Market Roundup
- BOJ adopts forward guidance on rates, makes framework flexible
- Japan Jun Jobs/applicants Ratio, 1.62, 1.60 f'cast, 1.60 prev
- Japan Jun Unemployment Rate, 2.4%, 2.3% f'cast, 2.2% prev
- Japan Jun Industrial Output Prelim MM, -2.1%, -0.4% f'cast, -0.2% prev
- China Jul NBS Manufacturing PMI, 51.2, 51.3, f'cast, 51.5 prev
- China Jul NBS Non-Mfg PMI, 54.00, 55.00 prev
- China Jul Composite PMI, 53.6, 54.4 prev
- Australia Jun Building Approvals, 6.4%, 0.0% f'cast, -3.2% prev
- New Zealand Jul NBNZ Business Outlook, -44.9%, -39.0% prev
- U.S. detects new activity at N. Korea factory that built ICBMs -source
Economic Data Ahead
- (0355 ET/0755 GMT) Germany Jul Unemployment Chg SA, -10k f'cast, -15k prev
- (0355 ET/0755 GMT) Germany Jul Unemployment Rate SA, 5.2% f'cast, 5.2% prev
- (0500 ET/0900 GMT) EZ Jul HICP Flash YY, 2.0% f'cast, 2.0% prev
- (0500 ET/0900 GMT) EZ Jul HICP ex F&E Flash YY, 1.2% f'cast, 1.2% prev
- (0500 ET/0900 GMT) EZ Q2 GDP Flash Prelim YY, 2.2% f'cast, 2.5% prev
- (0500 ET/0900 GMT) EZ Q2 GDP Flash Prelim QQ, 0.4% f'cast, 0.4% prev
- (0500 ET/0900 GMT) EZ Jun Unemployment Rate, 8.3% f'cast, 8.4% prev
Key Events Ahead
- No significant events scheduled
FX Beat
DXY: The dollar index tumbled as investors remained cautious ahead of the U.S. Federal Reserve policy meeting, where is it not expected to raise interest rates this week. The greenback against a basket of currencies trades 0.1 percent down at 94.27, having touched a low of 94.08 last week, its lowest since July 10. FxWirePro's Hourly Dollar Strength Index stood at 9.58 (Neutral) by 0600 GMT.
EUR/USD: The euro rose, extending gains for the third straight session, ahead of the Eurozone preliminary consumer price index, which is likely to show the cost of living rose 2 percent year-on-year in July, while the core CPI is seen rising 1 percent. The European currency traded 0.05 percent up at 1.1709, having touched a low of 1.1620 on Friday, its lowest since July 19. FxWirePro's Hourly Euro Strength Index stood at 45.01 (Neutral) by 0600 GMT. Investors’ attention will remain on the Eurozone prelim gross domestic product, flash consumer price index and the unemployment rate, ahead of the U.S. personal consumption expenditures. 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 rallied to a 1-week peak against the Japanese yen after the Bank of Japan took measures to make its massive stimulus programme more flexible and decided to maintain its short-term interest rate target at minus 0.1 percent. The BoJ pledged to guide 10-year government bond yields around zero percent by a 7-2 vote. The major was trading 0.2 percent up at 111.20, having hit a high of 111.45 earlier, its highest since July 24. FxWirePro's Hourly Yen Strength Index stood at -188.04 (Highly Bearish) by 0600 GMT. Investors’ will continue to track broad-based market sentiment, as U.S. personal consumption expenditures. Immediate resistance is located at 111.63 (10-DMA), a break above targets 112.00. On the downside, support is seen at 110.58 (July 26 low), a break below could take it lower 110.27 (July 4 Low).
GBP/USD: Sterling consolidated within narrow ranges, as investors remained on the sidelines ahead of the Bank of England policy meeting this week, where the central bank is widely expected to hike interest rake. The major traded flat at 1.3130, having hit a high of 1.3213 on Thursday; it’s highest since July 17. FxWirePro's Hourly Sterling Strength Index stood at -78.47 (Slightly Bullish) 0600 GMT. Immediate resistance is located at 1.3170 (21-DMA), a break above could take it near 1.3244 (July 12 High). On the downside, support is seen at 1.3082 (July 27 Low), a break below targets 1.3010 (July 18 Low). Against the euro, the pound was trading 0.1 percent down at 89.21 pence, having hit a low of 89.24 earlier, it’s lowest since July 24.
