Market Roundup
- Dollar falls versus yen, offshore yuan slips
- Gold hits fresh multi-year high
- Trade war between U.S. and China show no signs of abating
Economic Data Ahead
- (0330 ET/0730 GMT) UK Halifax House Prices MoM July
- (0330 ET/0730 GMT) UK Halifax House Prices 3M/YoY July
Key Event Ahead
- (0330 ET/0730 GMT) ECB Coeure's speech
FX Beat
DXY: The dollar index rose, extending previous session gains, as the trade war between China and the United States showed no signs of abating. The greenback against a basket of currencies traded 0.05 percent up at 97.85, having touched a low of 97.21 the day before, its lowest since July 22.
EUR/USD: The euro gained, hovering towards a 2-1/2 week peak hit in the previous session as risk sentiment improved after the Italian government won a confidence vote in the Senate on Monday, prolonging its tenure. Moreover, the major found support after data released yesterday showed June German industrial orders rebounded, indicating the downward trend for the industry had slowed in the second quarter. The European currency traded 0.1 percent up at 1.1219, having touched a high of 1.1249 earlier, its highest since July 19. Investors’ attention will remain on ECB Coeure's speech, ahead of the U.S. consumer credit speech. Immediate resistance is located at 1.1263 (July 16 High), a break above targets 1.1322 (July 2 High). On the downside, support is seen at 1.1164 (38.2% retracement of 1.1026 and 1.1249), a break below could drag it below 1.1133 (5-DMA).
USD/JPY: The dollar declined against the Japanese yen as market sentiment deteriorated after Beijing sent strong warnings that labelling it a currency manipulator would have severe consequences for the global financial order. The major was trading 0.2 percent down at 106.25, having hit a low of 105.52 on Tuesday, its lowest since Jan 3. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. consumer credit speech. Immediate resistance is located at 106.96 (38.2% retracement of 109.31 and 105.52), a break above targets 107.41 (50% retracement). On the downside, support is seen at 105.52 (Aug. 6 Low), a break below could take it lower at 104.65 (Jan. 3 Low
GBP/USD: Sterling held above 31-month lows, as British Prime Minister Boris Johnson is likely to witness no-confidence motion and/or forced to resign. The major traded flat at 1.2151, having hit a low of 1.2079 on Thursday, it’s lowest since Jan. 2017. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2253 (38.2% retracement of 1.2522 and 1.2079), a break above could take it near 1.2305 (61.8% retracement). On the downside, support is seen at 1.2079 (Aug. 1 Low), a break below targets 1.2017 (Jan 17, 2017, Low). Against the euro, the pound was trading 0.2 percent down at 92.19 pence, having hit a low of 92.49 on Tuesday, it’s lowest since Sept 2017.
AUD/USD: The Australian dollar declined to the lowest level since March 2009 as the aggressive easing by the RBNZ will likely put pressure on the Reserve Bank of Australia to ease further. The RBA delivered 25 basis point rate cuts in June and July and is expected to cut rates to 0.75 percent before the year-end. The Aussie trades 0.7 percent down at 0.6712, having hit a low of 0.6677 earlier, it’s lowest since March 2009. Immediate support is seen at 0.6650, a break below targets 0.6600. On the upside, resistance is located at 0.6800 (August 6 High), a break above could take it near 0.6831 (23.6% retracement of 0.7082 and 0.6677).
NZD/USD: The New Zealand dollar plunged below the 0.6400 handle to hit a 3-1/2 year low after the Reserve Bank of New Zealand cut interest rates by 50 basis points to a record low of 1.00 percent, confounding expectations for a smaller 25 basis point and kept the doors open for further easing in the near future. The Kiwi trades 2.0 percent down at 0.6397, having touched a low of 0.6376 earlier, its lowest level Jan 2016. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6474 (23.6% retracement of 0.6790 and 0.6376), a break above could take it near 0.6534 (38.2% retracement). On the downside, support is seen at 0.6350, a break below could drag it below 0.6300.
Equities Recap
Asian shares declined as market sentiment remained fragile, with no clear end in the U.S.-China trade standoff insight.
MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.05 percent.
Tokyo's Nikkei plunged 0.3 percent to 20,516.56 points, Australia's S&P/ASX 200 index rose 0.6 percent to 6,519.50 points and South Korea's KOSPI slumped 0.3 percent to 1,910.98 points.
Shanghai composite index eased 0.1 percent to 2,774.58 points, while CSI 300 index traded 0.1 percent down at 3,631.29 points.
Hong Kong’s Hang Seng traded 0.1 percent lower at 25,947.33 points. Taiwan shares shed 0.1 percent to 10,386.18 points.
Commodities Recap
Crude oil prices steadied after falling to its lowest level since January, as the intensifying U.S.-China trade dispute continued to cast a shadow over the market. International benchmark Brent crude was trading 0.3 percent higher at $58.83 per barrel by 0457 GMT, having hit a low of $58.55 earlier, its lowest since January. U.S. West Texas Intermediate was trading 0.2 percent up at $53.54 a barrel, after falling as low as $53.14, its lowest since the June 18.
Gold prices rallied to a more than 6-year high as the trade war between China and the United States showed no signs of abating, boosting the appeal of safe-haven assets. Spot gold surged 0.8 percent to $1,484.74 per ounce by 0502 GMT, having touched a high of $1,490.02 earlier, its highest since April 2013. U.S. gold futures were up 0.9 percent at $1,497.90 an ounce.
Treasuries Recap
The Japanese government bond futures hit a record high and yields hit multi-year lows, with the Benchmark 10-year JGB futures rising 0.22 point to 154.39. The 10-year JGB yield fell 1.5 basis points to minus 0.200 percent. Earlier 10-year yields touched minus 0.215 percent, the lowest since July 2016. The 20-year JGB yield fell 2.5 basis points to 0.140 percent. At the short end of the curve, the two-year JGB yield fell 1 basis point to minus 0.235 percent. The five-year JGB yield fell 2 basis points to minus 0.295 percent.
