Market Roundup
- EUR/USD 0.25%, USD/JPY flat, GBP/USD 0.18%, EUR/GBP 0.1%
- DXY -0.21%, DAX -0.24%, FTSE -0.3%, Brent 0.36%, Gold -0.06%
- China tempts Britain with free trade, says door to U.S. talks open
- Pompeo to announce U.S. economic initiatives in "Indo-Pacific"
- "Low road" of protectionism will cost jobs and growth-BoE's Carney
- EZ Jul Consumer Confid. Final, -0.6, -0.6 f'cast, -0.6 last
- EZ Jul Business Climate, 1.29, 1.35 f'cast, 1.39 prev
- EZ Jul Economic Sentiment, 112.1, 112 f'cast, 122.3 prev
- EZ Jul Indistrial Sentiment, 5.8, 6.7 f'cast, 6.9 prev
- GB Jun BOE Consumer Credit, 1.567 bln, 1.300 bln f'cast, 1.405 bln prev
Economic Data Ahead
- (0800 ET/1200 GMT) DE Jul CPI Prelim YY, 2.1% f'cast, 2.1% prev
- (0800 ET/1200 GMT) DE Jul HICP Prelim MM, 0.4% f'cast, 0.1% prev
- (0800 ET/1200 GMT) DE Jul HICP Prelim YY, 2.1% f'cast, 2.1% prev
- (0830 ET/1230 GMT) CA May GDP MM, 0.4% f'cast, 0.1% prev
- (1000 ET/1400 GMT) US Jun Pending Homes Index, 105.9 prev
- (1000 ET/1400 GMT) US Jun Pending Sales Change MM, 0.1% f'cast, -0.5% prev
- (1030 ET/1430 GMT) US Jun Dallas fed Mfg Bus Idx, 36.50 prev
Key Events Ahead
- No major econ events scheduled
FX Beat
DXY: US dollar steadied on Monday. The dollar index against a basket of currencies was hovering at 94.50, having repeatedly failed to clear resistance around 95.652 this month. Focus will be three central bank meetings. Bank of Japan and the Bank of England will be eyed for possible policy tweaks, while the U.S. Federal Reserve is unlikely to deliver surprises.
EUR/USD: USD has pared some of its gains made after better than expected Q2 GDP. US Q2 GDP came at 4.1% fastest pace since 2014.The pair hits low of 1.16200 after release of data and shown a minor jump from that level. Markets await German inflation data which is major Eurozone data to be released today. US fed meeting on Wed is the major event to be watched this week. EUR/USD’s near term support is around 1.1600 and any convincing break below will drag the pair to next level till 1.1500.Any break below 1.1500 confirms minor weakness and decline till 1.1400/1.13600 is likely.
GBP/USD: Cable has lost more than 100 pips from the high of 1.32132 on account of Brexit uncertainty. GBPUSD hits low of 1.30821 and shown a minor recovery. Markets eye BOE monetary policy decision on Thursday where BOE is expected to hike rates by 25 basis point. But BOE will have minimum impact as market expects hard Brexit which will drag the Pound sterling further down. Intraday trend is weak as long as resistance 1.3140 (100- H MA) holds. Any break above 1.3140 will take pair to 1.3165/1.3210 (61.8% fibo)/ 1.3260/1.3310. Any close above 1.3300 confirms further bullishness. The near term support is around 1.3070. Any break below targets 1.3000/1.2950.
EUR/CHF: EUR/CHF hovers around 1.16 handle as markets await German CPI data for further impetus. German CPI is expected to rise 0.4 percent m/m in July from June's print of 0.1 percent. Technical studies on daily charts still support weakness. Decisive break below 50-DMA could see test of 61.8% Fib at 1.15. On the flipside, 110-EMA is immediate resistance at 1.1605 ahead of 21-EMA at 1.1613. Breakout at 21-EMA could see further upside. Bullish continuation only on breach above daily cloud and 200-DMA resistance.
USD/JPY: USD/JPY extending sideways around 111 handle ahead of the Bank of Japan policy meeting. The central bank is expected to justify prolonging the current monetary easing policy this week. Price is consolidating between key support and resistance levels at 50-DMA and 21-EMA. Technical studies are neutral. Breakout could provide clear directional bias. Breakout at 21-EMA could see test of 113.17 (July 19 high). While break below 50-DMA could see drag till 200-DMA at 110.06.
