Market Roundup
- EUR/USD +0.68%, USD/JPY -0.41%, GBP/USD -0.11%, EUR/GBP +0.82%
- DXY -0. 5%, DAX -0.56%, FTSE +0.06%, Brent +0.37%, Gold +0.22%
- Germany Jul ZEW Economic sentiment, 17.5 vs forecast 18.0, previous 18.6
- Germany Jul ZEW Current conditions, 86.4 vs forecast 88.0, previous 88.0
- Great Britain Jun Core CPI y/y, 2.4% vs forecast 2.6%, previous 2.6%
- Great Britain Jun CPI y/y, 2.6% vs forecast 2.9%, previous 2.9%
- Great Britain Jun RPI y/y, 3.5% vs forecast 3.6%, previous 3.7%
- Great Britain Jun RPIX y/y, 3.8%, previous 3.9%
- Great Britain Jun PPI Input prices y/y NSA, 9.9% vs forecast 8.8%, previous 11.6% revised 12.1%
- Great Britain Jun PPI Output prices y/y NSA, 3.3% vs forecast 3.3%, previous 3.6%
- Britain's aim is to agree divorce deal so free trade talks can begin
- China's property market slows, Beijing prices down for first time since 2015
- Japan gov't says to miss primary surplus goal, debt/GDP ratio to fall
- Oil "stuck in range" as ample supply meets firm demand
- Gold scales two-week high as dollar slides
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Labor Department publishes import and export prices index for the month of June. The import prices are likely to have declined 0.2 percent after slumping 0.3 percent in May, while exports are expected to remain flat after falling 0.7 percent in the prior month.
- (1000 ET/1400 GMT) The National Association of Home Builders (NAHB) is expected to report that U.S. Housing Market Index remained unchanged at 67 for the month of July.
- (1630 ET/2030 GMT) API reports its weekly crude oil stock.
Key Events Ahead
- (0930 ET/1330 GMT) Bank of England Governor Mark Carney's speech.
- (1145 ET/1545 GMT) FedTrade operation 15-year Fannie Mae / Freddie Mac (max $500 mn)
FX Beat
DXY: The dollar tumbled versus its major peers following a setback to U.S. President Donald Trump's health care bill and fading expectations of another rate hike by the Federal Reserve this year. The greenback against a basket of currencies traded 0.5 percent down at 94.64, having touched a low of 94.61 earlier, it’s lowest since Sept. 08. FxWirePro's Hourly Dollar Strength Index stood at -164.76 (Highly Bearish) by 1000 GMT.
EUR/USD: The euro rallied to a 14-month peak ahead of the European Central Bank policy meeting later in the week. The ECB is likely to keep its policy on hold at its rates review on Thursday, while investors expect it to signal a reduction of its stimulus in the subsequent policy meeting in September. The European currency traded 0.6 percent up at 1.1552, having touched a high of 1.1560 earlier, its highest since May 3, 2016. FxWirePro's Hourly Euro Strength Index stood at 91.50 (Slightly Bullish) by 1000 GMT. The near term resistance is around 1.1614 (May 3rd 2016 high) and any break above targets 1.1716 (Aug 28th 2017 high). On the downside near term support is around 1.1440 (5- day MA) and any break below will drag the pair down till 1.1400/1.13700.
USD/JPY: The dollar slumped to an over 2-week low below the 112.00 handle, undermined by uncertainty over the pace of the Fed's policy tightening and setbacks to the passage of a U.S. healthcare bill. The major traded 0.4 percent down at 112.14, having hit a low of 111.98, its lowest since Jun 30. FxWirePro's Hourly Yen Strength Index stood at -28.57 (Neutral) by 1000 GMT. The near term resistance is around 114.50 and any break above targets 115.50. The pair is facing major support at 111.79 and any close below will drag it till 111/110.
GBP/USD: Sterling declined from a 10-month high after data showed British inflation surprisingly slowed for the first time since October last year, dampening expectations of a BoE rate hike this year. The economy's consumer prices rose at an annualized rate of 2.6 percent, down from a nearly four-year high of 2.9 percent in May. Sterling traded 0.3 percent down at 1.3019, having hit a high of 1.3125 earlier, its highest since Sept. 16. FxWirePro's Hourly Sterling Strength Index stood at -50.39 (Bearish) by 1000 GMT. On the higher side, the pair is facing minor resistance around 1.3130 and any break above will target 1.3200 level. On the lower side, near term support is around 1.3000 and any break below will drag it till 1.2965 (daily Tenkan-Sen)/1.29350 (61.8% retracement of 1.28118 and 1.31250). Against the euro, the pound traded 0.9 percent down at 88.74 pence, retreating from a 3-week high of 87.42 hit last week.
USD/CHF: The Swiss franc rose to a 11-month high as worries that President Donald Trump will fail to deliver healthcare reforms and uncertainty over the pace of the Federal Reserve's policy tightening heightened risk-off market sentiment. The major trades 0.8 percent down at 0.9541, having touched a low of 0.9539 earlier, it’s lowest since Aug. 19. FxWirePro's Hourly Swiss Franc Strength Index stood at 152.84 (Highly Bullish) by 1000 GMT. Any break below 0.9550 will drag the pair till 0.9520 /0.9440. On the higher side, it is facing minor trend line resistance around 0.9720 (trend line joining 0.98252 and 0.97708) and any break above will take it to next level till 0.97708/0.9808.
