Market Roundup
- EUR/USD -0.11%, USD/JPY +0.36%, GBP/USD -0.45%, EUR/GBP +0.43%
- DXY +0.27%, DAX +0.47%, FTSE +0.64%, Brent -0.02%, Gold -0.25%
- ECB to lay groundwork for autumn policy shift
- EZ May Current account SA (EUR), 30.1 bln, previous 22.0 bln revised 23.5 bln
- Great Britain Jun Retail sales y/y, 2.9% vs forecast 2.5%, previous 0.9%
- Germany Producer prices y/y, 2.4% vs forecast 2.3%, previous 2.8%
- BOJ pushes back inflation target for 6th time, keeps policy steady
- BoJ showed little appetite for reducing its monetary stimulus
- BoJ pushed out timetable for reaching 2% inflation target
- Kuroda: Real rates will fall as inflation picks up
- Kuroda: Will maintain 2% inflation target
- Kuroda: No need to ease policy further now
- U.S., China fail to agree on trade issues, casting doubt on other issues
- Fitch says China's regulation pledge could signal shift away from high growth targets
- Oil steady after drop in fuel stocks stokes demand hopes
- Gold retreats as dollar ticks up ahead of ECB meeting
Economic Data Ahead
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have decreased by 2,000 to a seasonally adjusted 245,000 for the week ended Jul. 15 while continuing claims for the week ended Jul. 7 is expected to rise to 1.950 million from 1.945 million a week earlier.
- (0830 ET/1230 GMT) Philadelphia Federal Reserve manufacturing survey is likely to show that its mid-Atlantic business activity index decreased to 24.0 in July from 27.6 in June.
- (1000 ET/1400 GMT) The European Commission releases Eurozone's preliminary Consumer Confidence reading for the month of July. The index posted a final reading of -1.3 in the prior month.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending July 14.
- (1845 ET/2245 GMT) The Statistics New Zealand will release visitor arrivals report for the month of June. The indicator posted an annualized gain of 8 percent in the prior month.
- (1950 ET/2350 GMT) Japan's Ministry of Finance will report foreign bond investment for the week ending June 10.
- (1950 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic stocks for the week ending June 10.
Key Events Ahead
- (0830 ET/1230 GMT) European Central Bank President releases the monetary policy statement, followed by a news conference with ECB President Mario Draghi and Vice President Vitor Constancio.
- (0945 ET/1345 GMT) FedTrade operation 30-year Ginnie Mae (max $1.1 bn)
- (1145 ET/1545 GMT) FedTrade operation 15-year Fannie Mae / Freddie Mac (max $500 mn)
FX Beat
DXY: The dollar rebounded versus the safe-haven Japanese yen following dovish BoJ policy outcome and Governor Kuroda’s remarks. The greenback against a basket of currencies traded 0.2 percent up at 95.02, having touched a low of 94.48 on Tuesday, it’s lowest since Sept. 08. FxWirePro's Hourly Dollar Strength Index stood at 29.65 (Neutral) by 1000 GMT.
EUR/USD: The euro declined, extending losses for the second consecutive session as investors anxiously awaited the European Central Bank policy meeting later in the day, where it is widely expected to keep its policy on hold. However, markets would scrutinize ECB President Mario Draghi's comments for clues over prospects of reducing its ongoing €60 billion per month bond purchase program. The European currency traded 0.1 percent up at 1.1502, having touched a high of 1.1583 on Tuesday, its highest since May 3, 2016. FxWirePro's Hourly Euro Strength Index stood at 64.24 (Bullish) by 0900 GMT. The near term resistance is around 1.1614 (May 3rd, 2016 high) and any break above targets 1.1716 (Aug 28th, 2017 high). On the downside near term support is around 1.1480 (5- day MA) and any break below will drag the pair down till 1.1435 (Jul 17th, 2017 low)/1.13700.
USD/JPY: The dollar rose above the 112.00 handle and away from a 3-week low hit in the previous after the Bank of Japan left the monetary policy settings unadjusted and scaled back the timing for achieving its 2 percent inflation target. The major traded 0.4 percent up at 112.40, having hit a low of 111.55 the day before, its lowest since Jun 27. FxWirePro's Hourly Yen Strength Index stood at -99.64 (Slightly Bearish) by 0900 GMT. Any daily close below 100- day MA will drag the pair down till 111/110.58 (61.8% fibo). The near term resistance is around 114.50 and any break above targets 115.50.
GBP/USD: Sterling tumbled to a 1-week low below the 1.3000 handle despite data showing British retail sales surpassed forecast in the month of June, easing the growing concerns over the pace of economic growth. The economy's retail sales expanded 0.6 percent, beating a forecasted gain of 0.4 percent and up from May’s 1.1 percent monthly contraction. Sterling traded 0.4 percent down at 1.2960, having hit a high of 1.3125 on Tuesday, its highest since Sept. 16. FxWirePro's Hourly Sterling Strength Index stood at -98.18 (Slightly Bearish) by 0900 GMT. On the higher side, the pair is facing major resistance around 1.3130 and any break above confirms bullish continuation. On the lower side, near term support is around 1.2960 (10- day MA) and any break below will drag it till 1.2857 (daily Kijun-Sen)/1.28118 (Jul 12th low). Against the euro, the pound traded 0.4 percent down at 88.78 pence, having hit a 1-week low of 88.99 on Monday.