AUD/USD: AUD/USD fails to extend Friday's recovery, trades muted below 0.74 handle. Data calendar for the Aussie remains limited, traders focus on US Federal Reserve policy meeting for further impetus. Larger trend remains bearish. However, bullish divergence keeps scope for upside. 21-EMA at 0.7410 is immediate resistance, while 0.7320 (trendline) is strong support on the downside.
Equities Recap
Disappointing earnings drag European shares lower. The pan-European STOXX 600 index was down 0.31 percent at 390.86 points, while the FTSEurofirst 300 index fell 0.28 percent to 1,530.77 points.
Britain's FTSE 100 was down 0.42 percent at 7,676.25 points, while mid-cap FTSE 250 was down 0.06 percent at 20,856.73 points.
Germany's DAX was down 0.26 percent at 12,827.55 points; France's CAC 40 was down 0.33 percent at 5,493.58 points.
Commodities Recap
Gold rangebound on firm dollar ahead of central bank meetings. Spot gold was down about 0.3 percent at $1,219.70 an ounce at 0656 GMT. U.S. gold futures were 0.3 percent lower at $1,219 an ounce.
Oil prices edged higher on US growth optimism, but global trade tensions limit price gains. October Brent crude futures were last up 36 cents at $75.12 a barrel by 0902 GMT. U.S. crude futures were up 78 cents at $69.47 a barrel.
Silver fell 0.3 percent at $15.41 per ounce, platinum fell 0.5 percent to $821 while palladium rose 0.5 percent to $925.90.
Treasuries Recap
U.S.: The U.S. Treasuries suffered Monday, as investors remain focused this week, primarily on the Federal Open Market Committee’s (FOMC) monetary policy meeting, scheduled to be concluded on August 1, although no sharp market reactions are expected this time. However, the ADP non-farm employment change and ISM manufacturing PMI for the month of July, due by later this week shall guide financial markets better. The yield on the benchmark 10-year Treasuries rose 1-1/2 basis points to 2.97 percent, the super-long 30-year bond yields also climbed 1-1/2 basis points to 3.10 percent and the yield on the short-term 2-year traded flat at 2.67 percent.
UK: The UK gilts plunged Monday as investors wait to watch the country’s manufacturing PMI for the month of July and the Bank of England’s (BoE) monetary policy meeting, scheduled for August 1 and 2 by 08:30 GMT and 11:00 GMT respectively. Also, Britain’s July construction PMI and the central bank’s Inflation Report, due to be released on the latter date will be closely watched for further insights into the debt market. The yield on the benchmark 10-year gilts, jumped 4 basis points to 1.32 percent, the super-long 30-year bond yields climbed 3-1/2 basis points to 1.76 percent and the yield on the short-term 2-year traded 2 basis points higher at 0.77 percent.
EUR: The German bunds slumped during European session Monday on expectations of an improvement in the country’s unemployment change for the month of July, besides eurozone’s consumer price inflation for the month of July, both scheduled to be released on July 31 by 07:55 GMT and 09:00 GMT respectively. The German 10-year bond yields, which move inversely to its price, jumped nearly 3 basis points to 0.43 percent, the yield on 30-year note also surged 3 basis points to 1.09 percent and the yield on short-term 2-year traded nearly 2 basis points higher at -0.59 percent.
JGBs: The Japanese government bonds suffered Monday, following persistent hypes over the Bank of Japan’s (BoJ) monetary policy meeting, where it is expected adopt a policy normalization. Also, the country’s retail sales for the month of June beat market estimates, also rising from that in May, thus pressurizing debt prices. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1/2 basis point to 0.10 percent, the yield on the long-term 30-year note surged 2 basis points to 0.82 percent and the yield on short-term 3-year traded nearly 1 basis point higher at -0.11 percent.
AUD: Australian government bonds traded mixed on Monday as markets await major central banks’ monetary policy decisions scheduled this week, where the Bank of Japan is speculated to start unwinding its quantitative easing and the Bank of England is expected to hike its interest rate, while the Federal Reserve is anticipated to keep policy steady. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, fell 1 basis point to 2.649 percent, the yield on the long-term 30-year Note also dipped 1 basis point to 3.120 percent and the yield on short-term 2-year traded flat at 2.017 percent.
