Market Roundup
- EUR/USD -0.27%, USD/JPY +0.71%, GBP/USD -0.72%, EUR/GBP +0.42%
- DXY +0.36%, DAX flat, FTSE +0.44%, Brent -0.51%, Gold -0.62%
- Trump faces business backlash over handling of Charlottesville upheaval
- N. Korea's Kim holds off on Guam missile plan; Seoul says will prevent war
- Britain asks for interim customs deal with EU, new trade deals post- Brexit
- Germany Q2 GDP Flash qq sa 0.6% vs 0.6%, revised 0.7%, forecast 0.7%
- Germany Q2 GDP Flash yy nsa 0.8% vs 1.7%, revised 3.2%, forecast 1.9%
- Switzerland Jul Producer/Import price yy -0.1% vs -0.1%
- Great Britain Jul Core CPI mm -0.1% vs 0%, forecast 0%
- Great Britain Jul Core CPI yy +2.4% vs 2.4%, forecast 2.5%
- Great Britain Jul CPI yy +2.6% vs 2.6%, forecast 2.7%
- Great Britain Jul RPI yy +3.6% vs 3.5%, forecast 3.5%
- Oil steady after dollar sell-off, OPEC and China weigh
- Gold falls on rising risk appetite as N. Korea tensions ease
Economic Data Ahead
- (0830 ET/1230 GMT) The Federal Reserve Bank of New York is expected to report that New York State manufacturing activity index grew at 10 in August after rising 9.8 percent in July.
- (0830 ET/1230 GMT) The U.S. Commerce Department is expected to report that retail sales rebounded 0.4 percent in July after falling 0.2 percent in June. While excluding autos, retail sales are likely to have gained 0.3 percent, after easing 0.2 percent in the previous month.
- (0830 ET/1230 GMT) The U.S. Labor Department publishes import and export prices index for the month of July. The import prices are likely to have edged up 0.1 percent after declining 0.2 percent in June, while exports are expected to have gained 0.2 percent after falling 0.2 percent in the prior month.
- (1000 ET/1400 GMT) The U.S. Commerce Department is expected to report that business inventories rose 0.4 percent in June, after rising 0.3 percent in May.
- (1000 ET/1400 GMT) The National Association of Home Builders (NAHB) is expected to report that U.S. Housing Market Index rose to 65 in August from 64 in July.
- (1100 ET/1500 GMT) The Federal Reserve Bank of New York issues its Q2 2017 Household Debt and Credit Report.
- (1630 ET/2030 GMT) API reports its weekly crude oil stock.
Key Events Ahead
- (0945 ET/1345 GMT) FedTrade operation 30-year Fannie Mae / Freddie Mac (max $1.65 bn)
FX Beat
DXY: The dollar rose across the board, underpinned by easing in U.S. - North Korea tensions and renewed expectations of another Fed interest rate hike this year. The greenback against a basket of currencies traded 0.3 percent up at 93.73, having touched a high of 93.85 earlier, it’s highest since Aug. 9. FxWirePro's Hourly Dollar Strength Index stood at 125.51 (Highly Bullish) by 1000 GMT.
EUR/USD: The euro declined, extending previous session losses, as hawkish comments from New York Fed President William Dudley renewed expectations of another Fed interest rate hike this year. The European currency traded 0.2 percent down at 1.1750, having touched a high of 1.1846 on Friday, its highest since Aug. 4. FxWirePro's Hourly Euro Strength Index stood at 63.01 (Bullish) by 0900 GMT. On the lower side, near term support is around 1.1745 and any break below will drag the pair till 1.16880 (Aug 9th, 2017 low)/1.16500. The near term resistance is around 1.1850 and any break above will take it till 1.19103 (Aug 8th 2017)/1.19391 (1.13% retracement of 1.19103 and 1.16880) /1.1200.
USD/JPY: The dollar rallied to a fresh 1-week high after a North Korean state media reported that leader Kim Jong Un had delayed a decision on firing missiles towards the U.S. Pacific territory of Guam. Additionally, the major was also underpinned by renewed expectations of another Fed interest rate hike this year following New York Fed President William Dudley's remarks. The major was trading 0.7 percent up at 110.42, having hit a high of 110.47, its highest since Aug 8. FxWirePro's Hourly Yen Strength Index stood at -105.30 (Highly Bearish) by 0400 GMT. On the lower side, any break below 108 confirms minor weakness, a decline till 106 likely. The pair is facing minor resistance at 110.66 (21- day EMA) and any break above will take the pair till 111.30 (100- day MA).
GBP/USD: Sterling slumped to a 1-month low below the 1.2900 handle after data showed British consumer price inflation declined 0.1 percent in July, while on annualized basis it unexpectedly held steady at 2.6 percent. Moreover, the dollar's rebound against a broad basket of currencies prompted investors to execute some short bets against it. Sterling traded 0.6 percent down at 1.2881, having hit a low of 1.2879 earlier, its lowest since July 13. FxWirePro's Hourly Sterling Strength Index stood at -132.04 (Highly Bearish) by 1000 GMT. On the higher side, 1.3027 (21- day EMA) will be acting major resistance and any convincing break above will take the pair slightly till 1.3082 (10- day MA)/1.3140 (61.8% retracement of 1.32680 and 1.29327). The near term support is around 1.2930 (Jul 20th low) and any break below will drag it till 1.2845 (61.8% fibo)/1.28120. Against the euro, the pound was trading 0.4 percent down at 91.23 pence, having hit a fresh 10-month low of 91.29 pence.
