Market Roundup
- EUR/USD 0.17%, USD/JPY 0.02%, GBP/USD 0.25%, EUR/GBP -0.07%
- DXY -0.22%, DAX 0.15%, FTSE -0.6%, Brent -1.63%, Gold 0.2%
- Trump blames Washington for poor Russia ties ahead of Putin summit
- U.S. credit market fires warning about recession
- EZ May Eurostat Trade NSA, Eur, 16.5 bln, 16.7 bln previous
- EU pushes China on trade, saying it could open up if it wanted
- China's Q2 GDP growth softens as trade row stirs concerns on outlook
- UK parliament vote to reveal extent of anger over May's Brexit plan
- Italy May Trade Balance EU, 1.015 bln, 1.077 bln previous, 1.124 bln revised
- Italy May Global Trade Balance, 3.378 bln, 2.938 bln previous, 2.985 bln revised
- Oil prices fall but supply tight with focus on outages
- Gold steadies, higher U.S. rates expected to weigh
Economic Data Ahead
- (0830 ET/1230 GMT) The Federal Reserve Bank of New York is expected to report that manufacturing activity in New York State grew to 22.75 percent in July after rising 25.00 percent in June.
- (0830 ET/1230 GMT) The U.S. Commerce Department is expected to report that retail sales edged up 0.6 percent in June after advancing 0.8 percent in May. While excluding autos, retail sales are likely to have gained 0.4 percent, after surging 0.8 percent in the previous month.
- (0830 ET/1230 GMT) The Statistics Canada will report foreign portfolio investment in domestic stocks for the month of May.
- (0830 ET/1230 GMT) The Statistics Canada will release investment in foreign securities figures for the month of May.
- (1000 ET/1400 GMT) The U.S. Commerce Department is expected to report that business inventories rose 0.4 percent in May, after rising 0.3 percent in June.
Key Events Ahead
- (1100 ET/1500 GMT) Treasury announces 4-week bills (e: $35 bn)
- (1130 ET/1530 GMT) Treasury auctions $51 bn 13-week and $45 bn 26-week bills (sizes increased by $3 bn each)
- (1145 ET/1545 GMT) FedTrade operation 30-year Ginnie Mae (max $515 mn)
FX Beat
DXY: The dollar index tumbled to a 5-day low as last week's weaker-than-expected U.S. CPI inflation report raised doubts on the strength of the U.S. economy, denting expectations of further Fed rate hikes. The greenback against a basket of currencies trades 0.3 percent down at 94.43, having touched a high of 95.24 on Friday, its highest since June 29. FxWirePro's Hourly Dollar Strength Index stood at -101.72 (Highly Bearish) by 1000 GMT.
EUR/USD: The euro rose above the 1.1700 handle after European Affairs Minister Paolo Savona proposed that Italy should boost investments by about 50 billion euros ($58 billion) and urged the EU to support the plan instead of insisting on deficit reduction. The European currency traded 0.2 percent up at 1.1707, having touched a high of 1.1790 last week, its highest since June 14. FxWirePro's Hourly Euro Strength Index stood at 43.86 (Neutral) by 1000 GMT. Immediate resistance is located at 1.1720 (July 5 High), a break above targets 1.1801 (June 13 High),. On the downside, support is seen at 1.1630 (July 4 Low), a break below could drag it till 1.1600.
USD/JPY: The dollar steadied against the Japanese yen as investors awaited the U.S. retail sales, which are expected to edge up 0.6 percent in June after advancing 0.8 percent in May. The major was trading 0.05 percent up at 112.37, having hit a high of 112.80 on Friday, its highest since Jan 9. FxWirePro's Hourly Yen Strength Index stood at -93.76 (Slightly Bearish) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. retail sales and business inventories. Immediate resistance is located at 113.07 (Dec 19 High), a break above targets 113.38 (Dec 8 High). On the downside, support is seen at 111.91 (July 12 Low), a break below could take it lower 111.17 (10-DMA).
