Market Roundup
- BOJ policymakers at logger-heads addressing weak prices, rising stimulus cost
- Apple breaches $1 trillion stock market valuation
- Trump national security team says Russia behind effort to meddle in U.S. elections
- China Jul Caixin Services PMI, 52.8, 53.9 prev
- Australia Jun Retail Sales MM, 0.4%, 0.3% f'cast, 0.4% prev
- Foreign U.S. bond holdings at Fed post biggest rise in 2 years
- Investors pull $1 billion from U.S. Treasury funds -Lipper
Economic Ahead
- (0350 ET/0750 GMT) France Jul Markit Serv PMI, 55.3 f'cast, 55.3 prev
- (0350 ET/0750 GMT) France Jul Markit Comp PMI, 54.5 f'cast, 54.5 prev
- (0355 ET/0755 GMT) Germany Jul Markit Services PMI, 54.4 f'cast, 54.4 prev
- (0355 ET/0755 GMT) Germany Jul Markit Comp Final PMI, 55.2 f'cast, 55.2 prev
- (0400 ET/0800 GMT) EZ Jul Markit Serv Final PMI, 54.4 f'cast, 54.4 prev
- (0400 ET/0800 GMT) EZ Jul Markit Comp Final PMI, 54.3 f'cast, 54.3 prev
- (0430 ET/0830 GMT) Great Britain Jul Markit/CIPS Serv PMI, 54.7 f'cast, 55.1 prev
- (0500 ET/0900 GMT) EZ Jun Retail Sales MM, 0.4% f'cast, 0.0% prev
- (0500 ET/0900 GMT) EZ Jun Retail Sales YY, 1.4% f'cast, 1.4% prev
Key Events Ahead
- No significant events scheduled.
FX Beat
DXY: The dollar index surged to a 2-week peak as the trade war between the U.S. and China intensified after U.S. President Donald Trump raised pressure on China by proposing a higher 25 percent tariff on $200 billion worth of Chinese imports. The greenback against a basket of currencies trades 0.05 percent up at 95.19, having touched a high of 95.21 earlier, its highest since July 20. FxWirePro's Hourly Dollar Strength Index stood at 53.03 (Bullish) by 0400 GMT.
EUR/USD: The euro steadied after falling to a fresh 2-week low as the greenback held gains ahead of U.S. nonfarm payrolls, which are expected rise by 190,000 jobs last month after increasing 213,000 in June. The European currency traded 0.1 percent up at 1.1593, having touched a low of 1.1581, its lowest since July 19. FxWirePro's Hourly Euro Strength Index stood at -78.27 (Slightly Bearish) by 0400 GMT. Investors’ attention will remain on the Eurozone retail sales, ahead of the U.S. non-farm payrolls, unemployment rate, trade balance and service PMI by both Markit and ISM. Immediate resistance is located at 1.1633 (June 21 High), a break above targets 1.1690 (June 29 High). On the downside, support is seen at 1.1558 (June 29 Low), a break below could drag it till 1.1508 (June 21 Low)..
USD/JPY: The dollar held gains after falling for two consecutive sessions, as investors awaited the July U.S. jobs report due later in the day, which will provide clues on the health of the economy and possible hints about the pace of Federal Reserve interest rate hikes. The major was trading 0.05 percent up at 111.69, having hit a high of 112.15 on Tuesday, its highest since July 20. FxWirePro's Hourly Yen Strength Index stood at -15.37 (Neutral) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. non-farm payrolls, unemployment rate, trade balance and service PMI by both Markit and ISM. Immediate resistance is located at 112.17 (July 11 High), a break above targets 112.56 (July 16 High). On the downside, support is seen at 111.34 (10-DMA), a break below could take it lower 111.00.
GBP/USD: Sterling edged up after falling to a 2-week low earlier in the day as BoE Governor Mark Carney signalled that the central bank was in no hurry to raise the interest rate further as Britain headed for Brexit next year with no clear plan for leaving the European Union. The major traded 0.1 percent up at 1.3123, having hit a low of 1.3006 earlier; it’s lowest since July 17. FxWirePro's Hourly Sterling Strength Index stood at 19.61 (Neutral) 0400 GMT. Investors’ attention will remain on the UK Markit service PMI, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.3083 (July 19 High), a break above could take it near 1.3116 (10-DMA). On the downside, support is seen at 1.2957 (July 19 Low), a break below targets 1.2925. Against the euro, the pound was trading flat at 89.00 pence, having hit a high of 88.55 on Thursday, it’s lowest since July 17.
