Market Roundup
- EUR/USD -0.01%, USD/JPY -0.16%, GBP/USD -0.02, EUR/GBP -0.08%
- DXY +0.06%, DAX -0.12%, FTSE -0.12%, Brent -0.32%, Gold +0.34%
- Swedish central bank holds rates, sees no further cuts
- EUR/SEK climbs 0.45% to 9.6995 after Riksbank decision
- BoE's McCafferty sticks to view interest rates should rise now
- Growth in UK construction cools in June - PMI
- Great Britain Jun Markit/CIPS Cons PMI, 54.8 vs forecast 55.o, previous 56.0
- EZ May Producer Prices y/y, +3.3% vs forecast +3.5%, previous +4.3%
- German firms operating abroad see better business despite risks-DIHK
- N. Korea says first intercontinental ballistic missile test successful
- New Jersey governor signs budget bill, ends partial government shutdown
- Australia central bank steers steady course on rates, knocks A$
- No more loan rangers? Beijing's waning support for private credit scores
- Oil prices fall on U.S. holiday after 8 days of gains
- Gold inches up as N. Korea missile launch buoys safe-haven demand
- China central bank will maintain prudent and neutral monetary policy
- Abe expected to agree EU-Japan trade deal on Thursday -EU
- BoJ Tankan corp prices expectations still well shy of BoJ target, +0.8% in year
- Corporate Japan turning corner on price hikes – Nikkei survey
- Japan corporate tax revenue sinks to post-Abenomics low - Nikkei
- Japan end-June monetary base Y468.0343 trln, +17.0% y/y
- Walmart revises guidance on multi-tranche samurais, via BAML, GS, MUFG –IFR
Economic Data Ahead
- (0930 ET/1330 GMT) Financial firm Markit releases Canada's Manufacturing PMI for the month of June. The index posted a final reading of 55.1 in May.
- (1630 ET/2030 GMT) API reports its weekly crude oil stock.
- (1901 ET/2301 GMT) The British Retail Consortium (BRC) will report its Shop Price Index for the month of June. The index posted an annualized decline of 0.4 percent in the previous month.
- (1930 ET/ 2330 GMT) The Australian Industry Group (AiG) releases its Performance of Services Index for the month of May. The index stood at 51.5 in April.
Key Events Ahead
- (1230 ET/1630 GMT) European Central Bank governing council member Ewald Nowotny's speech.
FX Beat
DXY: The dollar fell versus the Japanese yen as a missile launch by North Korea send investors seeking safe-haven assets. The greenback against a basket of currencies traded 0.1 percent up at 96.28, having touched a low of 95.47 last week, it’s lowest since Oct. 3. FxWirePro's Hourly Dollar Strength Index stood at 117.74 (Highly Bullish) by 1000 GMT.
EUR/USD: The euro tumbled to a 1-week low as monetary policy divergence between both continents and a recovery in the U.S. dollar across the board weighed heavily on the major. The European currency traded 0.1 percent down at 1.1348, having touched a high of 1.1445 on Friday, its highest since May 5, 2016. FxWirePro's Hourly Euro Strength Index stood at -20.79 (Neutral) by 1000 GMT. The pair has taken support near 7- day MA and any break below will drag the pair till 1.1290/1.1275 (10- day MA). On the higher side, major resistance is around 1.1450 and any break above will take the pair till 1.1500/1.1545.
USD/JPY: The dollar declined against the Japanese as another ballistic missile test by North Korea triggered a fresh bout of risk-averse sentiment across the board. Moreover, the BoJ Tankan report for the second quarter showed a moderate rise in the inflation expectations over the 12-month period, providing an additional boost to the Japanese Yen. The major traded 0.2 percent down at 113.18, having hit a high of 113.47 on Monday, its highest since May 16. FxWirePro's Hourly Yen Strength Index stood at -82.93 (Slightly Bearish) by 1000 GMT. The pair is facing near-term support at 111.75 (100- day MA) and any break below 111.75 will drag the pair down till 110.95/110. On the higher side, near term resistance is around 114.36 will take it to next level till 115.40.
GBP/USD: Sterling slumped, extending previous session losses after a survey of Britain's construction sector showed growth slowed in June, indicating that the economy might be struggling to gain momentum. The UK's construction Purchasing Managers' Index arrived at 54.8 points, as compared to a previous reading of 56.0. Sterling traded 0.1 percent down at 1.2931, having hit a high of 1.3029 on Friday, its highest since May 23. FxWirePro's Hourly Sterling Strength Index stood at 82.06 (Slightly Bullish) by 1000 GMT. The pair should break above 1.3050 for further bullishness and any violation above will take the pair till 1.3110 (113% retracement of 1.30475 and 1.25894)/1.3150/1.33150 (88.6% retracement of 1.3440 and 1.19040). On the lower side, near-term minor support is around 1.29250 (23.6% retracement of 1.25895 and 1.30298) and any break below will drag it down till 1.2839 (21- day EMA)/1.2810 (daily Kijun-Sen). Against the euro, the pound traded 0.1 percent up at 87.73 pence, having hit a 7-month low of 88.79 on Thursday.