AUD/USD: The Australian dollar extended gains for the third straight session after data showed domestic private sector credit rose 0.3 percent in June from 0.2 percent in May, indicating that the private sector can afford large expenses, which can fuel economic growth. The Aussie trades 0.3 percent up at 0.7430, having hit a high of 0.7434 earlier; it’s highest since July 26. FxWirePro's Hourly Aussie Strength Index stood at 108.67 (Highly Bullish) by 0600 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7386 (July 30 Low), a break below targets 0.7340. On the upside, resistance is located at 0.7458 (July 11 High), a break above could take it near 0.7483 (July 10 High).
NZD/USD: The New Zealand dollar rose, extending previous session gains despite a survey showed business pessimism deepened to a decade-low in July. The Kiwi trades 0.1 up at 0.6828, having touched a high of 0.6850 last week, its highest level since July 10. FxWirePro's Hourly Kiwi Strength Index was at 5.64 (Neutral) by 0600 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 0.6788 (21-DMA), a break below could drag it below 0.6710.
Equities Recap
Asian shares consolidated within narrow ranges, while the dollar gained against the Japanese yen after BoJ pledged to guide 10-year government bond yields around zero percent and left interest rate unchanged.
MSCI's broadest index of Asia-Pacific shares outside Japan remained unchanged
Tokyo's Nikkei rallied 0.05 percent to 22,553.72 points, Australia's S&P/ASX 200 index surged 0.05 percent to 6,280.20 points, and South Korea's KOSPI gained 0.1 percent to 2,295.26 points.
Shanghai composite index rose 0.3 percent to 2,876.40 points, while CSI300 index traded 0.1 percent up at 3,517.66 points.
Hong Kong’s Hang Seng traded 0.5 percent lower at 28,600.40 points. Taiwan shares added 0.2 percent to 10,057.51 points.
Commodities Recap
Crude oil prices rose to an over 2-week peak amid oversupply concerns after a report showed OPEC's output in July rose to its highest for 2018. International benchmark Brent crude was trading 0.5 percent up at $75.28 per barrel by 0549 GMT, having hit a high of $75.58 earlier, its highest since July 13. 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 consolidated within narrow ranges, with investors in a wait-and-see mode ahead of the outcome of central bank monetary policy meetings. Spot gold was trading flat at $1,221.61 an ounce at 0612 GMT, having hit a high of $1,235.12 on Thursday, its highest since July 17. U.S. gold futures were 0.1 percent lower at $1,219.80 an ounce.
Treasuries Recap
The Japanese government bonds jumped after the Bank of Japan remained on hold at its monetary policy decision, unveiled early today but decided to remain flexible on interest rates, depending on the economic situation. The yield on Japan’s benchmark 10-year bond, which moves inversely to its price, slumped 1-1/2 basis points to 0.06 percent, the yield on the long-term 30-year plunged nearly 6 basis points to 0.77 percent and the yield on short-term 3-year remained close to 1/2 basis point lower at -0.10 percent.
The Australian government bonds slumped as investors cashed in profits ahead of major central banks’ monetary policy decisions scheduled this week. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, rose 4-1/2 basis points to 2.700 percent, the yield on the long-term 30-year Note also jumped 4 basis points to 3.173 percent and the yield on short-term 2-year traded 2 basis points higher at 2.042 percent.
The New Zealand bonds closed lower as investors wait to watch the country’s employment report for the second quarter of this year, scheduled to be released today by 22:45GMT. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, jumped 3 basis points to 2.79 percent, the yield on the long-term 20-year note also surged 3 basis points to 3.09 percent while the yield on short-term 2-year closed 1-1/2 basis points to 1.84 percent.
The Canadian government bond prices were mixed across a steeper yield curve in sympathy with U.S. Treasuries. The two-year rose 1 Canadian cent to yield 2.058 percent and the 10-year fell 6 Canadian cents to yield 2.303 percent. The 10-year yield touched its highest since June 13 at 2.336 percent.
