Market Roundup
- EUR/USD -0.19%, USD/JPY 0.48%, GBP/USD -0.28%, EUR/GBP 0.07%
- DXY +0.25%, DAX +1.06%, FTSE +0.56%, Brent -0.58%, Gold -0.61%
- Eurozone Jun Industrial production mm -0.6% vs forecast -0.5%, previous 1.3%
- Eurozone Jun Industrial production yy 2.6% vs forecast 2.8%, previous 4%
- Britain says Brexit talks should move to next phase, as ministers show unity
- Korea tensions ease slightly as U.S. officials play down war risks
- Gold slips as dollar steadies; N. Korea headlines in focus
- Oil prices slip on Chinese demand concerns, rising U.S. activity
Economic Data Ahead
- No major economic data releases
Key Events Ahead
- (0745 ET/1145 GMT) FedTrade operation 30-year Ginnie Mae (max $1.475 bn)
- N/A Canadian Foreign Minister Chrystia Freeland will testify to a Parliamentary committee about the government's negotiating position heading into talks on recrafting the NAFTA.
FX Beat
DXY: The dollar gained versus most of its major peers after falling to multi-week lows in the previous session on the back of fading expectations of another U.S. rate hike this year. The greenback against a basket of currencies traded 0.3 percent up at 93.39, having touched a low of 92.93 on the prior session, it’s lowest since Aug 4. FxWirePro's Hourly Dollar Strength Index stood at 83.39 (Slightly Bullish) by 1000 GMT.
EUR/USD: The euro declined below the 1.1800 handle after data showed Eurozone's industrial output fell by more than expected in June, as the production of capital and durable goods dropped following sharp increases in the previous month. The economy's industrial production fell by 0.6 percent but still increased by 2.6 percent on an annual basis. The European currency traded 0.2 percent down at 1.1794, having touched a high of 1.1846 on Friday, its highest since Aug. 4. FxWirePro's Hourly Euro Strength Index stood at 78.39 (Slightly Bullish) by 1000 GMT. On the lower side, near term support is around 1.1745 and any break below will drag the pair till 1.1688 (Aug 9th, 2017 low)/1.16500. The near term resistance is around 1.1850 and any break above will take it till 1.19103 (Aug 8th, 2017)/1.19391 (1.13% retracement of 1.19103 and 1.16880)/1.1200.
USD/JPY: The dollar bounced back from a 4-month low hit in the previous session, as the yield on the benchmark 10-year Treasury jumped 3-1/2 basis points to 2.22 percent. The major was trading 0.5 percent up at 109.68, having hit a low of 108.72 the prior session, its lowest since Apr 20. FxWirePro's Hourly Yen Strength Index stood at 28.32 (Neutral) by 1000 GMT. On the lower side, any break below 108 confirms minor weakness, a decline till 106 likely. The near term resistance is around 112 (21- day EMA) and any break above targets 112.98/114.
GBP/USD: Sterling eased below the 1.3000 handle, in the wake of series of negative headlines from the first weeks of Brexit negotiations and broad based U.S. dollar recovery. The Welsh nationalist party joined Scotland in opposing the UK Government to pass the EU legislation into UK laws, triggering selling pressure around the British pound. Sterling traded 0.3 percent down at 1.2970, having hit a low of 1.2939 on Friday, its lowest since July 20. FxWirePro's Hourly Sterling Strength Index stood at 8.24 (Neutral) by 1000 GMT. On the higher side, 1.3033 (21- day EMA) will be acting as near term resistance and any convincing break above will take the pair slightly till 1.3082 (10- day MA)/1.3140 (61.8% retracement of 1.32680 and 1.29327). The near term support is around 1.2930 (Jul 20th low) and any break below will drag it till 1.2845 (61.8% fibo)/1.28120. Against the euro, the pound was trading 0.1 percent down at 90.95 pence, having hit a 10-month low of 91.18 on Friday.
USD/CHF: The Swiss franc retreated from an over 2-week high touched in the prior session, following a modest recovery in the dollar boosted by a pickup in the U.S. Treasury bond yields. The major trades 0.7 percent up at 0.9687, having touched a low of 0.9582 on Friday it’s lowest since Jul. 27. FxWirePro's Hourly Swiss Franc Strength Index stood at -175.30 (Highly Bearish) by 1000 GMT. The pair is facing support near 0.9600 (50% retracement of 0.94385 and 0.97728) and any close below will drag the pair till 0.9550/0.9500 in the short term. On the higher side, near-term major resistance is around 0.9700 and any break above will take it till 0.9736 (89- day EMA)/0.9783 (38.2% retracement of 1.03432 and 0.94385).
