Market Roundup
- EUR/USD -0.25%, USD/JPY 0.11%, GBP/USD -0.51%, EUR/GBP 0.25%
- DXY 0.33%, DAX -0.42%, FTSE 0.12%, Brent -1.02%, Gold -0.84%
- GB Jun Retail Sales MM, -0.5%, 0.2% f'cast, 1.3% prev, 1.4% rvsd
- GB Jun Retail Sales YY, 2.9%, 3.7% f'cast, 3.9% prev, 4.1% rvsd
- GB Jun Retail Sales Ex-Fuel MM, -0.6%, -0.3% f'cast, 1.3% prev, 1.4% rvsd
- GB Jun Retail Sales Ex-Fuel YY, 3.0%, 3.5% f'cast, 4.4% prev 4.5%, rvsd
- Japan exports to U.S. fall, business mood sours amid fears of trade war
- China says U.S. blaming Xi for blocking trade deal is "bogus"
- China to use 'counter-cyclical' measures to curb FX volatility
- UK watchdog tells banks to prepare for hard Brexit
- Oil prices fall on record U.S. output, stock build
- Gold slips to 1-year low as U.S. dollar firms
Economic Data Ahead
- (0830 ET/1230 GMT) US 14 Jul, w/e Initial Jobless Claims, 220k f'cast, 214k prev
- (0830 ET/1230 GMT) US 14 Jul, w/e Jobless Claims 4-Wk Avg, 223.00k prev
- (0830 ET/1230 GMT) US 7 Jul, w/e Continued Jobless Claims, 1.730 mln f'cast, 1.739 mln prev
- (0830 ET/1230 GMT) US Jul Philly Fed Business Indx, 21.5 f'cast, 19.9 prev
Key Events Ahead
- (0900 ET/1300 GMT) Fed's Quarles gives introductory remarks before the Alternative Reference Rates Committee Roundtable, New York
- (1100 ET/1500 GMT) Treasury announces 13-week and 26-week bills (e: $51/45 bn)
- (1100 ET/1500 GMT) Treasury announces 2-year floating rate notes (e: $17 bn)
- (1100 ET/1500 GMT) Treasury announces 2-, 5- and 7-year notes (e: $35/36/30 bn)
- (1145 ET/1545 GMT) FedTrade operation 15-year Fannie Mae/Freddie Mac (max $260 mn)
- (1300 ET/1700 GMT) Treasury auctions $13 bn 10-year TIPS
FX Beat
DXY: Dollar index up upbeat comments on the U.S. economy by the Fed chairman Jerome Powell. DXY brushing 4-week high at 95.56. Technical bias is bullish. We see scope for further upside.
EUR/USD: The euro extends weakness for the third straight session. EUR/USD was down 0.39 percent at $1.1591 at the time of writing. Price is holding minor support at 2 July low at 1.1591. Break would open 29 June low 1.1558. Technical indicators are biased lower. Stochs and RSI are sharply lower and daily cloud weighs heavily on the upside. 200W SMA at 1.1379 is major support on the downside. Break below to see major weakness.
GBP/USD: Cable drops to new 10-month low on UK retail sales miss. UK retail sales dropped 0.5% m/m, arriving below market expectations, while the core retail sales declined 0.6% m/m in June. UK retail sales miss is another blow for hawks advocating BoE hike at the August 2nd policy meeting. GBP/USD was trading at 1.2979, down 0.68% at the time of writing. Bears target August 2017 lows at 1.2773. Bearish invalidation only above 50-DMA at 1.3292.
USD/JPY: USD/JPY hovers around 113 handle as bulls fight back. The major has recovered from session lows at 112.65. Fed Powell's upbeat comments keep the greenback buoyed. Sell-off in the Chinese Yuan helps lift the bid tone around the buck. Upside finds stiff resistance at 61.8% Fib retracement of 118.662 to 104.629 fall at 113.30 and 200W SMA at 113.24. Focus now on the US Philly Fed manufacturing gauge. Upbeat data could see further gains in the pair. On the other side, crack below strong support at 112.62 (4H 21-EMA) to see a bearish continuation underway.
