Market Roundup
- PBOC sets USD/CNY mid-point at 6.3975, last close/today's open 6.3990.
- Foreign CB US debt holdings +$10.526 bln to $3.368 trln Aug 12 week, Treasury holdings +$10.816 bln to $3.028 trln, agencies -$250 mln to $295.488 bln.
- NY Fed - Swaps with foreign CBs $229 mln Aug 12 week, $1 mln with BoJ, $228 mln with ECB.
- Lipper - US-based bond funds post third week of outflows, $2 bln in week-ended Aug 12, stocks funds attract $936 mln inflows, first inflows in five weeks.
- IMF presses Europe to provide debt relief for Greece.
- Greece to get E6 bln in bridge loans if no agreement at Euro Group.
- German Deputy Fin Min Spahn - Greece must stick to timetable to get funds.
- RBA Assistant Gov/Econ Kent - Labour market more resilient than expected, jobless steady into '16, off in '17, eyes upward revisions to labour productivity, market more cost competitive, keeping open mind on interest rates.
- NZ Q2 retail sales +0.1% q/q, +5.9% y/y, +0.5% and +5.2% eyed.
- Panic in USD/MYR market, real money sales. High 4.1180, MYR weakest since September '98, fix 4.1505 (8 banks 4.1505, 2 4.1485).
Economic Data Ahead
- (0200 ET/0600 GMT) Germany Q2 GDP flash, +0.5% q/q, +1.5% y/y eyed; last +0.3%, +1.1%.
- (0245 ET/0645 GMT) France Q2 nonfarm payrolls; last unchanged q/q.
- (0400 ET/0800 GMT) IT Q2 GDP flash, +0.3% q/q, +0.5% y/y eyed; last +0.3%, +0.1%.
- (0430 ET/0830 GMT) UK June construction output, +2.2% m/m, +3.3% y/y eyed; last -1.3%, +1.3%.
- (0500 ET/0900 GMT) Euro zone Q2 GDP flash, +0.4% q/q, +1.3% y/y eyed; last 0.4%, +1.0%.
- (0500 ET/0900 GMT) Euro zone July inflation final, -0.6% m/m, +0.2% y/y eyed; flash unchanged +0.2%.
- (0500 ET/0900 GMT) Euro zone July ex-food/energy, -0.7% m/m, +1.0% y/y eyed; last unchanged, +0.8%.
- (0830 ET/1230 GMT) US July PPI final demand, +0.1% m/m, -0.9% y/y eyed; last +0.4%, -0.7%.
- (0830 ET/1230 GMT) US July ex-food/energy, +0.1% m/m, +0.5% y/y eyed; last +0.3%, +0.8%.
- (0915 ET/1315 GMT) US July industrial output, +0.3% m/m eyed; last +0.2%.
- (0915 ET/1315 GMT) US July capacity utilization, 78.0% eyed; last 77.8%.
- (1000 ET/1400 GMT) US August UOM sentiment index prelim, 93.5 eyed; last 93.1.
Key Events Ahead
- N/A Euro Group meeting on Greek bail-out in Brussels.
- N/A UK DMO GBP1.5/1.5/2.0 bln 1/3/6-month treasury bill auctions.
FX Recap
EUR/USD is supported above 1.1100 levels and currently trading at 1.1154 levels. It has made intraday high at 1.1161 and low at 1.1137 levels. The major is consolidating previous sharp moves against a back drop of China FX intervention and September Fed rate hike bets back on the table. The main currency pair continues to oscillate in a 20-pips narrow range as markets remain cautious ahead of a series of crucial macro data from the Euro zone including, German prelim GDP, bloc's final GDP and CPI figures. 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 124.53 levels. It has made intraday low at 124.36 and currently trading at 124.40 levels. The small appreciation of the Yuan, after three-consecutive days of devaluation, means the PBoC is serious about bringing the onshore Yuan (CNY) more in line with the offshore Yuan (CNH), rather than simply trying to devalue the currency in a bid to support the export sector, which should help restore risk appetite. Pair is trading flat as no major economic data is expecting from the Japan. Initial resistance is seen at 125.68 and support is seen at 120.63 levels.
