Market Roundup
- EUR/USD -0.17%, USD/JPY -0.1%, GBP/USD -0.13%, EUR/GBP -0.03%
- DXY +0.17%, DAX +0.06%, FTSE +0.18%, Brent +0.61%, Gold -0.16%
- Villeroy: ECB has made progress steering inflation but loose monetary policy still needed
- Britain will probably need to set up fewer than 10 new regulators after Brexit - government source
- Japan retains modestly optimist view on economy, overall view unchanged
- Over halfway into the year, steel outshines oil markets
- Strong gasoline boosts oil price, but high OPEC supplies weigh
- Gold retreats below $1,240/oz as dollar edges off 10-month low
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Department of Commerce is expected to report that housing starts increased to a 1.155 million unit rate in June from a 1.092 million unit rate in May.
- (0830 ET/1230 GMT) The U.S. building permits are likely to have increased to a 1.20 million-unit pace in June from a 1.168 million-unit pace in May.
- (0830 ET/1230 GMT) Statistics Canada releases manufacturing shipments data for the month of May.
Manufacturing sales are likely to have increased 0.8 percent after rising 1.1 percent in April.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending July 14.
- (1950 ET/2350 GMT) Japan's Ministry of Finance reports merchandise trade balance for the month of June. The economy's trade surplus is expected to rise to 484.7 billion yen after posting a deficit of 203.4 billion yen in May.
Key Events Ahead
- (1145 ET/1545 GMT) FedTrade operation 30-year Fannie Mae / Freddie Mac (max $1.575 bn)
FX Beat
DXY: The dollar consolidated near multi-month lows versus its major peers as Republican's failure to push through a stalled U.S. healthcare bill continued to dampen dollar bulls’ sentiments. The greenback against a basket of currencies traded 0.1 percent up at 94.80, having touched a low of 94.48 the day before, it’s lowest since Sept. 08. FxWirePro's Hourly Dollar Strength Index stood at -88.46 (Slightly Bearish) by 1000 GMT.
EUR/USD: The euro eased after rallying to 14-month peaks in the previous session as investors remained cautious ahead of European Central Bank policy meeting on Thursday. The central bank is likely to keep its policy on hold, however, investors will seek for clues on the reduction of the bond-buying programme. The European currency traded 0.2 percent down at 1.1525, having touched a high of 1.1583 on Tuesday, its highest since May 3, 2016. FxWirePro's Hourly Euro Strength Index stood at 18.82 (Neutral) 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 1.1515 (23.6% retracement of 1.13123 and 1.15830) and any break below will drag the pair down till 1.1434 (10- day MA)/1.13700.
USD/JPY: The dollar steadied after falling to 3-week lows in the prior session on the back of uncertainty over the U.S. President Donald Trump's healthcare bill and waning expectations for further rate hikes from the Federal Reserve this year. The major traded flat at 112.01, having hit a low of 111.68 the day before, its lowest since Jun 27. FxWirePro's Hourly Yen Strength Index stood at 98.60 (Slightly Bullish) by 1000 GMT. Any daily close below 100- day MA will drag the pair down till 111/110.58 (61.8% fibo). The near term resistance is around 114.50 and any break above targets 115.50.
GBP/USD: Sterling edged up after declining for two consecutive sessions on easing expectations that the Bank of England will hike rates this year. The major traded 0.05 percent up at 1.3045, having hit a high of 1.3125 the prior day, its highest since Sept. 16. FxWirePro's Hourly Sterling Strength Index stood at -128.95 (Highly 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 1.300 and any break below will drag the pair till 1.2965 (daily Tenkan-Sen)/1.29350 (61.8% retracement of 1.28118 and 1.31250). Against the euro, the pound traded 0.2 percent up at 88.44 pence, having hit a 3-week high of 87.42 on Friday.
USD/CHF: The Swiss franc rose, extending gains for the fourth straight session, as investors remained cautious ahead of this week's central bank policy meetings and on geopolitics in the United States. The major trades 0.06 percent down at 0.9544, having touched a low of 0.9523 the day before, it’s lowest since Aug. 19. FxWirePro's Hourly Swiss Franc Strength Index stood at 84.46 (Slightly Bullish) by 1000 GMT. Overall bullish invalidation is only below 0.9440 and any violation below will drag the pair further down till 0.9260. On the higher side, it is facing minor resistance around 0.9580 (23.6% retracement of 0.97708 and 0.95231) and any break above will take it to next level till 0.9630 (10- day MA)/0.96830.