NZD/USD: Antipodeans weakened by meltdown in the commodity space. NZD/USD was down 0.89% at the time of writing. Recovery attempts were capped at 21-EMA and price is extending weakness after channel breach on weekly charts. Drop was also influenced by weakness in the yuan which fell fresh one-year low against the USD. Stochs and RSI are biased lower and MACD well below zero levels. Scope for test of strong trendline support at 0.6685. Bullish reversal only on decisive breakout above 21-EMA.
Equities Recap
European bourses were in the red on Thursday. The pan-European STOXX 600 index was down 0.16 percent at 386.44 points, while the FTSEurofirst 300 index slipped 0.13 percent to 1,513.93 points.
Britain's FTSE 100 trades 0.06 percent up at 7,681.48 points, while mid-cap FTSE 250 was down 0.52 percent to 20,875.05 points.
Germany's DAX was down 0.41 percent at 12,713.23 points; France's CAC 40 was down 0.53 percent at 5,418.50 points.
Commodities Recap
Oil prices extend weakness on record U.S. output, stock build. International crude oil benchmark Brent was down 40 cents at $72.50 a barrel by 0740 GMT. U.S. light crude was 20 cents lower at $68.56.
Gold extended falls to a one-year low on Thursday on firm dollar. Spot gold was down 0.2 percent at $1,223.56 an ounce at 0703 GMT. U.S. gold futures for August delivery were 0.4 percent lower at $1,223.20 an ounce.
Silver was down 0.8 percent at $15.41 an ounce, Platinum was 0.4 percent lower at $810.30 an ounce and Palladium was down 0.1 percent at $905.47 per ounce.
Treasuries Recap
U.S.: The U.S. 10-year Treasury yield on Thursday, traded at over 3-week high, after Federal Reserve Chair Jerome Powell, once again remained upbeat on the U.S. economy and therefore, hawkish on the interest rates, mentioning that hiking rates is the only possible way to hold on to the ongoing expansion in the economy. The yield on the benchmark 10-year Treasuries jumped 1-1/2 basis points to 2.89 percent, the super-long 30-year bond yields also traded close to 1-1/2 basis points to 3.00 percent and the yield on the short-term 2-year too remained nearly 2 basis points higher at 2.62 percent.
UK: The United Kingdom’s gilts remained narrowly mixed during European session Thursday even after the country’s retail sales for the month of June disappointed market participants, reversing the rise seen in May. Retail sales registered -0.5 percent m/m, missing estimates of 0.1 percent m/m, from +1.4 percent m/m in May. On a y/y basis also, retail sales failed to hold the gains seen due to the royal wedding in the prior month, coming in at 2.9 percent, from previous 4.1 percent. The yield on the benchmark 10-year gilts, rose 1/2 basis point to 1.23 percent, the super-long 30-year bond yields fell nearly 1-1/2 basis points to 1.69 percent and the yield on the short-term 2-year traded flat at 0.74 percent.
JGBs: The Japanese government bonds remained tad higher Thursday as investors had largely shrugged-off the improvement in the country’s trade balance data for the month of June, released late yesterday. Investors now expect to see a slight pick-up in the national core consumer price inflation data for the same period, scheduled to be released today by 23:30GMT, to 0.8 percent y/y, from prior 0.7 percent y/y. The yield on Japan’s benchmark 10-year bond, which moves inversely to its price, remained 1/2 basis point lower at 0.04 percent, the yield on the long-term 30-year traded tad down at 0.68 percent and the yield on short-term 2-year hovered around -0.12 percent.
AUD: Australian government bonds slumped on Thursday after June employment change massively beat market expectations, pushing the 2-year yield to highest since June 21. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, rose 2 basis points to 2.669 percent, the yield on the long-term 30-year Note jumped 1-1/2 basis points to 3.140 percent and the yield on short-term 2-year up 4-1/2 basis points to 2.073 percent.
