Market Roundup
- China paper rebuts trade war criticism, says 'an elephant can't hide'
- Japan holds out for multilateral trade approach with US in new talks
- Australia c.bank charts steady course for rates as inflation lags economic growth
- Russia denounces new U.S. sanctions as illegal, mulls retaliation
- Japan Q2 GDP QQ, 0.5%, 0.3% f’cast, -0.2% prev
- Japan Q2 GDP QQ Annualised, 1.9%, 1.4% f’cast, -0.6% prev
- Japan Q2 GDP QQ Capital Expenditure, 1.3%, 0.6% f’cast, 0.3% prev
- Foreign CB US debt holdings +$8.007 bln to $3.442 tln Aug 8 week
- Treasuries +$6.526 bln to $3.068 tln, agencies +$1.616 bln to $300.4 bln
Economic Data Ahead
- (0430 ET/0830 GMT) Great Britain Q2 GDP Prelim QQ, 0.4% f'cast, 0.2% prev
- (0430 ET/0830 GMT) Great Britain Q2 GDP Prelim YY, 1.3% f'cast, 1.2% prev
- (0430 ET/0830 GMT) Great Britain Q2 Business Invest QQ Prelim, 0.3% f'cast, -0.4% prev
- (0430 ET/0830 GMT) Great Britain Q2 Business Invest YY Prelim, 2.0% prev
- (0430 ET/0830 GMT) Great Britain Jun Industrial Output MM, 0.4% f'cast, -0.4% prev
- (0430 ET/0830 GMT) Great Britain Jun Industrial Output YY, 0.7% f'cast, 0.8% prev
- (0430 ET/0830 GMT) Great Britain Jun Manufacturing Output MM, 0.3% f'cast, 0.4% prev
- (0430 ET/0830 GMT) Great Britain Jun Manufacturing Output YY, 1.0% f'cast, 1.1% prev
Key Events Ahead
- No significant events scheduled.
FX Beat
DXY: The dollar index surged to a 13-month peak as labor market strength and rising inflation likely kept the Federal Reserve on track to hike interest rates in September for the third time this year. The greenback against a basket of currencies trades 0.6 percent up at 96.14, having touched a high of 96.17 earlier, its highest since July 2017. FxWirePro's Hourly Dollar Strength Index stood at 101.62 (Highly Bullish) by 0500 GMT.
EUR/USD: The euro slumped to an over 1-year low below the 1.1500 handle after the European Central Bank highlighted the risks to global growth amid rising the risk of protectionism and the threat of higher U.S. tariffs sap confidence. Moreover, renewed investor concerns that Italy was heading for an expensive and unsustainable spending spree dented the bid tone around the major. The European currency traded 0.6 percent down at 1.1463, having touched a low of 1.1439, its lowest since July 2017. FxWirePro's Hourly Euro Strength Index stood at -102.88 (Highly Bearish) by 0500 GMT. Investors’ attention will remain on series of economic data from the Eurozone economies, ahead of the U.S. consumer price index and budget statement. Immediate resistance is located at 1.1484 (23.6% retracement of 1.6282 and 1.1439), a break above targets 1.1655 (21-DMA). On the downside, support is seen at 1.1410, a break below could drag it till 1.1380.
USD/JPY: The dollar tumbled to a fresh 2-week low as simmering tensions around global trade and steep sell-offs in several emerging market currencies sent investors seeking safe-haven assets. The major was trading 0.1 percent down at 110.94, having hit a low of 110.67 earlier, its lowest since July 26. FxWirePro's Hourly Yen Strength Index stood at 171.34 (Highly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. consumer price index and budget statement. Immediate resistance is located at 111.33 (5-DMA), a break above targets 111.65 (21-DMA). On the downside, support is seen at 110.59 (July 26 Low), a break below could take it lower 110.28 (July 5 Low).