GBP/USD: Sterling extended gains for the third straight session ahead of a debate in parliament that could reveal significant dissatisfaction within British Prime Minister Theresa May's party over her plans for Brexit. The major traded 0.4 percent up at 1.3287, having hit a high of 1.3362 last week; it’s highest since June 14. FxWirePro's Hourly Sterling Strength Index stood at 98.66 (Slightly Bullish) 1000 GMT. Immediate resistance is located at 1.3314 (June 22 High), a break above could take it near 1.3362 (July 9 High). On the downside, support is seen at 1.3180 (July 12 Low), a break below targets 1.3114 (July 3). Against the euro, the pound was trading 0.1 percent down at 88.32 pence, having hit a low of 89.00 pence last week, it’s lowest since March 9.
USD/CHF: The Swiss franc rebounded from multi-month lows as the greenback eased amid the risk of a further escalation in trade conflict between U.S. and China. The major trades 0.4 percent down at 0.9976, having touched a high of 1.0068 the day before, it’s highest since May 2017. FxWirePro's Hourly Swiss Franc Strength Index stood at -104.53 (Highly Bearish) by 1000 GMT. On the higher side, near-term resistance is around 1.0100 and any break above will take the pair to next level till 1.0160. The near-term support is around 0.9943 and any close below that level will drag it till 0.9910.
Equities Recap
European shares slumped in early deals, weighed down by basic resources and autos stocks, and worries over the escalating trade conflict between Beijing and Washington.
The pan-European STOXX 600 index eased 0.05 percent at 384.81 points, while the FTSEurofirst 300 index declined 0.2 percent to 1,504.95 points.
Britain's FTSE 100 trades 0.6 percent down at 7,613.79 points, while mid-cap FTSE 250 fell 0.3 percent to 20,871.15 points.
Germany's DAX rose 0.2 percent at 12,565.40 points; France's CAC 40 trades 0.1 percent lower at 5,425.17 points.
Commodities Recap
Crude oil prices declined by more than 1 percent as concerns about supply disruptions eased and Libyan ports reopened. International benchmark Brent crude was trading 1.1 percent down at $74.04 per barrel by 1021 GMT, having hit a low of $73.08 on Wednesday, its lowest since June 21. U.S. West Texas Intermediate was trading 1.0 percent lower at $69.80 a barrel, after falling as low as $69.26 on Wednesday, its lowest since June 26.
Gold prices rebounded from a 7-month low, as the dollar traded below its recent highs and after sluggish GDP data from China weighed on investor sentiment. Spot gold was 0.2 percent up at $1,243.85 an ounce at 1026 GMT, after marking the lowest since Dec. 12 at $1,236.46 on Friday. U.S. gold futures for August delivery were about 0.2 percent higher at $1,243 an ounce.
Treasuries Recap
The U.S. 10-year Treasuries remained resilient as investors wait to watch the summit between President Donald Trump and his Russian counterpart Vladimir Putin, scheduled to be held later today. The yield on the benchmark 10-year Treasuries remained tad higher at 2.83 percent, the super-long 30-year bond yields hovered around 2.93 percent and the yield on the short-term 2-year traded 1/2 basis point higher at 2.58 percent.
The German bund prices are expected to remain weak for a short period, following the improvement in investors’ risk appetite as the U.S.-China trade tensions started to ease, after a lengthy period of uncertainties and trade war worries. The German 10-year bond yields, which move inversely to its price, rose 1 basis point to 0.29 percent, the yield on 30-year note also edged higher by nearly 1 basis point to 1.02 percent and the yield on short-term 2-year traded tad higher at -0.65 percent.
The New Zealand bonds closed higher as investors wait to watch the country’s consumer price inflation (CPI) for the second quarter of this year, scheduled to be released today by 22:45GMT. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, plunged nearly 2-1/2 basis points to 2.86 percent, the yield on the long-term 20-year note slumped 2 basis points to 3.17 percent and the yield on short-term 2-year also closed 2 basis points lower at 1.83 percent
The Australian government bonds traded narrowly mixed in subdued session as markets receive no major economic data. However, weak China’s second quarter economic growth could push investors towards safe-haven buying. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, traded nearly flat 2.636 percent, the yield on the long-term 30-year Note almost steady at 3.112 percent and the yield on short-term 2-year down 1/2 basis point to 2.013 percent.
