Market Roundup
- EUR/USD -0.15%, USD/JPY +0.17%, GBP/USD +0.24%, EUR/GBP -0.39%
- DXY -0.11%, DAX -0.55%, FTSE -0.01%, Brent +0.29%, Gold +0.17%
- Germany Aug Gfk consumer sentiment, 10.8% vs forecast 10.6%, previous 10.6%
- Great Britain Jul CBI distributive trends, +22 vs forecast 10, previous 12
- Britain to scrap Libor rate benchmark from end-2021
- EZ Jun Loans to Non-fin, 2.1%, previous 2.4%
- EZ Jun Loans to households, 2.6%, previous 2.6%
- EZ Jun Money-M3 annual growth, 5.0% vs forecast 5.0%, previous 5.0%
- China factory sector seen maintaining solid growth in July
- China industrial profits jump most in 3 months, weather higher financing costs
- China economic outlook bright, prudent monetary policy to continue - senior official
- Japan’s life insurers curb enthusiasm for foreign bonds - Nikkei
- MoF flow data week-ended July 22 – Japanese again good buyers of foreign bonds
- Net Y1.1786 trln bought, adds to large buys previous week, stocks bought too
- Foreign investors buy net Y292.4 bln Japanese stocks, adds to buys previous wk
- Oil prices hover near 8-week highs on lower U.S inventories
- Gold rises to six-week high as dollar drops after Fed statement
Economic Data Ahead
- (0830 ET/1230 GMT) The Federal Reserve Bank of Chicago will release its Chicago Fed National Activity Index (CFNAI) for the month of June. The index stood at -0.26 in the prior month.
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 8,000 to a seasonally adjusted 241,000 for the week ended Jul. 21 while continuing claims for the week ended Jul. 14 is expected to decline to 1.950 million from 1.977 million the previous week.
- (0830 ET/1230 GMT) The U.S. Census Bureau is likely to report that preliminary wholesale inventories rose 0.3 percent in June after posting a gain of 0.4 percent in May.
- (0830 ET/1230 GMT) The United States releases goods trade balance data for the month of June. The economy recorded a trade deficit of $66.0 billion in the previous month.
- (0830 ET/1230 GMT) The U.S. durable goods orders are expected to have increased 3.0 percent in June after declining 0.8 percent in May, while non-defense capital goods orders excluding aircraft are likely to have risen 0.3 percent after gaining 0.2 percent the prior month.
- (0900 ET/1300 GMT) The Brazil's statistics agency IBGE releases its Producer Prices Index for the month of June. The index posted a decline of 0.12 percent in May.
- (0900 ET/1300 GMT) Mexico's statistics agency releases its trade balance data for the month of June. The economy posted a trade deficit of $773 million in May.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending July 17.
- (1100 ET/1500 GMT) Federal Reserve Bank of Kansas City issues manufacturing activity index for the month of July. The indicator stood at 23 in the previous month.
- (1901 ET/2301 GMT) The GfK Group will release Britain's consumer confidence index for the month of July. The index is expected to decline to 11 after slumping to -10 in June.
- (1930 ET/2330 GMT) Japan's Statistics Bureau will release its National Consumer Price Index for the month of June. The index rose at an annualized rate of 0.4 percent in November.
- (1930 ET/2330 GMT) Japan's Statistics Bureau is expected to report that unemployment rate declined to 3.0 percent in June from 3.1 percent the prior month.
- (1930 ET/2330 GMT) Japan's overall household spending probably rose 0.6 percent in June after tumbling 0.1 percent in May.
- (1950 ET/2350 GMT) Japan's Ministry of Economy, Trade and Industry releases retail trade data for the month of June. The indicator is likely to post an annualized rise of 2.3 percent after gaining 2.0 percent in the prior month.
Key Events Ahead
- (0945 ET/1345 GMT) FedTrade operation 30-year Fannie Mae / Freddie Mac (max $1.575 bn)
- (1430 ET/1830 GMT) FedTrade operation 30-year Ginnie Mae (max $1.1 bn)
FX Beat
DXY: The greenback rebounded versus the euro and the yen after slumping to multi-month lows following a Federal Reserve rate decision and perceived dovish statement. The greenback against a basket of currencies traded 0.2 percent up at 93.63, having touched a low of 93.15 earlier, it’s lowest since Jun. 23 2016. FxWirePro's Hourly Dollar Strength Index stood at -0.52 (Neutral) by 1000 GMT.
