Market Roundup
- EUR/USD -0.54 percent , USD/JPY flat, GBP/USD -0.21 percent , EUR/GBP -0.35 percent
- DXY +0.36 percent , DAX flat, FTSE -0.29 percent , Brent -0.14 percent , Gold +0.11 percent
- U.S. says joint S.Korea war games not on the negotiating table
- Britain confident of making progress in Brexit talks by Oct
- German employment hits record, home building permits fall
- GB Jul Retail sales mm +0.3 percent vs 0.6 percent , revised +0.3 percent , forecast 0.2 percent
- GB Jul Retail sales yy +1.3 percent vs 2.9 percent , revised +2.8 percent , forecast 1.4 percent
- EZ Jul Inflation final mm -0.5 percent vs 0 percent , forecast -0.5 percent
- EZ Jul Inflation final yy 1.3 percent vs 1.3 percent , forecast 1.3 percent
- JP Jul Exports +13.4 percent vs forecast +13.6 percent
- Oil steady as high U.S. output balances crude stock draw
- Gold rises on Fed caution, palladium hits 16-year peak
Economic Data Ahead
- (0830 ET/1230 GMT) Initial Jobless Claims (w/e Aug 12) (market 240k, previous 244k)
- (0830 ET/1230 GMT) Continued Claims (w/e Aug 5) (market 1.953 mn, previous 1.951 mn)
- (0830 ET/1230 GMT) Philly Fed Manufacturing Survey (Aug) (market 18.5, previous 19.5)
- (0915 ET/1315 GMT) Industrial Production (Jul) (market +0.3 percent m/m, +0.4 percent m/m)
- (0915 ET/1315 GMT) Factory Output (Jul) (market +0.2 percent m/m, +0.2 percent m/m)
- (0915 ET/1315 GMT) Capacity Utilization (Jul) (market 76.7 percent , previous 76.6 percent)
- (1000 ET/1400 GMT) Leading Economic Indicators (Jul) (market +0.3 percent m/m, previous +0.6 percent m/m)
- (1000 ET/1400 GMT) E-Commerce Retail Sales (Q2) (previous +4.1 percent q/q AR)
Key Events Ahead
- (1400 ET/1700 GMT) FRB's Kaplan in Q&A session at chamber of commerce event; Lubbock, TX
- (1445 ET/1745 GMT) FRB's Kashkari in Q&A session at Rotary Club event; Edina, MN
- (1430 ET/1830 GMT) FedTrade operation 30-year Fannie Mae / Freddie Mac (max $2.125 bn)
FX Beat
DXY: US dollar index in a near-term downtrend. DXY extends consolidation at multi-week lows. US dollar continues to face double whammy amid renewed political tensions and less optimistic Fed’s outlook on inflation.
EUR/USD: The single currency tumbled post-EMU CPI data. EUR/USD has faded yesterday’s advance after dovish FOMC minutes. The pair was down 0.48 percent at the time of writing, trading at 1.1708. On the lower side, near term support is around 1.16575 (23.6 percent retracement of 1.08390 and 1.19103) and any break below will drag the pair till 1.15985/1.1500. The minor trend reversal can be seen only below 1.16000. The near term resistance is around 1.1850 and any break above will take the pair till 1.19103 (Aug 8th 2017)/1.19391 (1.13 percent retracement of 1.19103 and 1.16880)/1.1200.
USD/JPY: USD/JPY pulls back from session lows at 109.66. The major has reclaimed the 110 handle and is currently trading at 110.09. Technical indicators show a neutral bias. 20-DMA at 110.46 is strong resistance on the upside. Only decisive break above could see further gains. We see scope for test of 'Triple bottom' at 108.72 on close below 5-DMA at 109.90.
GBP/USD: The pound remained largely muted against the greenback after a mixed batch of UK retail sales data. UK July retail sales came in better-than-expected. July sales were up by 0.3 percent m/m, but June figure was revised down from the original reading of 0.6 percent m/m. Cable finds strong support by daily cloud at 1.2866. Momentum studies are bearish. Break below will see test of 200-DMA at 1.2643. On the flipside, immediate resistance is seen at 1.2930 (50-DMA). We see minor upside on break above.
USD/CHF: USD/CHF struggles to break past 100-DMA which is stiff resistance at 0.9774. The pair has retraced dip below 50-DMA at 0.9650 and is currently trading at 0.9673. Price action below major moving averages and daily Ichi cloud. We see strong support at 0.9642. Weakness likely on break below. Scope then for test of 0.9444 levels.
