Market Roundup
- EUR/USD -0.11%, USD/JPY -0.17%, GBP/USD +0.26%, EUR/GBP -0.37%
- DXY -0.01%, DAX +0.21%, FTSE +0.12%, Brent -0.52%, Gold +0.24%
- Germany Jun CPI final y/y, 1.6% vs forecast 1.6%, previous 1.6%
- Germany Jun HICP final y/y, 1.5% vs forecast 1.5%, previous 1.5%
- BoE: banks plan to cut back lending to consumers on worries about economy
- Trump says he does not fault son for meeting Russian lawyer
- China June trade beats expectations on robust demand, but headwinds eyed
- China economy to grow 6.6 pct in 2017, topping gov't target despite policy curbs
- IEA says OPEC compliance with oil cuts at lowest in 6 months
- Oil prices dip as IEA sees waning compliance with OPEC cuts
- Gold rises after Yellen hints at only gradual tightening
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. producer price index is likely to have remained unchanged in June, while in the 12 months through the same period, it is expected to have advanced 1.9 percent. PPI excluding food and energy probably edged up 0.2 percent after rising 0.3 percent in the prior month.
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have decreased by 3,000 to a seasonally adjusted 245,000 for the week ended July. 8 while continuing claims for the week ended Jun. 30 is expected to decline to 1.950 million from 1.956 million a week earlier.
- (0830 ET/1230 GMT) The Statistics Canada is likely to report that New Housing Price Index (NHPI) rose 0.3 percent in May after rising 0.8 percent in April.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending July 7.
- (1400 ET/1800 GMT) The U.S. government reports its monthly budget statement for the month of June. The government's budget deficit is expected to narrow to $35 billion from $88 billion in the previous month.
- (1830 ET/2230 GMT) New Zealand will release its Business PMI index for the month of June. The index stood at 58.5 in the previous month.
Key Events Ahead
- (0945 ET/1345 GMT) FedTrade Operation 30-Year Fannie Mae / Freddie Mac (max $1.625 bn)
- (1000 ET /1400 GMT) The Federal Reserve Chair Janet Yellen delivers her second day of semiannual monetary policy testimony before the Senate Banking Committee, in Washington.
- (1130 ET/1530 GMT) Federal Reserve Bank of Chicago President Charles Evans speaks on current economic conditions and monetary policy before the Ninth Annual Rocky Mountain Economic Summit, in Victor, Idaho.
- (1145 ET/1545 GMT) FedTrade Operation 15-Year Fannie Mae / Freddie Mac (max $625 mn)
- (1300 ET/1700 GMT) The Federal Reserve Board Governor Lael Brainard speaks on monetary policy before the National Bureau of Economic Research Monetary Economics Summer Institute, in Cambridge, Massachusetts.
- N/A U.S. President Donald Trump visits French President Emmanuel Macron in Paris to discuss on counter-terrorism and Syria.
- N/A U.S. Energy Secretary Rick Perry will visit Mexico to see top officials as the United States and Mexico prepare to renegotiate trade rules.
- N/A U.S. governors including Massachusetts' Charlie Baker, North Carolina's Roy Cooper and Rhode Island's Gina Raimondo discuss their response to the opioid drug crisis at the summer meeting of the National Governors Association in Providence, Rhode Island.
FX Beat
DXY: The dollar recovered from recent lows versus most of its major peers as investors awaited the Round 2 of Yellen’s testimony before the Senate Banking Committee. The greenback against a basket of currencies traded 0.1 percent up at 95.84, having touched a low of 95.46 earlier, it’s lowest since Oct. 3. FxWirePro's Hourly Dollar Strength Index stood at -53.94 (Slightly Bearish) by 1000 GMT.
EUR/USD: The euro declined below the 1.1400 handle as the greenback rebounded from recent lows ahead of the Day 2 of Fed Chair Janet Yellen's semi-annual monetary policy testimony before the Senate Banking Committee. The European currency traded 0.1 percent down at 1.1394, having touched a high of 1.1489 the day before, its highest since May 5, 2016. FxWirePro's Hourly Euro Strength Index stood at -137.56 (Highly Bearish) by 1000 GMT. Immediate resistance is located at 1.1445, a break above targets 1.1500. On the downside, support is seen at 1.1381 (July 10 Low), a break below could drag it near 1.1350.
