Market Roundup
- EUR/USD -0.43%, USD/JPY -0.17%, GBP/USD -0.12%, EUR/GBP -0.29%
- DXY +0.25%, DAX -0.68%, FTSE -1.05%, Brent +0.99%, Gold +0.17%
- Great Britain Jun Construction output vol y/y, 0.9% vs forecast 1.9%, previous -0.3% revised 0.5%
- Great Britain Jun Industrial output y/y, 0.3% vs forecast -0.1%, previous -0.2%
- Great Britain Jun Manufacturing output y/y, 0.6% vs forecast 0.6%, previous 0.4% revised 0.3%
- Great Britain Jun Trade balance (GBP), -12.722 bln vs forecast -11.00 bln, previous -11.86 bln revised -11.30 bln
- North Korea details Guam missile plan, dismissing Trump warnings as "nonsense"
- Japan's June core machinery orders unexpectedly fall
- Japan July exports seen rising for 8th straight month
- Oil rises as inventory overhang erodes and Saudi cuts exports
- Gold hits over two-month high on N. Korea tensions
Economic Data Ahead
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely remained unchanged at 240,000 for the week ended Aug. 4, while continuing claims for the week ended Jul. 28 is expected to decline to 1.960 million from 1.968 million the week before.
- (0830 ET/1230 GMT) The U.S. producer price index is likely to have remained unchanged at 0.1 percent in July, while in the 12 months through the same period, it is expected to have advanced 2.2 percent. PPI excluding food and energy probably edged up 0.2 percent after rising 0.1 percent in June.
- (0830 ET/1230 GMT) The Statistics Canada is likely to report that New Housing Price Index (NHPI) rose 0.4 percent in June after rising 0.7 percent in May.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending August 4.
- (1400 ET/1800 GMT) The U.S. government reports its monthly budget statement for the month of July. The government's budget deficit narrowed to $73 billion from $90 billion in the previous month.
- (1830 ET/2230 GMT) New Zealand will release its Business PMI index for the month of July. The index stood at 56.2 in the previous month.
- (1845 ET/2245 GMT) Statistics New Zealand will release food price index for the month of July. The indicator posted a rise of 0.2 percent in the prior month.
Key Events Ahead
- (1000 ET/1400 GMT) Federal Reserve Bank of New York President William Dudley gives opening remarks and participates in a panel before an economic briefing in the Second District, including New York City, New York State, Northern New Jersey and Puerto Rico.
- (1230 ET/1630 GMT) Federal Reserve offers 7-day term deposits (0.010% over IOER)
- (1430 ET/1830 GMT) FedTrade operation 30-year Ginnie Mae (max $1.375 bn)
- (1930 ET/2330 GMT) Reserve Bank of Australia Deputy Governor Philip Lowe's Speech.
FX Beat
DXY: The dollar rose versus most its major peers as recent series of upbeat data revived expectations of an additional Fed rate hike this year. The greenback against a basket of currencies traded 0.2 percent up at 93.69, having touched a high of 93.89 the day before, it’s highest since July 28. FxWirePro's Hourly Dollar Strength Index stood at 54.90 (Bullish) by 1000 GMT.
EUR/USD: The euro came under renewed selling pressure as the greenback rebounded on recent series of upbeat data. Investors now await the U.S. PPI data for July, which is expected to come in at 0.1 percent, unchanged from previous reading, while the core figures are expected to edge slightly higher to 0.2 percent from 0.1 percent seen in June. The European currency traded 0.4 percent down at 1.1737, having touched a low of 1.1688 the day before, its lowest since Jul. 28. FxWirePro's Hourly Euro Strength Index stood at -157.61 (Highly Bearish) by 1000 GMT. On the lower side, 1.1650 will be acting as minor support and any break below will drag the pair down till 1.15980 (23.6% retracement of 1.05694 and 1.19098)/1.1500. The near term resistance is around 1.1770 and a break above targets 1.1800/1.18250.
USD/JPY: The dollar slumped, extending losses for the third consecutive session as escalating geopolitical tensions between the U.S. and N. Korea and weaker sentiments around the European equities supported the safe-haven yen. The major was trading 0.2 percent down at 109.80, having hit a low of 109.55 the day before, its lowest since Jun 15. FxWirePro's Hourly Yen Strength Index stood at 155.31 (Highly Bullish) by 1000 GMT. On the lower side, any break below 109.85 Aug 4th low confirms minor weakness, a decline till 108.80/108.12 likely. The upside remains capped by daily Tenken-Sen at 110.77 and any break above will take the pair till 111.35 (100- day MA).
GBP/USD: Sterling rebounded from a fresh 3-week low against the dollar as a mixed bag of UK economic data did little to alter investors' downbeat view over the outlook of the economy. British industrial output unexpectedly picked up in June and industrial output jumped by 0.5 percent, while the deficit in goods trade with the rest of the world widened to 12.7 billion pounds from 11.3 billion the month before. Sterling traded flat at 1.3001, having hit a low of 1.2952 earlier, its lowest since July 20. FxWirePro's Hourly Sterling Strength Index stood at 28.71 (Neutral) by 1000 GMT. On the higher side, 1.30280 (23.6% retracement of 1.2680 and 1.29527) will be acting as near term resistance and any break above will take the pair slightly till 1.3042 (21- day EMA)/1.30750/1.310 (10- day MA). The near term support is around 1.2948 (55- day EMA) and any break below will drag it till 1.2845 (61.8% fibo). Against the euro, the pound was trading 0.3 percent up at 90.16 pence, having hit a 10-month low of 90.87 on Tuesday.
