Market Roundup
- GBP/USD -0.45%, USD/JPY -0.64%, EUR/USD +0.25%
- Dollar falls against yen as BOJ easing expectations pared
- China's yuan rises to three-week high as Fed sends dollar lower
- Euro zone Jul Business Climate 0.39 vs 0.22 previous, 0.17 expected
- Euro zone Jul Economic Sentiment 104.6 vs 104.4 previous, 103.7 expected
- Euro zone Jul Industrial Sentiment -2.4 vs -2.8 previous, -3.4 expected
- Euro zone Jul Services Sentiment 11.1 vs 10.8 previous, 10.4 expected
- Euro zone Jul Consumer Confid. Final -7.9 vs -7.3 previous, -7.9 expected
- Euro zone Jul Cons Infl Expec 3.7 vs 5.1 previous
- Euro zone Jul Selling Price Expec 0.2 vs 0.7 previous
- German Jul Unemployment Total NSA 2.661mn vs 2.614 previous, 2.669 expected
- German Jul Unemployment Rate SA 6.1% vs 6.1 previous, 6.1 expected
- German Jul Unemployment Total SA 2.682mn vs 2.69 previous
- Credit Suisse profit surprise boosts CEO Thiam's turnaround strategy
- Brexit shockwaves hit UK consumers, companies brace for slowdown
- Lloyds to cut 3,000 jobs, close more branches after Brexit shock
- UK Jul Nationwide house price mm 0.5% vs 0.2 previous 0 expected
- UK Jul Nationwide house price yy 5.2% vs 5.1 previous4.5 expected
Economic Data Ahead
- (0830 ET/1230 GMT) New applications for U.S. unemployment benefits is likely to have increased 7,000 to a seasonally adjusted 260,000 for the week ending July 22, while continuing claims for the week ending July 8 is expected to have risen to 2.130m from 2.128m.
- (0830 ET/1230 GMT) The United States releases goods trade balance data for the month of June. The economy posted a trade deficit of $61 billion in the previous month.
- (1030 ET/1430 GMT) The Energy Information Administration reports its Natural Gas Storage for the week ending July 22.
- (1845 ET/2245 GMT) The Statistics New Zealand releases building permits s.a data for the month of June. The index posted a decline of 9.0 percent in May.
- (1905 ET/2305 GMT) The GfK Group will release Britain's consumer confidence index for the month of July.
Key Events Ahead
- (1145 ET/1545 GMT) FedTrade operation 30-year Fannie Mae / Freddie Mac, max $2.675bn.
FX Beat
DXY: The dollar index, against a basket of currencies trades 0.2 percent lower at 96.59, having declined to a 2-week low of 96.29, its biggest 1-day fall in eight weeks.
EUR/USD: The euro rose on the back of better-than-expected Euro zone sentiment indices. Euro zone's economic sentiment indicator for the month of July came in at 104.6, surpassing forecast of 103.7 and prior 104.4. Business climate increased 0.39 and Industrial confidence climbed -2.4, while service sentiment rose 11.1. The euro trades 0.2 percent higher at 1.1083, after rising as high as 1.1119. The short term trend is slightly bullish as long as support 1.1050 holds. Any violation below 1.1050 will take the pair to next level till 1.11375 (trend line joining 1.11861 and 1.11648)/1.11860 (Jul-5 High). On the higher side, any break above 1.11370 will take the pair to next level till 1.11860/1.1245. It should break above 1.11860 for further bullishness
USD/JPY: The Japanese yen gained against the dollar as the likelihood of the Bank of Japan providing the stimulus package as markets had expected earlier diminished. The greenback trades 0.6 percent lower at 104.75, attempting to recover from session's low of 104.47. Investors mow await BoJ's policy outcome due tomorrow, which is likely to cut rates and expand its QQE program. The short term trend is slightly bullish as long as support 104 holds. The major resistance is around 106.50 and any break above confirms minor trend reversal, a jump till 107/107.50 is possible. On the lower side minor support is around 104 and any break below 104 will drag the pair till 103/102.60.
GBP/USD: Sterling slumped against the dollar and the euro after British bank Lloyds cut 3,000 jobs, highlighting concerns that the UK economic outlook will deteriorate in the coming months following June's Brexit vote. Focus now turns on next week's Bank of England meeting, which is widely expected to cut the interest rates from a record low of 0.5 percent. Sterling trades 0.5 percent lower at 1.3151, pulling away from a high of 1.3248 touched earlier in the session. On the higher side, minor support is around 1.3100 and break below targets 1.3060/1.3000. Any break above 1.3250 will take the pair till 1.3290. Against the euro, the pound trades 0.8 percent lower at 84.27 pence.
USD/CHF: The Swiss franc touched a 1-week high against the dollar, supported by risk-off market profile. The greenback trades 0.2 percent lower at 0.9841, hovering away from a near 2-month high of 0.9950 touched on Wednesday. On the lower side, major support is around 0.9818 (21 DMA) and any indicative break below 0.9818 targets 0.980/0.9760 (90 DMA)/0.9680 in the short term. The major resistance is around 0.9960 and any break above targets 1.000/1.00920.
AUD/USD: The Australian dollar gained largely on the back of broad based U.S. dollar weakness, combined with rallying copper prices, Australia's top export. The Aussie rose 0.4 percent to 0.7522, having touched sessions high of 0.7549. Investors now eye ANZ activity and business confidence report, ahead of private sector credit and producer price index data, for further cues on the major. On the higher side, resistance is seen at 0.7580 and break above targets 0.7625/0.7680. The major support is around 0.7480 and break below will drag the pair till 0.7420/0.7380.
