- RBNZ cuts OCR 25 bps to 3.0%, further easing likely, further fall in NZD justified, will take time for housing imbalances to be corrected, growth outlook softer tha June, CPI likely close to target early '16, 25 bp OCR cut eyed in September, OCR eyed at 2.5% by year-end.
- Greek PM wins parliament backing for bailout reforms package.
- Japan June trade balance Y69.0 bln deficit, Y5.4 bln surplus eyed, exports +9.5% y/y, imports -2.9%, +10.0% and -4.0% eyed, exports to US +17.6%, China +5.9%, Asia +10.0%, exports rise at best pace in five months.
- Japan June crude oil import volume -9.7% y/y, LNG -2.8%, thermal coal +1.2%, average LNG import price lowest since September '09.
- Japan-US TPP trade talks - US tariff set to vanish swiftly on majority of Japanese auto-parts - Nikkei.
- Japan Fukoku Life PNC10 attracts $5.7 bln bids, Asia awarded 57%, Europe rest.
- Japan Softbank Group gearing up for major USD, EUR bond issues.
- Foreigners buy fewest US 30-year bonds at auction since '13.
- Giant fund Bridgewater flips view on China: No safe places to invest.
- Australia Q2 business conditions index +4, confidence +4, Q1 +3 and zero.
- (0300 ET/0700 GMT) Spain Q2 unemployment, 23.1% eyed; last 23.78%.
- (0330 ET/0730 GMT) Sweden June unemployment, 9.0% nsa eyed; last 8.0% nsa, 7.8% sa.
- (0330 ET/0730 GMT) Sweden June PPI; last +0.3% m/m, +1.6% y/y.
- (0400 ET/0800 GMT) Italy June trade balance - non-EU flash; last bln surplus.
- (0430 ET/0830 GMT) UK June retail sales, +0.3% m/m, +4.9% y/y eyed; last +0.2%, +4.6%.
- (0430 ET/0830 GMT) UK June ex-fuel, +0.3% m/m, +5.0% y/y eyed; last +0.2%, +4.4%.
- (0830 ET/1230 GMT) US weekly initial jobless claims, 280k eyed; last 281k.
- (0830 ET/1230 GMT) US June Chicago Fed national activity index; last -0.17.
- (1000 ET/1400 GMT) US Jun leading indicators index, +0.2% m/m eyed; last +0.7%.
- (1000 ET/1400 GMT) Euro zone July consumer confidence index - flash, -5.68 eyed; last -5.60.
- (1100 ET/1500 GMT) US July KC Fed composite and manufacturing indices; last -9, -21.
Key Events Ahead
- (1045 ET/1445 GMT) ECB/Buba Weidmann speech in Frankfurt.
FX Recap
EUR/USD is supported above 1.0900 levels and currently trading at 1.0940 levels. It has made intraday high at 1.0954 and low at 1.0919 levels. Currency is trading modestly flat versus the US dollar in the Asian session, keeping EUR/USD near the mid-point of 1.09 handle. Greece parliament has approved a prior actions bill on second batch of reforms, which paves the way to a third bailout negotiation. The day started in slow motion, with no relevant data released in Europe. Initial support is seen around at 1.0789 and resistance at 1.1083 levels.
USD/JPY is supported around 124.00 levels and posted a high of 124.13 levels. It has made intraday low at 123.90 and currently trading at 124.01 levels. Economic data out of Japan on Thursday showed the merchandise trade deficit shrinking to ¥69.0 billion in June from ¥217.2 billion in May, coming in worse than the surplus of ¥45.8 billion picked by analysts. Exports rose 9.5% year-on-year, while imports fell 2.9%. Near term resistance is seen at 124.57 and support is seen at 120.63 levels.
GBP/USD is supported above $1.5600 levels. It made an intraday high at 1.5624 and low at 1.5602 levels. Pair is currently trading at 1.5622 levels. The pair gained upside momentum after the meeting minutes as well as the positive comments by MPC member D.Miles, stating that rate hikes will be gradual and UK inflation should return to the target by year-end. Today UK will release retail sales data for the further direction. Initial support is seen at 1.5413 and resistance is seen around 1.5734 levels.
NZDUSD is supported above 0.6600 levels and trading at 0.6627 levels and made intraday low at 0.6560 and high at 0.6652 levels. The central bank lowered interest rates for the second time since June on Thursday; policymakers did however drop the harsh language about the strength of the New Zealand dollar, and signalled that its depreciation was helping to support the economy and inflation. The Official Cash Rate (OCR) was lowered from 3.25% to 3.0% on Thursday, and the central bank explicitly stated that further rate cuts were likely. Initial support is seen at 0.6465 and resistance at 0.6722 levels.
AUD/USD is supported below 0.7400 levels and trading at 0.7372 levels. It has made intraday high at 0.7392 levels and low at 0.7355 levels. Pair has been trodden on by the bears on a better overnight session for the greenback with commodities lagging and a recovery in the US dollar that has seen the Aussie down from though the 0.7440 heights of yesterday's business. RBA Governor Stevens spoke on monetary policy at the Anika Foundation. He said that although the economy is in the right path, the recovery is being slow and that further rate cuts are still on the table. For the rest of the week, we look out for HSBC Manufacturing PMI (Jul) from China and New Home Sales data for June as well as Markit Manufacturing for July from the US. Initial support is seen at 0.7325 and resistance at 0.7647 levels.
