Market Roundup
- China June official manufacturing PMI 51.7 vs May 51.2
- China June official services PMI 54.9 vs May 54.5
- China needs to eliminate barriers to investment, create jobs -premier
- Japan May industrial output -3.3% m/m, -3.2% eyed, +2.8%/-0.1% eyed in Jun/Jul
- May nationwide core CPI +0.4% m/m, June Tokyo core unch, +0.4% and +0.2% eyed
- May household spending +0.7% m/m but -0.1% y/y, +0.2% and -0.6% eyed
- Household spending posts 15th straight month of y/y declines, longest ever
- May unemployment 3.1%, 2.8% eyed, jobs-applicants ratio 1.49, best since 2/’74
- Japan fund managers trim equities, raise bond holdings in June -poll
- Trump to demand G20 action on steel; closely-watched report delayed
- Foreign CB US debt holdings +18 bln to 3.3 tln June 21 week
- Treasuries +19 bln to 3.0 tln, Debt -1.7 bln to 260.52 bln
- Mutual fund investors sour on stocks, bonds in latest week -Lipper
Economic Data Ahead
- (0245 ET/0645 GMT) France Jun CPI (EU Norm) Prelim, 0.80% y/y eyed, last 0.90%
- (0245 ET/0645 GMT) France May Consumer Spending, 0.50% eyed, last 0.50%
- (0400 ET/0800 GMT) Germany Jun Unemployment Rate SA, 5.70% eyed, last 5.70%
- (0430 ET/0830 GMT) Great Britain GDP Q1, 0.20% q/q, 2.0% y/y eyed; last 0.20%, 2.00%
- (0430 ET/0830 GMT) Great Britain Q1 Current Account, -17.25 bln eyed, last -12.09 bln
- (0500 ET/0900 GMT) Eurozone Jun Inflation, Flash, 1.20% y/y eyed, last 1.40%
- (0500 ET/0900 GMT) Eurozone Jun Infl Ex Food & Enr Flash, 1.00% eyed, last 1.00%
Key Events Ahead
- N/A Austrian National Bank gov speaks at economic conf.(Final Day)
- N/A ECB's Coeure speaks at conf. in Brussels
- (0500 ET/0900 GMT) Italy 7YF E1.500 bln auction
- (0500 ET/0900 GMT) Italy E2.50/4.0 bln, 2/5Y auctions
- (0730 ET/1130 GMT) ECB's Lautenschlager speaks in Berlin
FX Beat
DXY: The dollar eases against the Japanese yen as investors’ doubts that the Fed would be able to raise interest rates again this year. The greenback against a basket of currencies traded 0.1 percent up at 95.64, having touched a low of 95.47 earlier, it’s lowest since Oct. 3. FxWirePro's Hourly Dollar Strength Index stood at -93.50 (Slightly Bearish) by 0500 GMT.
EUR/USD: The euro extended gains for the fourth straight session to hit a fresh 14-year high on growing expectations of more hawkish monetary policies in Europe. The European currency traded 0.05 percent up at 1.1441, having touched a high of 1.1445 earlier, its highest since May 5. FxWirePro's Hourly Euro Strength Index stood at 81.06 (Slightly Bullish) by 0400 GMT. Investors’ attention will remain on German jobs data and Eurozone flash CPI estimate, ahead of the U.S. core PCE price, personal spending and consumer sentiment data for further clues on the pair. Immediate resistance is located at 1.1454, a break above targets 1.1500. On the downside, support is seen at 1.1377 (78.6% retrace of 1.1119 and 1.1445), a break below could drag it near 1.1321 (61.8% retrace).
USD/JPY: The dollar declined after rising to a 6-week high in the previous session as investors raised doubts about another U.S. interest rate hike this year. The major traded 0.2 percent down at 111.89, having hit a high of 112.92 on Thursday day, its highest since May 17. FxWirePro's Hourly Yen Strength Index stood at -54.54 (Bearish) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of the US Core PCE index, personal spending and revised consumer sentiment data. Immediate resistance is located at 112.50, a break above targets 113.00. On the downside, support is seen at 111.64 (10-DMA), a break below could take it near 111.35 (61.8% retrace of 108.80 and 112.94).
GBP/USD: Sterling rallied to a fresh 5-week high above the 1.3000 handle as comments from Bank of England Governor Mark Carney revived expectations for interest rate hikes in coming months. The major traded 0.1 percent up at 1.3017, having hit a high of 1.3029 earlier, its highest since May 23. FxWirePro's Hourly Sterling Strength Index stood at 89.36 (Slightly Bullish) by 0400 GMT. Investors’ focus will remain on the UK first quarter GDP reading, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.3047 (May 18 High), a break above could take it near 1.3087 (Sept 23 High). On the downside, support is seen at 1.2936 (78.6% retracement of 1.2589 and 1.3031), a break below targets 1.2862 (61.8% retrace). Against the euro, the pound traded 0.1 percent up at 87.86 pence, having hit a 7-month low of 88.79 on Thursday.
