Market Roundup
•Markets calm but sentiment remains fragile
• Yen gains as stunned investors seek safety
• China’s offshore yuan edges lower again
• U.S. 10-yr yields hit lowest levels since Oct 2016
• Brazil June Retail Sales (YoY) -0.3%,1.3%forecast, 1.0% previous
• Brazil June Retail Sales (MoM) -0.1%,0.2%forecast, -0.1% previous
• Canada Jul Ivey PMI NSA 51.2, 53.7 previous
• Canada Jul Ivey Jul PMI 54.2, 53.0 forecast, 52.4 previous
• US Consumer Credit -14.60B, 16.40B forecast ,17.79B previous
Looking Ahead - Economic Data (GMT)
• 23:45 Japan Adjusted Current Account, 1.76T forecast, 1.31T previous
• 23:45 Japan Jul Bank Lending (YoY) 2.4% forecast, 2.3% previous
• 23:45 Japan Jul Current Account 1.140T forecast, 1.595T previous
• 23:45 Foreign Bonds Buying -162.2B previous
• 23:45 Foreign Investments in Japanese Stocks 37.5B previous
• 03:00 China Exports (YoY) -2.2% forecast, -1.3% previous
• 03:00 China Exports (YoY) -7.6% forecast, -7.3% % previous
• 03:00 China Trade Balance 43.20B forecast, 50.98B previous
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD: The euro edged higher against the U.S. dollar on Wednesday, as investors remained cautious on risk after the U.S. branded China a currency manipulator, escalating their trade war. Euro gained, after Washington designated Beijing a currency manipulator. Analysts say the escalation increases pressure on the U.S. Federal Reserve to ease monetary policy. The Fed cut U.S. interest rates last week as insurance against the effects of “simmering” trade tensions. Interest rate futures now show traders see nearly a 40% chance the Fed will cut rates half a percentage point next month. The euro was up 0.06 percent at $1.1204. An index that tracks the dollar versus a basket of six major currencies was down 0.03 at 97.62. Immediate resistance can be seen at 1.1258 (Ichimoku Cloud Bottom), an upside break can trigger rise towards 1.1443 (Ichimoku Cloud Top).On the downside, immediate support is seen at 1.1160 (5 DMA), a break below could take the pair towards 1.1142 (11 DMA).
GBP/USD: Sterling declined against dollar on Wednesday, as investors further priced in the probability of Britain leaving the European Union without a deal in place.Boris Johnson, who took over as prime minister two weeks ago, has said he would take Britain out of the EU on Oct. 31, with or without a divorce agreement to smooth ties with the bloc. Most investors have been forced to recalculate their assumptions of a no-deal Brexit. Odds on betting websites currently suggest that the probability of Britain leaving the EU this year without a deal is roughly 60%. The pound was slightly lower at $1.2162 on Wednesday, not far from the 31-month low of $1.2080 it reached at the beginning of the month. Immediate resistance can be seen at 1.2174 (9 DMA), an upside break can trigger rise towards 1.2203 (10 DMA).On the downside, immediate support is seen at 1.2060 (Lower Bollinger Band), a break below could take the pair towards 1.2000 (Psychological level).
USD/CAD:The Canadian dollar extended its losses, falling to a near seven-week low against its U.S. counterpart on Wednesday as escalating global trade tensions worried investors. A year-long U.S.-China trade war has boiled over as Washington accused Beijing this week of manipulating its currency after China let the yuan drop to its lowest point in more than a decade.Canada exports many commodities, including oil, so its economy could be hurt by an escalation of trade tensions. Meanwhile, the price of oil, one of Canada’s major exports, extended recent heavy losses as rising global trade tensions weighed on the outlook for global energy demand. At (1933 GMT), the Canadian dollar was trading 0.5% lower at 1.3312 to the greenback. The currency hit its lowest intraday level since June 19 at 1.3344.Immediate resistance can be seen at 1.3348 (Higher Bollinger Band), an upside break can trigger rise towards 1.3400 (Psychological level).On the downside, immediate support is seen at 1.3240 (5 DMA), a break below could take the pair towards 1.3196 (11 DMA).
USD/JPY: The dollar weakened against the Japanese yen on Wednesday, as investors unwound long bets on greenback after New Zealand’s central bank cut interest rates by more than expected, feeding concerns about the weak global economy. The escalating U.S.-China trade war also added to economic headwinds and hurt business sentiment. Last week, U.S. President Donald Trump said he would impose more tariffs on Chinese goods. On Monday, China responded by allowing its currency to weaken past 7 per dollar for the first time since 2008, and Washington labeled Beijing a currency manipulator. The Japanese yen gained 0.66% to 105.74 against the greenback, nearing an eight-month high of 105.51 reached on Tuesday. Strong resistance can be seen at 106.45 (5 DMA), an upside break can trigger rise towards 107.09 (Aug 6th high).On the downside, immediate support is seen at 105.52 (Lower Bollinger Band), a break below could take the pair towards 105.00 (Psychological level).
Equities Recap
European shares rose on Wednesday, breaking a three-day losing streak on euphoria over a multi-billion dollar German chemical deal but gave up some gains after Wall Street opened sharply lower on recession worries.
UK's benchmark FTSE 100 closed up by 0.38 percent, Germany's Dax ended up by 0.71 percent, France’s CAC finished the day up by 0.61 percent.
U.S. stocks ended mixed on Wednesday, as investors reeling from rising trade tensions fled riskier assets for perceived safer havens, leading the bond market to price in a slide into recession.
Dow Jones closed down by 0.09 percent, S&P 500 ended up by 0.08 percent, Nasdaq finished the down up by 0.38 percent.
Treasuries Recap
U.S. Treasury yields tumbled on Wednesday, with 30-year yields approaching record lows, on growing fears over a global economic downturn and bets the Federal Reserve would have to pick up its pace of interest rate cuts to counter recession risks.
The yields on benchmark 10-year notes were 2.80 basis points lower at 1.711%. They had fallen earlier to 1.595%, the lowest since October 2016.
The prices on 30-year or long bonds at one point were up as much as 3 points, for a sixth day of gains.
Thirty-year yields were down 3.60 basis points at 2.234% after it hit 2.123% earlier, which was not far from an all-time low of 2.089% set in July 2016.
Commodities Recap
Gold soared more than 2% on Wednesday to breach the $1,500 ceiling for the first time in over six years as investors rushed to safe havens, spooked by a host of uncertainties including U.S.-China trade and a slowing global economy.
Spot gold gained 2.4% at $1,508.81 per ounce at 12:33 p.m. EDT (1633) GMT, having touched $1,510, its highest since April 2013.U.S. gold futures climbed 2.5% to $1,520.70.
Oil prices tumbled more than 4.5% on Wednesday to a seven-month low, extending recent heavy losses following a surprise build in U.S. crude stockpiles and fears that demand will shrink due to Washington’s escalating trade war with Beijing.
Brent crude futures settled down $2.71, or 4.6%, at $56.23 a barrel, the lowest close since early January. Prices have lost 24.5% since their 2019 peak in April.
U.S. West Texas Intermediate (WTI) crude futures finished $2.54, or 4.7%, lower at $51.09.
