Market Roundup:
- Australia July PSI +2.9 pts to 54.1, five sub-indices up, first since Feb '14.
- Australia July new vehicle sales +2.7% y/y, highest on record for July.
- NZ Q2 unemployment 5.9%, as eyed, employment +0.3% q/q, +0.5% eyed LCI private-sector wages ex-overtime + 0.5% q/q, +1.8% y/y, both as eyed, subdued.
- NZ Fonterra GDT price index -9.3% but volumes up at auction.
- IMF review recommends delaying currency basket adoption of CNY, won't revisit selection criteria now, current basket in place till September 30, '16.
- Japan July PMI services 51.2, June 51.8, expansion slower, new business up.
- China July Caixin PMI services 53.8, highest since Aug '14, June 51.8, new business sub-index jumps to 54.0 from 52.2.
- UK NIESR expects economic growth to slow to +0.4% q/q in Q3, +0.8% eyed in May, +2.5% still eyed for year.
Economic Data Ahead
- (0230 ET/0630 GMT) Sweden July PMI services; last 54.9.
- (0315 ET/0715 GMT) Switzerland July CPI, -0.4% m/m, -1.1% y/y eyed; last +0.1%, -1.0%.
- (0315 ET/0715 GMT) Spain July PMI services, 55.5 eyed; last 56.1.
- (0345 ET/0745 GMT) Italy July PMI services, 53.0 eyed; last 53.4.
- (0350 ET/0750 GMT) France July PMI services, 52.0 eyed; flash 52.0.
- (0350 ET/0750 GMT) France July PMI composite; last 51.5.
- (0355 ET/0755 GMT) Germany July PMI services, 53.7 eyed; flash 53.7.
- (0355 ET/0755 GMT) Germany July PMI composite; last 53.4.
- (0400 ET/0800 GMT) Euro Zone July PMI services, 53.8 eyed; flash 53.8.
- (0400 ET/0800 GMT) Euro zone July PMI composite, 53.7 eyed; flash 53.7.
- (0400 ET/0800 GMT) Italy June industrial output, -0.3% m/m eyed; last +0.9% m/m, +3.0% y/y.
- (0430 ET/0830 GMT) UK July PMI services, 58.0 eyed; last 58.5.
- (0500 ET/0900 GMT) Euro zone June retail sales, -0.3% m/m, +1.9% y/y eyed; last +0.2%, +2.4%.
- (0500 ET/0900 GMT) Norway July housing prices; last +8.1% y/y.
- (0815 ET/1215 GMT) US July ADP national employment, +215k eyed; last +237k.
- (0830 ET/1230 GMT) US June trade balance, $42.8 bln deficit eyed; last $41.9 bln deficit.
- (0830 ET/1230 GMT) Canada June trade balance, C$2.8 bln deficit eyed; last C$3.34 bln deficit.
- (0945 ET/1345 GMT) US July Markit PMI services final; flash 55.2.
- (0945 ET/1345 GMT) US July Markit PMI composite final; flash 55.2.
- (1000 ET/1400 GMT) US July ISM PMI non-manufacturing, 56.2 eyed; last 56.0.
Key Events Ahead
- N/A Greece E625 mln 26-week t-bill auction.
- (0530 ET/0930 GMT) Germany E4 bln 0.25% Bobl auction.
- (0700 ET/1100 GMT) Sweden SEK2 bln each 3.5% and 1.5% 2022 and 2023 govt bond auctions.
FX Recap
EUR/USD is supported below 1.0900 levels and currently trading at 1.0862 levels. It has made intraday high at 1.0892 and low at 1.0846 levels. The pair keeps the weekly range below the 1.1000 handle, against a backdrop of a cautious tone from investors in light of relevant releases in the US economy and ahead of the critical Non-farm Payrolls due on Friday. Pair was stamped on by the bears when Atlanta's FED President Dennis Lockhart changing from his usual dovish tone to say that September would be an appropriate time to hike rates, unless "significant deterioration" in data would occur between now and then. Industrial production for Germany will also bee keenly watched at the end of the week while Greece remains on the bench for the time being as discussions continue to progress between creditors and Athens. Initial support is seen around at 1.0789 and resistance at 1.1195 levels.
USD/JPY is supported above 124.00 levels and posted a high of 124.46 levels. It has made intraday low at 124.25 and currently trading at 124.37 levels. The greenback remained better bid in Asia against the Japanese currency as the USD bulls continued to ride higher on Fed Lockhart's comments, stating that Sept would be the appropriate time to raise interest rates which offered the much-need impetus to the US dollar. Moreover, downbeat Japanese services PMI data added to further losses in the yen, driving USD/JPY higher. Meanwhile, the buck appears to gather pace in a bid to re-test the key level - 124.50 for the fifth time ahead of Friday's NFP. Later in the day, the pair could be influenced by US ADP employment data, trade figures and services PMI report ahead of Friday's BOJ's monetary policy statement. Initial resistance is seen at 124.57 and support is seen at 120.63 levels.
