Market Roundup
- GBP/USD +0.22%, USD/JPY -0.03%, EUR/USD +0.05%, AUD/USD -0.13%
- DXY -0.06%, DAX +0.15%, Brent -0.75%, Iron +2.4%, FTSE +0.4%
- Germany May R.Sales 2.6% y/y vs revised, 2.7% previous, 3.0% exp
- PBOC says willing to let Yuan fall to 6.8 per-USD this year-Sources
- Everything on table when UK negotiates EU exit-French Finmin-Newsnight
- May says no A50 before year-end, no emergency budget
- Ladbrokes Tory leadership-May 4/5, Gov 7/2, Johnson 4/1
- Germany Jun Jobless S/Adj Rate 6.1% vas 6.1% previous,, 6.1% exp
- UK Q1 GDP 2.0% y/y vs 2.0% previous, 2.0% exp
- UK Q1 Bus Inv -0.8% y/y vs -0.4% previous
- UK Q1 C/A –GBP32.59 bln vs revised -33.96 bln, -27.10 bln exp
- EZ Jun Infl. 0.1% y/y vs 0.3% previous, 0.0% exp
- Switzerland Jun KoF Lead ind. 102.4 vs 101.8 revised previous, 102.8 exp
- BOJ board newcomer Masai warns against excess FX volatility
- Deut, Santander fail US stress test, M.Stanley gets 2nd chance
- UK YouGov/CEBR cons/conf lowest since May ’13 on Brexit
- UK June GfK consumer confidence index -1, May -1, April -3
- UK bank branch closures cut small business lending in half
Economic Data Ahead
- (0830 ET/1230 GMT) New applications for U.S. unemployment benefits is likely to have increased 8,000 to a seasonally adjusted 267,000 for the week ending June 24, while continuing claims for the week ending June 17 is expected to have rose to 2.150m from 2.142m.
- (0830 ET/1230 GMT) Canada's economic growth is likely to have edged up 0.1 percent in the month of April, after declining to 0.2 percent in March.
- (0830 ET/1230 GMT) Canadian producer prices are expected to have increased 0.4 percent in May, recovering most of the previous month's decline of 0.5 percent.
- (1030 ET/1430 GMT) The Energy Information Administration reports its Natural Gas Storage for the week ending June 24.
- (1400 ET/1800 GMT) Mexico's central bank announces its benchmark interest rate.
- (1500 ET/1900 GMT) Argentina's industrial output is expected to have declined 4.7 percent in May compared with the same month a year earlier. It contracted 6.7 percent in April versus the same month last year.
Key Events Ahead
- (1100 ET/1500 GMT) Bank of England Governor Mark Carney's Speech.
- (1145 ET/1545 GMT) FedTrade ops 30-yr Fannie Mae/Freddie Mac max $2.125 bln.
- (1515 ET/1915 GMT) St. Louis Fed President, James Bullard shares his "New Characterization of the U.S. Macroeconomic and Monetary Policy Outlook" before the Society of Business Economists Annual Dinner, in London.
FX Beat
USD: The dollar index, against a basket of currencies declined to 95.58, after rising to a high of 95.44 earlier in the previous session.
EUR/USD: The euro declined despite Eurozone posting better-than expected CPI figures. Eurozone's inflation for the month of June improved slightly to 0.1 percent y/y, against consensus 0 percent and previous -0.1 percent. The core -inflation also edged higher to 0.9 percent, versus forecast and previous 0.8 percent. The major trades 0.2 percent lower at 1.1099, having touched session’s low of 1.1084. Markets attention will remain on U.S jobless claims, and Chicago PMI data, ahead of Fed Bullard’s speech which will provide insights on the Brexit-vote and its impact on the U.S. economy. The short term trend is slightly bullish as long as support 1.1000 holds. Any break above 1.1120 will take the pair to next level till 1.1188 /1.1235 (61.8% retracement of 1.14278 and 1.109119). On the lower side, any break below 1.100 will drag it till 1.09700 (Jun 27th low) / 1.0900 (161.8% retracement of 1.14155 and 1.0971/1.0834 (61.8% retracement of 1.10852 and 1.09119).
USD/JPY: The major trades between tight range of 102.45-103.02 as investors refrain from taking positions amid Brexit led political uncertainty. The recovery in the greenback was fragile as the yen was strongly supported by better-than expected Japanese industrial output data. It last stood at 102.81, failing to extend gains above 103 level. The short term trend is slightly bearish as long as resistance 103.50 holds. The minor resistance is around 103.50 and any break above confirms minor trend reversal, a jump till 105/105.80 is possible. On the lower side, minor support is around 101.40 and any break below 101.40 will drag the pair till 100/98.80/98.
GBP/USD: Sterling rose for a third consecutive session, but traded in tight ranges as investors await new developments on Britain's decision to leave the European Union. Data released earlier in the day showed that Britain's gross domestic product in the first three months of 2016 stood at 0.4 percent, in line with consensus, and was 2.0 percent larger than a year earlier. Markets now await Bank of England Governor Mark Carney's speech for clues on interest rates. Sterling trades 0.3 percent higher at 1.3458, pulling away from a 31-year low of 1.3119 struck on Monday. Against the euro, the pound trades flat at 82.79 pence. On the higher side major intraday resistance is around 1.3500 and any break above 1.3500 will take the pair till 1.365/1.380/1.4000. On the lower side any break below 1.330 will drag it till 1.3220/1.3110/1.3020.
