Market Roundup
- EUR/USD +0.09%, USD/JPY -0.29%, GBP/USD +0.31%, EUR/GBP -0.26%
- DXY -0.17%, DAX +0.3%, FTSE +0.06%, Brent +0.47%, Gold +0.25%
- ECB survey sees lower inflation, higher GDP growth
- ECB policymakers see Oct as most likely date for QE decision: sources
- Inflation hits UK public finances in June, adding to Hammond's headache
- U.S. toughens stance on foreign deals in blow to China's buying spree
- Japan's household spending seen rising for 1st time since Feb 2016
- Oil rises on weak dollar, Gulf tensions as producers set to meet
- Dollar dip puts gold on track for biggest weekly rise in two months
Economic Data Ahead
- (0830 ET/1230 GMT) Statistics Canada is expected to report that retail sales rose 0.2 percent in May after rising 0.8 percent in April. While excluding autos, retail sales are likely to remain flat after advancing 1.5 percent in the previous month.
- (0830 ET/1230 GMT) The Statistics Canada is expected to report that annual inflation rate rose 1.0 percent in June, compared with 1.3 percent in May, taking it further away from the Bank of Canada’s 2 percent target. While core consumer price index fell 0.2 percent in May.
- (0900 ET/1300 GMT) Mexico's unemployment data is expected to show that the seasonally adjusted jobless rate remained unchanged at 3.50 percent in June.
- (0930 ET/1330 GMT) Brazil's current account surplus is likely to narrow to $1.33 billion in June from 2.90 billion in the previous month.
- (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count.
Key Events Ahead
- (0745 ET/1145 GMT) FedTrade operation 30-year Fannie Mae / Freddie Mac (max $1.575 bn)
FX Beat
DXY: The dollar slumped across the board on the back of growing concerns over U.S. President Donald Trump's administration and uncertainty over the pace of the Federal Reserve's policy tightening. The greenback against a basket of currencies traded 0.1 percent down at 94.14, having touched a low of 93.99 earlier, it’s lowest since Jun. 24. FxWirePro's Hourly Dollar Strength Index stood at -116.61 (Highly Bearish) by 1000 GMT.
EUR/USD: The euro rallied to a fresh 2-year high towards the 1.1700 handle after the ECB President delivered hawkish hint yesterday, suggesting that the QE tapering process could commence this autumn. The European currency traded 0.1 percent up at 1.1639, having touched a high of 1.1676 earlier, its highest since Aug 21, 2015. FxWirePro's Hourly Euro Strength Index stood at 32.21 (Neutral) by 1000 GMT. On the lower side, near term support stands around 1.15879 (23.6% retracement of 1.13123 and 1.1679) and any break below will drag the pair down till 1.1528 (5- day MA). The near term resistance is around 1.17140 and a break above will take it till 1.17420 (38.2 % retracement of 1.7420 (38.2% fibo)/1.1800.
USD/JPY: The dollar tumbled, extending losses for the fourth consecutive session, as prevalent risk-off sentiment continued to underpin the Japanese yen's safe-haven appeal. The major trading 0.3 percent lower at 111.50, having hit a low of 111.48 the day before, its lowest since Jun 27. FxWirePro's Hourly Yen Strength Index stood at 63.21 (Bullish) by 1000 GMT. The pair formed a temporary top around 114.49 and 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 112.50 and any break above targets 112.98/114.
GBP/USD: Sterling rebounded, halting its 4-day losing streak as persistent greenback selling supported the ongoing recovery in the major. However, uncertainty surrounding the Brexit negotiations and diminishing prospects of any immediate BoE monetary policy action limited the upside. Sterling traded 0.3 percent up at 1.3014, having hit a low of 1.2932 on Thursday, its lowest since Jul. 14. FxWirePro's Hourly Sterling Strength Index stood at -82.94 (Slightly Bearish) by 1000 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 1.2930 (21- 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 0.2 percent down at 89.50 pence, having hit an 8-month low of 89.90 earlier in the session.
USD/CHF: The Swiss franc rose, extending previous session gains, as the greenback declined to 13-month lows amid risk-off market sentiment. The major trades 0.2 percent down at 0.9498, having touched a low of 0.9490 earlier, it’s lowest since May 2, 2016. FxWirePro's Hourly Swiss Franc Strength Index stood at 9.71 (Neutral) by 1000 GMT. Overall bullish invalidation 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 major resistance around 0.9622 (10- day MA) and any break above will take it to next level till 0.96830.