GBP/USD is supported below $1.5600 levels. It made an intraday high at 1.5568 and low at 1.5525 levels. Pair is currently trading at 1.5540 levels. Sterling dropped against the dollar and the euro on Tuesday, after UK construction PMI slowed unexpectedly in July. The Bank of England is set to convene on interest rates on August 6th and for the first time it will publish Monetary Policy Committee (MPC) minutes and the Inflation Report all at the same time. Although no change in the interest rates is expected, given the recent verbal hawkishness from the MPC members, including David Miles and BOE's governor Mark Carney, sterling is likely to be boosted should the inflation forecast be accompanied by a solid wage growth forecast, justifying monetary tightening markets shrugged off upbeat UK manufacturing PMI data which continued its expansion in July. Market will eye on UK service PMI data for the further directions. Initial support is seen at 1.5413 and resistance is seen around 1.5734 levels.
NZDUSD is supported below 0.6600 levels and trading at 0.6525 levels and made intraday low at 0.6517 and high at 0.6548 levels. New Zealand's labour market took a turn for the worse in the June quarter, with job growth unable to meet population growth, pushing the unemployment rate higher. The jobless rate was seen rising from 5.8% in the March quarter to 5.9% in the June quarter, according to Statistics New Zealand, coming in line with market predictions. Employment growth slowed from 0.7% to just 0.3%, with only 7,000 more people employed over the quarter, the weakest increase since the March 2013 quarter. More bad news arrived for New Zealand overnight after Fonterra's fortnightly Global Dairy Trade (GDT) auction saw prices take another dive, with the GDT index sliding a further 9.3%, following the previous decline of 10.7%. Initial support is seen at 0.6465 and resistance at 0.6789 levels.
AUD/USD is supported below 0.7400 levels and trading at 0.7351 levels. It has made intraday high at 0.7382 levels and low at 0.7349 levels. The Aussie edged lower this session, erasing a part of yesterday's gains as a broadly stronger greenback on the back of Fed Lockhart's hawkish comments continue to boost the buck. Moreover, markets resorted to profit-taking after yesterday's RBA-driven rally to fresh two-week highs ahead of another big event due tomorrow from Australia employment data. Markets now await a series of crucial US economic releases due later in the US session. Initial support is seen at 0.7225 and resistance at 0.7647 levels.
Equity Recap
Japan's benchmark Nikkei 225 index lost 0.17% to trade at 20,486.00 points within the first hour of trade, while Tokyo's broader Topix gauge slipped 0.15% to 1,657.36 points.
Hong Kong's benchmark Hang Seng index advanced 0.22% to 24,460.54 points at the opening bell, and mainland China's benchmark Shanghai Composite shed 0.55% to trade at 3,737.80 points.
Korea's benchmark Kospi index slipped 0.11% to 2,025.75 points this morning in Seoul.
The benchmark Australian S&P/ASX 200 index fell 0.87% to 5,649.60 points in Sydney, with media stocks taking a dive. New Zealand's benchmark S&P/NZX 50 index rose 0.27% to 5,949.83 points this afternoon in Wellington.
Australia's S&P/ASX 200 index closes down 0.57 pct at 5,665.20 points.
Tokyo's Nikkei average closes up 0.46 pct at 20,614.06.
Treasury Recap
Japan 06-month treasury discount bill auction lowest price 100.0080, average price 100.0110, bids accepted at lowest price 47.0610 pct.
China finance ministry auctions 10-year bonds at 3.4460 pct yield- traders (market expected around 3.44 pct).
New Zealand government bond yields were as much as 3 basis points higher.
Australian government bond futures fell, with the three-year bond contract off 8 ticks at 98.000. The 10-year contract lost 8.5 ticks to 97.1450.
Commodity Recap
Gold slipped toward a 5-1/2-year low on Wednesday as the dollar strengthened after comments from a Federal Reserve official backed expectations that the U.S. central bank would hike interest rates as early as next month. Spot gold was down 0.2 percent at $1,085.10 an ounce by 0218 GMT. Bullion has stayed largely below $1,100 since breaching that key support level in a late July rout that pulled it to as low as $1,077, its weakest since February 2010.
Oil was traded slightly higher on Wednesday, with WTI hovering around the $46 level amid expectations for a weekly drop in US crude inventories. Futures for WTI rose 0.66% to $46.04 per barrel, while Brent futures were up 0.66% at $50.32 per barrel.
