Market Roundup
- BOJ pushes back inflation target for 6th time, keeps policy steady
- Cuts FY2017/18 inflation forecast to +1.1%
- Japan's Jun exports +9.7% y/y vs forecast +9.5%; last 14.9%
- Imports +15.5% y/y vs forecast +14.6%; last 17.8%
- China's regulation pledge could signal shift from high growth targets -Fitch
- U.S., China fail to agree on trade issues, casting doubt on other issues
- Australia unemployment rate steadied at 5.6% as 14,000 new jobs were added
- Australia businesses report widespread upturn in Q2-survey
- Asia growth outlook brightens on strong exports - ADB
- ECB to lay groundwork for autumn policy shift, avoiding market tantrum
- Republicans meet late into night as Trump demands new healthcare plan
Economic Data Ahead
- (0430 ET/0830 GMT) Great Britain Jun Retail Sales, 0.4% m/m, 2.5% y/y eyed; last -1.2%, 0.9%
- (1000 ET/1400 GMT) Eurozone Jul Consumer Confid. Flash, -1.1 eyed, last -1.3
Key Events Ahead
- (0230 ET/0630 GMT) BOJ Gov Kuroda holds a news conf.
- (0930 ET/1330 GMT) ECB's Draghi holds a press conf.
- N/A ECB Governing Council meeting in Frankfurt
- (0430 ET/0830 GMT) Spain E2.0/1.5/1.0 bln for 4/5/10 yr auctions
- (0450 ET/0850 GMT) France E2.5/4.0/1.0 bln for 3/5/5 yr auctions
- (0550 ET/0950 GMT) France E0.6/0.5/0.6 bln for 10/11/30 YI auctions
FX Beat
DXY: The dollar rose across the board as investors shrugged off soft U.S. inflation and political gloom. The greenback against a basket of currencies traded 0.1 percent up at 94.91, having touched a low of 94.48 on Tuesday, it’s lowest since Sept. 08. FxWirePro's Hourly Dollar Strength Index stood at -125.97 (Highly Bearish) by 0500 GMT.
EUR/USD: The euro consolidated above the 1.1500 handle as investors remained cautious ahead of the European Central Bank policy meeting, where it is expected to keep its policy on hold. The European currency traded 0.05 percent up at 1.1509, having touched a high of 1.1583 on Tuesday, its highest since May 3, 2016. FxWirePro's Hourly Euro Strength Index stood at -44.72 (Neutral) by 0400 GMT. Investors’ attention will remain on Eurozone current account and ECB decision, ahead of the U.S. unemployment benefits claims figures. Immediate resistance is located at 1.1550, a break above targets 1.1580. On the downside, support is seen at 1.1480 (61.8% retracement 1.1377 and 1.1583), a break below could drag it near 1.1448 (50.0% retrace).
USD/JPY: The dollar rebounded from a 3-week low touched in the previous after the Bank of Japan held key rates unchanged, revised its inflation forecasts lower and scaled back the timing for hitting the 2 percent inflation target. The major traded 0.1 percent up at 112.08, having hit a low of 111.55 the day before, its lowest since Jun 27. FxWirePro's Hourly Yen Strength Index stood at 6.34 (Neutral) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of the U.S. unemployment benefits claims figures. Immediate resistance is located at 112.47 (5-DMA), a break above targets 112.68 (78.6% retracement of 114.49 and 111.55). On the downside, support is seen at 111.46 (June 27 Low), a break below could take it near 111.00.
GBP/USD: Sterling steadied after slumping for three consecutive sessions, as markets awaited the UK retail sales release, which is expected to rise 0.4 percent in June rebounding from a 1.2 percent drop recorded in the month before. Retail sales excluding fuel are likely to gain 0.5 percent compared to 1.65 decline seen in May. Sterling traded flat at 1.3021, having hit a high of 1.3125 on Tuesday, its highest since Sept. 16. FxWirePro's Hourly Sterling Strength Index stood at -69.03 (Bearish) by 0400 GMT. Investors’ focus will remain on the UK retail sales, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.3120 (Sept. 22 High), a break above could take it near 1.3200. On the downside, support is seen at 1.3007 (61.8% retrace of 1.2816 and 1.3125), a break below targets 1.2970 (50.0% retrace). Against the euro, the pound traded up at 88.38 pence, having hit a 1-week low of 88.99 on Monday.