USD/CHF: The Swiss franc declined against the dollar as the greenback rebounded versus most of its major peers. The major trades 0.2 percent up at 0.9655, having touched a high of 0.9657 earlier, its highest since Jun. 27. FxWirePro's Hourly Swiss Franc Strength Index stood at -138.72 (Highly Bearish) by 1000 GMT. On the lower side, major bearish continuation can be seen below 0.9440. The upside remains capped by 10- day MA at 0.9659 and minor jump till 0.96877 (61.8% retracement of 0.97708 and 0.95504)/0.9710 is possible.
AUD/USD: The Australian dollar tumbled below the 0.7600 handle after the RBA decided to leave its key benchmark rate unchanged at a record low level of 1.5 percent, as widely expected. The Aussie trades 0.7 percent down at 0.7605, having hit a high of 0.7712 on Friday, it’s strongest since Mar. 21. FxWirePro's Hourly Aussie Strength Index stood at -80.40 (Slightly Bearish) by 1000 GMT. On the lower side, near term support is around 0.7600 (10- day MA) and any break below will drag the pair till 0.7530 (200- MA). The near term resistance is around 0.7750 and any break above targets 0.7800/0.7835.
Equities Recap
European shares slumped as a fall in crude oil prices and a long-range missile test by North Korea triggered a fresh bout of risk aversion across the global markets.
The pan-European STOXX 600 index dropped 0.1 percent to 383.12 points, while the FTSEurofirst 300 index lost 0.2 percent to 1,507.02 points.
Britain's FTSE 100 trades 0.2 percent down at 7,364.00 points, while mid-cap FTSE 250 declined 0.1 percent to 19,295.73 points.
Germany's DAX fell 0.2 percent at 12,449.50 points; France's CAC 40 trades 0.2 percent lower at 5,185.30 points.
Commodities Recap
Crude oil prices declined, halting an eight-day winning streak on signs of a persistent rise in U.S. crude production. International benchmark Brent crude was trading 0.2 percent down at $49.45 per barrel by 1014 GMT, having hit a high of $48.68 the prior day, its strongest since Jun. 7. U.S. West Texas Intermediate traded 0.3 percent lower at $46.89 a barrel, after rising as high as $47.10 earlier, its strongest since Jun 6.
Gold prices rose, rebounding from seven-week lows touched in the previous session as a successfully test-launched of an intercontinental ballistic missile by North Korea send investors seeking safe-haven assets. Spot gold gained 0.4 percent to $1,224.25 per ounce by 1021 GMT, having touched a low of $1,218.37 an ounce on Monday, its weakest since May 11. U.S. gold futures for August delivery climbed 0.4 percent to $1,224.50 an ounce.
Treasuries Recap
The UK gilts remained tad higher after reading the country’s lower construction PMI for the month of June, released earlier today. Also, the 10-year auction, scheduled to be held on July 6 will add more clarity to the debt market. The yield on the benchmark 10-year gilts, slumped 1-1/2 basis points to 1.24 percent, the super-long 30-year bond yields also plunged 1-1/2 basis points to 1.86 percent and the yield on the short-term 2-year too traded 1-1/2 basis points lower at 0.32 percent.
The Eurozone periphery bonds gained on rising demand for safe-haven assets and as investors wait to watch the benchmark German 5-year auction, scheduled to be held on July 5 for further direction in the debt market. The benchmark German 10-year bond yields, fell nearly 1 basis point to 0.47 percent, the French 10-year bond yields slipped nearly 1-1/2 basis points to 0.82 percent, Irish 10-year bond yields slumped nearly 6 basis points to 0.87 percent, Italian collapsed 1-1/2 basis points to 2.12 percent, Netherlands 10-year bond yield down nearly 1-1/2 basis points to 0.65 percent, Portuguese equivalents plunged 2-1/2 basis points to 2.98 percent and the Spanish 10-year yields traded nearly 2 basis points lower at 1.50 percent.
The Japanese government bonds disappointed as investors remained cautious ahead of the 30-year auction, scheduled to be held on July 6. Also, the 10-year auction, held earlier today failed to spur demand for safe-haven assets, leading to further sluggishness in the bond prices. The benchmark 10-year bond yield, rose nearly 1 basis point to 0.06 percent, the long-term 30-year bond yields hovered around 0.82 percent and the yield on the short-term 2-year note traded nearly 1/2 basis point higher at -0.12 percent.
The New Zealand bonds ended higher as investors wait to watch the country’s GlobalDairyTrade (GDT) price auction, scheduled to be held later today amid a silent trading week. At the time of closing, the yield on the benchmark 10-year bond, slumped 2-1/2 basis points to 3.02 percent, the yield on 7-year note also plunged 2-1/2 basis points to 2.92 percent and the yield on short-term 2-year note ended 4 basis points lower at 2.08 percent.
The Australian bonds sharply rebounded after the Reserve Bank of Australia (RBA) remained unchanged in its monetary policy decision, revealed today and maintained a lesser-than-expected hawkish tone of its underlying statement after major central banks pre-empted a hawkish sentiment across major global markets at an ECB forum early last week. The yield on the benchmark 10-year Treasury note, slumped 5-1/2 basis points to 2.58 percent, the yield on 15-year note plunged 6 basis points to 2.94 percent and the yield on short-term 2-year also traded nearly 6 basis points lower at 1.70 percent.
