Market Roundup
- German import price index at -1.4 percent in June (MM), previous -0.1, forecast -0.8 percent
- German import price index at -2.0 percent in June (YY), previous -0.2, forecast -1.5 percent
- Ready to work with UK PM Johnson on post-Brexit relationship: French state minister
- Oil prices rise as geopolitical tensions counter sluggish demand
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Commerce Department is expected to report that preliminary gross domestic product increased at a 1.8 percent annual rate in the second quarter after surging at a 3.1 percent pace in the first quarter.
- (0830 ET/1230 GMT) The U.S. Commerce Department releases the preliminary personal consumption expenditures (PCE) price index for the second quarter. The index is expected to rise 0.6 percent from 0.5 percent in the previous quarter, while core PCE is likely to increase 2.0 percent from 1.2 percent in the first quarter.
Key Events Ahead
- No Significant Event Scheduled
FX Beat
DXY: US dollar index shows strength ahead of Q2 GDP data. DXY trades 0.14% higher at 97.92 at 11:00 GMT. DXY trades with a bullish bias. The index has bounced back after brief dip below 200-DMA. Further gains on charts.
EUR/USD: The single currency remains under pressure following the ECB event. EUR/USD is expected to extend consolidative trade for now. Upside in the pair capped by 23.6% Fib. The pair hits an intraday low of 1.11321 and is currently trading around 1.11333. On the higher side, near term resistance is around 1.11752 (23.6% fib) and any break above will take the pair to next level till 1.1200/1.12450 (21- day MA)/1.12860 (Jul 11th, 2018 high). Major support is around 1.11000 and any violation confirms bearish continuation, a dip till 1.09097 (161.8% fib) is likely.
USD/CHF: Declining odds of a 50bps July Fed rate cut, in the wake of above-forecast US durable goods, wholesale sales and jobless claims data, continue to keep the greenback stronger. European Central Bank is having more negative impact on Swiss Franc. It has kept its interest rates unchanged and hinted at stimulus package next meeting. The pair hits 2-week high at 0.99202 and is currently trading around 0.99156. Near term resistance is around 0.9920 and any violation above will take the pair to next level till 0.99515 (Jul 9th high)/1.00150. Minor trend reversal only above 1.00150. On the flip side, near term support is around 0.9860 and any convincing break below targets 0.9800/0.9755.
GBP/USD: The British currency witnessed a fresh leg lower as the renewed jitters over a Brexit deal dented the sentiment around the pound. Major trend in the pair is bearish. Upside remains capped at 21-EMA. Cable has formed minor bottom around 1.23821 shown a recovery till 1.25583. Overall trend is still weak. Major support is the recent low made on Jul 17th at 1.23821 and any convincing break below will see decline till 1.2110. Near term resistance is around 1.25200, violation above confirms minor intraday bullishness and a jump till 1.25800 level likely.
USD/JPY: Broad-based US dollar strength buoys USD/JPY higher. Next week’s US-China trade talks and FOMC policy decision, will likely keep the moves limited. The pair is trading in a narrow range as market cautious ahead of Q2 GDP data. Upbeat data could ease odds of aggressive Fed easing, putting a bid under the USD. Price action has broken into cloud and technical indicators are biased higher. Scope for test of next major resistance at 109.39 (110-EMA). Weakness likely below 21-EMA support at 108.18.
Equities Recap
European markets staged a tentative recovery after European Central Bank’s disappointment to deliver. The pan-European stock benchmark index was up around 0.36% at 391.00. at 11:30 GMT. FTSEurofirst 300 index was up 0.44 percent at 1,538.22 points.
Britain's FTSE 100 was trading 0.59 percent higher at 7,533.15 points, while mid-cap FTSE 250 was up 0.24 percent at 19,868.63 points.
Germany's DAX trades 0.34 percent higher at 12,403.80 points; France's CAC 40 trades 0.52 percent higher at 5,607.11 points.
Commodities Recap
Crude oil gains traction on Friday. West Texas Intermediate rises over 1% on the day, trades near $56.50.
Gold consolidates on Friday, having losing 1% in the previous session on robust U.S. jobs data. Spot gold rose 0.3% to $1,418.40 an ounce by 0958 GMT. U.S. gold futures gained 0.3% to $1,418.50.
Among other precious metals, silver edged higher by 0.2 percent to $16.43, platinum dipped 0.2 percent to $863.50 an ounce while palladium rose 0.6 percent to $1,539.
Treasuries Recap
U.S.: The U.S. Treasuries gained during Friday’s afternoon session, ahead of the country’s gross domestic product (GDP) for the second quarter of this year, scheduled to be released today by 12:30GMT. The yield on the benchmark 10-year Treasury yield slipped nearly 1 basis point to 2.067 percent, the super-long 30-year bond yields suffered nearly 1-1/2 basis points to 2.591 percent and the yield on the short-term 2-year traded nearly flat at 1.860 percent.
EUR: The German bunds remained tad higher during European session of the last trading day of the week Friday after the European Central Bank (ECB) hinted at an extensive easing package in its forthcoming monetary policy meeting in September amid an otherwise, muted day that witnessed data of little economic significance. The German 10-year bond yields, which move inversely to its price, hovered around -0.362 percent, the yield on 30-year note edged nearly 1 basis point lower to 0.233 percent while the yield on short-term 2-year traded nearly flat at -0.760 percent.
AUS: Australian government bonds remained flat during Asian session Friday amid a muted trading day that witnessed data of little economic significance. Investors will now remain focused on the United States’ gross domestic product (GDP) for the second quarter of this year, scheduled to be released today by 12:30GMT for further direction in the debt market. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slipped nearly 1 basis point to 1.232 percent, the yield on the long-term 30-year bond traded flat at 1.893 percent and the yield on short-term 2-year hovered around 0.884 percent.
