Market Roundup
- EUR/USD 0.17%, USD/JPY -0.16%, GBP/USD -0.21%, EUR/GBP 0.39%
- DXY -0.16%, DAX -0.22%, FTSE 0.47%, Brent -0.65%, Gold 0.62%
- UK Jun Markit/CIPS Cons PMI, 43.1, 49.3 f'cast, 48.6 prev
- UK Jun Nationwide house price yy, 0.5%, 0.5% f'cast, 0.6% prev
- Germany May Retail Sales YY Real, 4.0%, 2.7% f'cast, 4.0% prev
- EZ May Producer Prices YY, 1.6%, 1.7% f'cast, 2.6% prev
- ECB policymakers see no need to rush into July rate cut - Bloomberg
- Italy PM says deficit back on track for 2.04%, should please EU
- EU leaders enter third day of summit to carve up top posts
- UK PM candidate Johnson will demand EU talks free trade - campaign chairman
- China's benchmark overnight repo rate falls to record low
- OPEC and allies set to extend oil supply cuts, prop up prices
Economic Data Ahead
- (0930 ET/1330 GMT) The Markit will release Canada's Manufacturing PMI for the Month of June. The indicator stood at 49.1 in the prior month.
- (0945 ET/1345 GMT) The NAPM-New York releases ISM-New York Index for the month of June. The index stood at 48.6 in the previous month.
- (1530 ET/1930 GMT) Autodata Corp is expected to report that U.S. auto sales figures dropped to an annualized rate of 17.00 million units in June from 17.3 million units in May.
- (1630 ET/2030 GMT) API reports its weekly crude oil stock.
Key Events Ahead
- (1005 ET/1405 GMT) BoE's Mark Carney attends Local Government Association Annual Conference and Exhibition in Bournemouth
- (1100 ET/1500 GMT) Federal Reserve Bank of Cleveland President Loretta Mester participates in Distinguished Speakers Seminar, European Economics and Financial Centre in London
FX Beat
DXY: The dollar index slightly eased from a near 2-week peak, as the yield on the benchmark 10-year Treasury yield slumped 2 basis points. The greenback against a basket of currencies traded 0.1 percent down at 96.74, having touched a high of 96.88 earlier, its highest since June 20. FxWirePro's Hourly Dollar Strength Index stood at 84.29 (Slightly Bullish) by 1000 GMT.
EUR/USD: The euro rebounded from a near 2-week low after Bloomberg reported that the European Central Bank policymakers see no need to rush into July rate cut. The major received an additional boost after Italian PM Giuseppe Conte stated that the country's 2019 budget deficit looked set to hit its target of 2.04 percent of gross domestic product, indicating Italy was compliant with European Union finance rules. The European currency traded 0.2 percent up at 1.1303, having touched a low of 1.1275 earlier, its lowest since June 20. FxWirePro's Hourly Euro Strength Index stood at 18.69 (Neutral) by 1000 GMT. Immediate resistance is located at 1.1327 (38.2% retracement of 1.1412 and 1.1275), a break above targets 1.1360 (61.8% retracement). On the downside, support is seen at 1.1251 (June 7 Low), a break below could drag it below 1.1203 (June 17 Low).
USD/JPY: The dollar declined, reversing most of its previous session gains, as investor risk appetite weakened amid growing worries the global economy was faltering after data showed manufacturing activity slowed in June. Moreover, Washington's latest tariff threats on $4 billion of additional European Union goods supported the safe-haven Japanese yen. The pair was trading 0.2 percent down at 108.26, having hit a high of 108.53 on Monday, its highest since Jun. 19. FxWirePro's Hourly Yen Strength Index stood at -34.98 (Neutral) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. ISM - NY business conditions index and Fed William's speech. Immediate resistance is located at 108.80 (June 11 High), a break above targets 109.08 (Jan. 8 Low). On the downside, support is seen at 107.81 (Jun. 5 Low), a break below could take it lower at 107.24 (June 24 Low).
GBP/USD: Sterling slumped to a near 2-week low, weighed down by uncertainty over Britain's next prime minister's priorities for running the country. Moreover, data showing Britain's construction industry suffered its worst month in more than 10 years in June further dented the bid tone around the British pound. The major traded 0.2 percent down at 1.2620, having hit a low of 1.2605 earlier, it’s lowest since June 19. FxWirePro's Hourly Sterling Strength Index stood at -66.77 (Bearish) 1000 GMT. Immediate resistance is located at 1.2674 (10-DMA), a break above could take it near 1.2743 (June 5 High). On the downside, support is seen at 1.2580 (June 14 Low), a break below targets 1.2542 (June 19 Low). Against the euro, the pound was trading 0.3 percent down at 89.53 pence, having hit a high of 89.19 earlier, it’s highest since Jun. 25.
