Market Roundup
- EUR/USD +0.11%, USD/JPY +0.32%, GBP/USD -0.12%, EUR/GBP +0.24%
- DXY +0.04%, DAX +0.49%, FTSE +0.92%, Brent +1.01%, Gold -0.36%
- Germany Jul Ifo Business climate, 116.0 vs forecast 114.9, previous 115.1 revised 115.2
- Germany Jul Ifo Current conditions, 125.4 vs forecast 123.8, previous 124.1 revised 124.2
- Germany Jul Ifo Expectations, 107.3 vs forecast 106.5, previous 106.8
- Germany Import prices y/y, 2.5% vs forecast 2.9%, previous 4.1%
- Strong euro no impediment to German economy - Ifo economist
- Great Britain Jul CBI Trends- orders, 10 vs forecast 11, previous 16
- UK inflation expectations edge lower in July - Citi/YouGov
- ECB'S Mersch says the ongoing economic expansion in the euro area provides confidence
- Greece on right reform path, but needs to keep "pedalling" – Moscovici
- PM Abe advisor Hamada favors reappointment of BoJ Gov Kuroda – Nikkei
- BoJ Policy Board June 15-16 meeting minutes – Most agreed need to remain easy
- 2% inflation target still distant, some noted importance of explaining exit
- BOJ newcomers back 2 pct price goal, say too early to debate stimulus exit
- Oil extends gains as Saudi pledges export curbs
- Gold steadies ahead of Fed meeting as dollar sags
Economic Data Ahead
- (0900 ET/1300 GMT) The S&P/Case-Shiller is expected to report that U.S. home price index of 20 metropolitan areas rose at an annualized rate of 5.8 percent in May, from a gain of 5.7 percent in the previous month.
- (0900 ET/1300 GMT) The Federal Housing Finance Agency releases its housing price index for the month of May. The index gained 0.7 percent in April.
- (0900 ET/1300 GMT) Mexico's annual retail sales are likely to have gained 2.9 percent in May after rising 1.4 percent in the previous month.
- (1000 ET/1400 GMT) The Conference Board is likely to report that U.S. consumer confidence index declined to 116.5 in July from a reading of 118.9 recorded in June.
- (1000 ET/1400 GMT) Federal Reserve Bank of Richmond will publish it Manufacturing Index for July. The index posted a rise of 7 in the prior month.
- (1500 ET/1900 GMT) Argentina's economic activity is expected to expand 3.1 percent in May, compared with a 0.6 percent increase in April.
- (1630 ET/2030 GMT) API reports its weekly crude oil stock.
- (1845 ET/2245 GMT) The Statistics New Zealand releases its trade balance data for the month of June. The economy posted an annual trade deficit of $3.75 billion in May.
Key Events Ahead
- (1145 ET/1545 GMT) FedTrade operation 30-year Ginnie Mae (max $1.1 bn)
- (1300 ET/1700 GMT) The U.S. Federal Open Market Committee begins its two-day meeting on interest rate policy.
- (1300 ET/1700 GMT) Bank of England MPC Member Andy G Haldane's Speech
- (1615 ET/2015 GMT) Reserve Bank of New Zealand Assistant Governor Dr. John McDermott's Speech
FX Beat
DXY: The dollar continued to weaken across the board as political strains in Washington and weak U.S. data undermined the case for a Fed rate increase in coming months. The greenback against a basket of currencies traded 0.1 percent down at 93.96, having touched a low of 93.82 the prior day, it’s lowest since Jun. 24. FxWirePro's Hourly Dollar Strength Index stood at -48.52 (Neutral) by 1000 GMT.
EUR/USD: The euro edged up, reversing most of the previous session losses, following the release of upbeat results from the German IFO. German business confidence unexpectedly rose in July, with business expectations, current assessment and business climate all above estimates at 107.3, 125.4 and 116.0, respectively. The European currency traded 0.1 percent up at 1.1649, having touched a high of 1.1684 on Monday, its highest since Aug 20, 2015. FxWirePro's Hourly Euro Strength Index stood at 137.92 (Highly Bullish) by 1000 GMT. The pair has formed Bearish AB=CD pattern in the hourly chart and potential reversal zone is around 1.16840. Any break above will take it till 1.1740 (Aug 2015 high) /1.1745/1.1800. On the lower side, minor support is around 1.1606 (10—H MA) and any break below will drag it down till 1.1538 (200- H MA)/1.1480.
USD/JPY: The dollar rebounded from a 6-week low against the Japanese yen as investors awaited the Federal Reserve's rate-setting two-day committee meeting starting today for possible hints on whether the Fed might raise interest rates again this year. The major traded 0.3 percent up at 111.40, having hit a low of 110.62 the day before, its lowest since Jun 15. FxWirePro's Hourly Yen Strength Index stood at -84.22 (Slightly Bearish) by 1000 GMT. The pair formed a temporary top around 114.49 and should close above 100- day MA for further bullishness. The near term resistance is around 112.50 and any break above targets 112.98/114.
