Market Roundup
- Japan June domestic CGPI unch m/m, +2.1% y/y, May +0.2% and +2.1%
- Fearing leaks, Japan to set new rules on foreign investment -Nikkei
- Japan retailers’ profit growth slows to 0.6% in March-May -Nikkei
- Trump Jr. emails suggest he welcomed Russian help against Clinton
- Trump seen replacing Yellen at Fed with NEC's Cohn: Politico
- U.S. firms in China decry local favoritism as market improves
- China should reduce intervention in foreign exchange markets - state media
- Australia consumer mood stays dark despite brighter signs- Westpac survey
- UK creditworthiness under pressure from Brexit uncertain, risks up -Moody's
Economic Data Ahead
- (0430 ET/0830 GMT) Great Britain May ILO Unemployment Rate, 4.6% eyed, last 4.6%
- (0500 ET/0900 GMT) Eurozone May Industrial Prod, 1.1%, 3.6% eyed; last 0.5%, 1.4%
Key Events Ahead
- (0400 ET/0800 GMT) C. Bank of Spain Gov Luis Linde to speak at Congress about saving accounts
- (0530 ET/0930 GMT) ECB's Galhau and Deutsche Bundesbank's Dombret to speak at conf.
- (0530 ET/0930 GMT) Portugal E0.50/0.50 bln, 10/28 yr auction
- (0530 ET/0930 GMT) Germany 10Y 5.0 bln auction
- (1000 ET/1400 GMT) Fed's Yellen delivers semi-annual monetary policy testimony
FX Beat
DXY: The dollar tumbled versus its major peers on U.S. President Donald Trump's alleged connection with Russia. The greenback against a basket of currencies traded 0.2 percent down at 95.60, having touched a low of 95.53 earlier, it’s lowest since Jun. 30. FxWirePro's Hourly Dollar Strength Index stood at -52.37 (Bearish) by 0500 GMT.
EUR/USD: The euro rallied to a 14-month high as the German bond yields resumed the rally, ahead of Federal Reserve Chair Janet Yellen's testimony. Moreover, emails released by President Donald Trump's eldest son suggesting he welcomed Russia's help in last year's election campaign dampen the bid tone around the greenback. The European currency traded 0.2 percent up at 1.1487, having touched a high of 1.1488 earlier, its highest since May 5, 2016. FxWirePro's Hourly Euro Strength Index stood at 59.36 (Bullish) by 0400 GMT. Investors’ attention will remain the Eurozone Industrial Production figures, ahead of Fed Yellen's testimony. Immediate resistance is located at 1.1500, a break above targets 1.1530. On the downside, support is seen at 1.1453, a break below could drag it near 1.1408 (5-DMA).
USD/JPY: The dollar declined below the 114.00 handle, after rising to a 4-month high in the prior session as dovish comments from Fed policymakers Brainard and Harker, coupled with renewed geopolitical turbulence in U.S. triggered a fresh bout of risk aversion. Investors’ attention will remain on Federal Reserve Chair Janet Yellen's semi-annual monetary policy testimony before Congress for clues on when the Fed will start reducing its massive balance sheet. The major traded 0.4 percent down at 113.42, having hit a high of 114.49 on Tuesday, its highest since Mar 15. FxWirePro's Hourly Yen Strength Index stood at 78.70 (Slightly Bullish) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of Fed Yellen's testimony. Immediate resistance is located at 114.75 (Mar 8 High), a break above targets 115.00. On the downside, support is seen at 113.18 (10-DMA), a break below could take it near 113.00.
