). On the downside, support is seen at 0.6655, a break below could drag it below 0.6600.
Equities Recap
Asian shares gained, underpinned by better-than-expected Chinese producer price index and consumer price index, while the Kiwi slumped to its lowest level since March 2016 on dovish RBNZ.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.5 percent.
Tokyo's Nikkei plunged 0.2 percent to 22,598.39 points, Australia's S&P/ASX 200 index rose 0.5 percent to 6,297.70 points, and South Korea's KOSPI declined 0.1 percent to 2,298.72 points.
Shanghai composite index rose 1.9 percent to 2,795.85 points, while CSI300 index traded 2.6 percent up at 3,401.68 points.
Hong Kong’s Hang Seng traded 1.2 percent higher at 28,689.12 points. Taiwan shares shed 0.4 percent to 11,028.07 points.
Commodities Recap
Crude oil prices rose after falling to a 3-week low in the previous session on concerns about Iranian crude supplies as the U.S. hit Tehran with renewed sanctions. International benchmark Brent crude was trading 0.4 percent up at $72.45 per barrel by 0518 GMT, having hit a low of $71.66 on Wednesday, its lowest since June 18. U.S. West Texas Intermediate was trading 0.3 percent higher at $66.99 a barrel, after falling as low as $66.36 on Wednesday, its lowest since June 22.
Gold prices edged up, extending gains for the third straight session, supported by a slightly weaker dollar versus the Japanese yen in Asian trade. Spot gold was up 0.1 percent at $1,214.43 an ounce at 0522 GMT, having hit its lowest since July 2017 at $1,204.06 on Friday. U.S. gold futures were up 0.15 percent at $1,222.8 an ounce.
Treasuries Recap
The Japanese government bonds traded nearly flat as investors remain cautious amid hopes of an improvement in the country’s second-quarter gross domestic product (GDP), scheduled to be released today by 23:50GMT. The yield on the benchmark 10-year JGB note, which moves inversely to its price, traded flat at 0.111 percent, the yield on the long-term 30-year note slipped slightly to 0.858 percent and the yield on short-term 2-year hovered around -0.107 percent.
The Australian government bonds gained across the board after China retaliated with USD16 billion tariffs on U.S. imported goods, injecting more fear in investors about a full-fledged trade war between the U.S. and China. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, fell nearly 3 basis points to 2.655 percent, the yield on the long-term 30-year Note also dipped 3 basis points to 3.130 percent and the yield on short-term 2-year slumped 2-1/2 basis points to 2.006 percent.
The Canadian government bond prices were mixed across a flatter yield curve, with the 10-year rising 4 Canadian cents to yield 2.365 percent.
