Market Roundup
- EUR/USD -0.14%, USD/JPY -0.05%, GBP/USD -0.12%, EUR/GBP 0.01%
- DXY 0.14%, DAX 0.4%, FTSE 0.53%, Brent -0.42%, Gold -0.34%
- ECB forecasters' survey sees quicker rise in inflation
- DE Jun Import Prices (mm), 0.5%, 0.2% f'cast, 1.6% prev
- DE Jun Import Prices (yy), 4.8%, 4.4% f'cast, 3.2% prev
- FR Q2 GDP Preliminary (qq), 0.2%, 0.3% f'cast, 0.2% prev
- FR Jun Consumer Spending (mm), 0.1%, 0.6% f'cast, 0.9% prev, 1.0% rvsd
- Tokyo inflation ticks up in July, but BOJ's key target remains elusive
- China eyes infrastructure boost to cushion growth as trade war escalates - sources
- Brent eases but on course for weekly gain
- Gold at one-week low as dollar rallies and trade tensions ease
Economic Data Ahead
- (0830 ET/1230 GMT) US Q2 GDP Advance, 4.1% f'cast, 2.0% prev
- (0830 ET/1230 GMT) US Q2 GDP Sales Advance, 3.7% f'cast, 2.0% prev
- (0830 ET/1230 GMT) US Q2 GDP Cons Spending Advance, 0.9% prev
- (0830 ET/1230 GMT) US Q2 GDP Deflator Advance, 2.3% f'cast, 2.2% prev
- (0830 ET/1230 GMT) US Q2 Core PCE Prices Advance, 2.2% f'cast, 2.3% prev
- (0830 ET/1230 GMT) US Q2 PCE Prices Advance, 2.0% f'cast, 2.5% prev
- (1000 ET/1400 GMT) US Jul U Mich Sentiment Final, 97.1 f'cast, 97.1 prev
- (1000 ET/1400 GMT) US Jul U Mich Conditions Final, 114.0 f'cast, 113.9 prev
- (1000 ET/1400 GMT) US US Jul U Mich Expectations Final, 86.5 f'cast, 86.4
- (1000 ET/1400 GMT) US US Jul U Mich 1Yr Inf Final, 2.9% prev
- (1000 ET/1400 GMT) US Jul U Mich 5-Yr Inf Final, 2.4% prev
- CA Apr Budget Balance C$, -10.63 bln prev
- CA Apr Budget, Year-To-Date C$, -16.19 bln prev
Key Events Ahead
- No major events scheduled for the day
FX Beat
DXY: The dollar index , which measures the greenback against a basket of six major currencies, extending previous session's gains. DXY was up 0.10 percent at 94.87. Markets slightly cautious ahead of U.S. economic growth data that could shed light on the pace of rate hikes in the world's top economy.
EUR/USD: The bearish sentiment around the European currency remains intact in wake of the dovish tone by President Mario Draghi. EUR/USD trades muted ahead of US GDP data. The major was trading at 1.1629, down 0.11 percent at 1025 GMT. Price action was rejected at 55-EMA and has slipped below daily cloud. Technical indicators are biased lower and we see scope for further weakness. The pair finds minor trendline support at 1.1595. Break below will see test of 1.1508 (June 21 low).
GBP/USD: Cable extends downside on Brexit concerns and US dollar strength. The major is trading in a narow range with a day's high at 1.3123 and a low at 1.3082. Upside was capped at 5-DMA and technical indicators support further downside in the pair. Markets await US Q2 GDP data for further impetus. Upbeat US Q2 GDP figures could trigger a fresh USD rally sending the cable further lower. We see scope for test of 1.3050 levels.
EUR/CHF: EUR/CHF is trading in a narrow range today, likely consolidating previous session's slump. 55-EMA is major resistance on the upside. Price action has broken strong trendline support and has slipped below 50-DMA at 1.1591 on Thursday's trade. Momentum studies are bearish, recovery attempts lack traction. We see scope for test of 61.8% Fib at 1.15 levels. Bearish invalidation only on breakout at 55-EMA.
USD/JPY: USD/JPY rangebound ahead of next week's BOJ policy meeting. Despite disappointments in data, resurgent US Treasury bond yields kept the dollar supported. Downside held support at 50-DMA at 110.56 and we see weakness only on break below. Upside on the day remains capped at 21-EMA at 111.31, break above could see further upside. Focus on US Q2 GDP data, expectations are for Q2-2018 GDP to show meaningful acceleration in real activity. Spike in real activity could steepen the Fed rate hike path thereby boosting the US dollar.