GBP/USD: Sterling steadied after slumping to a near 2-week low in the previous session, as investors awaited the UK employment data and Fed Chair Yellen’s testimony due later today. The major traded 0.1 percent up at 1.2855, having hit a low of 1.2831 on Tuesday, its lowest since Jun. 28. FxWirePro's Hourly Sterling Strength Index stood at -87.94 (Slightly Bearish) by 0400 GMT. Investors’ focus will remain on the UK fundamental drivers, ahead of highly influential Fed Yellen's remarks. Immediate resistance is located at 1.2902 (5-DMA), a break above could take it near 1.3047 (May 18 High). On the downside, support is seen at 1.2825 (5-DMA), a break below targets 1.2800. Against the euro, the pound traded 0.1 percent down at 89.36 pence, having hit an 8-month low of 89.38 earlier.
AUD/USD: The Australian dollar rose to a fresh 1-week high as the greenback came under intense selling pressure following emails released by President Donald Trump's eldest son suggesting he welcomed Russian aid in 2016's election campaign. The Aussie trades 0.2 percent up at 0.7652, having hit a high of 0.7664 earlier, it’s highest since Jul. 4. FxWirePro's Hourly Aussie Strength Index stood at 58.91 (Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of Fed Chair Yellen's testimony to Congress. Immediate support is seen at 0.7630 (10-DMA), a break below targets 0.7601 (21-DMA). On the upside, resistance is located at 0.7682 (July 4 High), a break above could take it near 0.7712 (June 30 High).
NZD/USD: The New Zealand dollar recovered from four-week lows as the greenback tumbled amid re-emergence of uncertainty surrounding the U.S. politics. The Kiwi trades 0.2 percent up at 0.7237, having touched a low of 0.7201 the day before, its weakest level since Jun. 21. FxWirePro's Hourly Kiwi Strength Index was at -97.86 (Slightly Bearish) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of Fed Chair Yellen's testimony. Immediate resistance is located at 0.7257 (61.8% retracement of 0.7346 and 0.7201), a break above could take it near 0.7300. On the downside, support is seen at 0.7200 (June 22 Low), a break below could drag it lower 0.7170.
Equities Recap
Asian shares gained following a volatile trade on Wall Street, while the dollar declined across the board ahead of Federal Reserve Chair Janet Yellen's testimony to Congress.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4 percent.
Tokyo's Nikkei edged down 0.5 percent to 20,097.70 points, Australia's S&P/ASX 200 index declined 0.9 percent to 5,677.90 points and South Korea's KOSPI eased 0.1 percent to 2,393.33 points.
Shanghai composite index fell 0.3 percent to 3,191.82 points, while CSI300 index was trading 0.2 percent down at 3,662.59 points.
Hong Kong’s Hang Seng was trading 0.7 percent higher at 26,072.03 points. Taiwan shares added 0.05 percent to 10,420.68 points.
Commodities Recap
Crude oil prices rose, extended gains from the previous session, as the U.S. government cut its crude production outlook for next year and as fuel inventories plunged by 8.1 million barrels in the week to July 7 to 495.6 million. International benchmark Brent crude was trading 0.3 percent up at $48.23 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 0.1 percent up at $44.79 a barrel, after falling as low as $43.63 on Monday, its weakest since Jun 27.
Gold prices drifted further away from a 4-month low, as investors’ awaited testimony from U.S. Federal Reserve Chair Janet Yellen. Spot gold rose 0.2 percent to $1,219.41 per ounce at 0428 GMT, having hit a low of $1,204.69 on Monday, the lowest since March 15. U.S. gold futures for August delivery rose 0.3 percent to $1,218.30 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.349 percent lower by 0.012 bps, while 5-year yield was 0.017 down at 1.902 percent.
The Australian government bond futures also gained, with the three-year and 10-year contracts both up 2 ticks at 97.980 and 97.2700 respectively.
The New Zealand government bond prices were higher across the curve, with yields down 1.5 basis points.
The Canadian government bond prices were higher across the yield curve. The two-year rose 6.5 Canadian cents to yield 1.124 percent and the 10-year climbed 29 Canadian cents to yield 1.860 percent. The 2-year yield fell 3.1 basis further below its U.S. equivalent to a spread of -25.82 basis points. The spread had touched its narrowest on Tuesday since October at -22.7 basis points.
