Markrt Roundup
• Trump again threatens to shut down U.S. government over immigration policy.
• US Jun Pending Sales Change MM, 0.9%, 0.0% forecast cast, -0.5% previous.
• US Jun Pending Homes Index, 106.9, 105.9 previous.
• US Jul Dallas Fed Mfg Bus Idx, 32.30, 36.50 previous.
• Trump says he's willing to talk to Iran without preconditions.
• Manafort is first ex-Trump aide to go on trial in Russia probe.
• Wary of China's rise, Pompeo announces U.S. initiatives in emerging Asia.
• Rising UK borrowing sets stage for Bank of England rate hike.
• Brazil June fiscal deficit slightly larger than expected.
• Global auto powers plotting response to Trump auto tariff threats.
• Zimbabwe begins counting votes after first post-Mugabe election.
Looking Ahead - Economic Data (GMT)
• Jul 30 23:30 Japan Jun Unemployment Rate, 2.3% forecast, 2.2% previous
• Jul 30 23:30 Japan Jun Jobs/Applicants Ratio, 1.60 forecast, 1.60 previous
• Jul 30 23:50 Japan Jun Industrial Output Prelim, -0.4% forecast, -0.2% previous
• Jul 30 22:45 New Zealand Jun Building Consents, 7.15 previous
• Jul 31 N/A JP BOJ rate decision, -0.10% forecast, -0.10% previous
• Jul 31 01:00 New Zealand Jul NBNZ Business Outlook, -39.0% previous
• Jul 31 01:00 China Jul NBS Mfg PMI, 51.3 forecast, 51.5 previous
• Jul 31 01:30 Australia Jun Building Approvals, 0.0% forecast, -3.2% previous
• Jul 31 01:30 Australia Jun Private Sector Credit, 0.2% previous
• Jul 31 01:30 Australia Jun Housing Credit, 0.4% previous
• Jul 31 01:45 Australia Jul Caixin Mfg PMI Final, 50.8 forecast, 51.0 previous
• Jul 31 05:00 Japan Jun Housing Starts YY, -2.4% forev, 1.3% previous
• Jul 31 05:00 Japan Jul Consumer Confidence Index, 43.7 previous
• Jul 31 05:00 Japan Jun Construction Orders, -18.7% previous
Looking Ahead - Events, Other Releases (GMT)
• 31 Jul N/A Fed’s FOMC starts two-day meeting on interest rates – Washington
Currency Summaries
EUR/USD is likely to find support at 1.1652 levels and currently trading at 1.1703 levels. The pair has made session high at 1.1717 and hit lows at 1.1690 levels. The dollar slipped against the euro on Monday ahead of several central bank monetary policy meetings this week, and a gauge of global equity markets fell, pulled down by a slide in U.S. technology heavyweights. Most major currencies stuck to narrow trading ranges ahead of central bank decisions. The Bank of Japan ends a two-day meeting on Tuesday, the U.S. Federal Reserve concludes its policy meeting on Wednesday, and the Bank of England is expected to raise interest rates on Thursday. The euro's gains follow a sharp decline last week after the European Central Bank reaffirmed that rates would stay low through the summer of 2019. Analysts said the rebound was largely because traders felt it had been oversold last week. German and Spanish inflation remained slightly above the European Central Bank's price stability target in July, preliminary data showed on Monday, supporting the ECB's cautious approach of winding down its monetary stimulus only gradually. The euro rose 0.46 percent against the dollar, as it recovered from its worst weekly performance against the greenback in six weeks.
GBP/USD is supported in the range of 1.3080 levels and currently trading at 1.3129 levels. It reached session high at 1.3152 and dropped to session low at 1.3119 levels. Sterling edged higher against the dollar on Monday but its modest gains reflected concern among investors about the currency's prospects before a widely anticipated Bank of England interest rate hike this week. The Bank of England (BoE) looks set to pass a post-financial crisis milestone on Thursday by finally raising interest rates above their emergency levels set more than nine years ago. Sterling has fallen for three consecutive weeks against the dollar. That is despite markets pricing in an 86 percent chance of a 25 basis point increase at Thursday's policy meeting. The pound on Monday climbed 0.2 percent higher at $1.3145. Against the euro, it traded broadly flat at 89.08 pence. With just over eight months left until Britain is due to leave the European Union, there is little clarity about how trade will flow, as Prime Minister Theresa May tries to strike a deal with the bloc. Markets are perturbed by the prospect of Britain crashing out of Europe without a trade deal and being left isolated. The U.S. dollar index, which measures the greenback against a basket of six currencies, was down 0.38 percent at 94.316, ahead of economic data and central bank monetary policy meetings this week.
