Market Roundup
- Japan May regular pay +0.9% y/y, best gain since ’00, total cash earnings +0.7%
- Real wages +0.1% y/y, first annual gain in five months, overtime pay +0.7%
- Japan end-June foreign reserves $1.2498 trln, end-May $1.2518 trln.
- BOJ to buy unlimited amounts of JGB 10s at 0.110%, ups 5-10 buys to Y500 bln
- Revised Tibor rates to better reflect market forces -Nikkei
- Fed's Fischer: U.S. Govt should boost 'dismal' productivity growth
- Foreign CB US debt holdings +$8.2 bln to $3.3 tln June 28 wk
- Treasuries +$7.8 bln to $3.0 tln, Agencies +$238 mln to $260.8 bln
- Swap with foreign CBs $3.07 bln latest week, $3.06 bln with ECB -NY Fed
- Canada RBC up fixed-term mortgages 20 bps –Reuters
- Non-domestic stock funds favored over U.S. equities in latest wk -Lipper
- U.S. job growth seen accelerating; unemployment rate steady
- Trump pledges to act 'very strongly' on North Korea missile threat
- Bitcoin can be an asset but not currency -PBOC
Economic Data Ahead
- (0245 ET/0645 GMT) France May Ind Output, +0.50% eyed, last -0.50%
- (0300 ET/0700 GMT) Sweden May Foreign Trade Bal, 341.40 mln eyed, last 253.40 mln
- (0300 ET/0700 GMT) Spain May Ind Output Cal Adj, 2.00% eyed, last 0.70%
- (0430 ET/0830 GMT) Great Britain May Goods Trade Bal, -10.80 bln eyed, last -10.38 bln
- (0430 ET/0830 GMT) Great Britain May Goods Trade Bal, Non-EU, -2.50 bln eyed, last -2.07 bln
- (0430 ET/0830 GMT) Great Britain May Mfg Output, 0.50% m/m, 1.0% y/y eyed; last 0.20%, 0.0%
- (0430 ET/0830 GMT) Great Britain May Ind Output, 0.40% m/m, 0.20% y/y eyed; last 0.20%, -0.80%
Key Events Ahead
- (0300 ET/0700 GMT) Donald Tusk and EU's Juncker hold joint news conf. at G20 summit
- (0355 ET/0755 GMT) ECB's Yves Mersch to speak at conf. in Ohrid, Macedonia
- (0400 ET/0800 GMT) Ukraine's PM Groysman, Finmin and cbank dep gov to speak at London conf.
- N/A EU Informal Meeting of mins of justice and home affairs at Tallinn (final day)
- N/A France's yearly business conf. in Aix (to July 9)
- N/A G20 International Summit in Hamburg, Germany (to July 8)
FX Beat
DXY: The dollar rose versus its Japanese counterpart after the Bank of Japan increased its purchases of Japanese government bonds in a move aimed at restricting a rise in yields. The greenback against a basket of currencies traded 0.1 percent up at 95.95, having touched a high of 96.51 on Wednesday, it’s highest since Jun. 28. FxWirePro's Hourly Dollar Strength Index stood at -9.71 (Neutral) by 0500 GMT.
EUR/USD: The euro slightly eased after rallying above the 1.1400 handle in the previous session on hawkish ECB minutes. The European Central Bank’s latest meeting minutes showed policymakers are open to a further step towards reducing their monetary stimulus but are likely to move slowly due to market turmoil. The European currency traded down at 1.14179, having touched a low of 1.1312 on Wednesday, its lowest since Jun 28. FxWirePro's Hourly Euro Strength Index stood at 88.70 (Slightly Bullish) by 0400 GMT. Investors’ attention will remain on German industrial production figures, ahead of the U.S. Non-farm payroll, unemployment rate and Fed monetary policy report for further clues on the pair. Immediate resistance is located at 1.1445 (June 30 High), a break above targets 1.1500. On the downside, support is seen at 1.1380 (5-DMA), a break below could drag it near 1.1343 (10-DMA).
USD/JPY: The dollar rose to a fresh 7-week high near the 114.00 handle after the Bank of Japan offered to buy an unlimited amount of 10-year JGBs and also increased its buying of five- to ten-year JGBs through an auction to 500 billion yen from 450 billion yen. The major traded 0.4 percent up at 113.64, having hit a high of 113.83 earlier, its highest since May 16. FxWirePro's Hourly Yen Strength Index stood at -35.44 (Neutral) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of the U.S. Non-farm payroll, unemployment rate, and Fed monetary policy report. Immediate resistance is located at 114.00, a break above targets 114.30. On the downside, support is seen at 113.09 (5-DMA), a break below could take it near 112.54 (10-DMA).