AUD/USD: The Australian dollar declined as downbeat Chinese economic data including industrial production, fixed asset investment and retail sales, coupled with a softer tone around commodity space dented the major’s bid tone. The Aussie trades 0.3 percent down at 0.7869, having hit a low of 0.7839 on Friday, it’s weakest since July 18. FxWirePro's Hourly Aussie Strength Index stood at -70.80 (Bearish) by 1000 GMT. On the lower side, near term support is around 0.7800 and any break below will drag the pair till 0.7760 (61.8% fibo)/0.7688 (89- day EMA). The near term resistance is around 0.8070 and any break above targets 0.8100/0.8150.
Equities Recap
European shares rebounded after registering their worst weekly losses of the year, while the greenback rebounded from recent lows amid improving risk appetite.
The pan-European STOXX 600 index rallied 0.8 percent to 375.16 points, while the FTSEurofirst 300 index climbed 0.8 percent to 1,474.46 points.
Britain's FTSE 100 trades 0.5 percent up at 7,349.42 points, while mid-cap FTSE 250 gained 0.5 percent to 19,646.12 points.
Germany's DAX rose 1.1 percent at 12,150.82 points; France's CAC 40 trades 0.9 percent higher at 5,106.01 points.
Commodities Recap
Crude oil prices declined, reve3rsing its previous session gains as a slowdown in Chinese refining activity growth cast doubts over its crude demand outlook. International benchmark Brent crude was trading 0.3 percent down at $52.00 per barrel by 1001 GMT, having hit a low of $51.28 on Friday, its weakest since Aug. 2. U.S. West Texas Intermediate was trading 0.3 percent up at $48.58 a barrel, after falling as low as $47.95 last week, its strongest since July 26.
Gold prices eased from near two-month highs touched on Friday as the dollar inched up from last week's lows, amid developments on tensions over the Korean peninsula. Spot gold was down 0.7 percent at $1,280.99 per ounce by 1004 GMT, having touched a high of $1,288.86 an ounce on Friday, it highest level since June 7. U.S. gold futures for December delivery fell 0.12 percent to $1,292.4 per ounce.
Treasuries Recap
The U.S. Treasuries traded lower as investors wait to watch the country’s core retail sales, for the month of July, scheduled to be released on August 15 by 12:30GMT. The yield on the benchmark 10-year Treasury, jumped 3-1/2 basis points to 2.22 percent, the super-long 30-year bond yields surged nearly 2-1/2 basis points to 2.81 percent and the yield on short-term 2-year note traded 1-1/2 basis points higher at 1.31 percent.
The UK gilts plunged Monday on expectations of a slight rise in the region’s consumer price-led inflation index (CPI) for the month of July, scheduled to be released on August 15 by 8:30GMT. The yield on the benchmark 10-year gilts, jumped 2-1/2 basis points to 1.08 percent, the super-long 30-year bond yields climbed nearly 2-1/2 basis points to 1.74 percent and the yield on the short-term 2-year traded 1-1/2 basis points higher at 0.22 percent.
The Eurozone periphery bonds remained mixed Monday after industrial production of the region for the month of June missed market expectations, while investors remain keen to focus on Germany’s second-quarter gross domestic product (GDP), scheduled to be released on August 15 by 06:00GMT. The benchmark German 10-year bond yields, which moves inversely to its price, jumped 3-1/2 basis points to 0.42 percent, the French 10-year bond yields climbed 3 basis points to 0.72 percent, Irish 10-year bond yields surged 3-1/2 basis points to 0.75 percent; however, Italian 10-year bond yields fell 1-1/2 basis points to 2.02 percent, Netherlands 10-year bond yields rose nearly 4 basis points to 0.54 percent, Portuguese equivalents down 3-1/2 basis points to 2.82 percent and the Spanish 10-year yields traded 1-1/2 basis points lower at 1.43 percent.
The Japanese government bonds continued to gain after a long weekend Monday as investors largely shrugged-off the upbeat reading of the country’s second-quarter gross domestic product, released over the weekend. Also, investors remain keen to watch the industrial production for the month of June, scheduled to be released on August 15 for further direction in the debt market. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, traded tad 1/2 basis point lower at 0.05 percent, the yield on long-term 30-year note slipped nearly 1 basis point to 0.84 percent and the yield on short-term 2-year traded flat at -0.11 percent.
The New Zealand bonds slumped at the time of closing Monday after reading higher-than-expected retail sales for the second-quarter of this year. Also, investors will now be focusing on the GlobalDairyTrade price auction scheduled to be held on August 15 for further direction in the bond market. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 5 basis points to 2.86 percent, the yield on 7-year note also climbed 4-1/2 basis points to 2.71 percent and the yield on short-term 2-year ended 3 basis points higher at 2.05 percent.
The Australian bonds slumped Monday as North Korean tensions apparently subsided a little flowing into a better mood for 'risk assets' and less demand for the 'safe haven instruments’. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 3 basis points to 2.625 percent, the yield on 15-year note also jumped 3 basis points to 2.926 percent and the yield on short-term 2-year traded nearly 2-1/2 basis points higher at 1.798 percent.
