Market Roundup
- China says U.S. solar tariffs violate trade rules, lodges WTO complaint
- China to ensure achievement of annual growth target despite trade war - state planner
- China's new home price growth hits 2-year high as small cities boom
- China c.bank injects 383 bln yuan through 1-year MLF, rate unchanged - statement
- Turkey raises tariffs on some U.S. imports, including cars, alcohol - Official Gazette
- Musk bid for Tesla: no formal offer, no firm deals with advisers
- Trump ally Kobach wins Republican governor primary in Kansas
- Australia Q2 Wage Price Index YY, 2.1%, 2.1% f'cast, 2.1% prev
- Australia Aug Consumer Sentiment, -2.3%, 3.9% prev
Economic Data Ahead
- (0430 ET/0830 GMT) Great Britain Jul Core CPI YY, 1.9% f'cast, 1.9% prev
- (0430 ET/0830 GMT) Great Britain Jul CPI YY, 2.5% f'cast, 2.4% prev
- (0430 ET/0830 GMT) Great Britain Jul PPI Output Prices YY NSA, 3.0% f'cast, 3.1% prev
- (0430 ET/0830 GMT) Great Britain Jul PPI Core Output YY NSA, 2.1% f'cast, 2.1% prev
Key Events Ahead
- No significant events scheduled.
FX Beat
DXY: The dollar index rallied to multi-month peaks as U.S. import prices remain unchanged in July as a rally in the cost of fuels was offset by weak prices elsewhere, indicating that a strong dollar was keeping imported inflation in check. The greenback against a basket of currencies trades 0.05 percent up at 96.71, having touched a high of 96.87 earlier, its highest since July 2017. FxWirePro's Hourly Dollar Strength Index stood at 64.60 (Bullish) by 0500 GMT.
EUR/USD: The euro slumped to a fresh 13-month low, weighed down by concerns about the European banks' exposure to Turkey’s lira. The European currency traded 0.2 percent down at 1.1326, having touched a low of 1.1316, its lowest since July 2017. FxWirePro's Hourly Euro Strength Index stood at -96.82 (Slightly Bearish) by 0500 GMT. Investors’ attention will remain on geopolitical developments, ahead of the U.S. retail sales, industrial production, capacity utilization, prelim Q2 unit labor cost and business inventories. Immediate resistance is located at 1.1391 (23.6% retracement of 1.1628 and 1.1316), a break above targets 1.1473 (50% retracement). On the downside, support is seen at 1.1300, a break below could drag it till 1.1260.
USD/JPY: The dollar rallied to a 1-week peak ahead of U.S. retail sales (excluding autos), which are expected to come in at 0.3 percent in July, compared to a previous reading of 0.4 percent. Moreover, improving investor risk sentiment undermined the safe-haven Japanese yen. The major was trading 0.2 percent up at 111.29, having hit a high of 111.43 earlier, its highest since August 8. FxWirePro's Hourly Yen Strength Index stood at -14.76 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. retail sales, industrial production, capacity utilization, prelim Q2 unit labor cost and business inventories. Immediate resistance is located at 111.71 (78.6% retracement of 112.15 and 110.11), a break above targets 112.15 (August 1 Low). On the downside, support is seen at 110.94 (5-DMA), a break below could take it lower 110.58 (August 1 Low).
GBP/USD: Sterling tumbled to a 13-month low, weighed down by a strong dollar and concerns about the state of negotiations with the European Union over a trade deal for when Britain leaves the bloc. The major traded 0.1 percent down at 1.2709, having hit a low of 1.2691; it’s lowest since June. 2017. FxWirePro's Hourly Sterling Strength Index stood at -31.40 (Neutral) 0500 GMT. Investors attention will remain on the UK producer price index, consumer price index and retail price index, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.2830 (23.6% retracement of 1.3173 and 1.2722), a break above could take it near 1.2948 (50% retracement). On the downside, support is seen at 1.2675, a break below targets 1.2640. Against the euro, the pound was trading 0.05 percent down at 89.20 pence, having hit a high of 88.96 on Tuesday, it’s highest since August 6.
AUD/USD: The Australian dollar tumbled to a fresh 1-1/2 month low after data showed domestic wage growth hovered near record lows last quarter, while a gauge of consumer sentiment deteriorated in August. The Aussie trades 0.3 percent down at 0.7222, having hit a low of 0.7202 earlier; it’s lowest since Jan. 2017. FxWirePro's Hourly Aussie Strength Index stood at -69.64 (Bearish) 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 0.7261 (23.6% retracement of 0.7453 and 0.7202), a break above could take it near 0.7298 (38.2% retracement).
NZD/USD: The New Zealand dollar plunged to multi-month lows as weakness in emerging markets undermined the outlook for global growth. The Kiwi trades 0.3 percent down at 0.6551, having touched a low of 0.6545 earlier, its lowest level since February 2016. FxWirePro's Hourly Kiwi Strength Index was at -29.38 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6598 (23.6% retracement of 0.6763 and 0.6545), a break above could take it near 0.6629 (38.2% retracement). On the downside, support is seen at 0.6515, a break below could drag it below 0.6484.
Equities Recap
Asian shares plunged to a 1-year low as bearish Chinese markets and Turkey's financial crisis worsened investor sentiment.
MSCI's broadest index of Asia-Pacific shares outside Japan slumped more than 1 percent to its lowest since August 2017.
Tokyo's Nikkei declined 0.7 percent to 22,204.22 points, Australia's S&P/ASX 200 index surged 0.5 percent to 6,329.00 points.
Shanghai composite index fell 1.9 percent to 2,727.67 points, while CSI300 index traded 2.3 percent down at 3,295.05 points.
Hong Kong’s Hang Seng traded 1.8 percent lower at 27,277.80 points. Taiwan shares shed 0.9 percent to 10,716.75 points.
Commodities Recap
Crude oil prices edged up after falling in the previous session on the back of a report that showed U.S. crude inventories increased, while concerns over economic outlook stoked expectations of lower fuel demand. International benchmark Brent crude was trading 0.2 percent up at $72.27 per barrel by 0537 GMT, having hit a low of $71.02 on Monday, its lowest since April 18. U.S. West Texas Intermediate was trading 0.2 percent higher at $66.74 a barrel, after falling as low as $65.74 on Monday, its lowest since June 21.
Gold prices slumped to their lowest since January 2017 as the dollar rallied to an over 13-month peak on demand emerging from concerns about Turkey's financial turmoil. Spot gold was 0.5 percent down at $1,188.25 an ounce at 0539 GMT, having hit a low of $1188.05, its lowest since January 26, 2017. U.S. gold futures were down 0.47 percent at $1,195 an ounce.
Treasuries Recap
The Japanese government bonds remained flat in a muted trading session as investors wait to watch the country’s trade balance data for the month of July, scheduled to be released today by 23:50GMT. The yield on the benchmark 10-year JGB note, which moves inversely to its price, slipped 1/2 basis point to 0.100 percent, the yield on the long-term 30-year note hovered around 0.847 percent and the yield on short-term 2-year traded tad lower at -0.115 percent.
The Australian government bonds surged during Asian session as political woes from Turkey lingered on despite measures by the Central Bank of Turkey (CBRT) to control the free fall in the lira. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, slumped nearly 2-1/2 basis points to 2.562 percent, the yield on the long-term 30-year Note fell 2 basis points to 3.054 percent and the yield on short-term 2-year traded tad lower at 2.001 percent.
