Market Roundup
- BOJ should dial back stimulus before inflation hits 2 pct - ex-BOJ dep gov Iwata
- UK Jul BRC like-for-like retail sales +0.9% y/y, June +1.2%
- Total sales +1.4% vs +2.0%, gains on higher food prices, non-food sales
- China says willing to pay the price for new N. Korea sanctions
- China Jul EXIM, +7.2%, +11% vs 11.3%, 17.2%
- China Jul Trade balance, +46.74 bln vs 42.77 bln
- Australia Jul Business conditions, 15 vs 15
- Australia Jul Business confidence, 12 vs 9
- Japan June current account surplus Y934.6 bln, Y814.0 bln eyed, May Y165.4 bln
- MOF July flows – Japanese buy net Y4.463 trln for-bonds, Y1.1635 trln stocks
- Net Y2.6457 tln short-term Japanese bills sold, some re-invested, repatriated
- Foreign investors bought net Y591.3 bln Japanese stocks, Y184.7 bln JGBs
- Japan Jul outstanding bank loans +3.3% year, rise steady, to Y516.254 tln
Economic Data Ahead
- (0245 ET/0645 GMT) France June Current Account
- (0245 ET/0645 GMT) France June Trade Balance
- (0245 ET/0645 GMT) France Jun Exports
- (0245 ET/0645 GMT) France Jun Imports
Key Events Ahead
- (0500 ET/0900 GMT) Austria E1.1 bln for 6/30 yr auctions
- (0530 ET/0930 GMT) UK Stg1.0 bln for 9YI auction
- (0535 ET/0935 GMT) Belgium E2.1-2.5 bln for 3-month auction
- (0630 ET/1030 GMT) ESM E1.5 bln for 3-month auction
FX Beat
DXY: The dollar eased versus most of its major peers as investors remained concerned over the prospects of the U.S. Federal Reserve interest rate hike this year. The greenback against a basket of currencies traded 0.1 percent down at 93.31, having touched a high of 93.77 on Friday, it’s highest since July 28. FxWirePro's Hourly Dollar Strength Index stood at 54.60 (Bullish) by 0500 GMT.
EUR/USD: The euro rose, extending previous session gains, as the greenback eased following comments from St. Louis Fed President James Bullard and Minneapolis Fed President Neel Kashkari on Monday. The European currency traded 0.2 percent up at 1.1814, having touched a high of 1.1909 on Wednesday, its highest since Jan 5, 2015. FxWirePro's Hourly Euro Strength Index stood at -8.17 (Neutral) by 0400 GMT. Investors’ attention will remain on series of data from the Eurozone economies, ahead of the U.S. NFIB Business Optimism index and IBD/TIPP Economic Optimism Index. Immediate resistance is located at 1.1900, a break above targets 1.1930. On the downside, support is seen at 1.1720 (61.8% retracement 1.1370 and 1.1909), a break below could drag it near 1.1638 (50.0% retracement 1.1370 and 1.1909).
USD/JPY: The dollar declined after rising for two consecutive sessions, as investors pondered the timing of the U.S. central bank's next tightening steps. The major was trading 0.1 percent down at 110.56, having hit a low of 109.84 on Friday, its lowest since Jun 15. FxWirePro's Hourly Yen Strength Index stood at 21.55 (Neutral) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of the U.S. NFIB Business Optimism index and IBD/TIPP Economic Optimism Index for further momentum. Immediate resistance is located at 111.03 (50.0% retracement of 112.19 and 109.84), a break above targets 111.31 (61.8% retracement of 112.19 and 109.84). On the downside, support is seen at 110.21 (July 31 Low), a break below could take it near 109.63 (June 12 Low).
GBP/USD: Sterling edged up, halting its 3-day losing streak, supported by the view that the BoE would hike rates by the end of this year after policymakers at the Bank made a series of hawkish comments. The major traded 0.1 percent up at 1.3049, having hit a low of 1.3014 the prior day, its lowest since July 26. FxWirePro's Hourly Sterling Strength Index stood at -65.09 (Bearish) by 0400 GMT. Investors’ focus will remain on U.S. fundamental drivers, amid a lack of economic data from the UK docket. Immediate resistance is located at 1.3100, a break above could take it near 1.3126 (5-DMA). On the downside, support is seen at 1.3014 (23.6% retracement of 1.2816 and 1.3268), a break below targets 1.2932 (July 20 Low). Against the euro, the pound was trading down at 90.50 pence, having hit a near 10-month low of 90.60 the prior session.