USD/CAD is supported at 1.2945 levels and is trading at 1.3029 levels. It has made session high at 1.3076 and lows at 1.2995 levels. The Canadian dollar strengthened to a nearly seven-week high against its U.S. counterpart on Monday, boosted by higher oil prices and optimism that progress could be made in talks to revamp the NAFTA trade pact. Negotiations to update the North American Free Trade Agreement had stalled since June when the United States imposed tariffs on Mexican and Canadian steel and aluminum. But Mexico and the United States have agreed to step up talks in hopes of reaching an agreement on major issues by August. The price of oil, one of Canada's major exports, rose as traders kept the focus on supply disruptions and the possible hit to crude output from U.S. sanctions on Iran. U.S. crude oil futures settled 2.1 percent higher at $70.13 a barrel. Gains for the loonie came as the U.S. dollar lost ground against a basket of major currencies ahead of a policy decision by the Bank of Japan on Tuesday that could mark a change to its monetary easing policy. The Canadian dollar was last trading 0.2 percent higher at C$1.3029 to the greenback,. The currency, which rose 0.7 percent last week, touched its strongest level since June 14 at C$1.2995.
USD/JPY is supported around 110.77 levels and currently trading at 111.02 levels. It peaked to hit session high at 111.08 and made session lows at 110.88 levels. The U.S. dollar edged lower against the yen on Monday as investors braced for the possibility that the Bank of Japan will announce changes to its monetary easing policy on Tuesday at the conclusion of a two-day meeting. The BoJ will consider changes to its massive stimulus program to make it more sustainable, such as allowing greater swings in interest rates and widening its stock-buying selection, Reuters reported last week, citing people familiar with the central bank's thinking. The changes, although small, would be the first since 2016 and the latest sign Governor Haruhiko Kuroda is gradually walking away from his radical stimulus program deployed five years ago to shock the public out of a persisting deflationary mindset. Besides the BoJ, other central bank news is likely to be on investors' radar this week as the Federal Reserve concludes its meeting on Wednesday and the Bank of England is expected to raise interest rates on Thursday. The dollar index fell 0.38 percent, while the Japanese yen strengthened 0.05 percent versus the greenback at 111.00 per dollar
Equities Recap
European shares retreated from a six-week high on Monday as industrials and tech stocks slipped and disappointing earnings, including from brewer Heineken, dented investors' confidence.
The UK's benchmark FTSE 100 closed flat, FTSEurofirst 300 ended the day down by 0.26 percent, Germany's Dax ended down by 0.4 percent, and France’s CAC finished the down by 0.3 percent.
A broad sell-off of technology stocks pushed all three major U.S. stock indexes lower on Monday, with the Nasdaq Composite posting its third consecutive loss of more than 1 percent for the first time in three years just days after hitting a record high.
Dow Jones closed down by 0.56 percent, S&P 500 ended down 0.59 percent, Nasdaq finished the day up by 1.39 percent.
Treasuries Recap
U.S. Treasury bond yields on Monday afternoon were back to where they started the day as investors traded cautiously in the lead up to Tuesday's interest-rate policy decision from the Bank of Japan.
The benchmark 10-year government bond hit 2.99 percent on Monday morning, its highest since June 13, before falling to 2.98 percent in the afternoon, less than two basis points above its open. The two-year note yield was little changed from Friday at 2.67 percentage.
Commodities Recap
Gold steadied on Monday ahead of a meeting of the U.S. Federal Reserve this week that could yield clues to the future direction of U.S. interest rates and the dollar, key factors for precious metals prices.
Spot gold was steady at $1,223.14 per ounce by 1:34 p.m. EDT (1734 GMT), compared with a one-year low of $1,211.08 hit earlier this month.
U.S. gold futures for August delivery settled down $1.70, or 0.1 percent, at $1,221.30 per ounce.
Oil prices rose on Monday, as traders kept the focus on supply disruptions and the possible hit to crude output from U.S. sanctions on Iran.
October Brent crude futures were up 76 cents at $75.52 a barrel by 11:57 a.m. EDT (1557 GMT). The September contract expires on Tuesday. U.S. crude futures rose $1.51 at $70.21 a barrel.