GBP/USD: Sterling consolidated near a 1-week high touched in the previous session as uncertainty surrounding the Brexit negotiations and worries over the pace of UK economic growth weighed on investor sentiment. Investors now await the BoE Chief Economist Haldane’s speech due later today for fresh clues on interest rate hike prospects. Sterling traded flat at 1.3027, having hit a high of 1.3057 on Monday, its highest since Jul. 18. FxWirePro's Hourly Sterling Strength Index stood at -71.42 (Bearish) 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 it till 1.2857 (daily Kijun-Sen)/1.28118 (Jul 12th low). Against the euro, the pound traded 0.1 percent down at 89.41 pence, having hit an 8-month low of 89.94 last week.
USD/CHF: The Swiss franc eased, extending previous session losses amid prevalent positive trading sentiment around European equity markets. The major trades 0.2 percent up at 0.9481, 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 93.35 (Slightly Bullish) by 1000 GMT. The upside seems limited by cloud top around 0.9529 and any break above will take the pair till 0.9565 (200- HMA). On the lower side, major support is around 0.9440 and any daily close below will take it down till 0.9260 in the short term.
AUD/USD: The Australian dollar gained as a rise in crude oil prices and renewed U.S. dollar selling strengthened the bid tone around the major. The Aussie trades 0.2 percent higher at 0.7936, having hit a high of 0.7987 on Thursday, it’s highest since May 19, 2015. FxWirePro's Hourly Aussie Strength Index stood at -48.52 (Neutral) by 1000 GMT. On the lower side, near term support is around 0.7897 (7- day MA) and any break below will drag the pair till 0.7830 (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 rallied, bolstered by banking stocks and strength among commodity firms, while the dollar fell to a more than one-year low on bets that subdued U.S. inflation and political worries in Washington would limit Federal Reserve interest rate hikes for the rest of the year.
The pan-European STOXX 600 index advanced 0.6 percent to 381.48 points, while the FTSEurofirst 300 index rallied 0.7 percent to 1,500.03 points.
Britain's FTSE 100 trades 0.9 percent up at 7,440.42 points, while mid-cap FTSE 250 declined 0.06 percent to 19,604.83 points.
Germany's DAX rose 0.5 percent at 12,271.24 points; France's CAC 40 trades 0.9 percent higher at 5,174.48 points.
Commodities Recap
Crude oil prices advanced, extended gains from the previous session after Saudi Arabia pledged to curb exports from next month and OPEC called on several members to boost compliance with output cuts to help rein in oversupply. International benchmark Brent crude was trading 0.9 percent up at $49.13 per barrel by 1019 GMT, having hit a low of $47.67 on Monday, its weakest since Jul. 13. U.S. West Texas Intermediate traded 0.9 percent up at $46.86 a barrel, after falling as low as $45.38 the day before, its lowest since Jul 13.
Gold prices edged lower after rising to a one-month high in the previous session on the back of political uncertainty in the United States. Spot gold was 0.3 percent down at $1,250.62 per ounce at 1023 GMT, having hit a high of $1,258.76 an ounce on Monday, it highest since June 15. U.S. gold futures for August delivery climbed as much as 0.2 percent to $1,257.00 per ounce.
Treasuries Recap
The U.S. Treasuries slumped in silent trading and as investors remain cautious ahead of the 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, jumped nearly 2-1/2 basis points to 2.27 percent, the super-long 30-year bond yields surged 2 basis points to 2.85 percent and the yield on short-term 2-year note traded nearly 1 basis point higher at 1.37 percent.
The UK gilts traded nearly flat as investors remain cautious ahead of the Bank of England (BoE) member Haldane’s speech, scheduled today. The yield on the benchmark 10-year gilts, hovered around 1.19 percent, the super-long 30-year bond yields traded flat at 1.83 percent and the yield on the short-term 2-year traded tad higher at 0.28 percent.
The Eurozone periphery bonds remained mixed after reading the surprise jump in the benchmark Germany’s Business Climate Index, released today by the Munich-based institute Ifo. The benchmark German 10-year bond yields, jumped nearly 1-1/2 basis points to 0.51 percent, the French 10-year bond yields hovered around 0.75 percent, Irish 10-year bond yields slipped nearly 1 basis point to 0.80 percent, Italian tad lower at 2.04 percent, Netherlands 10-year bond yields remained slightly higher at 0.63 percent, Portuguese equivalents climbed nearly 1 basis point to 2.90 percent and the Spanish 10-year yields traded flat at 1.48 percent.
The Japanese government bonds remained almost unnerved even after the Bank of Japan (BoJ) released its July monetary policy meeting minutes. The minutes confirmed that the central bank’s targeted 2 percent inflation seems quite far till now and seemed to clap along its policy decision to hold back the timing for the achievement of its inflation goal. The benchmark 10-year bond yield, traded flat at 0.07 percent, the long-term 30-year bond yields also hovered around 0.87 percent and the yield on the short-term 2-year note remained tad higher at -0.11 percent.
The New Zealand bonds slumped at the time of closing as investors remained muted in any major trading activity in a session that lacked data of any economic significance. At the time of closing, the yield on the benchmark 10-year bond, jumped 2 basis points to 2.96 percent, the yield on 7-year note also climbed 2 basis points to 2.83 percent while the yield on short-term 2-year note ended flat at 1.95 percent.
The Australian bonds traded slightly on the downside as investors wait to watch 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, rose nearly 1 basis point to 2.70 percent, the yield on 15-year note remained tad higher by 1/2 basis point at 2.99 percent and the yield on short-term 2-year traded nearly flat at 1.85 percent.
