Market Roundup
- Iran dismisses angry Trump warning against threatening U.S.
- Japan's factory growth slowest in over 1-1/2 yrs, new orders weaken - flash PMI
- End "botched" Brexit, Labour's Corbyn calls on Britain to back his vision
- Reversing QE would not be hawkish signal, says BoE's Broadbent
Economic Data Ahead
- (0245 ET/0645 GMT) France Jul Business Climate Mfg, 110 f'cast, 110 prev
- (0245 ET/0645 GMT) France Jul Markit Mfg Flash PMI, 52.4 f'cast, 52.5 prev
- (0330 ET/0730 GMT) Germany Jul Markit Mfg Flash PMI, 55.5 f'cast, 55.9 prev
- (0400 ET/0800 GMT) EZ Jul Markit Mfg Flash PMI, 54.6 f'cast, 54.9 prev
- (0400 ET/0800 GMT) EZ Jul Markit Comp Flash PMI, 54.8 f'cast, 54.9 prev
- (0600 ET/1000 GMT) Great Britain Jul CBI Trends - Orders, 9 f'cast, 13 prev
Key Events Ahead
- N/A The EU Economic and Financial Affairs Council meeting in Brussels
FX Beat
DXY: The dollar index held firm as the U.S. Treasury yield surged despite criticism from President Donald Trump about the impact of the strength of the greenback and Federal Reserve interest rate rises on the economy. The greenback against a basket of currencies trades 0.1 percent up at 94.69, having touched a low of 94.21 on Monday, its lowest since July 11. FxWirePro's Hourly Dollar Strength Index stood at 6.04 (Neutral) by 0500 GMT.
EUR/USD: The euro eased, extending previous session losses, as the greenback gained after U.S. Treasury yields rose on expectations the Federal Reserve would persist with its rate hikes this year. The European currency traded 0.1 percent down at 1.1678, having touched a high of 1.1750 the day before, its highest since July 11. FxWirePro's Hourly Euro Strength Index stood at -44.23 (Neutral) by 0500 GMT. Investors’ attention will remain on the Eurozone prelim manufacturing and service PMI, ahead of the U.S. flash Markit manufacturing, service, and composite PMI. Immediate resistance is located at 1.1762 (June 10 High), a break above targets 1.1801 (June 13 High). On the downside, support is seen at 1.1649 (July 12 Low), a break below could drag it till 1.1600.
USD/JPY: The dollar steadied against the Japanese yen, as the benchmark 10-year U.S. Treasury yields surged to a 5-week high on expectations the Federal Reserve would further hike rate hikes this year. The major was trading flat at 111.30, having hit a low of 110.75 the day before, its lowest since July 9. FxWirePro's Hourly Yen Strength Index stood at 139.09 (Highly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, as U.S. flash Markit manufacturing, service and composite PMI. Immediate resistance is located at 112.10 (21-DMA), a break above targets 112.62 (July 20 High). On the downside, support is seen at 110.75 (July 24 low), a break below could take it lower 110.27 (July 4 Low).
GBP/USD: Sterling declined after a weekend poll showed Britons opposed Prime Minister Theresa May's recently unveiled Brexit plan and would instead support a new right-wing political party committed to a complete break from the bloc. The major traded 0.05 percent down at 1.3093, having hit a low of 1.2957 on Thursday; it’s lowest since Sept. 2017. FxWirePro's Hourly Sterling Strength Index stood at 63.69 (Bullish) 0500 GMT. Immediate resistance is located at 1.3180 (21-DMA), a break above could take it near 1.3244 (July 12 High). On the downside, support is seen at 1.2957 (July 19 Low), a break below targets 1.2910. Against the euro, the pound was trading 0.05 percent down at 89.23 pence, having hit a low of 89.57 on Friday, it’s lowest since March 7.
AUD/USD: The Australian dollar extended previous session losses, as traders wagered interest rates in Australia will stay at record lows for some time yet compared to the steady pace of tightening by the U.S. Federal Reserve. The Aussie trades 0.1 percent down at 0.7375, having hit a low of 0.7317 on Friday; it’s lowest since July 3. FxWirePro's Hourly Aussie Strength Index stood at -146.43 (Highly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7335 (June 29 Low), a break below targets 0.7300. On the upside, resistance is located at 0.7444 (July 6 High), a break above could take it near 0.7483 (July 10 High).
NZD/USD: The New Zealand dollar slumped as investors awaited domestic Trade Balance figures due later in the day. New Zealand's monthly Trade Balance is expected to contract from $294 million to $200 million for June, while market median forecasts are expecting a decline in both imports and exports. The Kiwi trades 0.1 percent down at 0.6777, having touched a high of 0.6824 the day before, its highest level since July 17. FxWirePro's Hourly Kiwi Strength Index was at -152.40 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6860, a break above could take it near 0.6900. On the downside, support is seen at 0.6736 (June 29 Low), a break below could drag it below 0.6700.
Equities Recap
Asian shares advanced, while the greenback steadied amid talk of central bank tightening and the risk of a robust reading on U.S. economic growth later in the week.
MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.2 percent.
Tokyo's Nikkei rallied 0.5 percent to 22,504.71 points, Australia's S&P/ASX 200 index surged 0.6 percent to 6,265.80 points, and South Korea's KOSPI advanced 0.5 percent to 2,281.92 points.
Shanghai composite index rose 1.4 percent to 2,899.29 points, while CSI300 index was trading 1.4 percent up at 3,575.67 points.
Hong Kong’s Hang Seng was trading 1.4 percent higher at 28,642.70 points. Taiwan shares added 0.4 percent to 10,995.39 points.
Commodities Recap
Crude oil prices consolidated within narrow ranges, as attention shifted to the risk of oversupply, with investors shrugging off escalating tensions between the United States and Iran. International benchmark Brent crude was trading 0.2 percent down at $72.76 per barrel by 0451 GMT, having hit a low of $71.19 on Wednesday, its lowest since April 17. U.S. West Texas Intermediate was trading 0.2 percent lower at $67.63 a barrel, after falling as low as $67.08 on Tuesday, its lowest since June 22.
Gold prices declined, extending previous session losses, as the dollar held firm and the U.S. Treasury yields rose, while investors' reaction to the dispute between the United States and Iran remained muted. Spot gold was 0.4 percent down at $1,219.26 an ounce at 0455 GMT, having hit a low of $1,211.26 on Thursday, its lowest since early July 2017. U.S. gold futures for August delivery were 0.3 percent lower at $1,221.90 an ounce.
Treasuries Recap
The Japanese government bonds remained mixed amid a muted trading session that witnessed data of little economic significance. The yield on Japan’s benchmark 10-year bond, which moves inversely to its price, hovered around 0.08 percent, the yield on the long-term 30-year surged nearly 2 basis points to 0.93 percent and the yield on short-term 2-year remained tad lower at -0.10 percent.
The Australian government bonds slumped tracking board weakness in the U.S. Treasuries as investors remained optimistic about world’s largest economy and Federal Reserve interest rate hikes. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, rose 4-1/2 basis points to 2.724 percent, the yield on the long-term 30-year Note also jumped 4-1/2 basis points to 3.201 percent and the yield on short-term 2-year up 1 basis point to 2.075 percent.
The New Zealand bonds closed Tuesday’s session on a mixed tone as investors are keeping a close eye on the country’s employment report for the second quarter of this year, besides the trade balance for the month of June, both scheduled to be released today by 22:45GMT respectively. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, rose 1-1/2 basis points to 2.85 percent, the yield on the long-term 20-year note slipped 1 basis point to 3.14 percent while the yield on short-term 2-year closed flat at 1.85 percent.
