Market Roundup
- EUR/USD -0.22%, USD/JPY -0.51%, GBP/USD -0.15%, EUR/GBP -0.00%
- DXY 0.07%, DAX -0.66%, FTSE -0.56%, Brent -0.01%, Gold -0.75%
- Turkish lira pulls back from a record low, markets rattled
- Turkey contagion fears roil Italy's bond market
- BOJ should ditch negative rates, yield cap - ex-BOJ exec
- Sterling stuck near 2018 low on dollar strength, Brexit woes
- Italy Jul CPI (EU Norm) Final YY, 1.9%, 1.9% forecast, 1.9% previous
- Italy Jul Consumer Prices Final YY, 1.5%, 1.5% previous
- Iran's Khamenei says mismanagement hurts the economy more than U.S. sanctions - TV
Economic Data Ahead
- No major economic data releases
Key Events Ahead
- No significant events scheduled
FX Beat
DXY: The dollar index surged to a fresh 13-month peak, underpinned by a rise in the U.S. 10-year Treasuries yields. The greenback against a basket of currencies trades 0.2 percent up at 96.47, having touched a high of 96.52 earlier, its highest since July 2017. FxWirePro's Hourly Dollar Strength Index stood at 96.74 (Slightly Bullish) by 1000 GMT.
EUR/USD: The euro slumps for the third straight session, hitting a 13-month low as political uncertainty in Italy and ECB's concerns over European banks' exposure to Turkey dented investor risk sentiment. The European currency traded 0.2 percent down at 1.1386, having touched a low of 1.1365, its lowest since July 2017. FxWirePro's Hourly Euro Strength Index stood at -59.36 (Bearish) by 1000 GMT. Immediate resistance is located at 1.1427 (23.6% retracement of 1.6282 and 1.1365), a break above targets 1.1497 (50% retracement). On the downside, support is seen at 1.1350, a break below could drag it till 1.1310.
USD/JPY: The dollar declined to a 6-week low as Turkey's worsening currency crisis persuaded investors to dump equities and emerging markets and seek safe-haven assets, such as the Japanese yen. The major was trading 0.4 percent down at 110.37, having hit a low of 110.11 earlier, its lowest since June 28. FxWirePro's Hourly Yen Strength Index stood at 120.05 (Highly Bullish) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, as U.S. economic calendar remains absolutely data empty. Immediate resistance is located at 110.88 (38.2% retracement of 112.15 and 110.11), a break above targets 111.31 (10-DMA). On the downside, support is seen at 109.96 (June 28 Low), a break below could take it lower 109.36 (June 25 Low).
GBP/USD: Sterling tumbled, extending losses for the eighth straight session, as investors remain uncertain whether Britain would secure a trade deal with the European Union before it exits the bloc. The British pound traded 0.2 percent down at 1.2747, having hit a low of 1.2722 on Friday; it’s lowest since June. 2017. FxWirePro's Hourly Sterling Strength Index stood at -56.88 (Bearish) 1000 GMT. Immediate resistance is located at 1.2830 (23.6% retracement of 1.3173 and 1.2722), a break above could take it near 1.2948 (50% retracement). On the downside, support is seen at 1.2700, a break below targets 1.2665. Against the euro, the pound was trading 0.1 percent up at 89.27 pence, having hit a high of 89.12 earlier, it’s highest since August 6.
USD/CHF: The Swiss franc rose, retreating from a 4-day low touched in the prior session, as the fallout from the Turkish lira's slump sent investors seeking safe-haven currencies. The major trades 0.05 percent down at 0.9944 having touched a low of 0.9894 on Thursday, it’s lowest since July 31. FxWirePro's Hourly Swiss Franc Strength Index stood at 58.48 (Bullish) by 1000 GMT. On the higher side, near-term resistance is around 1.0010 (July 20 High) and any break above will take the pair to next level till 1.0043 (July 19 High). The near-term support is around 0.9915 (August 2 Low) and any close below that level will drag it till 0.9897 (August 1 Low).
Equities Recap
European shares tumbled, dragged lower by losses in banking stocks as growing economic crisis in Turkey dented investor risk sentiment.
The pan-European STOXX 600 index declined 0.5 percent at 383.78 points, while the FTSEurofirst 300 index eased 0.5 percent to 1,502.35 points.
Britain's FTSE 100 trades 0.6 percent down at 7,623.79 points, while mid-cap FTSE 250 fell 0.5 percent to 20,570.81 points.
Germany's DAX fell 0.7 percent at 12,339.56 points; France's CAC 40 trades 0.4 percent lower at 5,392.09 points.
Commodities Recap
Crude oil prices declined as trade tensions dented the outlook for fuel demand; however, U.S. sanctions against Iran indicated tighter supply ahead. International benchmark Brent crude was trading 0.1 percent down at $72.86 per barrel by 1010 GMT, having hit a low of $71.43 on Friday, its lowest since June 18. U.S. West Texas Intermediate was trading 0.3 percent lower at $67.58 a barrel, after falling as low as $66.18 on Friday, its lowest since June 22.
Gold prices slumped to a fresh 17-month low, as the U.S. dollar rallied to a 13-month high against a basket of currencies amid a financial crisis in Turkey. Spot gold had dropped 0.7 percent to $1,201.90 an ounce by 1012 GMT, having hit a low of $1,201.05 earlier, its lowest since Mach 2017.U.S. gold futures were down 0.3 percent at $1,215.7 an ounce.
Treasuries Recap
The U.S. Treasury yields traded in green despite money markets emerging in red following investor worries over Turkey’s political scenario, as the tussle with the U.S. gets going. The yield on the benchmark 10-year Treasuries rose 1 basis point to 2.86 percent, the super-long 30-year bond yields jumped nearly 2-1/2 basis points to 3.03 percent and the yield on the short-term 1-year traded close to 1 basis point higher at 2.59 percent.
The German bunds rallied during European session as political turmoil in Turkey took a savage turn, forcing investors to turn risk-averse, thus leading to a rise in debt prices. The German 10-year bond yields, which move inversely to its price, fell nearly 1-1/2 basis points to 0.31 percent, the yield on 30-year note slipped nearly 1 basis point to 0.97 percent and the yield on short-term 2-year traded tad lower at -0.65 percent.
The New Zealand bonds closed higher after investors flooded into safe-haven instruments, following a decline in the Turkish lira as markets remain worried over the political tiff the country is experiencing with the United States. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, slipped 1 basis point to 2.60 percent, the yield on the long-term 20-year note fell 1-1/2 basis points to 2.93 percent and the yield on short-term 1-year also closed 1/2 basis point lower at 1.72 percent.
The Japanese government bonds gained during Asian session as falls in the Turkish lira spurred demand for safe-haven assets, following a political deadlock in the country. The yield on the benchmark 10-year JGB note, which moves inversely to its price, slipped 1/2 basis point to 0.100 percent, the yield on the long-term 30-year note fell 1 basis point to 0.837 percent and the yield on short-term 2-year traded tad lower at -0.115 percent.
The Australian government bonds rallied across the board on the first trading day amid the ongoing political crisis in Turkey, pushing investors towards safe-haven assets. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, fell 3-1/2 basis points to 2.575 percent, the yield on the long-term 30-year Note also dipped 2-1/2 basis points to 3.063 percent and the yield on short-term 2-year slumped 2 basis points to 2.003 percent.