EUR/USD: The euro eased after rising to a 2-1/2 year high earlier in the session as the greenback attempted a minor recovery across the board following a rebound in the U.S. Treasury yields. The European currency traded 0.2 percent down at 1.1714, having touched a high of 1.1776 earlier, its highest since Jan 14, 2015. FxWirePro's Hourly Euro Strength Index stood at 4.76 (Neutral) by 1000 GMT. The pair has formed a temporary top at 1.17767 and any break above will take the pair till 1.18000/1.1845. On the lower side, minor support is around 1.1662 (5- day MA) and any break below will drag it down to 1.1600 (38.2% fibo)/1.1572 (10- day MA)/1.1480.
USD/JPY: The dollar rebounded above the 111.00 handle as the yield on the benchmark 10-year Treasury rose 1-1/2 basis points to 2.29 percent. Investors now await the U.S. initial claims, June’s durable goods orders, and trade balance figures, ahead of Japan inflation figures along with household spending, retail trade and the unemployment rate for further momentum. The major was trading 0.2 percent up at 111.35, having hit a low of 110.62 on Monday, its lowest since Jun 15. FxWirePro's Hourly Yen Strength Index stood at -135.25 (Highly Bearish) by 1000 GMT. The pair formed a temporary top around 114.49 and should close above 100- day MA for further bullishness. The near term resistance is around 112.50 and any break above targets 112.98/114.
GBP/USD: Sterling rallied to a 10-month high against the dollar after the U.S. Federal Reserve left policy unchanged and signalled that the balance sheet reduction should start relatively soon. Moreover, better-than expected UK CBI retail sales data, which showed retail sales balance rose to 22 in July from 12 in June, its highest since April, provided an additional boost to the GBP bulls. Sterling traded 0.2 percent up at 1.3143, having hit a high of 1.3158 earlier, its highest since Sept. 16. FxWirePro's Hourly Sterling Strength Index stood at 106.92 (Highly Bullish) by 1000 GMT. On the higher side, the pair has broken major resistance 1.3130 confirms major trend reversal, a jump till 1.3220/1.3245 (161.8% retracement of 1.31260 and 1.29343). On the lower side, near term support is around 1.30750 (23.6% retracement of 1.28118 and 1.31586) and any break below will drag it till 1.3030 (daily Tenkan-Sen)/1.3000/1.2969 (21- day EMA). Against the euro, the pound traded 0.4 percent up at 89.06 pence, having hit an 8-month low of 89.94 last week.
USD/CHF: The Swiss franc tumbled to a 1-week low against the dollar as the greenback attempted a recovery following a rise in the U.S Treasury yields. The major trades 0.9 percent up at 0.9590, having touched a high of 0.9597 earlier, it’s highest since Jul. 20. FxWirePro's Hourly Swiss Franc Strength Index stood at -118.58 (Highly Bearish) by 1000 GMT. In the daily chart, the pair is facing strong resistance around 0.9592 (21- EMA) and any close above will take it till 0.9700. On the lower side, major support is around 0.9440 and any daily close below will take it down till 0.9260 in the short term.
AUD/USD: The Australian dollar trimmed gains after rising to a 2-year high on the back of stronger-than expected rise in the Chinese industrial profits data. The Aussie trades 0.1 percent higher at 0.8013, having hit a high of 0.8065 earlier, it’s highest since May 15, 2015. FxWirePro's Hourly Aussie Strength Index stood at 66.89 (Bullish) by 1000 GMT. On the lower side, near term support is around 0.7946 (5- day MA) and any break below will drag the pair till 0.7895 (10-day MA)/0.7792 (21- day EMA). The near term resistance is around 0.8070 and any break above targets 0.8100/0.8150.
Equities Recap
European shares eased, weighed down by weak healthcare stocks, while the dollar recovered against the euro after falling to a 2-1/2 year low following the Federal Reserve rate decision and statement.
The pan-European STOXX 600 index fell 0.1 percent to 382.34 points, while the FTSEurofirst 300 index eased 0.1 percent to 1,502.08 points.