USD/CHF: The Swiss franc plunged to a 1-1/2 week low, as the greenback surged to multi-week peaks after the United States and China trade agreement took some pressure off Federal Reserve to stimulate the economy. The major trades 0.1 percent up at 0.9884, having touched a high of 0.9885 earlier; it’s highest since June 20. FxWirePro's Hourly Swiss Franc Strength Index stood at -105.37 (Highly Bearish) by 1000 GMT. On the higher side, near-term resistance is around 0.9920 (June 10 High) and any break above will take the pair to next level till 0.9963 (June 6 High). The near-term support is around 0.9817 (10-DMA), and any close below that level will drag it till 0.0.9738 (June 28 Low).
Equities Recap
European shares rallied, boosted by gains in the healthcare sector, while euro gained after Prime Minister Giuseppe Conte said that Italy's 2019 budget deficit was back on track.
The pan-European STOXX 600 index surged 0.1 percent at 388.18 points, while the FTSEurofirst 300 gained 0.3 percent to 1,530.62 points.
Britain's FTSE 100 trades 0.6 percent up at 7,545.60 points, while mid-cap FTSE 250 rallied 0.05 to 19,641.28 points.
Germany's DAX declined 0.2 percent at 12,493.38 points; France's CAC 40 trades 0.1 percent lower at 5,563.26 points.
Commodities Recap
Crude oil prices declined as concerns that the global economy could be slowing outweighed an agreement by producer cartel OPEC to extend supply cuts until next March. International benchmark Brent crude was trading 0.7 percent lower at $64.76 per barrel by 1017 GMT, having hit a low of $64.00 on Friday, its lowest since June 21. U.S. West Texas Intermediate was trading 0.6 percent down at $58.82 a barrel, after rising as high as $60.26 on Monday, its highest since the May 23.
Gold prices rallied after a steep fall in the previous session, as investors remain concerned about an economic slowdown amid weak global manufacturing data and U.S.-European trade dispute. Spot gold was 0.6 percent up at $1,392.75 per ounce by 1019 GMT, having touched a low of $1,381.62 on Monday, its lowest since June 20. U.S. gold futures were up 0.4 percent to $1,395 an ounce.
Treasuries Recap
The U.S. Treasuries jumped during the afternoon session, amid a relatively quiet day with the June vehicle sales the only notable new data release. However, Cleveland Fed President Mester is also scheduled to speak publicly today at 15:00GMT ahead of the Independence Day holiday. The yield on the benchmark 10-year Treasury yield slumped 2 basis points to 2.012 percent, the super-long 30-year bond yields suffered nearly 1-1/2 basis point to 2.544 percent and the yield on the short-term 2-year traded 2 basis points down at 1.767 percent.
The United Kingdom’s gilts surged during European session after the country’s construction PMI for the month of June utterly disappointed market participants, failing to meet estimates, as well as shrinking further into contraction mode. Investors shall now also be focussing on Britain’s services sector PMI, along with a host of speeches by BoE members, all scheduled on July 3 for further direction in the debt market. The yield on the benchmark 10-year gilts, plunged 5 basis points to 0.762 percent, the 30-year yield slumped 5-1/2 basis points to 1.391 percent, and the yield on the short-term 2-year traded 4-1/2 basis points lower at 0.565 percent.
The German bunds traded flat during European session ahead of the country’s 5-year auction, scheduled to be held on July 3 by 09:40GMT and eurozone’s retail sales for the month of May, due for release the following day by 09:00GMT, for further direction in the debt market. The German 10-year bond yields, which move inversely to its price, hovered around -0.352 percent, the yield on 30-year note jumped 2-1/2 basis points to 0.268 percent and the yield on short-term 2-year remained flat at -0.748 percent.
The Japanese government bonds closed lower as investors wait to watch the country’s super-long 30-year auction, scheduled to be held on July 4 by 03:35GMT and the household spending data for the month of May, due on the same day by 23:30GMT. At close, the yield on the benchmark 10-year JGB note, which moves inversely to its price, improved 14 basis points to -0.144 percent, the yield on the long-term 30-year remained tad higher at 0.371 percent and the yield on short-term 2-year also improved to -0.216 percent.
The Australian government bonds edged tad higher towards end of Asian session of the second trading day of the week after the Reserve Bank of Australia (RBA) cut its benchmark Overnight Cash Rate (OCR) by 25 basis points to 1 percent, matching market expectations as well. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slipped 1 basis point to 1.335 percent, the yield on the long-term 30-year bond remained tad lower at 1.947 percent and the yield on short-term 2-year slumped nearly 3 basis points to 0.960 percent.
