Market Roundup
- EUR/USD -0.05%, USD/JPY -0.39%, GBP/USD +0.34%, EUR/GBP -0.39%
- DXY +0.05%, DAX -0.64%, FTSE +1%, Brent -0.06%, Gold +0.2%
- ECB's Mersch: As conditions normalize, it is unlikely that unconventional policies will remain necessary
- EZ Markit Composite Flash PMI Jul 55.8 vs forecast 56.2, previous 56.3
- EZ Markit Manufacturing Flash PMI Jul 56.8 vs forecast 57.2, previous 57.4
- EZ Markit Service Flash PMI Jul 55.4 vs forecast 55.5, previous 55.4
- Germany Markit Composite Flash PMI Jul 55.1 vs forecast 56.3, previous 56.4
- Germany Markit Manufacturing Flash PMI 58.3 vs forecast 59.2, previous 59.6
- Germany Markit Service Flash PMI 53.5 vs forecast 54.3, previous 54.0
- IMF keeps US forecasts unchanged from Jun revisions at 2.1% for both 2017 and 2018
- China's politburo says will stabilise foreign investment, private investment – Xinhua
- Saudi calls OPEC members to stick to limits, sees oil demand up
- S. Korea FX authorities suspected of buying dollars - traders
Economic Data Ahead
- (0830 ET/1230 GMT) Statistics Canada will release its wholesale trade figures for the month of May. The indicator is likely to have increased by 0.5 percent, after unexpectedly rising 1.0 percent in April.
- (0945 ET/1345 GMT) Financial firm Markit releases preliminary U.S. composite PMI for the month of July. The index posted a final reading of 53.9 in the previous month.
- (0945 ET/1345 GMT) Financial firm Markit Economics is likely to report that preliminary U.S. service PMI business activity index rose to 54.3 in July after printing a final reading of 54.2 in June.
- (0945 ET/1345 GMT) Financial firm Markit releases U.S. Manufacturing PMI for the month of July. The index is likely to show a reading of 52.1 after posting a final reading of 52.0 in the previous month.
- (1000 ET/1400 GMT) National Association of Realtors is likely to report that U.S. existing home sales declined 0.8 percent to 5.58 million units in June after unexpectedly rising to 5.62 million units in May.
- (1950 ET/2350 GMT) Bank of Japan publishes the minutes of its latest monetary policy meeting.
Key Events Ahead
- (1145 ET/1545 GMT) FedTrade operation 30-year Fannie Mae / Freddie Mac (max $1.575 bn)
- (1430 ET/1830 GMT) FedTrade operation 15-year Fannie Mae / Freddie Mac (max $500 mn)
FX Beat
DXY: The dollar slumped to a fresh 1-month low against the Japanese yen amid renewed political jitters from the U.S. and a prevalent risk-off environment. The greenback against a basket of currencies traded flat at 93.97, having touched a low of 93.82 earlier, it’s lowest since Jun. 24. FxWirePro's Hourly Dollar Strength Index stood at -120.89 (Highly Bearish) by 1000 GMT.
EUR/USD: The euro declined after rising to a fresh 2-year near the 1.1700 handle following the release of downbeat flash PMI's from the Euro area. Financial firm Markit's data showed Eurozone Flash Composite Purchasing Managers' Index for July fell to 55.8 from June's 56.3, while Germany's private sector grew at a slower pace in July. The European currency traded 0.1 percent down at 1.1650, having touched a high of 1.1684 earlier, its highest since Aug 24, 2015. FxWirePro's Hourly Euro Strength Index stood at 30.20 (Neutral) by 1000 GMT. On the lower side, near term support stands around 1.1593 (23.6% retracement of 1.13123 and 1.16840 and any break below will drag the pair down till 1.1565 (5- day MA)/1.1527 (daily Tenken-Sen). The near term resistance is around 1.17140 and a break above will take it till 1.17420 (38.2 % retracement of 1.7420 (38.2% fibo)/1.1800.
USD/JPY: The dollar tumbled, extending losses for the fifth consecutive session, dragged down by softening U.S. Treasury yields and weak data that undermined the case for a further rise in the Fed interest rates this year. Moreover, renewed U.S, political concerns coupled with the prevalent risk-off environment benefited the Japanese Yen's safe-haven appeal. The major traded 0.4 percent down at 110.68, having hit a low of 110.61 earlier, its lowest since Jun 15. FxWirePro's Hourly Yen Strength Index stood at 88.69 (Slightly Bullish) by 1000 GMT. Any daily close below 111.75 (100- day MA) confirms major weakness, a decline till 108 is likely. The near term resistance is around 112.50 and any break above targets 112.98/114.
GBP/USD: Sterling regain the 1.3050 handle on the back of renewed selling pressure around the U.S. dollar and rising expectations that the Bank of England would raise interest rates in the coming months. However, the latest downward revision to the UK growth forecasts by the IMF due to looming concerns over Brexit deal undermined the GBP bulls’ sentiments. Sterling traded 0.3 percent up at 1.3034, having hit a low of 1.2932 on Thursday, its lowest since Jul. 14. FxWirePro's Hourly Sterling Strength Index stood at -18.80 (Neutral) by 1000 GMT. On the higher side, the pair is facing major resistance around 1.3130 and any break above confirms bullish continuation. On the lower side, near term support is around 1.2930 (21- day MA) and any break below will drag the pair till 1.2857 (daily Kijun-Sen)/1.28118 (Jul 12th low). Against the euro, the pound traded 0.5 percent up at 89.33 pence, having hit an 8-month low of 89.94 in the prior session.