AUD/USD: AUD/USD rejected at session highs at 0.7962, edges lower to currently trade around 20-DMA at 0.7927 levels. The pair has broken major trendline resistance at 0.7925, and we see scope for further upside on decisive break above 20-DMA. Immediate support is seen at 0.7892 (23.6 percent Fib retrace of 0.7328 to 0.8065 rise) ahead of 5-DMA at 0.7883. Break below 5-DMA could see test of 0.78 levels.
Equities Recap
European indices edged lower on Thursday, on track to break their three-day winning streak as banks stocks fell following cautious FOMC minutes and as energy stocks weighed.
The pan-European STOXX 600 index was down 0.3 percent by 0845 GMT, while euro zone blue chips fell 0.5 percent.
Britain's FTSE 100 fell 0.3 percent, as did Germany's DAX.
Commodities Recap
Oil prices steadied on Thursday after U.S. data showed a big fall in crude stockpiles but also an increase in production, taking U.S. crude output to its highest in more than two years. Brent crude was unchanged at $50.27 a barrel by 0845 GMT. U.S. light crude was 5 cents lower at $46.73.
Gold rose on Thursday as the dollar remained subdued after minutes from the U.S. Federal Reserve's July meeting hinted at a delay in further rate hikes. Spot gold was up 0.3 percent at $1,286.99 an ounce at 0910 GMT. U.S. gold futures for December delivery were 0.8 percent higher at $1,292.70 an ounce.
Palladium was up 0.7 percent at $920 after earlier touching 927.80, the highest since February 2001. Silver was flat at $17.08 an ounce and platinum down 0.1 percent at $975.40 an ounce.
Treasuries Recap
U.S.: The U.S. Treasuries fell as investors wait to watch the Federal Open market Committee (FOMC) members Kaplan and Kashkari’s speech, scheduled to be held today by 17:00GMT and 17:45GMT respectively. Also, market s remain focussed to read the country’s initial jobless claims, due later today by 12:30GMT for detailed direction in the debt market . The yield on the benchmark 10-year Treasury, rose nearly 1 basis point to 2.23 percent, the super-long 30-year bond yields also climbed nearly 1 basis point to 2.81 percent and the yield on short-term 2-year note traded flat at 1.33 percent.
UK: The UK gilts traded flat despite the country’s July retail sales registering a higher-than-expected figure, with sales rising by 0.3 percent m/m in July, matching the new June figure, revised down from the original reading of 0.6 percent m/m. The yield on the benchmark 10-year gilts, hovered around 1.10 percent, the super-long 30-year bond yields traded flat at 1.76 percent and the yield on the short-term 2-year too traded steady at 0.23 percent.
EUR: The German government bonds traded flat after the eurozone’s July CPI, released today, matched market consensus at 1.3 percent y/y. Further, the core CPI also came in line with estimates, at 1.2 percent y/y, both unchanged from previous ious as well. The German 10-year bond yields, which moves inversely to its price, slipped nearly 1 basis point to 0.43 percent, the yield on 30-year note hovered round 1.18 percent and the yield on short-term 2-year traded flat at -0.70 percent.
JGBs: The Japanese government bonds remained tad lower Thursday, following higher-than-expected trade balance for the month of July, with exports remaining upbeat during the period. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1/2 basis point to 0.05 percent, the yield on long-term 30-year traded flat at 0.86 percent and the yield on short-term 2-year also hovered around -0.11 percent.
NZD: The New Zealand bonds jumped at the time of closing Thursday after the country’s producer price index for the second-quarter of this year registered higher figures than the previous ious readings in the Q1. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 3-1/2 basis points to 2.88 percent, the yield on 7-year note plunged 3 basis points to 2.73 percent and the yield on short-term 2-year ended 2-1/2 basis points lower at 2.04 percent.
AUS: The Australian bonds sharply rebounded Thursday as investors have largely shrugged-off the upbeat reading of the country’s employment report for the month of July, with the jobless rate matching expectations, albeit lower than the previous ious reading in June. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped nearly 2-1/2 basis points to 2.65 percent, the yield on 15-year note also plunged 2-1/2 basis points to 2.95 percent and the yield on short-term 2-year traded nearly 1 basis point lower at 1.83 percent.
