Market Roundup
- EUR/USD -0.14%, USD/JPY +0.29%, GBP/USD -0.22%, EUR/GBP +0.09%
- DXY +0.2%, DAX +0.49%, FTSE +0.32%, Brent -0.83%, Gold -0.51%
- Robust German exports push up trade surplus in May
- Germany May Trade balance (EUR) SA, 20.3 bln vs forecast 20.6 bln, previous 19.8 bln revised 19.7 bln
- Facing Brexit challenge, Britain's May vows to fight on
- Investors brace for ECB to roil European bond markets: Sentix
- Eurozone Jul Sentix index, 28.3 vs forecast 28.2, prev 28.4
- Banks to borrow 8.4 bln euros at weekly tender from ECB
- Trump's push to replace Obamacare faces trouble as U.S. Congress returns
- China's June factory price inflation subdued on modest raw materials recovery
- Japan PM Abe to reshuffle cabinet as support plunges to lowest since 2012
- Japan's May machinery orders unexpectedly fall, gov't downgrades outlook
- Kuroda repeats BOJ's resolve to maintain ultra-loose policy
- BOJ offers most upbeat view on regional Japan in 12 years
- France to push ahead with tax cuts in 2018 after Macron overrules PM
- Oil prices dip on ample supply as OPEC may consider widening cap
- Gold falls as strong data points to central bank tightening
Economic Data Ahead
- (1000 ET/1400 GMT) The Fed releases its labor market conditions index (LMCI) for the month of June. The indicator posted a rise of 2.3 in the previous month.
- (1500 ET/9000 GMT) The U.S. Federal Reserve is likely to report that consumer credit rose to $11.9 billion in May from $8.20 billion the month before.
- (1845 ET/2245 GMT) The Statistics New Zealand will release Electronic Card Retail Sales figures for the month of June. The indicator posted a decline of 0.4 percent in the previous month.
- (1901 ET/2301 GMT) The British Retail Consortium (BRC) will report its Like-for-Like Retail Sales for the month of June. The index fell at an annualized rate of 0.4 percent in May.
Key Events Ahead
- (1045 ET/1145 GMT) FedTrade Operation 30-Year Fannie Mae / Freddie Mac (max $1.8 bn)
FX Beat
DXY: The dollar rallied versus most of its major peers as signs of U.S. labor market strength bolstered expectations that the Fed was on course for a third interest rate hike this year. The greenback against a basket of currencies traded 0.2 percent up at 96.16, having touched a high of 96.51 on Wednesday, it’s highest since Jun. 28. FxWirePro's Hourly Dollar Strength Index stood at 34.72 (Neutral) by 1100 GMT.
EUR/USD: The euro declined below the 1.1400 handle, after the release of the Eurozone Sentix Investor Confidence data failed to cheer the EUR bulls. The economy's Sentix data came in at 28.3, below market expectations of 28.4, suggesting that investors were more pessimistic about the impact of the ECB tapering on the European bond market. The European currency traded 0.1 percent down at 1.1390, having touched a low of 1.1312 on Wednesday, its lowest since Jun 28. FxWirePro's Hourly Euro Strength Index stood at 133461 (Highly Bullish) by 1100 GMT. On the higher side, temporary top formed at 1.1445 will be acting as near-term resistance and any break above will take the pair till 1.1500/1.1560. The major intraday support is around 1.1290 and any break below will drag it till 1.12600 (21- day EMA).
USD/JPY: The dollar rallied to a 2-month high above the 114.00 handle as the prevalent risk-on environment, dovish comments by the BoJ Governor Haruhiko Kuroda and prospects of another Fed rate hike this year supported of the bid tone surrounding the major. The pair traded 0.3 percent up at 114.21, having hit a high of 114.30 earlier, its highest since May 11. FxWirePro's Hourly Yen Strength Index stood at -103.71 (Highly Bearish) by 1100 GMT. The near term resistance is around 114.36 and any break above targets 115.50. The pair is facing minor support at 113.05 (7- day MA) and any break below will drag it till 111.75 (100- day MA).