Britain's FTSE 100 trades 0.01 percent up at 7,452.39 points, while mid-cap FTSE 250 gained 0.4 percent to 19,843.62 points.
Germany's DAX declined 0.5 percent at 12,237.15 points; France's CAC 40 trades 0.1 percent higher at 5,194.97 points.
Commodities Recap
Crude oil prices steadied after rising to a fresh eight-week high on the back of hopes that a steeper-than-expected decline in U.S. crude oil inventories will reduce global oversupply. International benchmark Brent crude was trading flat at $50.85 per barrel by 0956 GMT, having hit an early high of $51.12, its strongest since Jun. 1. U.S. West Texas Intermediate was little changed at $48.67 a barrel, after rising as high as $48.90 earlier, its strongest since Jun 1.
Gold prices rose for a second straight day, hitting a six-week high as the dollar slumped to a 13-month low after the U.S. Federal Reserve indicated it would keep to a slow path of monetary tightening. Spot gold rallied 0.1 percent to $1,261.51 per ounce at 1000 GMT, having hit a high of $1,264.77 an ounce earlier, its highest since June 15. U.S. gold futures for August delivery advanced 1.1 percent to $1,262.50 per ounce.
Treasuries Recap
The U.S. Treasuries lost ahead of the country’s 7-year auction, besides the initial jobless claims, scheduled to be held today at 17:00GMT and 12:30GMT respectively. The yield on the benchmark 10-year Treasury rose 1-1/2 basis points to 2.29 percent, the super-long 30-year bond yields climbed nearly 1 basis point to 2.89 percent and the yield on short-term 2-year note traded 1 basis point higher at 1.39 percent.
The UK gilts surged Thursday as investors poured into safe-haven assets in muted trading activity amid uncertainties and worries over the ongoing Brexit negotiations. The yield on the benchmark 10-year gilts slumped nearly 4 basis points to 1.19 percent, the super-long 30-year bond yields plunged 2-1/2 basis points to 1.84 percent and the yield on the short-term 2-year also traded nearly 3 basis points lower at 0.25 percent.
The Eurozone periphery bonds rallied Thursday in a muted trading session that witnessed data of little economic significance. Also, the German consumer price inflation index, scheduled for release on July 28 is keenly awaited for further direction to the debt market. The benchmark German 10-year bond yields, which moves inversely to its price, slumped 4 basis points to 0.52 percent, the French 10-year bond yields also plunged 4 basis points to 0.77 percent, Irish 10-year bond yields nose-dived 5-1/2 basis points to 0.82 percent, Italian down by nearly 5 basis points to 2.07 percent, Netherlands 10-year bond yields traded 4-1/2 basis points down at 0.63 percent, Portuguese equivalents slipped 3 basis points to 2.94 percent and the Spanish 10-year yields traded 4 basis points lower at 1.50 percent.
The Japanese bonds climbed Thursday, following the overnight rise in U.S. bond prices after the Federal Reserve maintained a relatively dovish tone in its monetary policy statement, released yesterday. Also, investors are closely eyeing Japan’s consumer price-led inflation index (CPI) for the month of June, scheduled to be released today at 23:30GMT. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1 basis point to 0.70 percent, the yield on 30-year note also slipped nearly 1 basis point to 0.86 percent and the yield on short-term 2-year traded 1/2 basis point lower at -0.11 percent.
The New Zealand bonds jumped at the time of closing Thursday as the market received a lift after seeing U.S. Treasuries gain on a slightly dovish Federal Reserve policy meeting statement. At the time of closing, the yield on the benchmark 10-year bond, which moves inversely to its price, fell 1 basis point to 3.00 percent, the yield on 7-year note also slipped 1 basis point to 2.86 percent while the yield on short-term 2-year note ended 1/2 basis point lower at 1.97 percent.
The Australian bonds jumped Thursday, tracking strength in the U.S. counterpart after the Federal Reserve delivered a slightly dovish statement in its meeting concluded late Wednesday, signalling that it is ready to announce the start of balance sheet normalization. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped nearly 3-1/2 basis points to 2.69 percent, the yield on 15-year note also plunged 3-1/2 basis points to 3.00 percent and the yield on short-term 3-year too traded 3-1/2 basis points lower at 2.03 percent.
