- Chinese regulator vows share support after markets tumble 8.5%.
- PBOC - Policy meeting in August, will make adjustments as needed, credit stable, CNY level balanced, economy improving, prices stable at low levels, injects CNY50 bln via RRs, largest open market ops since July 7.
- Why the RBA has gone soft on expected growth, don't expect another cut in interest rates.
- As oil slumps, BOJ relies on yogurt, ketchup to hit price goal.
- AUD set for long spell down in the dumps.
- (0330 ET/0730 GMT) Sweden June retail sales, +0.7% m/m eyed; last -0.1% m/m, +3.9% y/y.
- (0400 ET/0800 GMT) Italy July consumer confidence index, 109.0 eyed; last 109.5.
- (0400 ET/0800 GMT) Italy July business confidence index, 103.6 eyed; last 103.9.
- (0430 ET/0830 GMT) UK Q2 GDP prelim, +0.7% q/q, +2.6% y/y eyed; last +0.4%, +2.9%.
- (0900 ET/1300 GMT) US May CaseShiller 20, +1.3% m/m nsa, +5.6% y/y eyed; last +1.1%, +4.9%.
- (0945 ET/1345 GMT) US July Markit services PMI flash, 55.0 eyed; last 54.8.
- (0945 ET/1345 GMT) US July Markit composite PMI flash; last 54.6.
- (1000 ET/1400 GMT) US July consumer confidence index, 100.0 eyed; last 101.4.
- (1000 ET/1400 GMT) US July Richmond Fed services/comp/mfg shipments indices; last 19, 6.
- (1030 ET/1430 GMT) US July Dallas Fed services revenues/serv outlook indices; last 13.2, 4.1.
Key Events Ahead
- N/A FOMC begins two-day policy meeting.
- (0400 ET/0800 GMT) Netherlands E1.5-2.5 bln 0.25% 2020 DSL auction.
- (0500 ET/0900 GMT) Italy E500-750 mln 3.1% 2026 BTP auction.
- (0530 ET/0930 GMT) ECB 7-day refi at fixed 0.05%, E75 bln allotment eyed, last bln.
FX Recap
EUR/USD is supported below 1.1100 levels and currently trading at 1.1076 levels. It has made intraday high at 1.1098 and low at 1.1070 levels. The positive US figures failed to help dollar bulls as long positions are trimmed ahead of the Federal Reserve (Fed) meeting on Wednesday. Durable goods orders for June improved sharply from a revised -2.1% to 3.4%, while the core gauge ticked higher to 0.8% from a revised -0.1%. The greenback did not react and was trading at daily lows against the euro, around $1.1070 as there are no incentives to open fresh positions ahead of the FOMC meeting. The main focus will remain Wednesday's conclusion of the FOMC meeting, which is not expected to bring any changes to monetary policy, but Fed Chair Janet Yellen might suggest some further hints as to when the main rate will be hiked. The September meeting is still in play. Furthermore, US GDP for the second quarter is due on Thursday and should post growth of 2.5%, returning to strong figures after Q1's dismal -0.2%. Initial support is seen around at 1.0789 and resistance at 1.1195 levels.
USD/JPY is supported below 124.00 levels and posted a high of 123.59 levels. It has made intraday low at 123.06 and currently trading at 123.50 levels. The major erased loses and rebounded higher to session highs after the USD bulls jumped back into bids largely on profit-taking after the recent drop. The US dollar index, a virtual gauge of the greenback's relative strength reversed previous losses and edged 0.10% higher to 96.72. Markets ignored the extended sell-off seen in Chinese equities on Tuesday which offers little support to the safe-haven appeal in yen. Looking ahead, US macro data due later today may also influence the pair amid data-quiet European session ahead. Near term resistance is seen at 124.57 and support is seen at 120.63 levels.