AUD/USD: The Australian dollar tumbled from a 2-year high after the RBA Deputy Governor Guy Debelle's dovish comments dampening expectations of any monetary policy action in the near-future. The Aussie trades 0.5 percent lower at 0.7916, having hit a high of 0.7987 the day before, it’s highest since May 19, 2015. FxWirePro's Hourly Aussie Strength Index stood at 0.54 (Neutral) by 1000 GMT. On the lower side, near term support is around 0.7835 (7- day MA) and any break below will drag the pair till 0.7770 (10- day MA)/0.7730 (61.8% retracement of 0.75711 and 0.79878). The near term resistance is around 0.8000 and any break above targets 0.8100.
Equities Recap
European shares rose in early trade, while the greenback tumbled to a 13-month low on increasing uncertainty over the pace of the Federal Reserve's policy tightening this year.
The pan-European STOXX 600 index advanced 0.1 percent to 384.40 points, while the FTSEurofirst 300 index rallied 0.1 percent to 1,510.69 points.
Britain's FTSE 100 trades 0.2 percent up at 7,505.00 points, while mid-cap FTSE 250 gained 0.2 percent to 19,807.52 points.
Germany's DAX rose 0.05 percent at 12,453.34 points; France's CAC 40 trades 0.1 percent higher at 5,204.90 points.
Commodities Recap
Crude oil prices edged higher, after falling from multi-week lows in the previous session, ahead of a meeting between OPEC and non-OPEC members in Russia on Monday. International benchmark Brent crude was trading 0.5 percent up at $49.50 per barrel by 0938 GMT, having hit a high of $50.16 the day before, its strongest since Jun. 7. U.S. West Texas Intermediate traded 0.3 percent up at $47.07 a barrel, after rising as high as $47.71 on Thursday, its strongest since Jun 7.
Gold prices rallied to a three-week high and were poised for a second straight weekly gain as the dollar slumped to a 13-month low amid broad based risk-off market sentiment. Spot gold was 0.3 percent up at $1,247.00 per ounce as of 0943 GMT, after hitting a high of $1,248.31 an ounce, its highest since Jun 29 and has gained about 1.5 percent so far this week. U.S. gold futures for August delivery rose 0.1 percent to $1,246.50 per ounce.
Treasuries Recap
The U.S. Treasuries jumped in an uneventful day with no economic data of note due for release. The yield on the benchmark 10-year Treasury, slumped nearly 3 basis points to 2.24 percent, the super-long 30-year bond yields also plunged nearly 3 basis points to 2.81 percent and the yield on short-term 2-year note also remained nearly 1-1/2 basis points lower at 1.34 percent.
The UK gilts traded tad higher ahead of the country’s Q2 gross domestic product (GDP), scheduled for release early next week amid a silent trading session that witnessed data of little economic significance. The yield on the benchmark 10-year gilts, slumped 1-1/2 basis points to 1.19 percent, the super-long 30-year bond yields also plunged 1-1/2 basis points to 1.83 percent and the yield on the short-term 2-year traded 1 basis point lower at 0.28 percent.
The Eurozone periphery bonds jumped as investors wait to watch the benchmark Germany’s manufacturing PMI, scheduled for release early next week. The benchmark German 10-year bond yields, slumped 2-1/2 basis points to 0.51 percent, the French 10-year bond yields plunged nearly 3-1/2 basis points to 0.75 percent, Irish 10-year bond yields fell 4-1/2 basis points to 0.79 percent, Italian down 3-1/2 basis points to 2.08 percent, Netherlands 10-year bond yields lower by 3 basis points to 0.63 percent, Portuguese equivalents slipped 3 basis points to 2.98 percent and the Spanish 10-year yields traded 4 basis points lower at 1.44 percent.
The Japanese government traded flat amid a muted trading session that lacked data of economic significance. The benchmark 10-year bond yield, traded flat at 0.07 percent, the long-term 30-year bond yields also hovered round 0.87 percent and the yield on the short-term 2-year note too remained steady at -0.11 percent.
The New Zealand bonds ended on the upside as investors 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, slumped 3-1/2 basis points to 2.95 percent, the yield on 7-year note plunged 4 basis points to 2.82 percent while the yield on short-term 2-year note ended 1/2 basis point lower at 1.96 percent.
The Australian bonds jumped on the last trading day of the week, tracking similar movement in the U.S. Treasuries and as investors covered previous short positions. The yield on the benchmark 10-year Treasury note, slumped 4 basis points to 2.71 percent, the yield on 15-year note also plunged nearly 4 basis points to 3.01 percent and the yield on short-term 2-year traded 7 basis points lower at 1.85 percent.
