Market Roundup
- EUR/USD -0.05%, USD/JPY +0.25%, GBP/USD +0.23%, EUR/GBP -0.25%
- DXY +0.1%, DAX +0.21%, FTSE -0.79%, Brent -0.58%, Gold -0.28%
- Fed's Williams still sees rate hike, asset unwinding this year
- US Jun NFIB business optimism, 103.6 vs previous 104.5
- Launching gig economy review, Britain's May hopes to regain authority
- Italy industry output rebounds in May after April drop
- Italy Industrial output y/y, 2.8% vs forecast 2.2%, revised 0.9% previous 1.0%
- IMF sees trouble ahead for emerging Europe
- EU set to approve strategy to tackle bad loans
- Oil falls as banks cut price forecasts
- Gold hovers near four-month low, undermined by firm dollar
Economic Data Ahead
- (0815 ET/1315 GMT) Canadian Mortgage and Housing Corp will report housing starts for the month of June. The indicator is expected to rise at a seasonally adjusted annualized rate of 200,000 after decreasing to 194,000 in the previous month.
- (1000 ET/1400 GMT) The U.S. Labor Department releases Job Openings and Labor Turnover Survey (JOLTS) report for the month of May. The report is expected to show job openings dropped to 5.950 million from 6.044 million in April.
- (1000 ET/1400 GMT) The U.S. Census Bureau is likely to report that wholesale inventories remain unchanged at 0.3 percent in May.
- (1630 ET/2030 GMT) API reports its weekly crude oil stock.
Key Events Ahead
- (0945 ET/1345 GMT) FedTrade Operation 30-Year Ginnie Mae (max $1.05 bn)
- (1230 ET/1630 GMT) The Federal Reserve Board Governor Lael Brainard speaks on monetary policy before the "Normalizing Central Banks' Balance Sheets: What is the New Normal?" conference hosted by the Federal Reserve Bank of New York.
- (1320 ET/1720 GMT) The Federal Reserve Bank of Minneapolis President Neel Kashkari participates in a Town Hall question-and-answer session moderated by Bremer Bank CEO Jeanne Crain in Minneapolis, Minnesota.
FX Beat
DXY: The dollar rallied versus most of its major peers on the back of the past fortnight's 25 basis-point rise in 10-year U.S. government bond yields. The greenback against a basket of currencies traded 0.1 percent up at 96.15, having touched a high of 96.51 last week, it’s highest since Jun. 28. FxWirePro's Hourly Dollar Strength Index stood at 5.71 (Neutral) by 1100 GMT.
EUR/USD: The euro consolidated below the 1.1400 handle as the investors refrained from taking big positions ahead of U.S. Federal Reserve chief Janet Yellen testimony to lawmakers on Wednesday and Thursday. The European currency traded down at 1.1394, having touched a low of 1.1312 on Wednesday, its lowest since Jun 28. FxWirePro's Hourly Euro Strength Index stood at 90.46 (Slightly Bullish) by 1000 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. Major intraday support is around 1.1290 and any break below will drag it till 1.12600 (21- day EMA).
USD/JPY: The dollar climbed to a fresh 4-month high as hawkish comments by Fed policymakers and Bank of Japan Governor Kuroda's remarks to adjust the central bank policy whenever necessary strengthened the bid tone around the major. Investors now await the Federal Reserve Chair Janet Yellen's testimony to the Congress for further momentum. The major traded 0.2 percent up at 114.29, having hit a high of 114.47 earlier, its highest since Mar. 15. FxWirePro's Hourly Yen Strength Index stood at -66.87 (Bearish) by 1000 GMT. The near term resistance is around 114.50 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 rose above the 1.2900 handle, rebounding from near 10-day lows after data showed British households spent more money on food and other essentials in June. The major traded 0.2 percent up at 1.2913, having hit a low of 1.2854 the day before, its lowest since Jun. 28. FxWirePro's Hourly Sterling Strength Index stood at -22.76 (Neutral) by 1000 GMT. The pair formed a temporary top around 1.30475 on May 18 and any violation above 1.3050 will take it 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 0.2 percent up at 88.26 pence, having hit a 1-week low of 88.60 on Friday.
USD/CHF: The Swiss franc declined to a 2-week low as the greenback rallied against its major peers ahead of U.S. Federal Reserve chief Janet Yellen testimony to the lawmakers. The major trades 0.3 percent up at 0.9683, having touched a high of 0.9696 earlier, it’s highest since Jul. 7. FxWirePro's Hourly Swiss Franc Strength Index stood at -11.06 (Neutral) by 1100 GMT. The intraday major resistance is 0.96875 (61.8% retracement of 0.97780 and 0.95504) and any close 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 trimmed gains as the greenback gained following a rise in the U.S. Treasury yields. The Aussie trades flat at 0.7607, having hit a high of 0.7626 earlier, it’s highest since Jul. 4. FxWirePro's Hourly Aussie Strength Index stood at 101.39 (Highly Bullish) 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 declined, as losses among consumer staples and real estate stocks offset gains in autos, miners and banks, while the dollar hit a 4-month high against the yen on growing expectations of U.S. interest rate hike.
The pan-European STOXX 600 index eased 0.3 percent to 380.54 points, while the FTSEurofirst 300 index fell 0.4 percent to 1,496.17 points.
Britain's FTSE 100 trades 0.7 percent down at 7,312.88 points, while mid-cap FTSE 250 declined 0.5 percent to 19,257.42 points.
Germany's DAX rose 0.2 percent at 12,473.89 points; France's CAC 40 trades 0.1 percent lower at 5,160.03 points.
Commodities Recap
Crude oil prices declined towards a 1-week low hit in the previous session, as the outlook remained weak amid oversupply concerns. International benchmark Brent crude was trading 0.8 percent down at $46.59 per barrel by 1008 GMT, having hit a low of $46.09 on Monday, its weakest since Jun. 27. U.S. West Texas Intermediate traded 1.01 percent lower at $44.10 a barrel, after falling as low as $43.63 the prior session, its weakest since Jun 27.
Gold prices slumped, hovering towards near four-month lows touched the prior day as the dollar gained momentum on expectations of tighter U.S. monetary policy. Spot gold was down 0.3 percent at $1,210.56 an ounce at 1012 GMT, having hit a low of $1,204.72 on Monday, the lowest since March 15. U.S. gold futures slipped 0.3 percent to $1,209.5 an ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.383 percent higher by 0.013 bps, while 5-year yield was 0.014 up at 1.943 percent.
The German 10-year yield edged up 2 basis points to 0.56 percent, having more than doubled over the last few weeks.
The Australian government bond futures were mixed, with the three-year bond contract down 1 tick at 97.970 and the 10-year contract unchanged at 97.2600.
The New Zealand government bond prices were mostly higher, with the 10-year yield down 1 basis point on the day at 3.04 percent.
The Canadian government bond prices were mixed across the yield curve, with the two-year up 2 Canadian cents to yield 1.154 percent and the 10-year down 3 Canadian cents to yield 1.888 percent.