USD/CHF: The Swiss franc tumbled to a 1-week low as improvement in risk appetite weakened the demand for safe-haven assets. The major trades 0.05 percent up at 0.9722, having touched an early high of 0.9758, it’s highest since Aug. 8. FxWirePro's Hourly Swiss Franc Strength Index stood at -14.05 (Neutral) by 1000 GMT. The pair is facing support near 0.9600 (50% retracement of 0.94385 and 0.97728) and any close below will drag the pair till 0.9550/0.9500 in the short term. On the higher side, near term major resistance is around 0.9783 (38.2% retracement of 1.03432 and 0.94385) and any break above will take it till 0.9845/0.9900.
AUD/USD: The Australian dollar fell to a 1-month low as the minutes of the latest RBA policy meeting released highlighted the disinflationary impact of the strong currency and took note of a potential economic slowdown if the Aussie extended the rally. The Aussie trades 0.2 percent down at 0.7837 having hit a low of 0.7825 earlier, it’s weakest since July 18. FxWirePro's Hourly Aussie Strength Index stood at 10.23 (Neutral) by 1000 GMT. On the lower side, near term support is around 0.7800 and any break below will drag the pair till 0.7760 (61.8% fibo)/0.7688 (89- day EMA). The near term resistance is around 0.8070 and any break above targets 0.8100/0.8150.
Equities Recap
European shares rose modestly amid holiday-thinned trading, while the dollar rebounded against the yen as easing geopolitical tensions prompted investors to buy riskier assets.
The pan-European STOXX 600 index rallied 0.1 percent to 376.56 points, while the FTSEurofirst 300 index climbed 0.1 percent to 1,479.89 points.
Britain's FTSE 100 trades 0.3 percent up at 7,378.97 points, while mid-cap FTSE 250 gained 0.05 percent to 19,701.63 points.
Germany's DAX rose 0.3 percent at 12,195.09 points; France's CAC 40 trades 0.4 percent higher at 5,142.30 points.
Commodities Recap
Crude oil prices steadied after tumbling to a three week low in the previous session on signs of weaker demand in China, the world's second-largest consumer. International benchmark Brent crude was trading 0.4 percent up at $50.78 per barrel by 0932 GMT, having hit a low of $50.53 on Monday, its weakest since Jul. 27. U.S. West Texas Intermediate was trading 0.4 percent up at $47.68 a barrel, after falling as low as $47.42 the prior day, its weakest since July 25.
Gold prices declined to a near 1-week low as easing tensions between the United States and North Korea pushed investors to seek riskier assets. Spot gold fell 0.6 percent at $1,273.97 per ounce as of 0935 GMT, having touched a high of $1,288.86 an ounce on Friday, it highest level since June 7. U.S. gold futures for December delivery shed 0.8 percent to $1,280.10 per ounce.
Treasuries Recap
The U.S. Treasuries slumped as investors wait to watch the country’s core retail sales, for the month of July, scheduled to be today by 12:30GMT. The yield on the benchmark 10-year Treasury, jumped 3-1/2 basis points to 2.25 percent, the super-long 30-year bond yields surged 3 basis points to 2.84 percent and the yield on short-term 2-year note traded 1-1/2 basis points higher at 1.33 percent.
The UK gilts plunged Tuesday after consumer price inflation stagnated during the month of July. Also, investors now look forward to the release of unemployment rate for the month of June, scheduled to be released on August 16 by 0830GMT. The yield on the benchmark 10-year gilts, jumped nearly 3 basis points to 1.09 percent, the super-long 30-year bond yields climbed 2-1/2 basis points to 1.75 percent and the yield on the short-term 2-year traded nearly 2-1/2 basis points higher at 0.23 percent.
The Eurozone periphery bonds traded tad lower as investors have largely shrugged-off the lower-than-expected reading of the country’s second-quarter domestic product (GDP), released earlier today. The German 10-year bond yields, which moves inversely to its price, rose 1 basis point to 0.41 percent, the yield on 30-year note also climbed 1 basis point to 1.17 percent and the yield on short-term 2-year traded tad 1/2 basis point higher at -0.71 percent.
The Japanese government bonds traded flat after the country’s industrial production for the month of June, released today, came in higher than what markets had initially anticipated. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, hovered around 0.05 percent, the yield on long-term 30-year note traded flat at 0.85 percent and the yield on short-term 2-year also remained steady at -0.11 percent.
The New Zealand bonds slumped at the time of closing investors remain focussed to watch the GlobalDairyTrade price auction scheduled to be held later today. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 5 basis points to 2.86 percent, the yield on 7-year note also climbed 4-1/2 basis points to 2.71 percent and the yield on short-term 2-year ended 3 basis points higher at 2.05 percent.
The Australian bonds plunged after the Reserve Bank of Australia (RBA) maintained optimism in its August monetary policy meeting minutes, released today. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 3 basis points to 2.65 percent, the yield on 15-year note also jumped nearly 3 basis points to 2.95 percent and the yield on short-term 2-year traded nearly 1 basis point higher at 1.80 percent.