AUD/USD: The Australian dollar rallied to a fresh over two-year peak as perceived hawkish RBA meeting minutes and broad based U.S. dollar weakness continued to support the major The Aussie trades 0.2 percent up at 0.7929, having hit a high of 0.7947 earlier, it’s highest since May 19, 2015. FxWirePro's Hourly Aussie Strength Index stood at 175.77 (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 gained following upbeat updates from European firms, while the greenback steadied near 10-month lows following a rebound in the U.S. treasury yields.
The pan-European STOXX 600 index advanced 0.3 percent to 383.66 points, while the FTSEurofirst 300 index rallied 0.2 percent to 1,506.51 points.
Britain's FTSE 100 trades 0.1 percent up at 7,396.11 points, while mid-cap FTSE 250 gained 0.2 percent to 19,576.71 points.
Germany's DAX rose 0.06 percent at 12,437.55 points; France's CAC 40 trades 0.2 percent higher at 5,182.71 points.
Commodities Recap
Crude oil prices rose, extending previous session gains, supported by a strong gasoline market, however, rising output from OPEC producers capped the upside. International benchmark Brent crude was trading 0.8 percent up at $49.07 per barrel by 1025 GMT, having hit a high of $49.38 the day before, its strongest since Jul. 5. U.S. West Texas Intermediate traded 0.8 percent up at $46.55 a barrel, after rising as high as $46.89 on Tuesday, its strongest since Jul 5.
Gold prices declined from an over 2-week high touched in the previous session as the dollar recovered from 10-month lows against a basket of currencies. Spot gold was 0.1 percent down at $1,239.93 an ounce at 1028 GMT, having touched a high of $1,244.44 on Tuesday, its highest since June 30. U.S. gold futures for August delivery were down $3.00 an ounce at $1,238.90.
Treasuries Recap
The U.S. Treasuries plunged on expectations of a fall in the country’s initial jobless claims, scheduled to be released on July 19, besides the 10-year auction, due to be held on the same day. The yield on the benchmark 10-year Treasury, jumped nearly 2 basis points to 2.27 percent, the super-long 30-year bond yields climbed nearly 1-1/2 basis points to 2.86 percent and the yield on short-term 2-year note traded nearly 1 basis point higher at 1.36 percent.
The UK gilts slumped on expectations of a rise in the country’s retail sales for the month of June, scheduled to be released on July 20. 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 gained as investors wait to watch the European Central Bank’s (ECB) monetary policy decision, scheduled to be unveiled on July 20. The benchmark German 10-year bond yields, slumped nearly 2 basis points to 0.54 percent, the French 10-year bond yields also slumped nearly 2 basis points to 0.80 percent, Irish 10-year bond yields slid a little over 2 basis points to 0.84 percent, Italian down 1 basis point to 2.18 percent, Netherlands 10-year bond yields also lower 2 basis points to 0.66 percent, Portuguese equivalents struggled nearly 1 basis point at 3.05 percent and the Spanish 10-year yields slid 1-1/2 basis points to 1.53 percent.
The Japanese government bonds slid as investors remained cautious ahead of the Bank of Japan’s (BoJ) two-day monetary policy decision, scheduled to be unveiled on July 20. The benchmark 10-year bond yield, rose 1/2 basis point to 0.08 percent, the long-term 30-year bond yields hovered around 0.86 percent and the yield on the short-term 2-year note traded flat at -0.10 percent.
The New Zealand bonds jumped at the time of closing as investors have largely shrugged-off the rise in dairy prices at the latest GlobaldairyTrade (GDT) price auction, held late Tuesday. 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 sharply rebounded on expectations of a rise in the country’s unemployment rate and ahead of the country’s labor market report for the month of June, scheduled to be released on July 20. The yield on the benchmark 10-year Treasury note, slumped 3 basis points to 2.72 percent, the yield on 15-year note plunged nearly 4 basis points to 3.03 percent and the yield on short-term 2-year traded 1-1/2 basis points lower at 1.91 percent.