AUD/USD: The Australian dollar advanced to two-year peaks after the release of hawkish RBA minutes painted a more optimistic view on the economic outlook, which led investors to narrow the odds on a hike in interest rates. The Aussie trades 1.7 percent higher at 0.7934, having hit a high of 0.7942 earlier, it’s highest since May 19, 2015. FxWirePro's Hourly Aussie Strength Index stood at 155.08 (Highly Bullish) by 1000 GMT. On the lower side, near term support is around 0.7730 (5- day MA) and any break below will drag the pair till 0.7715 /0.7645 (21- day EMA). The near term resistance is around 0.7950 and any break above targets 0.8000/0.8100.
Equities Recap
European shares declined following disappointing results from companies, while the greenback fell to a 10-month low as investors scaled back expectations of monetary tightening by Federal Reserve this year.
The pan-European STOXX 600 index declined 0.4 percent to 385.39 points, while the FTSEurofirst 300 index fell 0.4 percent to 1,514.29 points.
Britain's FTSE 100 trades 0.01 percent up at 7,405.20 points, while mid-cap FTSE 250 gained 0.2 percent to 19,560.34 points.
Germany's DAX eased 0.5 percent at 12,518.12 points; France's CAC 40 trades 0.2 percent lower at 5,219.69 points.
Commodities Recap
Crude oil prices steadied after declining from 2-week highs hit in the previous session, supported by strong demand, however, high supplies from OPEC and the United States weighed on prices. International benchmark Brent crude was trading 0.6 percent up at $48.61 per barrel by 0939 GMT, having hit a high of $49.21 on Monday, its strongest since Jul. 5. U.S. West Texas Intermediate traded 0.5 percent up at $46.19 a barrel, after rising as high as $46.85 the prior day, its strongest since Jul 5.
Gold prices rallied to a two-week high as the dollar tumbled to multi-month lows on diminishing prospects of further rate hikes by the U.S. Federal Reserve this year and doubts whether President Donald Trump would be able to push through healthcare reforms. Spot gold was 0.3 percent up at $1,236.57 per ounce at 0942 GMT, having touched a high of $1,238.74 earlier, its highest since July 3. U.S. gold futures for August delivery rose 0.3 percent to $1,236.80 per ounce.
Treasuries Recap
The U.S. Treasuries traded slightly on the upside in a silent trading session that eyes data of little economic significance throughout this week and ahead of the initial jobless claims, scheduled to be released later this week. The yield on the benchmark 10-year Treasury, slid nearly 1 basis point to 2.30 percent, the super-long 30-year bond yields fell 1/2 basis point to 2.88 percent and the yield on short-term 2-year note traded flat at 1.36 percent.
The UK gilts jumped after markets were disappointed by the weaker-than-expected reading of the country’s consumer price inflation for the month of May, released today. The yield on the benchmark 10-year gilts, plunged 3-1/2 basis points to 1.24 percent, the super-long 30-year bond yields slumped nearly 4 basis points to 1.86 percent and the yield on the short-term 2-year traded nearly 3 basis points lower at 0.27 percent.
The Eurozone periphery bonds rallied as investors wait to watch the European Central Bank’s (ECB) monetary policy decision, scheduled to be held on July 20. Also, the benchmark German super long 30-year auction, due to be held on July 19 will add further direction to the debt market. The benchmark German 10-year bond yields, slumped nearly 2 basis points to 0.56 percent, the French 10-year bond yields also slumped 2 basis points to 0.82 percent, Irish 10-year bond yields slid 2 basis points to 0.86 percent, Italian also down nearly 4 basis points to 2.20 percent, Netherlands 10-year bond yields also lower nearly 2 basis points to 0.68 percent, Portuguese equivalents struggled 3-1/2 basis points lower at 3.47 percent and the Spanish 10-year yields slid 4 basis points to 1.55 percent.
The Japanese government bonds gained as investors wait to watch the Bank of Japan’s (BoJ) two-day monetary policy decision, scheduled to be unveiled on July 20. The benchmark 10-year bond yield, fell 1 basis point to 0.07 percent, the long-term 30-year bond yields slipped 1/2 basis point to 0.86 percent and the yield on the short-term 2-year note hovered around -0.10 percent.
The New Zealand bonds ended the session on a slightly higher note after the country’s consumer price-led inflation for the second-quarter of this year disappointed markets, coming in flat for the quarter. At the time of closing, the yield on the benchmark 10-year bond, remained flat at 2.99 percent, the yield on 7-year note slipped 1/2 basis point to 2.87 percent while the yield on short-term 2-year note ended 2-1/2 basis points lower at 1.95 percent.
The Australian bonds plunged after the Reserve Bank of Australia (RBA) maintained a hawkish tone in its July monetary policy meeting minutes, released earlier today. The yield on the benchmark 10-year Treasury note, jumped 4 basis points to 2.77 percent, the yield on 15-year note also surged 4 basis points to 3.07 percent while the yield on short-term 2-year climbed 8-1/2 basis points to 1.94 percent.
