Market Roundup
- U.S. says more sanctions await if Turkey does not free pastor
- Trump hails U.S. dollar strength in tweet
- Japan's manufacturers most confident in 7 mths despite trade war worries -Reuters Tankan
- Pentagon says China military 'likely training for strikes' on U.S. targets
- Australia c.bank gov signals lower for longer rates
- Foreign CB US debt holdings -$9.9 bln to $3.432 tln Aug 15 week
- Treasuries -$8.9 bln to $3.060 tln, agencies +$213 mln to $300.6 bln
- Investors see opportunity in emerging market funds -Lipper
- U.S. muni bond funds post $452 mln in inflows -Lipper
Economic Data Ahead
- (0500 ET/0900 GMT) EZ Jul HICP Final MM, -0.3% f'cast, 0.1% prev
- (0500 ET/0900 GMT) EZ Jul HICP Final YY, 2.1% f'cast, 2.0% prev
Key Events Ahead
- No significant events scheduled
FX Beat
DXY: The dollar index eased after the White House Economic adviser Larry Kudlow warned Beijing not to underestimate President Donald Trump's resolve in pushing for changes in China’s economic policies. The greenback against a basket of currencies trades 0.05 percent down at 96.56, having touched a high of 96.98 on Wednesday, its highest since July 2017. FxWirePro's Hourly Dollar Strength Index stood at 44.92 (Neutral) by 0500 GMT.
EUR/USD: The euro consolidated within narrow ranges, amid concerns that financial turmoil in Turkey could negatively affect European banks. The European currency traded 0.05 percent up at 1.1380, having touched a low of 1.1301 on Wednesday, its lowest since July 2017. FxWirePro's Hourly Euro Strength Index stood at 33.16 (Neutral) by 0500 GMT. Investors’ attention will remain on EZ current account and consumer price index, ahead of the U.S. Michigan Consumer Sentiment index. Immediate resistance is located at 1.1427 (38.2% retracement of 1.1628 and 1.1301), a break above targets 1.1503 (50% retracement). On the downside, support is seen at 1.1300, a break below could drag it till 1.1260.
USD/JPY: The dollar held gains amid easing risk aversion and as investors awaited the next developments in the U.S.-China trade talks. The major was trading 0.05 percent up at 110.90, having hit a high of 111.43 on Wednesday, its highest since August 8. FxWirePro's Hourly Yen Strength Index stood at -51.49 (Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. Michigan Consumer Sentiment index. Immediate resistance is located at 111.37 (61.8% retracement of 112.15 and 110.11), a break above targets 111.87 (August 3 Low). On the downside, support is seen at 110.11 (August 13 Low), a break below could take it lower 109.68 (June 27 Low).
GBP/USD: Sterling rose, extending previous session gains, underpinned by yesterday’s stronger-than-expected UK retail sales figures. However, concerns that Britain will fail to secure an agreement before leaving the EU in March limited the upside. The major traded 0.1 percent up at 1.2724, having hit a low of 1.2661 on Wednesday; it’s lowest since June. 2017. FxWirePro's Hourly Sterling Strength Index stood at 16.15 (Neutral) 0500 GMT. Investors attention will remain on the U.S. fundamental drivers, amid a lack of data from the UK docket. Immediate resistance is located at 1.2782 (23.6% retracement of 1.3173 and 1.2661), a break above could take it near 1.2857 (38.2% retracement). On the downside, support is seen at 1.2660, a break below targets 1.2610. Against the euro, the pound was trading 0.1 percent up at 89.42 pence, having hit a high of 88.96 on Tuesday, it’s highest since August 6.
AUD/USD: The Australian dollar surged, extending gains from the prior session, despite Reserve Bank of Australia Governor Philip Lowe stating that interest rates will remain at record lows for a while as inflation remains subdued. The Aussie trades 0.1 percent up at 0.7267, having hit a low of 0.7202 on Wednesday; it’s lowest since Jan. 2017. FxWirePro's Hourly Aussie Strength Index stood at 44.69 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7180, a break below targets 0.7135. On the upside, resistance is located at 0.7298 (38.2% retracement of 0.7453 and 0.7202), a break above could take it near 0.7327 (50.0% retracement).
NZD/USD: The New Zealand dollar steadied near the 0.6600 handle after China and the United States agreed to hold a new round of trade talks on Aug. 21-22, helping to ease risk aversion in the broader markets. The Kiwi trades 0.1 percent up at 0.6602, having touched a low of 0.6544 on Wednesday, its lowest level since February 2016. FxWirePro's Hourly Kiwi Strength Index was at 53.47 (Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6629 (38.2% retracement of 0.6763 and 0.6544), a break above could take it near 0.6680 (61.8% retracement). On the downside, support is seen at 0.6515, a break below could drag it below 0.6484.
Equities Recap
Asian shares bounced back after China and the United States agreed to hold their first trade talks since June next week.
MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.6 percent.
Tokyo's Nikkei declined 0.4 percent to 22,274.52 points, Australia's S&P/ASX 200 index surged 0.2 percent to 6,339.90 points, and South Korea's KOSPI rose 0.3 percent to 2,248.28 points.
Shanghai composite index fell 0.4 percent to 2,693.47 points, while CSI300 index traded 0.6 percent down at 3,255.00 points.
Hong Kong’s Hang Seng traded 0.6 percent higher at 27,254.27 points. Taiwan shares added 0.05 percent to 10,690.96 points.
Commodities Recap
Crude oil prices consolidated within narrow ranges amid increasing concerns about slowing global economic growth that could hit demand. International benchmark Brent crude was trading 0.05 percent up at $71.36 per barrel by 0507 GMT, having hit a low of $70.28 on Wednesday, its lowest since April 10. U.S. West Texas Intermediate was trading 0.05 percent higher at $65.44 a barrel, after falling as low as $64.45 on Thursday, its lowest since June 21.
Gold prices steadied near a 19-month low as the dollar eased from a 13-month peak, but were on track to post its biggest weekly decline since May 2017. Spot gold rose 0.2 percent at $1,175.73 an ounce by 0513 GMT, having hit a low of $1160.07 on Thursday, its lowest since early January 2017. U.S. gold futures were unchanged at $1,184 an ounce.
Treasuries Recap
The Japanese government bonds remained tad higher on the last trading day of the week in a muted session that witnessed least investor interference amid a slew of geopolitical tensions surrounding China and Turkey with the United States. The yield on the benchmark 10-year JGB note, which moves inversely to its price, slipped 1/2 basis point to 0.095 percent, the yield on the long-term 30-year note also fell 1/2 basis point to 0.846 percent and the yield on short-term 2-year traded nearly 1-1/2 basis points lower at -0.127 percent.
The Australian government bonds jumped during early Asian session even as risk sentiments among investors rebounded, following expectations of a resumption in trade talks between the United States and China after a series of sour emotions between the two nations. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, fell nearly 1-1/2 basis points to 2.555 percent, the yield on the long-term 30-year bond also dipped-1/2 basis points to 3.048 percent and the yield on short-term 2-year remained tad lower at 2.003 percent.
The Canadian government bond prices were higher across a flatter yield curve, with the 10-year rising 12 Canadian cents to yield 2.255 percent. The 10-year yield touched 2.246 percent, its lowest intraday since July 25.