USD/CHF: The Swiss franc held firm near a 14-month peak touched in the previous session, as the greenback fell to its lowest in 13 months. The major trades flat at 0.9460, having touched a low of 0.9438 on Friday, it’s lowest since May 2, 2016. FxWirePro's Hourly Swiss Franc Strength Index stood at 123.87 (Highly Bullish) by 1000 GMT. Overall bullish invalidation is only if it closes below 0.9440 and any violation below will drag the pair further down till 0.9260. On the higher side, the pair is facing major resistance around 0.9540 (5- day MA) and any break above will take it to next level till 0.9572/0.9632 (daily Kijun-Sen).
AUD/USD: The Australian dollar rose, reversing most of its previous session losses following a rebound in commodity prices, especially copper and gold. Moreover, doubts over the passage of U.S. President Donald Trump's stimulus and tax reform agendas continued to weigh on the U.S. dollar. The Aussie trades 0.5 percent higher at 0.7952, having hit a high of 0.7987 on Thursday, it’s highest since May 19, 2015. FxWirePro's Hourly Aussie Strength Index stood at -45.08 (Neutral) by 1000 GMT. On the lower side, near term support is around 0.7870 (7- day MA) and any break below will drag the pair till 0.7801 (10- day MA)/0.7730 (61.8% retracement of 0.75711 and 0.79878). The near term resistance is around 0.8000 and any break above targets 0.8100.
Equities Recap
European shares tumbled in early deals, while the greenback declined to a 13-month low on increasing uncertainty over the pace of the Federal Reserve's policy tightening this year.
The pan-European STOXX 600 index slumped 0.5 percent to 378.22 points, while the FTSEurofirst 300 index eased 0.4 percent to 1,485.99 points.
Britain's FTSE 100 trades 1.0 percent down at 7,377.93 points, while mid-cap FTSE 250 declined 0.9 percent to 19,573.95 points.
Germany's DAX fell 0.7 percent at 12,157.21 points; France's CAC 40 trades 0.4 percent lower at 5,099.14 points.
Commodities Recap
Crude oil prices steadied after tumbling to an over 1-week low, as several OPEC and non-OPEC ministers met to discuss a pact to curb oil output. International benchmark Brent crude was trading 0.7 percent up at $48.14 per barrel by 0952 GMT, having hit a low of $47.67 earlier, its weakest since Jul. 13. U.S. West Texas Intermediate traded 0.5 percent up at $45.80 a barrel, after falling as low as $45.38, its lowest since Jul 13.
Gold prices held firm after hitting a four-week high, supported by political uncertainty in the United States and as the dollar hovered near its lowest in 13 months. Spot gold rose 0.1 percent at $1,256.20 per ounce at 1000, having hit a high of $1,257.79 an ounce in early trade, its highest since Jun 26. U.S. gold futures for August delivery were also nearly flat at $1,254.30 per ounce.
Treasuries Recap
The U.S. Treasuries remained flat as investors wait to watch the 5-year auction, besides the Federal Open Market Committee (FOMC) monetary policy meeting, scheduled to be held on July 26. The yield on the benchmark 10-year Treasury, traded flat at 2.23 percent, the super-long 30-year bond yields hovered around 2.81 percent and the yield on short-term 2-year note traded tad 1/2 basis point higher at 1.34 percent.
The UK gilts traded in a tight range Monday as investors remain cautious ahead of the country’s super-long 30-year auction and the Bank of England (BoE) member Haldane’s speech, scheduled for July 25 at 09:35GMT and 17:00GMT respectively. The yield on the benchmark 10-year gilts, hovered around 1.18 percent, the super-long 30-year bond yields slipped barely 1 basis point to 1.81 percent and the yield on the short-term 2-year traded flat at 0.26 percent.
The Eurozone periphery bonds gained after investors poured into safe-haven assets after reading the weaker-than-expected composite PMI for the month of July. Also, the benchmark Germany’s manufacturing PMI disappointed for the similar period, adding to rise in bond prices. The benchmark German 10-year bond yields, fell nearly 1 basis point to 0.49 percent, the French 10-year bond yields slipped nearly 2 basis points to 0.73 percent, Irish 10-year bond yields slumped 3-1/2 basis points to 0.79 percent, Italian also down 3-1/2 basis points to 2.04 percent, Netherlands 10-year bond yields lower by nearly 1-1/2 basis points to 0.61 percent, Portuguese equivalents plunged nearly 5 basis points to 2.88 percent and the Spanish 10-year yields traded 1 basis point lower at 1.45 percent.
The Japanese government bonds traded nearly flat as investors wait to watch the Bank of Japan’s (BoJ) July monetary policy meeting minutes, scheduled to be released on July 25. Also, the International Monetary Fund’s (IMF) higher revision of the latest GDP forecasts for 2017 and 2018, added sluggishness to the country’s debt market. The benchmark 10-year bond yield, hovered around 0.06 percent, the long-term 30-year bond yields traded flat at 0.86 percent and the yield on the short-term 2-year note remained tad lower at -0.11 percent.
The New Zealand bonds ended on the upside as investors remain sidelined in any major trading activity due to lack of any economically significant data and tracking some strength in the U.S. Treasuries. At the time of closing, the yield on the benchmark 10-year bond, fell 1/2 basis point to 2.94 percent, the yield on 7-year note also slipped 1/2 basis point to 2.81 percent while the yield on short-term 2-year note ended 1 basis point lower at 1.95 percent.
The Australian bonds jumped at the start of the trading week as investors are hoping for a tad lower reading of the country’s consumer price-led inflation index (CPI) for the second-quarter of this year, scheduled to be released on July 26. The yield on the benchmark 10-year Treasury note, slumped nearly 3-1/2 basis points to 2.68 percent, the yield on 15-year note also plunged 3-1/2 basis points to 2.98 percent and the yield on short-term 2-year traded 1-1/2 basis points lower at 1.84 percent.
