Market Roundup
- GBP/USD +0.25%, USD/JPY -0.04%, EUR/USD +0.18%
- Japan Mizuho, MUFG reorganizing in Europe over Brexit fears – Nikkei
- BoJ Gov Kuroda: Will tweak policy as needed
- Japan government leaves economic assessment as it, notes biz sentiment off
- Japan June Trade balance 692.8bn vs -40.7bn previous, 494.8bn exp
- China statement: Will continue to improve ccy regime, increase transparency
- As China lets yuan depreciate, other nations take note – WSJ
- G20 will use all policy tools to lift growth as Brexit weighs
- G20: Global excess capacity issue requires collective response
- ECB/Buba Weidmann: No signs yet Brexit having economic impact on Europe
- German Fin Min Schaeuble: Not up to rest of Europe to cushion Brexit
- German July Ifo business climate 108.3 vs 108.7 previous, 107.5 exp
- German July Ifo current conditions 114.7 vs 114.5 previous, 114.0 exp
- German July Ifo expectations 102.2 vs 103.1 previous, 101.2 exp
- UK July CBI trends (orders) -2 vs -4 previous
Economic Data Ahead
- (0900 ET/1300 GMT) Mexico will release its retail sales data for the month of May. According to the national statistics agency, retail sales declined 1.4 percent in April from March, while sales grew 10.6 percent in April compared to the same month a year earlier.
- (1030 ET/1430 GMT) Federal Reserve Bank of Dallas releases its Texas Manufacturing Outlook Survey for the month of July. The indicator stood at -18.3 in the prior month.
- (1845 ET/2245 GMT) The Statistics New Zealand releases its trade balance data for the month of June. The economy posted an annual trade deficit of $3.633 billion in May.
Key Events Ahead
- (1145 ET/1545 GMT) FedTrade operation 30-year Fannie Mae / Freddie Mac max $2.550bn.
FX Beat
DXY: The dollar index, against a basket of currencies trades flat at 97.36, having touched an early 4-month high of 97.57.
EUR/USD: The euro retreated from a 1-month low of 1.0952, however, it lost momentum to regain the 1.1000 handle. The major rose on the back of better-than-expected from German IFO surveys for the month of July. Business climate index fell to 108.3 in July from 108.7 in June, however stronger than consensus of 107.5. The major trades 0.1 percent higher at 1.0982, having touched session’s high of 1.0996 earlier in the session. Traders will continue to digest the latest macro-fundamentals from the Eurozone as U.S. data- calendar remains absolutely data empty. The pair has formed bullish Gartley pattern in 4 hours chart. The major support is at 1.0940 and any break below targets 1.0910/1.0870 in the short term. Technically on the higher side, major pschycological resistance is around 1.1000 and any indicative break above will take the pair to next level at 1.10600 (Jul 21st high)/1.10800 (200 DMA).
USD/JPY: The greenback advanced, as strong U.S. economic data continues to renew expectations of an imminent Fed rate-hike later during this year. The major trades 0.2 percent higher at 106.21, having touched an early high of 106.72. However, the upside was capped as investors remain cautions ahead of this week's FOMC and BOJ monetary policy meetings on Wednesday and Friday, respectively. With the lack of macro-fundamentals from the U.S, markets will track sentiments surrounding riskier assets. The major resistance is around 107.72 (Cloud top) and any break above confirms minor trend reversal, a jump till 107.50/108/109 is possible. On the lower side minor support is around 106.10 and any break below 106.10 will drag the pair till 105.80/105.60.
GBP/USD: Sterling recovered from Friday's low, after Britain's CBI industrial trends survey-order came in better-than expected at -4 against consensus of -6 and previous -2. However, the recovery seem to be fragile after last week’s PMI surveys suggested that Britain was heading towards recession, strengthening likelihood of further policy easing by the Bank of England as early as next month. Sterling trades 0.2 percent higher at 1.3132, hovering away from a low of 1.3078 struck on Friday. Any break below 1.3060 confirms minor weakness, a decline till 1.3000 is possible. Technically any break above 1.3166 (21 day MA) will take the pair till 1.3191/1.3290. Against the euro, the pound trades flat at 83.67 pence.
USD/CHF: The Swiss franc gained against the dollar, as investors remain cautious ahead of major risk events ahead in the week, including Fed and BoJ policy decision. The greenback trades 0.1 percent lower at 0.9856, pulling away from a peak of 0.9906 touched last week. The short term trend is bullish as long as support 0.9838 (200 DMA) holds. On the lower side, major support is around 0.9838 and any indicative break below 0.9845 targets 0.980/0.9760 (90 DMA)/0.9680 in the short term.