AUD/USD: The Australian dollar rose, reversing some of its previous session losses, after data showed domestic retail sales for the June quarter jumped 1.2 percent in inflation-adjusted terms, indicating consumer spending helped the economy maintain momentum. The Aussie trades 0.1 percent up at 0.7365, having hit a low of 0.7355 the day before; it’s lowest since July 20. FxWirePro's Hourly Aussie Strength Index stood at -4.88 (Neutral) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7343 (July 18 Low), a break below targets 0.7300. On the upside, resistance is located at 0.7404 (10-DMA), a break above could take it near 0.7444 (July 6 High).
NZD/USD: The New Zealand dollar slumped to a 2-week low as worries over escalating trade tensions between the United States and China weighed on investor sentiment. The Kiwi trades 0.2 percent down at 0.6728, having touched a low of 0.6724 earlier, its lowest level since July 20. FxWirePro's Hourly Kiwi Strength Index was at -138.10 (Highly Bearish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6759 (July 3 High), a break above could take it near 0.6797 (July 5 High). On the downside, support is seen at 0.6713 (June 19 Low), a break below could drag it below 0.6687 (July 3 Low).
Equities Recap
Asian shares nudged up following a tech-led rise on Wall Street, however, the upside appeared limited as the latest exchange of trade threats between Beijing and Washington renewed risk-off market sentiment.
MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.05 percent.
Tokyo's Nikkei gained 0.05 percent to 22,525.18 points, Australia's S&P/ASX 200 index eased 0.1 percent to 6,234.80 points, and South Korea's KOSPI surged 0.7 percent to 2,287.63 points.
Shanghai composite index fell 0.4 percent to 2,755.86 points, while CSI300 index traded 1.1 percent down at 3,334.28 points.
Hong Kong’s Hang Seng traded 0.05 percent lower at 27,711.86 points. Taiwan shares added 0.7 percent to 11,012.43 points.
Commodities Recap
Crude oil prices steadied after falling to multi-week lows in the prior session, supported by expectations of a decline in U.S. crude inventories, however, the upside appeared limited amid prospects of rising global supplies. International benchmark Brent crude was trading 0.1 percent up at $73.40 per barrel by 0459 GMT, having hit a low of $71.81 on Thursday, its lowest since July 19. U.S. West Texas Intermediate was trading 0.1 percent higher at $69.04 a barrel, after falling as low as $66.95 on Thursday, its lowest since June 22.
Gold prices rebounded from a 1-year low touched earlier in the session amid US-China trade war tensions. Spot gold was 0.05 percent up at $1,208.05 an ounce at 0503 GMT, after hitting its lowest since July 2017 at $1,206.39 and was down more than 1 percent for the week. U.S. gold futures were, however, 0.2 percent lower at $1,217.20 an ounce on Friday.
Treasuries Recap
The Japanese benchmark 10-year JGB yield declined after the Bank of Japan bought bonds in its scheduled market operation. The yield on the benchmark 10-year JGB note, which moves inversely to its price, fell 1 basis point to 0.112 percent, and the yield on short-term 2-year also moved 1 basis point lower to -0.107 percent, while the yield on the long-term 30-year note rose 1-1/2 basis points to 0.847 percent.
The Australian government bonds remained flat on the last trading day of the week after the country’s retail sales for the month of June remained unchanged, albeit topping market expectations. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, hovered around 2.73 percent, the yield on the long-term 30-year Note remained flat at 3.20 percent and the yield on short-term 2-year remained tad lower at 2.05 percent.
The Canadian government bond prices were mixed across the yield curve, with the two-year down 0.5 Canadian cent to yield 2.091 percent and the 10-year rising 4 Canadian cents to yield 2.365 percent. The gap between the two-year yield and its U.S. counterpart narrowed by 2.1 basis points to a spread of 57.4 basis points in favor of the U.S. bond, its narrowest since June 8.