GBP/USD: Sterling consolidated within a narrow range as investors remained cautious ahead of Bank of England Governor Carney's speech. The major traded flat at 1.2970, having rebounded from a low of 1.2893 touched on Wednesday, its lowest since Jun. 28. FxWirePro's Hourly Sterling Strength Index stood at 26.56 (Neutral) by 0400 GMT. Investors’ focus will remain on the UK trade balance report, industrial and manufacturing production figures, and BoE Governor’s Speech, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2300, a break above could take it near 1.3047 (May 18 High). On the downside, support is seen at 1.2932 (July 3 Low), a break below 1.2896 (10-DMA). Against the euro, the pound traded up at 88.02 pence, having hit a 1-week low of 88.18 the prior day.
AUD/USD; The Australian dollar steadied after falling for four consecutive sessions, amid widespread risk-aversion and broad-based U.S. dollar recovery. However, the major is likely to decline further after Australian Department of Industry Resources and Energy Quarterly report cited that iron-ore prices to fall below $50 by 2018. The Aussie trades up at 0.7583, having hit a low of 0.7571 on Wednesday, it’s weakest since Jul. 28. FxWirePro's Hourly Aussie Strength Index stood at -51.62 (Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7571 (July 5 Low), a break below targets 0.7550. On the upside, resistance is located at 0.7619 (10-DMA), a break above could take it near 0.7700.
NZD/USD: The New Zealand dollar edged down, extending previous session losses as the greenback gained momentum across the board on rising U.S. Treasury yields. The Kiwi trades down at 0.7274, having touched a low of 0.7244 on Thursday, its weakest level since Jun. 22. FxWirePro's Hourly Kiwi Strength Index was at -1.69 (Neutral) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7300, a break above could take it near 0.7320. On the downside, support is seen at 0.7259 (21-DMA), a break below could drag it till 0.7200.
Equities Recap
Asian shares declined following overnight losses on Wall Street, while global sovereign debt yields rose across the board on speculation that the European Central Bank is moving closer towards unwinding its massive monetary stimulus.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.6 percent.
Tokyo's Nikkei edged down 0.4 percent to 19,917.23 points, Australia's S&P/ASX 200 index fell 0.9 percent to 5,706.00 points and South Korea's KOSPI declined 0.6 percent to 2,374.67 points.
Shanghai composite index eased 0.1 percent to 3,210.67 points, while CSI300 index was trading 0.3 percent down at 3,648.89 points.
Hong Kong’s Hang Seng was trading 0.3 percent lower at 25,383.17 points. Taiwan shares shed 0.7 percent to 10,297.25 points.
Commodities Recap
Crude oil prices fell by more than 1 percent to a 1-week low, as news of a rise in U.S. production added to earlier reports that OPEC output was also increasing. International benchmark Brent crude was trading 0.9 percent down at $47.52 per barrel by 0424 GMT, having hit a low of $47.22 earlier, its weakest since Jun. 29. U.S. West Texas Intermediate traded 0.8 percent lower at $44.94 a barrel, after rising as high as $47.29 earlier in the week, its strongest since Jun 6.
Gold prices edged down, extending previous session losses, as the greenback gained ahead of key U.S. non-farm payrolls data due later in the day. Spot gold fell 0.2 percent to $1,221.25 per ounce by 0429 GMT, having dropped 1.5 percent this week and was on track for its biggest weekly decline since early May. U.S. gold futures for August delivery declined 0.1 percent to $1,222.40 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.383 percent higher by 0.013 bps, while 5-year yield was 0.013 up at 1.955 percent.
The Australian government bond futures sank, with the three-year bond contract slipping 7 ticks to 97.97and the 10-year contract skidded 8.5 ticks lower to 97.2750.
The New Zealand government bonds eased, sending yields 7 basis points up at the long end of the curve.
The Canadian government bond prices were lower across a steeper yield curve in sympathy with U.S. Treasuries and German Bunds. The two-year fell 2 Canadian cents to yield 1.142 percent and the 10-year declined 36 Canadian cents to yield 1.834 percent. The two-year yield touched its highest since September 2014 at 1.159 percent.