GBP/USD: Sterling plunged to an over 1-year low below the 1.2800 handle amid increasing speculation Britain will leave the European Union without an agreement regarding its future relationship with Brussels. The major traded 0.1 percent down at 1.2805, having hit a low of 1.2798 earlier; it’s lowest since Aug. 2017. FxWirePro's Hourly Sterling Strength Index stood at -44.41 (Slightly Bearish) 0500 GMT. Investors’ attention will remain on the UK Q2 GDP reading, industrial production, manufacturing production, total business investment, and trade balance, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2917 (5-DMA), a break above could take it near 1.3008 (21-DMA). On the downside, support is seen at 1.2780, a break below targets 1.2755. Against the euro, the pound was trading 0.5 percent up at 89.44 pence, having hit a low of 90.30 the day before, it’s lowest since Oct. 2017.
AUD/USD; The Australian dollar declined to a 3-week low as the Reserve Bank of Australia expects underlying inflation to slow to 1.75 percent by the end of this year, down from a previous forecast of 2 percent. The Aussie trades 0.6 percent down at 0.7332, having hit a low of 0.7322 earlier; it’s lowest since July 20. FxWirePro's Hourly Aussie Strength Index stood at -177.51 (Highly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7310 (July 2 Low), a break below targets 0.7285. On the upside, resistance is located at 0.7353 (23.6% retracement of 0.7453 and 0.7322), a break above could take it near 0.7377(38.2% retracement).
NZD/USD: The New Zealand dollar fell to an over 2-1/2 year low after the Bank of New Zealand-Business NZ's seasonally adjusted Performance of Manufacturing Index showed that manufacturing activity dropped for the third month in a row in July, Moreover, Reserve Bank of New Zealand's dovish tilt to its statement forced markets to consider the chance of a rate cut in near future. The Kiwi trades 0.4 percent down at 0.6587, having touched a low of 0.6585, its lowest level since March 2016. FxWirePro's Hourly Kiwi Strength Index was at -120.24 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6630, a break above could take it near 0.6645. On the downside, support is seen at 0.6555, a break below could drag it below 0.6500.
Equities Recap
Asian shares tumbled amid deepening investor concerns over intensifying global trade tensions.
MSCI's broadest index of Asia-Pacific shares outside Japan slumped 0.5 percent.
Tokyo's Nikkei plunged 1.3 percent to 22,298.08 points, Australia's S&P/ASX 200 index eased 0.3 percent to 6,278.40 points, and South Korea's KOSPI declined 0.9 percent to 2,283.37 points.
Shanghai composite index fell 0.2 percent to 2,789.90 points, while CSI300 index traded 0.05 percent up at 3,398.04 points.
Hong Kong’s Hang Seng traded 0.9 percent lower at 28,321.10 points. Taiwan shares shed 0.4 percent to 10,983.68 points.
Commodities Recap
Crude oil prices rose, reversing most of its previous session losses on worries that re-imposed U.S. sanctions against Iran would tighten supplies. International benchmark Brent crude was trading 0.2 percent up at $72.13 per barrel by 0502 GMT, having hit a low of $71.66 on Wednesday, its lowest since June 18. U.S. West Texas Intermediate was trading 0.2 percent higher at $66.79 a barrel, after falling as low as $66.36 on Wednesday, its lowest since June 22.
Gold prices declined, extending prior session losses, amid growing global political tensions and turbulence in currency markets. Spot gold was trading 0.1 percent down at $1,211.07 an ounce at 0504 GMT, having hit its lowest since July 2017 at $1,204.06 last week. U.S. gold futures were steady at around $1,219.6 an ounce.
Treasuries Recap
The Japanese government bonds remained tad higher on the last trading day of the week as investors have largely shrugged-off the better-than-expected gross domestic product (GDP) for the second quarter of this year, released late yesterday. The yield on the benchmark 10-year JGB note, which moves inversely to its price, slipped 1/2 basis point to 0.109 percent, the yield on the long-term 30-year note traded flat at 0.858 percent and the yield on short-term 2-year also slipped 1/2 basis point to -0.112 percent.
The Australian government bonds rallied across the board on the last trading day of the week following the U.S.-China tit-for-tat trade warmongering, which is pushing investors to buy safe-haven assets in fear of full fledge trade war between the world’s two biggest economies. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, fell 3 basis points to 2.625 percent, the yield on the long-term 30-year Note also dipped 2-1/2 basis points to 3.105 percent and the yield on short-term 2-year slumped 1-1/2 basis points to 1.993 percent.