GBP/USD: Sterling steadied after declining to a 1-week low earlier in the session as last week's series of weak data raised doubt on the Bank of England's surprise warnings that it is on the verge of hiking interest rates. Moreover, looming political uncertainty surrounding the UK continued to hamper market sentiment. Sterling traded flat at 1.2883, having hit an early low of 1.2857, its lowest since Jun. 28. FxWirePro's Hourly Sterling Strength Index stood at -17.87 (Neutral) by 1100 GMT. The pair formed a temporary top around 1.3047 (May 18 High) and any violation above 1.3050 will take the pair till 1.3110 (113% retracement of 1.30475 and 1.25894)/1.3150/1.33150 (88.6% retracement of 1.3440 and 1.19040). On the lower side, near-term minor support is around 1.2860 (21- day EMA) and any break below will drag it down till 1.2810 (daily Kijun-Sen)/1.2758. Against the euro, the pound traded 0.1 percent up at 88.39 pence, having hit a 1-week low of 88.60 the prior session.
USD/CHF: The Swiss franc declined, extending previous session losses, as the greenback continued to gain momentum across the board following last weeks robust U.S. jobs data. The major trades 0.3 percent up at 0.9667, having touched a low of 0.9595 on Friday, it’s lowest since Jul. 3. FxWirePro's Hourly Swiss Franc Strength Index stood at -116.09 (Highly Bearish) by 1100 GMT. The intraday major resistance is 0.96875 (61.8% retracement of 0.97780 and 0.95504) and any break above will take the pair till 0.9710/0.97708. On the lower side, major support is around 0.9550 and any break below will drag it till 0.9520/0.9495 level.
AUD/USD: The Australian dollar declined below the 0.7600 handle as downbeat Chinese CPI and service PMI data, combined with tumbling crude oil prices weighed heavily on the major. The Aussie trades 0.2 percent down at 0.7591, having hit a low of 0.7571 on Wednesday, it’s weakest since Jul. 28. FxWirePro's Hourly Aussie Strength Index stood at -21.04 (Neutral) by 1100 GMT. On the lower side, near term support is around 0.7560 (38.2% retracement of 0.77120 and 0.75711) and any break below will drag the pair till 0.7530 (200- MA). The near term resistance is around 0.7750 and any break above targets 0.7800/0.7835.
Equities Recap
European shares advanced, with banks and utilities the strongest sectors, while the dollar rallied to a 2-month high against the yen amid prevalent risk-on environment.
The pan-European STOXX 600 index climbed 0.4 percent to 381.67 points, while the FTSEurofirst 300 index rallied 0.4 percent to 1,500.64 points.
Britain's FTSE 100 trades 0.2 percent up at 7,369.49 points, while mid-cap FTSE 250 declined 0.3 percent to 19,335.62 points.
Germany's DAX rose 0.5 percent at 12,451.68 points; France's CAC 40 trades 0.3 percent higher at 5,163.87 points.
Commodities Recap
Crude oil prices declined by more than 1 percent to a 1-1/2 week low on the back of high drilling activity in the United States and ample supplies from OPEC and non-OPEC nations. International benchmark Brent crude was trading 1.0 percent down at $46.32 per barrel by 1026 GMT, having hit a low of $46.17 earlier, its weakest since Jun. 28. U.S. West Texas Intermediate traded 1.0 percent lower at $43.85 a barrel, after falling as low as $43.69, its weakest since Jun 28.
Gold fell to its lowest level since mid-March after robust economic data in the United States and Germany strengthened expectations that central banks will hike interest rates. Spot gold dropped 0.4 percent at $1,207.53 an ounce by 1029 GMT, having touched a low of $1,204.72, its lowest since March 15. U.S. gold futures for August delivery slipped by 0.3 percent to $1,206.60.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.383 percent lower by 0.009 bps, while 5-year yield was 0.012 down at 1.945 percent.
The bond markets were stable after being, hit hard by jitters about tighter central bank policies in the past two weeks. Germany's benchmark 10-year Bund yield was flat at 0.56 percent but within sight of 18-month highs.
The Australian 10-year government bond yields were at their highest since March around 2.79 percent. The three-year bond futures were off 2 ticks at 97.960, while the 10-year contract dipped 2 ticks to 97.250.
The New Zealand government bonds were little changed after yields jumped on Friday in the wake of the U.S. jobs report.