GBP/USD is supported above $1.5500 levels. It made an intraday high at 1.5574 and low at 1.5552 levels. Pair is currently trading at 1.5568 levels. Pair was trading elevated on Monday despite better-than-expected US durable goods orders for June, ahead of Wednesday's conclusion of the FOMC meeting. Pair stayed in a moderate rebound in July, increasing from the six-week bottom at $1.5328 seen July 8. However, sterling gave up most of its bullish momentum as the trading activity has been locked in a relatively narrow range for the last two weeks. In the UK, the biggest release of this week will release today in form of the first estimate of GDP in the second quarter. The market survey is set for an acceleration to 0.7% quarter-to-quarter, from the figure of 0.4% seen in the March quarter. 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 0.6663 levels and made intraday low at 0.6597 and high at 0.6673 levels. Absolutely dry Asian session with Asian equities extending their sell-off tracking negative close on Wall Street overnight amid China turmoil. While Chinese markets extended in the red for the third straight session, albeit recovered heavy losses seen at open. the Kiwi led the rally in the entire antipodeans complex, correcting higher towards 0.6650 levels after falling to fresh six-year lows recently. Initial support is seen at 0.6465 and resistance at 0.6722 levels.
AUD/USD is supported above 0.7300 levels and trading at 0.7320 levels. It has made intraday high at 0.7325 levels and low at 0.7256 levels. Unwinding US dollar positions ahead of the FOMC statement lifted the Aussie above the $0.73 handle. The gains are offset, however, by a sharp fall on Chinese equity markets, raising the sense of nervousness on financial markets. On the flip side, the gains are offset by a sharp fall in the Shanghai equity market, and the consequent fall on global equity markets, with further falls in commodity prices, which has left a sense of nervousness across financial markets, while bears watch closely. Initial support is seen at 0.7225 and resistance at 0.7647 levels.
Asian stocks fell to three-week lows on Tuesday as a deepening rout in Chinese stocks erased risk appetite sending investors flocking to safe-haven instruments such as government bonds and the Japanese yen.
Tokyo's Nikkei fell more than 1 percent, with a strong yen accelerating the decline. Australian shares fell 0.9 percent and South Korea's Kospi shed 1 percent.
The Korea Composite Stock Price Index (KOSPI) was quoted at 2,039.38 points as of 0424 GMT, barely changed from the previous close at 2,038.81. It slid as much as 1.1 percent to 2,015.91, the lowest in nearly three weeks.
Taiwan stocks rose on Tuesday, recovering somewhat from a steep fall in the previous session spurred by huge losses in Chinese markets. Taiwan stocks close up 0.3 pct at 8,582.49 points.
Australia's S&P/ASX 200 index closes down 0.16 pct at 5,581.20 points.
Tokyo's Nikkei average unofficially closes down 0.10 pct at 20,328.89.
Treasury Recap
Bonds were the solitary bright spot in Asia with U.S. Treasuries and Japanese government debt standing tall in a sea of red across stock markets as investors dumped riskier bets.
The benchmark Japanese government bond yield slipped to an eight-week trough on Tuesday on flight-to-quality spurred by a global retreat in equities, although market wariness towards driving yields too low kept the decline shallow. Ten-year Japanese bond yields held firm at 0.40 percent, from 0.55 percent two weeks earlier, a large move for the markets while 10-year U.S. Treasuries held at 2.2 percent.
New Zealand government bonds slipped with yields as much as 5.5 basis points higher. Yields on the 10-year bond hit a three-month low of 3.25 percent at one point.
Australian bond futures dipped, with the three-year contract off 2 ticks at 98.120. The 10-year contract was a tick lower at 97.2050.
Commodity Recap
Gold hovered near its weakest level since early 2010 on Tuesday, reflecting investor hesitation to bid up bullion amid growing expectations of a near-term hike in U.S. interest rates. The Federal Reserve begins a two-day meeting later in the day where policymakers are likely to signal that a rate hike later in the year is certain as the U.S. economy strengthens. Spot gold was flat at $1,094.40 an ounce by 0251 GMT. Bullion fell to as low as $1,077 on Friday, it's cheapest since February 2010, stretching its losing run to a fifth week.
Oil struggled at four-month lows after the Chinese stock market crash fuelled worries the world's biggest energy consumer may cut back and as more evidence emerged of a global crude supply glut. U.S. crude was down nearly a percent at $46.98 a barrel, near $46.9; it is lowest since late March.