AUD/USD: The Australian dollar's minor recovery attempts after previous day's tumble were rejected below 5-DMA. AUD/USD has retraced from session highs at 0.7394 and is currently trading at 0.7379 levels. Price action is below cloud and major moving averages, but a bullish divergence on CCI keeps scope for upside. US Q2 DGP data is a major catalyst for the next move. Upbeat data could take the pair lower to test major trendline support at 0.7315. Further weakness only on break below.
Equities Recap
Easing transatlantic trade tensions after EU-US agreement this week to try to cut trade barriers boosted investor confidence, buoying global equity markets.
The pan-European STOXX 600 index was up 0.29 percent at 391.68 points, while the FTSEurofirst 300 index rose 0.34 percent to 1,534.45 points.
Britain's FTSE 100 was up 0.55% at 7,705.03 points, while mid-cap FTSE 250 was up 0.27 percent to 20,825.41 points.
Germany's DAX was up 0.40 percent at 12,860.75 points; France's CAC 40 was up 0.22 percent at 5,492.44 points.
Commodities Recap
Markets wary ahead of U.S. Q2 GDP data that could shed light on the pace of Fed rate hikes. Gold slips lower from session highs at $1225, trades 0.3 percent lower at $1218 at around 1000 GMT. Spot gold down 0.6 percent for week. U.S. gold futures for August delivery were 0.2 percent lower at $1,223.20 an ounce.
Silver rose 0.4 percent at $15.43 an ounce, on track for its seventh weekly decline. Palladium gained 0.4 percent to $930.50 an ounce and platinum was nearly unchanged at $822.75 an ounce.
Oil markets pause 3 successive session's of gains, but supply concerns keep upside pressure. Brent futures were down 5 cents at $74.49 a barrel by 0319 GMT. U.S. West Texas Intermediate futures were 5 cents lower, at $69.56.
Treasuries Recap
U.S.: The U.S. Treasuries steadied Friday, as investors wait to watch the country’s gross domestic product (GDP) for the second quarter of this year, scheduled to be released today by 12:30 GMT. Also, due today is the Federal Open Market Committee (FOMC) member Bullard’s speech, which shall add further direction to the debt market. The yield on the benchmark 10-year Treasuries hovered around 2.97 percent, the super-long 30-year bond yields slipped 1/2 basis point to 3.09 percent and the yield on the short-term 2-year traded 1 basis point lower at 2.67 percent.
EUR: The German bunds remained flat during European session Friday as investors side-lined amid a muted trading session that witnessed data of least economic significance. Further, the European Central Bank’s (ECB) monetary policy meeting, held yesterday, delivered in line with majority of the market expectations, remaining on hold, although few expected a hike.The German 10-year bond yields, which move inversely to its price, rose nearly 1/2 basis point to 0.40 percent, the yield on 30-year note remained tad higher at 1.06 percent and the yield on short-term 2-year hovered around -0.60 percent.
NZ: New Zealand government 10-year bond yield slumped to nearly 2-month low Friday despite burgeoning trade tensions ahead of the country’s employment report for the second quarter of this year, scheduled to be released by early next week. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, slumped 4 basis points to 2.76 percent, the yield on the long-term 20-year note also plunged 4 basis points to 3.06 percent and the yield on short-term 2-year closed 1-1/2 basis points lower at 1.82 percent
JGBs: The Japanese government bonds remained tad lower on the last trading day of the week after Tokyo’s headline consumer price inflation slightly beat market expectations. Investors will now focus on the Bank of Japan’s (BoJ) monetary policy meeting, scheduled to be held early next week for further direction in the debt market. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 2-1/2 basis points to 0.09 percent, the yield on the long-term 30-year note surged nearly 3-1/2 basis points to 0.81 percent and the yield on short-term 2-year too traded 1 basis point higher at -0.11 percent.
AUD: Australian government bonds gained on last trading day of the week on Friday as investors covered previous short positions amid persisting trade tensions.The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, fell 3 basis points to 2.666 percent, the yield on the long-term 30-year Note dipped 3-1/2 basis points to 3.138 percent and the yield on short-term 2-year down 1-1/2 basis point to 2.023 percent.