USD/CHF: The Swiss franc gained against the dollar, as risk-on profile started fading away. The greenback declined 0.4 percent to 0.9759, hovering away from a 3-week high of 0.9836 touched on Tuesday. The short term trend is bullish as long as support 0.9700 holds. On the higher side, any break above 0.9835 will take the pair to next level till 0.99075/0.9960 level. The major short term support is around 0.9700 and any break below targets 0.9670/0.9630/0.9580. Overall bullish invalidation is only below 0.9500 level.
AUD/USD: The Australian dollar recovered after declining on talks of PBoC allowing the yuan to devalue further. The Aussie rose back above the 0.7400 level from session low of 0.7371, to trade at 0.7453. The gains in the major were capped as ongoing political and economic uncertainty surrounding the Brexit vote continues to hurt market sentiment. Markets now await U.S. weekly jobless claims and Chicago PMI data, for further momentum. On the higher side, it is facing resistance at 0.7450 and any break above major resistance will take the pair till 0.7510/0.7580. The major support is around 0.7370 and break below will drag it till 0.7320/0.7280/0.7250.
NZD/USD: The New Zealand dollar rose back above the 0.7100 level, reversing its earlier losses. The major strengthened on the back of recovery in oil price and upbeat ANZ Business Confidence Index and activity outlook data. The trades 0.1 percent higher at 0.7120, hovering towards a high of 0.7136 struck in the previous session. Immediate resistance is located at 0.71500, break above will take the pair till 0.7169. On the lower side, support is seen at 0.7057 (Session Low).
Equities Recap
European shares rose, underpinned by energy and consumer stocks as crude oil prices hovered towards $51 a barrel mark.
The MSCI All-Country World index was little changed on the day, but is set to end the month down 2.5 percent, while MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.3 percent, pulling further away from a one-month low touched on Friday.
Europe's FTSEurofirst 300 gained 0.3 pct, Germany's DAX rose 0.2 pct, France's CAC climbed 0.6 pct and Britain's FTSE 100 advanced 0.4 pct.
Tokyo's Nikkei nudged up 0.06 pct at 15,575.92, Australia's S&P/ASX 200 index rose 1.64 pct at 5,226.50 points and South Korea's Kospi 200 gained 0.83 pct.
Shanghai composite index edged down 0.1 pct at 2,929.61 points, while CSI300 index added 0.1 pct at 3,153.92 points. Hong Kong’s Hang Seng index rose 1.8 pct at 20,794.37 points.
Commodities Recap
Oil price rose, hovering towards $51 a barrel, despite pressured by higher Nigerian output and concern about the economic outlook following Brexit vote. Brent crude oil was up 1.3 percent a barrel at $50.83 at 1018 GMT, while U.S. crude was down 0.3 percent at $49.47.
Gold nudged down as the demand for the safe-haven eased, with the shock of Britain's decision to leave the European Union began to fade away. Spot gold was trading flat at $1,317.21 an ounce by 1024 GMT, while U.S. gold was down 0.7 percent at $1,317.40.
Treasuries Recap
The U.S. Treasury prices are down slightly further today after the 10-year bond yield made a late surge prior to yesterday's close to over 1.50 percent, the highest since the UK's referendum date. The yield on the benchmark 10-year Treasury note rose 4 basis points to 1.517 percent and the yield on short-term 2-year note climbed 1 basis points to 0.637 percent.
The UK gilts plunged as the FTSE 100 has surged to highest level since April 21 today as investors hope Mark Carney's speech will calm Brexit fears. The yield on the benchmark 10-year gilts rose more than 3 basis points to 0.981 percent, yield on super-long 30-year bonds jumped 2-1/2 basis points to 1.797 percent and the yield on short-term 2-year note bounced 2 basis points to 0.225 percent.
The Eurozone government bonds slumped as stocks retained most of the previous session's big gains. The benchmark German 10-year bonds yield rose 3 basis points to -0.098 percent, French 10-year bunds yield jumped 2-1/2 basis points to 0.241 percent, Irish 10-year bonds yield moved up 1 basis points to 0.612 percent, Italian equivalents inched higher 1-1/2 basis points to 1.311 percent, Netherlands 10-year bonds yield climbed 3 basis points to 0.134 percent and the Spanish 10-year bonds yield bounced more than 1/2 basis points to 1.273 percent.
The German bunds slumped as investors cooled on safe-haven instruments after sources from Reuters noted the European Central Bank is in no rush to incur in further easing following the recent ‘Brexit’ vote as long as markets remain calm. The yield on the benchmark 10-year bond rose 2 basis points to -0.104 percent, yield on super-long 30-year bonds jumped 3 basis points to 0.417 percent and the yield on short-term 2-year note climbed 1 basis point to -0.643 percent.
The Japanese short-term government bonds traded nearly flat on Thursday, succumbing to thin trading activity during a relatively quiet session that saw little data of much significance. On the other hand, long-dated JGBs extended their earlier losses amid a lack of the BoJ buying. The yield on the benchmark 10-year bonds hovered around -0.22 percent mark, short-term 2-year JGB yield remained steady at -0.298 percent, super-long 40-year bonds jumped 2-1/2 basis points to 0.132 percent and the yield on 30-year JGB climbed more than 3 basis points to 0.122 percent.
The New Zealand government bonds ended firmer as investors increased bets that New Zealand’s central bank will cut its cash rate in the coming months from an already record-low 2.25 percent. The yield on benchmark 10-year bond fell 1-1/2 basis point to 2.370 percent in the end session, yield on 7-year note also dipped 1/2 basis point to 2.090 percent and the yield on short-term 2-year note ended steady at 2.045 percent.
The Australian government bonds were little changed during a relatively quiet session that saw little data of much significance. The yield on the benchmark 10-year Treasury note remained steady at 2.007 percent and the yield on short-term 2-year note hovered around 1.608 percent.