USD/CHF: The Swiss franc retreated after rising to a 2-week high in the previous session as the greenback attempted a minor recovery ahead of key U.S. economic data. The major trades 0.2 percent up at 0.9659, having touched a low of 0.9611 on Wednesday, it’s lowest since Jul. 27. FxWirePro's Hourly Swiss Franc Strength Index stood at 92.43 (Slightly Bullish) by 1000 GMT. The pair has taken support near 0.96100 (100- 4H MA) and any break below will drag it till 0.9550/0.9500 in the short term. On the higher side, near term major resistance is around 0.9783 (38.2% retracement of 1.03432 and 0.94385) and any convincing break above will take it till 0.9808/0.9845 (61.8% fibo).
AUD/USD: The Australian dollar extended losses for the eighth consecutive session on the back of a modest rebound in the U.S. dollar and downbeat domestic consumer inflation expectation figures. The Aussie trades 0.1 percent down at 0.7880, having hit a low of 0.7855 the day before, it’s weakest since July 18. FxWirePro's Hourly Aussie Strength Index stood at -66.76 (Bearish) by 1000 GMT.. On the lower side, near term support is around 0.7850 and any break below will drag the pair till 0.7800/0.7760 (61.8% fibo). The near term resistance is around 0.8070 and any break above targets 0.8100/0.8150.
Equities Recap
European shares declined as cyclicals fell and some big stocks went ex-dividend, while investors sought safe-haven assets on escalating geopolitical tensions between the United States and North Korea.
The pan-European STOXX 600 index fell 0.5 percent to 378.03 points, while the FTSEurofirst 300 index shed 0.6 percent to 1,485.53 points.
Britain's FTSE 100 trades 1.07 percent down at 7,416.22 points, while mid-cap FTSE 250 declined 0.5 percent to 19,785.29 points.
Germany's DAX eased 0.7 percent at 12,071.27 points; France's CAC 40 trades 0.4 percent lower at 5,125.02 points.
Commodities Recap
Crude oil prices rallied to multi-week high, boosted by a sustained decline in inventories and as Saudi Arabia prepared to cut crude supplies to its Asian customers. International benchmark Brent crude was trading 0.8 percent up at $32.24 per barrel by 1001 GMT, having hit a high of $53.30 earlier, its strongest since May 25. U.S. West Texas Intermediate was trading 0.5 percent up at $49.87 a barrel, after rising as high as $49.96, its strongest since Aug. 1.
Gold prices rose to a near two-month high earlier in the day, as rising tensions on the Korean peninsula continued to support safe-haven demand. Spot gold climbed 0.1 percent to $1,279.14 per ounce at 1006 GMT, having touched a high of $1,280.45 an ounce, it highest level since June 14. U.S. gold futures for December delivery rose 0.4 percent to $1,284.40 per ounce.
Treasuries Recap
The U.S. Treasuries traded flat ahead of the super-long 30-year bond auction and as investors wait to watch the country’s initial jobless claims, scheduled for release later today, besides, the FOMC member Dudley’s speech, due to be held today by 14:00GMT. The yield on the benchmark 10-year Treasury, slipped 1/2 basis point to 2.23 percent, the super-long 30-year bond yields hovered around 2.81 percent and the yield on short-term 2-year note traded flat at 1.34 percent.
The UK gilts remained steady Thursday after the country’s manufacturing production for the month of June, remained flat on the month, while industrial production during the period, rose more than what markets had initially anticipated. The yield on the benchmark 10-year gilts, hovered around 1.11 percent, the super-long 30-year bond yields slipped nearly 1 basis point to 1.75 percent and the yield on the short-term 2-year traded flat at 0.22 percent.
The Eurozone periphery bonds remained flat Thursday after investors side-lined from any major trading activity and as they await the release of benchmark Germany’s consumer price-led inflation index (CPI), scheduled to be released on August 11 by 06:00GMT. The benchmark German 10-year bond yields, which moves inversely to its price, hovered around 0.43 percent, the French 10-year bond yields nearly flat at 0.72 percent, Irish 10-year bond yields steady at 0.73 percent, Italian down nearly a basis point to 2.00 percent, Netherlands 10-year bond yields also flat at 0.55 percent, Portuguese equivalents fell nearly 1-1/2 basis points to 2.81 percent and the Spanish 10-year yields traded 1/2 basis point lower at 1.41 percent.
The Japanese government bonds gained Thursday after investors covered previous short positions on growing geo-political tension between the US and North Korea over a possible nuclear war ahead of a long weekend in Japan. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, traded tad lower at 0.06 percent, the yield on long-term 30-year note rose nearly 1 basis point to 0.86 percent and the yield on short-term 2-year traded flat at -0.10 percent.
The New Zealand bonds plunged at the time of closing Thursday after the Reserve Bank of New Zealand (RBNZ) left interest rates on hold, while clearly maintaining a neutral bias. Also, Governor Wheeler’s comments remained tad optimistic, adding value for riskier assets. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1 basis point to 2.83 percent, the yield on 7-year note also slid 1 basis point to 2.68 percent and the yield on short-term 2-year too ended 1 basis point lower at 2.01 percent.
The Australian bonds slid Thursday, tracking weakness in the U.S. Treasuries, after the overnight 10-year note auction was welcomed with weak demand. Markets will now look forward to the Reserve Bank of Australia (RBA) Governor Philip Lowe’s speech, scheduled to be held today by 23:30GMT for further direction in the bond market. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose nearly 1 basis point to 2.65 percent, the yield on 15-year note also climbed nearly 1 basis point to 2.96 percent while the yield on short-term 2-year traded flat at 1.81 percent.
