Market Roundup
- China says U.S. currency manipulator labeling could cause chaos in financial markets
- Oil hovers around $60 as U.S.-China trade tensions weigh
- Gold holds near six-year peak as trade tensions simmer
Economic Data Ahead
- (1000 ET/1400 GMT) The U.S. Labor Department releases Job Openings and Labor Turnover Survey (JOLTS) report for the month of June. The report is expected to show job openings eased to 7.317 million from 7.323 million in July.
- (1000 ET/1400 GMT) The Investor's Business Daily (IBD)/ TechnoMetrica Institute of Policy and Politics (TIPP) will release U.S. Economic Optimism index for the month of August. The indicator rose to 56.6 in July.
- (1530 ET/1930 GMT) Autodata Corp is expected to report that U.S. auto sales figures dropped to an annualized rate of 16.9 million units in July from 17.3 million units in June.
- (1630 ET/2030 GMT) API reports its weekly crude oil stock.
Key Events Ahead
- (1200 ET/1600 GMT) Federal Reserve Bank of St. Louis President James Bullard gives a speech
FX Beat
DXY: The dollar index rebounded from multi-week lows after Trump called the Chinese currency move a major violation and currency manipulation. The greenback against a basket of currencies traded 0.2 percent up at 97.66, having touched a high of 98.93 on Thursday, its highest since May 15, 2017.
EUR/USD: The euro trimmed gains after rising to an over 2-week peak earlier as the greenback rebounded from recent lows. The major found some support after data showed German industrial orders rose 2.5 percent in June, the biggest jump since August 2017. The European currency traded flat at 1.1200, having touched a low of 1.1026 on Thursday, its lowest since May 2017. Immediate resistance is located at 1.1282 (July 19 High), a break above targets 1.1322 (July 2 High). On the downside, support is seen at 1.1164 (38.2% retracement of 1.1026 and 1.1249), a break below could drag it below 1.1133 (10-DMA).
USD/JPY: The dollar bounced back from a 7-month low as a rebound in the equity markets boosted investor risk sentiment. However, escalation of U.S.-China trade tensions limited the upside. The major was trading 0.4 percent up at 106.32, having hit a low of 105.52 earlier, its lowest since Jan 3. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. JOLTS Job Openings data and Fed Bullard's speech. Immediate resistance is located at 107.41 (50.0% retracement of 109.31 and 105.52), a break above targets 107.86 (61.8% retracement). On the downside, support is seen at 104.65 (Jan. 3 Low), a break below could take it lower at 104.00.
GBP/USD: Sterling steadied above a 31-month low as investors refrained from taking big positions and preferred staying on the sidelines due to the summer recess in the British Parliament. However, worries that Britain is heading for a no-deal Brexit will continue to dent investor sentiment. The major traded 0.3 percent up at 1.2209, having hit a low of 1.2079 on Thursday, it’s lowest since Jan. 2017. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2253 (38.2% retracement of 1.2522 and 1.2079), a break above could take it near 1.2305 (61.8% retracement). On the downside, support is seen at 1.2079 (Aug. 1 Low), a break below targets 1.2017 (Jan 17, 2017, Low). Against the euro, the pound was trading 0.4 percent up at 91.93 pence, having hit a low of 92.49 earlier, it’s lowest since Sept 2017.
USD/CHF: The Swiss franc retreated from a 1-1/2 month peak as the greenback rebounded from recent lows. The major trades 0.2 percent up at 0.9749, having touched a low of 0.9703 earlier; it’s lowest since June 25. On the higher side, near-term resistance is around 0.9768 (23.6% retracement of 0.9975 and 0.9703) and any break above will take the pair to next level till 0.9808 (38.2% retracement). The near-term support is around 0.9700, and any close below that level will drag it till 0.9650 (Sept. 6 Low).
Equities Recap
European shares steadied after recording their biggest 2-day decline in over 3 years, as upbeat German data revived investor risk sentiment.
The pan-European STOXX 600 index surged 0.5 percent at 371.44 points, while the FTSEurofirst 300 gained 0.5 percent to 1,461.40 points.
Britain's FTSE 100 trades 0.1 percent up at 7,232.80 points, while mid-cap FTSE 250 rallied 0.7 to 19,008.24 points.
Germany's DAX rose 0.6 percent at 11,729.11 points; France's CAC 40 trades 0.9 percent higher at 5,289.57 points.
Commodities Recap
Crude oil prices plunged near 7-month lows after U.S. President Donald Trump vowed to impose new tariffs on Chinese imports, escalating trade tensions between China and the United States. International benchmark Brent crude was trading 0.4 percent lower at $59.81 per barrel by 1101 GMT, having hit a low of $59.08 earlier, its lowest since January. U.S. West Texas Intermediate was trading 0.2 percent down at $54.85 a barrel, after falling as low as $53.58 on Thursday, its lowest since the June 19.
Gold prices steadied after hitting a 6-year high earlier in the session as simmering tensions between Washington and Beijing propelled investors towards safe-haven assets. Spot gold was trading flat at $1,463.86 an ounce at 1103 GMT after having touched a high of $1,474.80 earlier, its highest since April 2013. U.S. gold futures were down 0.2 percent at $1,474.10.
Treasuries Recap
The U.S. Treasuries suffered during the afternoon session, ahead of today’s JOLTs job openings data for the month of June, FOMC member Bullard’s speech and the short-term 3-year auction, all scheduled at 14:00GMT, 16:00GMT and 17:00GMT respectively. The yield on the benchmark 10-year Treasury yield remained tad 1/2 basis point higher at 1.741 percent, the super-long 30-year bond yields hovered around 2.291 percent and the yield on the short-term 2-year edged nearly 1 basis point higher to 1.589 percent.
The United Kingdom’s gilts slipped slightly during European trading hours ahead of the country’s gross domestic product (GDP) for the second quarter of this year, scheduled to be released on August 9 by 08:30GMT and the manufacturing production data for the month of June, due on the same day for further direction in the debt market. The yield on the benchmark 10-year gilts, edged tad 1/2 basis point higher to 0.519 percent, the 30-year yield remained flat at 1.191 percent and the yield on the short-term 2-year surged 1-1/2 basis points to 0.444 percent.
The Australian government bonds slumped during Asian session of the second trading day of the week, even as investors maintained distance from riskier assets amid ongoing trade tensions between the United States and China after the Reserve Bank of Australia (RBA) remained on hold at its monetary policy meeting, held today. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped nearly 2-1/2 basis points to 1.042 percent, the yield on the long-term 30-year bond surged 4 basis points to 1.729 percent and the yield on short-term 2-year traded 3 basis points higher at 0.768 percent.