USD/CHF: The Swiss franc declined, extended previous session losses, as the greenback rebounded from recent lows amid improving risk-on market sentiment. The major trades 0.2 percent up at 0.9578, having touched a low of 0.9523 on Tuesday, it’s lowest since Aug. 19. FxWirePro's Hourly Swiss Franc Strength Index stood at 55.11 (Bullish) by 1000 GMT. Overall bullish invalidation is only below 0.9440 and any violation below will drag the pair further down till 0.9260. On the higher side, the pair is facing minor resistance around 0.9606 (5- day MA) and any break above will take it to next level till 0.9630 (10- day MA)/0.96830.
AUD/USD: The Australian dollar declined from 2-year peaks as traders seemed inclined to take some profits, amid extremely overbought conditions. The Aussie trades 0.7 percent lower at 0.7899, having hit a high of 0.7987 earlier, it’s highest since May 19, 2015. FxWirePro's Hourly Aussie Strength Index stood at 78.68 (Slightly Bullish) by 1000 GMT. On the lower side, near term support is around 0.78890 (23.6% retracement of 0.75700 and 0.79870) and any break below will drag the pair till 0.7840 (5- day MA)/0.7740 (daily Kijun-Sen). The near term resistance is around 0.8000 and any break above targets 0.8100.
Equities Recap
European shares extended gains in early trade, bolstered by a surge in global stocks, while investors awaited a highly anticipated policy meeting at the European central bank.
The pan-European STOXX 600 index advanced 0.1 percent to 385.97 points, while the FTSEurofirst 300 index rallied 0.2 percent to 1,516.35 points.
Britain's FTSE 100 trades 0.7 percent up at 7,483.15 points, while mid-cap FTSE 250 gained 0.2 percent to 19,723.58 points.
Germany's DAX rose 0.4 percent at 12,504.66 points; France's CAC 40 trades 0.3 percent higher at 5,230.24 points.
Commodities Recap
Crude oil prices rallied to multi-week highs on the back of falling U.S. crude inventories, as analysts offered mixed supply outlooks ahead of a key OPEC meeting next week. International benchmark Brent crude was trading 0.1 percent up at $49.63 per barrel by 0909 GMT, having hit an early high of $49.78, its strongest since Jul. 5. U.S. West Texas Intermediate traded 0.1 percent down at $47.20 a barrel, after rising as high as $47.38 earlier, its strongest since Jun 7.
Gold prices declined, extending previous session losses as investors awaited the European Central Bank policy meeting later in the day for clues on the outlook for its stimulus programme. Spot gold fell 0.2 percent to $1,238.06 per ounce at 0913 GMT, having touched a high of $1,244.44 on Tuesday, its highest since June 30. U.S. gold futures for August delivery fell 0.3 percent to $1,237.80 per ounce.
Treasuries Recap
The U.S. Treasuries remained flat ahead of the country’s initial jobless claims, scheduled to be today, besides the 10-year auction. The yield on the benchmark 10-year Treasury, hovered around 2.27 percent, the super-long 30-year bond yields traded flat at 2.84 percent and the yield on short-term 2-year note also remained nearly steady at 1.36 percent.
The UK gilts slumped, following a rebound in the country’s retail sales for the month of June, released today, largely owing to rise in demand for clothing during the summer season. The yield on the benchmark 10-year gilts, jumped 1-1/2 basis points to 1.20 percent, the super-long 30-year bond yields also climbed 1-1/2 basis points to 1.84 percent and the yield on the short-term 2-year traded 1 basis point higher at 0.28 percent.
The Eurozone periphery bonds traded slightly mixed as investors wait to watch the European Central Bank’s (ECB) monetary policy decision, scheduled to be later today. The benchmark German 10-year bond yields, rose 1 basis point to 0.55 percent, the French 10-year bond yields also climbed nearly 1-1/2 basis points to 0.81 percent, Irish 10-year bond yields hovered around 0.85 percent, Italian down nearly 1 basis point to 2.18 percent, Netherlands 10-year bond yields higher by 1 basis point to 0.67 percent, Portuguese equivalents surged 1-1/2 basis points to 3.07 percent and the Spanish 10-year yields traded flat at 1.53 percent.
The Japanese government lost ground after the Bank of Japan (BoJ) delivered along the line of market expectations, keeping its monetary policy unchanged at the two-day meeting that concluded early today. The Bank has also revised its real gross domestic forecasts (GDP) higher at the meeting for the upcoming few fiscals. The benchmark 10-year bond yield, remained tad higher at 0.07 percent, the long-term 30-year bond yields rose nearly 1 basis point to 0.87 percent and the yield on the short-term 2-year note traded flat at -0.10 percent.
The New Zealand bonds ended on the downside as investor remain sidelined in any major trading activity due to lack of any economically significant data and tracking some strength in the U.S. Treasuries. At the time of closing, the yield on the benchmark 10-year bond, jumped 2-1/2 basis points to 2.98 percent, the yield on 7-year note climbed 2 basis points to 2.85 percent while the yield on short-term 2-year note ended 1 basis point lower at 1.96 percent.
The Australian bonds slumped as investors moved away from safe-haven assets after witnessing a solid result in the country’s employment sector, with rising job addition and a stable rate of unemployment. The yield on the benchmark 10-year Treasury note, jumped 2 basis points to 2.76 percent, the yield on 15-year note climbed 2-1/2 basis points to 3.06 percent and the yield on short-term 2-year traded nearly 2 basis points higher at 1.94 percent.