USD/JPY: The dollar eased, extending losses for the third straight session, as Federal Reserve Chair Janet Yellen dovish comments curbed speculation that U.S. interest rates would rise more than once this year. The major traded 0.2 percent down at 112.92, having hit a high of 114.49 on Tuesday, its highest since Mar 15. FxWirePro's Hourly Yen Strength Index stood at 87.75 (Slightly Bullish) by 1000 GMT. Immediate resistance is located at 113.64 (5-DMA), a break above targets 114.00. On the downside, support is seen at 112.73 (July 4 low), a break below could take it near 112.00.
GBP/USD: Sterling rose to a 1-week high as prevalent U.S. dollar selling, in wake of perceived dovish testimony by the Fed Chair Janet Yellen boosted the bid tone around the major. The British currency was also supported by yesterday's better than expected labor market data, which strengthened expectations for a tightening of Bank of England policy. Sterling traded 0.3 percent up at 1.2920, having hit a low of 1.2811 on Wednesday, its lowest since Jun. 28. FxWirePro's Hourly Sterling Strength Index stood at -36.57 (Neutral) by 1000 GMT. Immediate resistance is located at 1.2983 (July 6 High), a break above could take it near 1.3047 (May 18 High). On the downside, support is seen at 1.2831 (21-DMA), a break below targets 1.2800. Against the euro, the pound traded 0.5 percent up at 88.12 pence, having hit an 8-month low of 89.48 the day before.
USD/CHF: The Swiss franc declined, extending previous session losses as the greenback rebounded ahead of Fed Chair Janet Yellen's testimony. The major trades 0.1 percent up at 0.9660, having touched a high of 0.9696 on Tuesday, it’s highest since Jul. 7. FxWirePro's Hourly Swiss Franc Strength Index stood at -112.29 (Highly Bearish) by 1000 GMT. Any break above 0.9770 will take the pair till 0.9845 (38% retracement of 1.03435 and 0.9550) /0.9887 (100- day MA)/0.9950 (200- day MA). On the lower side, near term support is around 0.9600 and any violation below will drag it till 0.9580/0.9546 in the short term.
AUD/USD: The Australian dollar rallied to a 3-1/2 month high, as better-than-expected Chinese trade data coupled with easing U.S. Treasury bond yields boosted the Aussie bulls’ sentiment. The major trades 0.7 percent up at 0.7732, having hit a high of 0.7739 earlier, it’s highest since Mar. 21. FxWirePro's Hourly Aussie Strength Index stood at 154.90 (Highly Bullish) by 1000 GMT. Immediate support is seen at 0.7702 (78.6% retracement of 0.7571 and 0.7739), a break below targets 0.7674 (61.8% retrace). On the upside, resistance is located at 0.7749 (Mar 21 High), a break above could take it near 0.7800.
Equities Recap
European shares advanced following gains in rate-sensitive real estate stocks, while the greenback steadied after falling to multi-month lows ahead of Fed Yellen's testimony.
The pan-European STOXX 600 index added 0.4 percent to 386.68 points, while the FTSEurofirst 300 index advanced 0.4 percent to 1,521.14 points.
Britain's FTSE 100 trades 0.1 percent up at 7,425.43 points, while mid-cap FTSE 250 rallied 0.5 percent to 19,361.02 points.
Germany's DAX rose 0.2 percent at 12,647.64 points; France's CAC 40 trades 0.6 percent higher at 5,250.65 points.
Commodities Recap
Crude oil prices declined, extending previous session losses, as weak compliance with production cuts among OPEC members heightened worries about oversupply. International benchmark Brent crude was trading 0.4 percent up at $47.49 per barrel by 1028 GMT, having hit a low of $46.09 on Monday, its weakest since Jun. 27. U.S. West Texas Intermediate traded 0.3 percent down at $45.31 a barrel, after falling as low as $43.63 on Monday, its weakest since Jun 27.
Gold prices rallied, extending gains for the fourth straight session, as the dollar weakened after Federal Reserve Chair Janet Yellen said the Fed would only gradually tighten monetary policy, slashing speculation that interest rates would rise more than once this year. Spot gold rose 0.2 percent to $1,222.43 per ounce at 1031 GMT, having hit a low of $1,204.69 on Monday, the lowest since March 15. U.S. gold futures for August delivery rose 0.3 percent to $1,222.10 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.314 percent lower by 0.013 bps, while 5-year yield was 0.008 down at 1.870 percent.
The German benchmark 10-year Bund yield was flat on the day at 0.51 percent.
The Australian government bond futures gained, with both the three-year and the 10-year bond contracts up 3 ticks at 98.010 and 97.3100 respectively.
The New Zealand government bonds rose in line with U.S. Treasuries, sending yields down 3 basis points across the curve.