AUD/USD: The Australian dollar eased after rising to a fresh 2-year high earlier on the back of stronger-than expected domestic jobs report and mixed NAB business confidence data. The Aussie trades 0.2 percent lower at 0.7937, having hit a high of 0.7987 earlier, it’s highest since May 19, 2015. FxWirePro's Hourly Aussie Strength Index stood at 162.91 (Highly Bullish) by 0500 GMT. Investors will continue to digest upbeat domestic Jobs report, ahead of U.S. economic releases. Immediate support is seen at 0.7900 (78.6% retracement of 0.7571 and 0.7987), a break below targets 0.7829 (61.8% retrace). On the upside, resistance is located at 0.8000, a break above could take it near 0.8050.
NZD/USD: The New Zealand dollar declined after rallying to an 8-month peak the day before as the U.S. dollar attempted a minor recovery across the board. The Kiwi trades 0.2 percent down at 0.7344, having touched a high of 0.7387 on Wednesday, its highest level since Nov. 9. FxWirePro's Hourly Kiwi Strength Index was at -12.22 (Neutral) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7372 (July 18 High), a break above could take it near 0.7390. On the downside, support is seen at 0.7338 (5-DMA), a break below could drag it till 0.7260 (June 30 Low).
Equities Recap
Asian shares rallied to a near-decade peak, boosted by a surge in global stocks to new records on robust U.S. corporate earnings, while the dollar rose against the yen after the Bank of Japan pushed back the timing for hitting 2 percent CPI target.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.15 percent, hovering near its highest level since December 2007.
Tokyo's Nikkei advanced 0.7 percent to 20,153.21 points, Australia's S&P/ASX 200 index rallied 0.5 percent to 5,763.40 points and South Korea's KOSPI dropped 0.4 percent to 2,438.59 points.
Shanghai composite index rose 0.4 percent to 3,244.22 points, while CSI300 index was trading 0.4 percent up at 3,745.86 points.
Hong Kong’s Hang Seng was trading 0.4 percent higher at 26,770.95 points. Taiwan shares shed 0.06 percent to 10,499.36 points.
Commodities Recap
Crude oil prices steadied after rising to a 2-week high in the previous session, supported by falling U.S. fuel inventories but concerns about high supplies from producer cartel OPEC weighed on prices. International benchmark Brent crude was trading 0.4 percent up at $49.66 per barrel by 0424 GMT, having hit a high of $49.78 the day before, its strongest since Jul. 5. U.S. West Texas Intermediate traded 0.06 percent up at $47.27 a barrel, after rising as high as $47.33 earlier, its strongest since Jun 7.
Gold prices declined, extending previous session losses, as the dollar steadied while markets waited for clues on the future of key stimulus programmes in upcoming European Central Bank meeting. Spot gold was trading 0.1 percent down at $1,238.39 per ounce at 0429 GMT, having touched a high of $1,244.44 on Tuesday, its highest since June 30. U.S. gold futures for August delivery fell 0.19 percent to $1,239.60 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.267 percent higher by 0.001 bps, while 5-year yield was 0.002 up at 1.822 percent.
The Japanese government lost ground after the Bank of Japan (BoJ) delivered along the line of market expectations, keeping its monetary policy unchanged at the two-day meeting that concluded early today. The benchmark 10-year bond yield remained tad higher at 0.07 percent, the long-term 30-year bond yields rose nearly 1 basis point to 0.87 percent and the yield on the short-term 2-year note traded flat at -0.10 percent.
The Australian bonds slumped as investors moved away from safe-haven assets after witnessing a solid result in the country’s employment sector, with rising job addition and a stable rate of unemployment. The yield on the benchmark 10-year Treasury note jumped 2 basis points to 2.76 percent, the yield on the 15-year note climbed 2-1/2 basis points to 3.06 percent and the yield on short-term 2-year traded nearly 2 basis points higher at 1.94 percent.
The New Zealand bonds ended on the downside as investor remain sidelined in any major trading activity due to lack of any economically significant data and tracking some strength in the U.S. Treasuries. At the time of closing, the yield on the benchmark 10-year bond jumped 2-1/2 basis points to 2.98 percent, the yield on 7-year note climbed 2 basis points to 2.85 percent while the yield on short-term 2-year note ended 1 basis point lower at 1.96 percent.
The Canadian government bond prices were lower across the yield curve, with the two-year down 6 Canadian cents to yield 1.228 percent and the 10-year falling 30 Canadian cents to yield 1.894 percent. The gap between Canada's 2-year yield and its U.S. equivalent narrowed by 3.1 basis points to a spread of -13.2 basis points, its narrowest since Aug. 18.
