- IMF warns Japan to step up reforms, avoid over-reliance on weak JPY -FT, RTRS.
- MoF flow data week-ended July 18 - Japanese buy net Y399.3 bln foreign stocks, Y576.3 bln bonds, sell Y36.4 bln bills; foreign investors buy net Y622.6 bln Japanese stocks, sell Y176.6 bln bonds, buy trln bills.
- Japan July flash mfg PMI 51.4, June 50.1, new orders and output up, new export orders still in expansion but off, China cited.
- Japan Mitsubishi Motors to end US production, focus more on Asia, won't move output to Japan even with weaker JPY - Nikkei, Reuters.
- Japan Meiji-Yasuda Life to buy US Stancorp for about $5 bln.
- China Cabinet to expand CNY band both ways.
- China July Caixin mfg PMI 48.2, 15-mo low, June final 49.4, output 16-mo low.
- Foreign CB US debt holdings -$27.059 bln to $3.326 trln July 22 week, Treasury holdings -$26.369 bln to $2.983 trln, agencies -$810 mln to $298.534 bln.
- NY Fed - Swaps with foreign CBs $659 mln July 22 week, BoJ $1 mln, ECB rest.
- US-based commodities, precious metal funds bleed $779 mln.
- US June business borrowing for new equipment +4% m/m at $9.5 bln, volume +34%.
- S&P - Could lower Australia rating if budget doesn't improve broadly.
- NZ June trade balance NZ$60 mln deficit, NZ$100 mln surplus eyed, annual balance NZ$2.85 bln deficit, NZ$2.7 bln eyed.
Economic Data Ahead
================
- (0300 ET/0700 GMT) France July PMI manufacturing flash, 50.7 eyed; last 50.7.
- (0300 ET/0700 GMT) France July PMI services flash, 53.8 eyed; last 54.1.
- (0300 ET/0700 GMT) France July PMI composite flash; last 53.3.
- (0330 ET/0730 GMT) Germany July PMI manufacturing flash, 51.9 eyed; last 51.9.
- (0330 ET/0730 GMT) Germany July PMI services flash, 53.9 eyed; last 53.8.
- (0330 ET/0730 GMT) Germany July PMI composite flash; last 53.7.
- (0330 ET/0730 GMT) Sweden June trade balance; last SEK2.3 bln surplus.
- (0400 ET/0800 GMT) Euro zone July PMI manufacturing flash, 52.5 eyed; last 52.5.
- (0400 ET/0800 GMT) Euro zone July PMI services flash, 54.2 eyed; last 54.4.
- (0400 ET/0800 GMT) Euro zone July PMI composite flash, 54.0 eyed; last 54.2.
- (0400 ET/0800 GMT) Italy June wage inflation; last unchanged m/m, +1.1% y/y.
- (0900 ET/1300 GMT) Belgium July leading indicator index, -4.0 eyed; last -3.9.
- (0945 ET/1345 GMT) US July Markit PMI manufacturing PMI - flash, 53.6 eyed; last 53.6.
- (1000 ET/1400 GMT) US June new home sales, 550k units AR eyed; last 550k, +2.2% m/m.
Key Events Ahead
============
N/A UK DMO GBP0.5/1.5/2.0 bln 1/3/6-month treasury bill auctions.
FX Recap
======
EUR/USD is supported below 1.1000 levels and currently trading at 1.0969 levels. It has made intraday high at 1.0992 and low at 1.0964 levels. Yesterday the euro managed to keep most of its morning gains despite the greenback receiving powerful support in the form of another cheerful update from the US labour market. Today market will eye macroeconomic data release from Euro zone for the further directions. Initial support is seen around at 1.0789 and resistance at 1.1083 levels.
USD/JPY is supported below 124.00 levels and posted a high of 124.03 levels. It has made intraday low at 123.83 and currently trading at 123.87 levels. Today Japan released Flash manufacturing PMI data with positive numbers at 51.4 vs 50.1 previous release. Later today market will eye on US manufacturing PMI data and new home sales data for the further momentum. Near term resistance is seen at 124.57 and support is seen at 120.63 levels.