NZD/USD: The New Zealand dollar continued with its recovery mode, however, trimmed gains to trade below the 0.7100 handle. The Kiwi trades at 0.7080, after going as high as 0.7121 earlier in the session. The major will continue to track broad market sentiments ahead of economic data from the U.S and New Zealand’s building permit report. Immediate resistance is located at 0.7135 (20-DMA), break above targets 0.7150/ 0.7200. On the lower side, support is seen at 0.7050, break below could take it till 0.7020.
Equities Recap
European shares retreated, weighed down by some soft corporate updates, which weakened risk sentiment across financial markets.
MSCI's 46-country All World stocks index had touched its highest level since early November, while MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.1 percent.
The pan-European STOXX 600 index slumped 0.3 percent to 341.55 points, while the FTSEurofirst 300 index lost 0.4 percent to 1,345.78 points.
Germany's DAX index trades flat, France’s CAC nudged down 1.5 pct. Britain's FTSE 100 index lost 0.1 percent, while mid-cap FTSE 250 index gained 0.6 pct.
Tokyo's Nikkei declined 1.13 pct at 16,476.84, Australia's S&P/ASX 200 index gained 0.32 pct at 5,557.50 points and South Korea's KOSPI 200 shed 0.20 pct.
Shanghai composite index and CSI300 index both added 0.1 pct at 2,994.32 points and 3,221.14 points, respectively. Hong Kong's Hang Seng index dropped 0.2 pct at 22,174.34 points.
Commodities Recap
Oil prices declined below $42 a barrel, as crude producers continued to pump more than needed, adding to the supply glut concerns hampering investors’ sentiments. Brent crude oil was down 1.0 percents at $42.95 per barrel by1025 GMT, hitting fresh 3-month lows. U.S. West Texas Intermediate crude was down 0.3 percents at $41.76.
Gold rose, extending previous session gains as investors remained cautious ahead of BoJ policy meeting outcome amid risk-off market sentiment. Spot gold was little changed at $1,340.11 an ounce at 1030 GMT, having gained 1.5 percent in the wake of the Fed statement. U.S. gold futures for August delivery were up 1.1 percent at $1,340.70.
Treasuries Recap
The US Treasuries traded mixed following the release of the July FOMC statement that noted diminished risk for the economic outlook, highlighted by modest downward pressure in the short-end contrasted by further buying in the long end. The yield on the benchmark 10-year Treasury note fell nearly 1 basis points to 1.505 percent, the yield on 5-year note rose 1 basis point to 0.830 percent and the yield on short-term 2-year note fell ½ basis points at 0.726 percent.
The Eurozone periphery bonds rallied as investors sought refuge in the safe-haven instruments ahead of July preliminary consumer inflation and the second-quarter preliminary gross domestic product (GDP) reading. The French 10-year bund yield fell 1 basis point to 0.130 percent, The 10-year Irish 10-year bonds yield dipped 4-1/2 basis points to 0.451 percent, Italian equivalents inched lower 1-1/2 basis points to 1.200 percent, Netherlands 10-year bonds yield tumbled 1-1/2 basis points to 0.022 percent, Portuguese 10-year bonds yield slid 1-1/2 basis points to 2.984 percent and the Spanish 10-year bonds yield inched lower 1 basis point to 1.097 percent.
The UK gilts continued to rally due to rising speculation that the Bank of England may restart quantitative easing at next week's meeting or opt for lower interest rates. The yield on the benchmark 10-year gilts fell more than 3 basis points to a record low of 0.707 percent, the yield on super-long 30-year bond dipped nearly 2 basis points to 1.593 percent and the yield on short-term 2-year bonds slid 1/2 basis point to 0.125 percent.
The German bunds traded mixed, with the yield on the benchmark 10-year bond falling 1/2 basis point to -0.084 percent, the yield on long-term 30-year note dipped nearly 2 basis points to 0.377 percent and the yield on short-term 3-year note rose 1/2 basis point to -0.641 percent. The short-term Japanese government bonds slumped as investors awaited the result of the two-day monetary policy meeting of the Bank of Japan on July 28-29. The benchmark 10-year bond yield rose more than 2 basis points to -0.269 percent, the yield on 5-year note jumped 2-1/2 basis points to -0.346 percent (recovered from record low levels), the yield on super long 30-year note dipped 1 basis point to 0.260 percent and the short-term 2-year JGB yield also bounced 2 basis points to -0.344 percent (rebounded from record low).
The New Zealand government bonds closed firmer after crude oil futures fell to its lowest levels in more than three months as the United States Energy Information Administration (EIA) inventories data revealed a surprise rise in stockpiles. The yield on the benchmark 10-year bond slid 1 basis point to 2.245 percent, the yield on 7-year note also dipped 1 basis point to 2.00 percent and the yield on short-term 2-year note ended 1/2 basis point lower at 1.865 percent.
The Australian government bonds rallied as investors remain cautious ahead of the Reserve Bank of Australia’s (RBA) monetary policy meeting, which is scheduled to take place on August 2. The yield on the benchmark 10-year Treasury note fell 8 basis points to 1.886 percent and the yield on short-term 2-year note dipped nearly 5 basis points to 1.539 percent.