AUD/USD: The Australian dollar gained after slumping for the five consecutive sessions, following upbeat domestic indicators. The economy's business conditions soared to a 9-1/2 year high in July and profits stayed strong. However, weaker-than-expected trade data from China limited the upside in the major. The Aussie trades 0.1 percent up at 0.7918, having hit a low of 0.7891 on Friday, it’s weakest since July 26. FxWirePro's Hourly Aussie Strength Index stood at -14.85 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7891 (August 8 Low), a break below targets 0.7850. On the upside, resistance is located at 0.7962 (10-DMA), a break above could take it near 0.8042.
NZD/USD: The New Zealand dollar eased to near three-week lows as investors expect the Reserve Bank of New Zealand to leave cash rates at a record low 1.75 percent at its policy review this week and reinforce the need for low rates. Moreover, weaker-than-expected Chinese trade data which showed exports rose 7.2 percent from a year earlier and imports grew 11 percent also undermined the major. The Kiwi trades 0.1 percent down at 0.7357, having touched a low of 0.7348 the prior day, its lowest level since July 20. FxWirePro's Hourly Kiwi Strength Index was at -77.19 (Slightly Bearish) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7395 (21-DMA), a break above could take it near 0.7456 (10-DMA). On the downside, support is seen at 0.7338 (38.2% retracement of 0.7201 and 0.7558), a break below could drag it till 0.7300.
Equities Recap
Asian shares traded in a volatile market as disappointing Chinese trade data raised doubts over the upbeat outlook on global growth, while the greenback eased as investors awaited the U.S inflation data.
MSCI's broadest index of Asia-Pacific shares outside Japan reversed early gains.
Tokyo's Nikkei fell 0.3 percent to 19,993.27 points, Australia's S&P/ASX 200 index slumped 0.6 percent to 5,739.10 points and South Korea's KOSPI gained 0.1 percent to 2,400.17 points.
Shanghai composite index rose 0.1 percent to 3,282.71 points, while CSI300 index was trading 0.2 percent up at 3,734.29 points.
Hong Kong’s Hang Seng was trading 0.4 percent higher at 27,800.43 points. Taiwan shares shed 0.1 percent to 10,568.97 points.
Commodities Recap
Crude oil prices declined, extending previous session losses following a recovery in output at Libya's largest oil field and on doubts about OPEC-led production cuts. International benchmark Brent crude was trading 0.2 percent down at $52.14 per barrel by 0429 GMT, having hit a high of $52.90 on Tuesday, its strongest since May 25. U.S. West Texas Intermediate was trading 0.1 percent lower at $49.21 a barrel, after rising as high as $50.40 on Tuesday, its strongest since May 25.
Gold prices steadied, drifting away from a two-week lows hit on Friday, with the U.S. dollar supported by hopes of another Fed interest rate hike this year following robust U.S. employment data. Spot gold edged up 0.2 percent to $1,260.23 per ounce at 0434 GMT, having touched a low of $1,254.08 on Friday, its lowest since July 26. U.S. gold futures for December delivery were nearly flat at $1,264.20 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.258 percent higher by 0.001 bps, while 5-year yield was 0.004 bps up at 1.815 percent.
The Japanese government bonds edged down, taking cues from an overnight performance of the U.S. Treasuries in choppy trading on Monday after Friday's stronger-than-expected U.S. non-farm payrolls report, with no real influences ahead of government bond and corporate supply this week. The yield on the benchmark 10-year Treasury note rose 1/2 basis point to 0.07 percent, the yield on long-term 30-year note hovered around at 0.88 percent and the yield on short-term 2-year too traded flat at -0.10 percent.
The Australian bonds continued to be on the downside as investors moved away from safe-haven assets despite sharp losses witnessed in the equity market, slightly tracking U.S. Treasuries. The yield on the benchmark 10-year Treasury note rose 1 basis point to 2.64 percent, the yield on the 15-year note climbed 1/2 basis point to 2.94 percent and the yield on short-term 2-year also traded 1 basis point higher at 1.80 percent.