GBP/USD is supported around $1.5500 levels. It made an intraday high at 1.5522 and low at 1.5499 levels. Pair is currently trading at 1.5507 levels. Sterling fell below $1.55 levels after UK retail sales fell 0.2 pct unexpectedly in June having traded at $1.5656 beforehand. Today UK will release BBA mortgage approvals data. Initial support is seen at 1.5413 and resistance is seen around 1.5734 levels.
NZDUSD is supported below 0.6600 levels and trading at 0.6587 levels and made intraday low at 0.6561 and high at 0.6623 levels. The New Zealand dollar is the biggest mover, jumping 1.5 percent after the RBNZ disappointed those who bet on a larger cut in interest rates and toned down its call for more falls for the kiwi. The Official Cash Rate (OCR) was lowered from 3.25% to 3.0% on Thursday, and the central bank explicitly stated that further rate cuts were likely. New Zealand's monthly merchandise trade balance fell into deficit for the first time since December last month. The monthly trade balance went from a revised surplus of $371 million in May to a shortfall of $60 million last month, according to Statistics New Zealand data released Friday, coming in worse than analysts' predicted $100 million surplus. Initial support is seen at 0.6465 and resistance at 0.6722 levels.
AUD/USD is supported around 0.7300 levels and trading at 0.7298 levels. It has made intraday high at 0.7360 levels and low at 0.7268 levels. Pair has been hit by another wave of selling pressure, resulting on a fresh multiyear trend low at 0.7270, next area of support as per Jan 2009 high. The big miss in China's Flash Caixin PMI, lowest in 15 months, has reinforced the bearish sentiment in the Aussie, with the smart money continuing to push the rate lower, which coupled with stop loss orders being triggered sub 0.73, has allowed sellers to capitalize on this latest Chinese disappointment. Initial support is seen at 0.7225 and resistance at 0.7647 levels.
Equity Recap
=========
Asian equities slipped on Friday after a survey showed China's manufacturing activity hit 15-month lows, raising concerns for the region's exports as the economy struggles to hold a broad downturn.
MSCI's broadest index of Asia-Pacific shares outside Japan fell about 1 percent in early trading, on track for a weekly loss of more than 2 percent.
Australia's S&P/ASX 200 index closed down 0.44 pct at 5,565.60 points. Tokyo's Nikkei average ended down 0.67 pct at 20,544.53 points.
Shanghai Composite Index was trading up 0.75 pct, while Hang Seng stock index dropped 0.92 pct.
Treasury Recap
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The benchmark U.S. 10-year yield stood at 2.29 percent in Asian trading, compared to its U.S. close of 2.278 percent on Thursday with some analysts expecting 10-year yields to rise to 3 percent by the year end.
JGB prices remain mostly unchanged from yesterday. The results of today's monthly JPY500bn liquidity enhancement auction for old 10-yr to 20-yr JGBs were mixed, and had limited impact on JGBs. Stronger US TSY overnight and weaker Tokyo stocks today also have little impact on JGBs across the curve. Yields on the current 5-yr JGBs are unchanged from yesterday at 0.10%, while the 10s are also flat at 0.41%, vs 0.405% (-0.5bp) earlier. In the super-long zone, the new 20s are flat at 0.16%, vs 1.155% (-0.5bp) earlier, while the 30s are also unchanged at 1.39%, vs 1.395% (+0.5bp) earlier.
New Zealand government bond yields were down as much as 8 bps at the long end of the curve. While Australian government bond futures rose as the poor Chinese data added to the case for more policy easing. The 3-year bond contract added 8 ticks to 98.100, while the 10-year contract rose 6 ticks to 97.1650.
Commodity Recap
=================
Oil prices inched higher on Friday after closing at their lowest in months in the previous session as oversupply and disappointing Chinese factory activity dragged on the market. U.S. crude for September delivery traded 34 cents higher at $48.79 a barrel by 0345 GMT, after closing down 74 cents at $48.45, the lowest settlement since March 31.
Gold fell more than 1 percent to its lowest since 2010 on Friday, on course for its biggest weekly loss in nine months, as strong U.S. jobs data helped deepen this week's rout and fuelled fears the metal has some way to fall yet. Spot gold was down as much as 1.2 percent to 1,077 an ounce, its lowest since February 2010. It was down 0.6 percent at $1,084 at 0322 GMT. U.S. gold for August delivery fell 1 percent to $1,083.60 an ounce after hitting a trough of $1,072.30.