GBP/USD is supported above $1.5600 levels. It made an intraday high at 1.5619 and low at 1.5603 levels. Pair is currently trading at 1.5613 levels. The British pound keeps its range play intact, although edges slightly higher in the mid-Asian session, lifting GBP/USD once again for a test of key barrier near 1.5635 levels. Ahead in a day, market will focus on UK construction output data as well as US prelim UOM consumer sentiment 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 0.6535 levels and made intraday low at 0.6514 and high at 0.6572 levels. The New Zealand dollar experienced bearish pressure on Friday after the retail sales report, which proved to be negative. Moreover, the US dollar stayed firm, pushing the so-called kiwi close to its lowest level since 2009. Statistics New Zealand informed on Friday that consumers' appetite in the second quarter increased only marginally by a seasonally-adjusted 0.1%, adding to the disappointment from the second quarter. Forecasts had pointed to a 0.5% increase, while the previous quarter saw a 2.3% rise. Core retail sales, excluding the fuel and motor industry, also rose by a poor 0.1% in the second quarter, confirming the poor outcome in the quarter. Initial support is seen at 0.6465 and resistance at 0.6789 levels.
AUD/USD is supported above 0.7300 levels and trading at 0.7372 levels. It has made intraday high at 0.7384 levels and low at 0.7355 levels. Dovish comments from Reserve Bank of Australia (RBA) Assistant Governor Christopher Kent saw a 0.3% gain in the Australian dollar against the US dollar all but wiped out on Friday. Kent said the central bank was "keeping an open mind" with regards to interest rates, following a speech on employment at the Economic Society of Australia's 2015 Business Lunch on Friday. Looking ahead, the pair will track US dollar moves amid lack of fresh trigger in the European session as focus now shifts back to a host of US data to be released later tonight. Initial support is seen at 0.7225 and resistance at 0.7647 levels.
Equity Recap
The Indian market is edging up supported by pharma, auto and IT stocks. The Sensex is up 146.39 points or 0.5 percent at 27695.92 and the Nifty is up 46.30 points or 0.6 percent at 8402.15.
Japan's benchmark Nikkei 225 index fell 0.33% to 20,528.25 points within the first hour of trade, while Tokyo's broader Topix gauge was down 0.09% at 1,666.54 points.
Hong Kong's benchmark Hang Seng index advanced 0.36% to 24,104.14 points shortly after the opening bell, and mainland China's benchmark Shanghai Composite grew 0.45% to 3,972.35 points at the same time.
The benchmark Australian S&P/ASX 200 index gained 0.20% to reach 5,398.90 points in Sydney, after trading with early losses, with the heavily-weighted banks supporting the index, while resource stocks trading broadly lower.
New Zealand's benchmark S&P/NZX 50 index rose 0.24% to 5,751.69 points this afternoon in Wellington.
Australia's S&P/ASX 200 index closes down 0.50 pct at 5,361.10 points.
Tokyo's Nikkei average closes down 0.37 pct at 20,519.45.
Treasury Recap
10-year US treasury yield at 2.181 percent vs US close of 2.187 percent on Thursday.
Thai 40 bln baht, 14-day central bank bond average accepted yield 1.41241 pct. Thai 10 bln baht, 2.5-year central bank bond average accepted yield 1.54085 pct.
New Zealand government bond yields were flat.
Australian government bond futures were a shade lower as the Yuan scare faded. The three-year bond contract YTTc1 eased 3 ticks to 98.040, while the 10-year YTCc1 lost 3 ticks to 97.2000.
Commodity Recap
Gold edged lower on Friday after the Yuan firmed as China bid to calm jittery global markets, while upbeat U.S. retail sales renewed expectations for a near-term increase in U.S. interest rates. Spot gold was down 0.1 percent at $1,113.15 an ounce by 0228 GMT, after peaking at $1,126.31 on Thursday, it's highest since July 20. Thursday's drop ended gold's five-day rise, its longest rally since May.
Prices for WTI extended Thursday's huge losses, hovering slightly below the $42 level, with the US benchmark heading for another weekly drop. Futures for WTI slipped 0.59% to $41.94 per barrel, while Brent futures moved 0.18% down to $49.54 per barrel.