AUD/USD: The Australian dollar rebounded from a 2-week low of 0.7442 and now targets to regain the 0.7500 handle. The Aussie trades 0.4 percent higher at 0.7484, having touched an early low of 0.7451. Australian CPI report due on Wednesday will provide further insights if Reserve Bank of Australia would cut interest rates in August, after RBA minutes suggested that the central bank might ease its monetary policy further in order to support the economy and eliminated deflationary pressure. On the higher side resistance is around 0.7520 and any break above targets 0.7580/0.7625. The major support is around 0.7440 and break below will drag the pair till 0.7380/0.7350.
NZD/USD: The New Zealand dollar struggles to regain 0.7000 handle, as markets expect RBNZ to ease its monetary policy at August meeting after its economic assessment report pointed to further easing to address the problem of low inflation. The Kiwi trades 0.2 percent lower at 0.6986, having touched a high of 0.7016 earlier in the session. Markets will closely watch New Zealand's trade balance figures for further cues on t he major. Immediate support is seen at 0.6951, break below could take it till 0.6900. On the higher side, resistance is located at 0.7021, break above targets 0.7050.
Equities Recap
European shares advanced on the back of better-than-expected Germany's IFO business morale data and easing worries over the impact of Britain's Brexit vote, ahead of central bank meetings in the United States and Japan this week.
The pan-European FTSEuroFirst 300 gained 0.6 pct, while STOXX 600 advanced 0.7 pct, Germany's DAX was higher 1.0 pct and France's CAC 40 added 0.7 pct.
Britain's FTSE 100 rose 0.1 pct, while mid-cap FTSE 250 index soared 0.9 pct.
Tokyo's Nikkei ended down 0.04 pct at 16,620.29, Australia's S&P/ASX 200 index climbed 0.62 pct at 5,532.30 points and South Korea's KOSPI added up 0.08 pct.
Shanghai composite index rose 0.1 pct at 3,015.83 points, while CSI300 index gained 0.2 pct at 3,230.89 points. Hong Kong’s Hang Seng index edged up 0.1 pct at 21,993.44 points.
Commodities Recap
Oil prices continue to decline for the third consecutive session, hovering towards a 2-1/2 month low amid growing worries of a global crude and refined product glut. International Brent crude oil trades 0.5 percent lower at $45.43 per barrel at 0956 GMT, while U.S. West Texas Intermediate crude was at $44.11, down 8 cents a barrel.
Gold extended losses as a recovery in risk appetite supported Asian and European ahead of central bank meetings in the United States and Japan this week. Spot gold was down 0.3 percent at $1,317.01 an ounce at 1005 GMT, while U.S. gold was down 0.5 percent at $1,316.20 an ounce.
Treasuries Recap
The US Treasuries slumped ahead of the Fed policy decision, which is scheduled to take place on Wednesday at 18:00 GMT. In addition, markets also await fresh 2-year note, 5-year note and 7-year note auctions on Monday, Tuesday and Thursday, respectively. The yield on the benchmark 10-year Treasury note rose 1-1/2 basis points to 1.583 percent and the yield on short-term 2-year note also bounced 2-1/2 basis points to 0.731 percent.
The UK gilts slumped as investors expect the second quarter preliminary gross domestic product (GDP) to grow higher than the economists have forecasted. The yield on the benchmark 10-year gilts rose 3-1/2 basis points to 0.835 percent, the yield on super-long 30-year bond also jumped 3-1/2 basis points to 1.728 percent and the yield on short-term 2-year bonds climbed 3 basis points to 0.164 percent.
The German bunds plunged after data showed that the country’s business sentiment fell less than expected in July, which boosted share prices and reduced demand for safe-haven buying. The yield on the benchmark 10-year bond rose 2 basis points to -0.008 percent, the yield on long-term 30-year note jumped 1-1/2 basis points to 0.505 percent and the yield on short-term 2-year note also climbed 1-1/2 basis points to -0.599 percent.
The Japanese government bonds narrowly mixed on Monday, succumbing to thin trading activity during a relatively quiet session that saw little data of much significance. The yield on the benchmark 10-year bonds fell more than 1 basis point to -0.236 percent, the yield on long-term 30-year note rose 1 basis point to 0.281 percent, the yield on 20-year note also jumped nearly 1 basis point to 0.190 percent and the short-term 2-year JGB yield dipped 1/2 basis points to -0.329 percent.
The New Zealand government bonds closed narrowly mixed as investors await the Reserve Bank of New Zealand Governor Graeme Wheeler’s speech, in an attempt to predict the central bank's likely step to ease interest rates in the upcoming monetary policy meeting. The yield on benchmark 10-year bond fell half basis point to 2.245 percent, the yield on 7-year note also dipped half basis points to 1.990 percent and the yield on short-term 2-year note ended 1 basis point higher at 1.880 percent.
The Australian government bonds slumped as investors anticipate higher second quarter consumer inflation amid rising possibilities that the Reserve Bank of Australia will hold its key interest rate at its upcoming policy meeting. The yield on the benchmark 10-year Treasury note rose more than 3 basis points to 1.923 percent and the yield on short-term 2-year note also jumped more than 3 basis points to 1.544 percent.
