Market Roundup
- EUR/USD -0.09%, USD/JPY 0.11%, GBP/USD -0.05%, EUR/GBP -0.07%
- DXY 0.15%, DAX -0.35%, FTSE -0.96%, Brent -1.35%, Gold -0.08%
- China vows retaliation if Trump slaps 25 pct tariff on $200 bln of Chinese imports
- EZ Jul Markit Mfg Final PMI, 55.1, 55.1 forecast, 55.1 previous
- Germany Jul Markit/BME Mfg PMI, 56.9, 57.3 forecast, 57.3 previous
- France Jul Markit Mfg PMI, 53.3, 53.1 forecast, 53.1 previous
- Italy Jul Markit/ADACI Mfg PMI, 51.5, 53.0 forecast, 53.3 previous
- Great Britain Jul Nationwide house price yy, 2.5%, 1.9% forecast, 2.0% previous
- Great Britain Jul Markit/CIPS Mfg PMI, 54.0, 54.2 forecast, 54.4 previous
- Brazil set to hold rates at all-time low despite inflation spike
- Zimbabwe's ruling party wins majority in parliament, opposition questions poll
Economic Data Ahead
- (0815 ET/1215 GMT) Payrolls processor ADP releases U.S. employment report for the month of July. The report is expected to show that 185,000 jobs were added as compared with 177,000 jobs in June.
- (0930 ET/1330 GMT) The Markit will release Canada's Manufacturing PMI for the Month of July. The indicator rose to a seasonally adjusted 57.1 in the prior month.
- (0945 ET/1345 GMT) Financial firm Markit releases U.S. Manufacturing PMI for the month of July. The index is likely to show a final reading of 55.5 after posting similar gains in the previous month.
- (1000 ET/1400 GMT) The Institute for Supply Management (ISM) is expected to report that U.S. manufacturing Purchasing Managers' index eased to 59.5 in July from 60.2 in June.
- (1000 ET/1400 GMT) The Commerce Department is likely to report that U.S. construction spending increased 0.3 percent in June after rising 0.4 percent in the previous month.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending July 27.
- (1530 ET/1930 GMT) Autodata Corp is expected to report that U.S. auto sales figures dropped to an annualized rate of 17.10 million units in July from 17.47 million units in June.
Key Events Ahead
- (1400 ET/1800 GMT) The U.S. Federal Reserve's Federal Open Market Committee (FOMC) announces decision on interest rate, followed by statement in Washington D.C.
FX Beat
DXY: The dollar index surged as investors awaited the Federal Reserve policy meeting outcome, where it is expected to keep interest rates unchanged at 1.75-2.00 percent later in the day, having lifted borrowing costs by 25 basis points in June. The greenback against a basket of currencies trades 0.05 percent up at 94.58, having touched a low of 94.08 last week, its lowest since July 10. FxWirePro's Hourly Dollar Strength Index stood at -6.66 (Neutral) by 1000 GMT.
EUR/USD: The euro tumbled after data showed Eurozone manufacturing growth remained subdued in July as worries about trade tensions, tariffs, and rising prices weighed on market sentiment. The European currency traded 0.1 percent down at 1.1682, having touched a low of 1.1620 on Friday, its lowest since July 19. FxWirePro's Hourly Euro Strength Index stood at 55.61 (Bullish) by 1000 GMT. Immediate resistance is located at 1.1762 (June 10 High), a break above targets 1.1801 (June 13 High). On the downside, support is seen at 1.1649 (July 12 Low), a break below could drag it till 1.1600.
USD/JPY: The dollar trimmed gains after rising to a 1-week peak earlier in the day as investors awaited the Federal Reserve's policy statement for clues on whether the expected two rate hikes for the remainder of 2018 can be cemented into pricing and for any change in the tone of its policy statement. The major was trading 0.05 percent up at 111.92, having hit a high of 112.15 earlier, its highest since July 20. FxWirePro's Hourly Yen Strength Index stood at -115.77 (Highly Bearish) by 1000 GMT. Immediate resistance is located at 112.17 (July 11 High), a break above targets 112.56 (July 16 High). On the downside, support is seen at 111.53 (10-DMA), a break below could take it lower 111.00.
GBP/USD: Sterling steadied above the 1.3100 handle, ahead of the Bank of England policy meeting that is widely expected to raise interest rates. Moreover, the bid tone around the British pound strengthened after The National Institute of Economic and Social Research (NIESR) stuck to its forecast for British economic growth of 1.4 percent this year and 1.7 percent next year. The major traded 0.1 percent up at 1.3129, having hit a high of 1.3213 on Thursday; it’s highest since July 17. FxWirePro's Hourly Sterling Strength Index stood at -9.49 (Neutral) 1000 GMT. Immediate resistance is located at 1.3172 (21-DMA), a break above could take it near 1.3244 (July 12 High). On the downside, support is seen at 1.3082 (July 27 Low), a break below targets 1.3010 (July 18 Low). Against the euro, the pound was trading 0.1 percent up at 89.00 pence, having hit a low of 89.35 on Tuesday, it’s lowest since July 23.