AUD/USD: The Australian dollar advanced to a more than three-month peak above the 0.7700 handle after a survey showed a solid manufacturing growth in China. The world's second biggest economy's manufacturing activity expanded to 51.7 in June, its eleventh straight month of gains and the fastest pace since March. The Aussie trades 0.1 percent up at 0.7693, having hit a high of 0.7712 earlier, it’s strongest since Mar. 21. FxWirePro's Hourly Aussie Strength Index stood at -0.35 (Neutral) by 0500 GMT. Investors will continue to digest upbeat Chinese data, ahead of U.S. economic releases. Immediate support is seen at 0.7673 (78.6% retracement of 0.7535 and 0.7712), a break below targets 0.7634 (61.8% retracement). On the upside, resistance is located at 0.7720, a break above could take it near 0.7749 (Mar 21 High).
NZD/USD: The New Zealand dollar gained following the release of stronger China manufacturing PMI data. The Chinese manufacturing PMI came at 51.7 for the month of June against expectations of 51.0 and previous reading of 51.2, while non-manufacturing PMI for June was 54.9 versus 54.5 last. The Kiwi trades 0.4 percent up at 0.7328, having touched a peak of 0.7344 on Tuesday, its strongest level since Feb. 2. FxWirePro's Hourly Kiwi Strength Index was at -76.66 (Bearish) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7350, a break above could take it near 0.7370. On the downside, support is seen at 0.7288 (5-DMA), a break below could drag it till 0.7263 (10-DMA).
Equities Recap
Asian shares declined following steep losses on Wall Street, while the euro rallied to a fresh 14-year high as speeches by European Central Bank President Mario Draghi convinced markets the central bank was preparing to start reducing its aggressive monetary stimulus later this year.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.7 percent.
Tokyo's Nikkei edged down 1.1 percent to 20,000.26 points, Australia's S&P/ASX 200 index fell 1.6 percent to 5,727.00 points and South Korea's KOSPI declined 0.3 percent to 2,388.20 points.
Shanghai composite index eased 0.01 percent to 3,187.56 points, while CSI300 index was trading 0.2 percent up at 3,663.40 points.
Hong Kong’s Hang Seng was trading 0.7 percent lower at 25,790.24 points. Taiwan shares shed 0.3 percent to 10,395.26 points.
Commodities Recap
Crude oil prices rose, extending gains for the seventh consecutive session and were on track for their biggest weekly gain since mid-May, as a decline in U.S. output underpinned prices. International benchmark Brent crude was trading 0.8 percent up at $47.88 per barrel by 0420 GMT, having hit a high of $48.01 earlier, its strongest since Jun. 14. U.S. West Texas Intermediate traded 0.8 percent up at $45.17 a barrel, after rising as high as $45.42 the prior day, its strongest since Jun 14.
Gold prices steadied, supported by an easing dollar and declining global equities, despite comments from global central banks suggesting monetary tightening in Europe. Spot gold was 0.1 percent up at $1,246.95 per ounce at 0431 GMT, having hit a low of $1,235.26 hit on Monday, its lowest since May 16 and was set to end about 1 percent lower for the week. U.S. gold futures for August delivery fell 0.1 percent to $1,245.10 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.287 percent higher by 0.023 bps, while 5-year yield was 0.017 up at 1.866 percent.
The Australian bond yields remained one of the biggest movers in the global debt market overnight, marking a substantial increase through the week after the world’s money market witnessed a massive sell-off, following hawkish comments from various central bank governors. The yield on the benchmark 10-year Treasury note jumped 10 basis points to 2.60 percent, the yield on 15-year note also surged 10 basis points to 2.96 percent and the yield on short-term 2-year traded nearly 4-1/2 basis points higher at 1.75 percent.
The New Zealand bonds suffered a sharp plunge at the time of closing Friday, tracking footprints left behind by the global debt market in a massive reaction to the hawkish comments made by the European Central Bank (ECB) Governor Mario Draghi earlier in the week. At the time of closing, the yield on the benchmark 10-year bond jumped 9-1/2 basis points to 2.99 percent, the yield on 7-year note surged 9 basis points to 2.88 percent and the yield on short-term 2-year note ended 6 basis points higher at 2.09 percent.
The Canadian government bond prices were lower across a steeper yield curve in sympathy with U.S. Treasuries and German Bunds. The 10-year declined 73 Canadian cents to yield 1.707 percent. The 10-year yield touched its highest intraday since March 21 at 1.715 percent, while the gap between it and its U.S. equivalent narrowed by 3.8 basis points to a spread of -56.1 basis points, its narrowest since Oct. 19, as Canadian government bonds underperformed.