USD/CHF: The Swiss franc eased, extending previous session losses, as the greenback surged ahead of the Federal Reserve's policy meeting outcome. The major trades 0.1 percent up at 0.9910, having touched a low of 0.9867 the day before, it’s lowest since July 9. FxWirePro's Hourly Swiss Franc Strength Index stood at 20.45 (Neutral) by 1000 GMT. On the higher side, near-term resistance is around 0.9944 (2DMA) and any break above will take the pair to next level till 0.9978 (July 27 High)). The near-term support is around 0.9857 (July 9 Low) and any close below that level will drag it till 0.9810.
Equities Recap
European shares slumped amid fears of an imminent escalation in the U.S.-China tariff war, while the greenback surged ahead of the FOMC monetary policy decision on interest rate.
The pan-European STOXX 600 index plunged 0.3 percent at 390.36 points, while the FTSEurofirst 300 index declined 0.3 percent to 1,530.31 points.
Britain's FTSE 100 trades 0.9 percent down at 7,673.97 points, while mid-cap FTSE 250 eased 0.3 percent to 20,813.42 points.
Germany's DAX fell 0.05 percent at 12,761.70 points; France's CAC 40 trades 0.05 percent lower at 5,511.18 points.
Commodities Recap
Crude oil declined, extending previous session losses, weighed down by an industry report that U.S. stockpiles of crude rose unexpectedly and by higher OPEC production. International benchmark Brent crude was trading 0.7 percent down at $73.49 per barrel by 1026 GMT, having hit a high of $75.58 the day before, its highest since July 13. U.S. West Texas Intermediate was trading 0.4 percent lower at $68.11 a barrel, after rising as high as $70.41 on Monday, its highest since July 16.
Gold prices eased, pressured by a stronger U.S. dollar ahead of the outcome of a Federal Reserve monetary policy meeting later in the day. Spot gold was 0.05 percent down at $1,223.09 an ounce by 1023 GMT, having hit a high of $1,235.12 on Thursday, its highest since July 17. U.S. gold futures were 0.3 percent lower at $1,220.10 an ounce.
Treasuries Recap
The U.S. 10-year Treasury is on its way to reach the 3 percent mark ahead of the Federal Open Market Committee’s (FOMC) monetary policy meeting, scheduled to be held later today. 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 jumped nearly 2-1/2 basis points to 3.10 percent and the yield on the short-term 2-year traded tad higher at 2.67 percent.
The United Kingdom’s gilt prices disappointed despite a decline in the country’s manufacturing PMI for the month of July. Investors will now be awaiting the Bank of England’s (BoE) monetary policy meeting, scheduled to be held on August 2 by 11:00GMT for further direction in the debt market. The yield on the benchmark 10-year gilts, jumped 3 basis points to 1.36 percent, the super-long 30-year bond yields climbed 1-1/2 basis points to 1.78 percent and the yield on the short-term 2-year traded 2 basis points higher at 0.78 percent
The German bunds plunged during European session after investors have largely shrugged-off the country’s lower-than-expected manufacturing PMI for the month of July. The German 10-year bond yields, which move inversely to its price, slumped 2-1/2 basis points to 0.46 percent, the yield on 30-year note climbed 2 basis points to 1.10 percent and the yield on short-term 2-year traded nearly 1 basis point higher at -0.57 percent.
The New Zealand bonds ended Wednesday’s session on a choppy note as investors have started to shift away from safe-haven assets towards riskier counterparts, like oil and equities, following rise of slight optimism from the ongoing U.S.-China trade talks. Also, the country’s employment report for the second quarter of this year pleased market participants, although the jobless rate failed to slow down, but the participation rate is clue to some good news going forward. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, jumped nearly 3 basis points to 2.81 percent, the yield on the long-term 20-year note surged 2-1/2 basis points to 3.11 percent while the yield on short-term 2-year closed 2 basis points to 1.86 percent.
The Japanese government bonds slumped during Asian session after investors’ risk sentiments improved, following an ease in global trade tensions between the United States and China, on deemed possibility of a trade talk between the duo. The yield on Japan’s benchmark 10-year bond, which moves inversely to its price, jumped 6 basis points to 0.12 percent, the yield on the long-term 30-year climbed 6-1/2 basis points to 0.81 percent and the yield on short-term 2-year remained 2-1/2 basis points higher at -0.08 percent.
The Australian government bonds slumped across the board ahead of the Federal Open Market Committee’s (FOMC) monetary policy decision, where the central bank is widely expected to keep its fed funds rate unchanged with a bias of further policy tightening. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, rose 4-1/2 basis points to 2.704 percent, the yield on the long-term 30-year Note also jumped 4 basis points to 3.176 percent and the yield on short-term 2-year traded rose 2-1/2 basis points to 2.053 percent.
