Market Roundup
- EUR/USD 0.17%, USD/JPY 0.38%, GBP/USD 0.19%, EUR/GBP -0.01%
- DXY -0.01%, DAX -0.05%, FTSE 0.3%, Brent -0.29%, Gold -0.34%
- Fed set to hold interest rates steady, remains on track for more hikes
- BOJ seeks to make its ammunition last longer as options dwindle
- EZ Q2 GDP Flash Prelim YY, 2.1%, 2.2% forecast, 2.5% previous
- Italy's economy slows in second quarter, posing challenge for new government
- Brent facing biggest monthly slide in two years on supply rise
- EZ Jul HICP Flash YY, 2.1%, 2.0% forecast, 2.0% previous
- EZ Jun Unemployment Rate, 8.3%, 8.3% forecast, 8.4% previous
- Germany Jun Retail Sales YY Real, 3.0%, 1.5% forecast, -1.6% previous
- Germany Jul Unemployment Rate SA, 5.2%, 5.2% forecast, 5.2% previous
- France Jul CPI (EU Norm) Prelim YY, 2.6%, 2.4% forecast, 2.3% previous
- Great Britain Jul Gfk Consumer Confidence, -10, -9 forecast, -9 previous
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Commerce Department releases personal income figures for June, which is expected to rise 0.4 percent, after posting similar gains in the previous month.
- (0830 ET/1230 GMT) The U.S. Commerce Department releases the personal consumption expenditures (PCE) price index for the month of June. The index rose at an annualized rate of 2.3 percent in the prior month while core PCE is likely to have increased 0.1 percent after rising 0.2 percent in the previous month.
- (0830 ET/1230 GMT) The U.S. Personal spending is likely to rise 0.4 percent in the month of June, after surging 0.2 percent in May.
- (0830 ET/1230 GMT) The U.S. Labor Department will release its employment cost index for the second quarter. The index is expected to rise 0.7 percent.
- (0830 ET/1230 GMT) The Statistics Canada releases its Raw Material Price Index for the month of June. The index posted a rise of 3.8 percent in May.
- (0830 ET/1230 GMT) The Statistics Canada will report its industrial producer prices for the month of June. The indicator rose 1.0 percent in the prior month.
- (0830 ET/1230 GMT) The Statistics Canada is expected to report that gross domestic product increased 0.3 percent in May after it grew by 0.1 in April.
- (0900 ET/1300 GMT) The S&P/Case-Shiller is expected to report that U.S. home price index of 20 metropolitan areas rose at an annualized rate of 6.4 percent in May, after rising 6.6 percent in the previous month.
- (0945 ET/1345 GMT) Chicago Purchasing Managers' Index is likely to show that business conditions rose to 62.0 in July from 64.1 last month.
- (1000 ET/1400 GMT) The U.S. Conference Board is likely to report that its consumer confidence index came in at 126.0 in July.
- (1630 ET/2030 GMT) API reports its weekly crude oil stock.
Key Events Ahead
- N/A The U.S. Federal Reserve's Federal Open Market Committee (FOMC) commences its two-day meeting on interest rates.
FX Beat
DXY: The dollar index tumbled as markets expect the Federal Reserve to keep interest rates unchanged on Wednesday, however, investors anticipate more two hikes this year even as President Donald Trump has criticized the central bank's move to raise rates. The greenback against a basket of currencies trades 0.2 percent down at 94.20, having touched a low of 94.08 last week, its lowest since July 10. FxWirePro's Hourly Dollar Strength Index stood at -83.92 (Slightly Bearish) by 1000 GMT.
EUR/USD: The euro rallied above the 1.1700 handle after data showed preliminary consumer prices index rose at an annualized rate of 2.1 percent in the month of July from previous month's reading of 2.0 percent. Meanwhile, core CPI edged up to 1.1 on a yearly basis percent from 0.9 percent, surpassing expectations of 1.0 percent. The European currency traded 0.2 percent up at 1.1732, having touched a low of 1.1620 on Friday, its lowest since July 19. FxWirePro's Hourly Euro Strength Index stood at 124.48 (Highly Bullish) by 1100 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 surged to an over 1-week peak against the Japanese yen after the Bank of Japan pledged to maintain its short-term interest rate target at minus 0.1 percent and adopted a forward guidance model to strengthen its commitment for its massive policy stimulus. The major was trading 0.4 percent up at 111.52, having hit a high of 111.59 earlier, its highest since July 24. FxWirePro's Hourly Yen Strength Index stood at -133.39 (Highly Bearish) by 1100 GMT. Investors’ will continue to track broad-based market sentiment, as U.S. personal consumption expenditures. Immediate resistance is located at 111.63 (10-DMA), a break above targets 112.00. On the downside, support is seen at 110.58 (July 26 low), a break below could take it lower 110.27 (July 4 Low).
GBP/USD: Sterling rose, extending gains for the third straight session, as investors awaited the Bank of England's monetary policy meeting later in the week at which investor price in a near 90 percent probability of a 25 basis points rate hike. The major traded 0.2 percent up at 1.3164, having hit a high of 1.3213 on Thursday; it’s highest since July 17. FxWirePro's Hourly Sterling Strength Index stood at -68.36 (Bullish) 1100 GMT. Immediate resistance is located at 1.3170 (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 0.05 percent down at 89.15 pence, having hit a low of 89.27 earlier, it’s lowest since July 23.
USD/CHF: The Swiss franc rose to a near 3-week peak as the greenback eased ahead of Federal Reserve's two-day policy meeting. The major trades 0.05 percent down at 0.9877, having touched a low of 0.9869 earlier, it’s lowest since July 9. FxWirePro's Hourly Swiss Franc Strength Index stood at 112.39 (Highly Bearish) by 1000 GMT. On the higher side, near-term resistance is around 0.9900 and any break above will take the pair to next level till 0.9944 (10-DMA). 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 edged up, reversing early session losses, while the greenback eased ahead of a two-day monetary policy meeting of the U.S. Federal Reserve
The pan-European STOXX 600 index surged 0.1 percent at 391.40 points, while the FTSEurofirst 300 index rallied 0.3 percent to 1,534.49 points.
Britain's FTSE 100 trades 0.6 percent up at 7,748.44 points, while mid-cap FTSE 250 gained 0.2 percent to 20,906.79 points.
Germany's DAX rose 0.05 percent at 12,798.97 points; France's CAC 40 trades 0.1 percent higher at 5,495.83 points.
Commodities Recap
Crude oil prices rose but were on track for their biggest monthly loss in two years after a Reuters survey showed OPEC's oil output hit a 2018 high in July, renewing concern about supply surpassing demand. International benchmark Brent crude was trading 0.5 percent up at $75.24 per barrel by 1030 GMT, having hit a high of $75.58 earlier, its highest since July 13. U.S. West Texas Intermediate was trading 0.5 percent lower at $69.68 a barrel, after rising as high as $70.41 on Monday, its highest since July16.
Gold prices declined as investors remained on the sidelines ahead of a two-day monetary policy meeting of the U.S. Federal Reserve. Spot gold was 0.2 percent up at $1,218.40 an ounce at 1042 GMT, having hit a high of $1,235.12 on Thursday, its highest since July 17. U.S. gold futures were 0.1 percent lower at $1,220.70 an ounce.
Treasuries Recap
The U.S. 10-year hovered around the 3 percent mark, with yield slumping to as low as 2.934, a level last seen on July 24 ahead of key central banks’ meetings throughout this week, including the Federal Reserve. The yield on the benchmark 10-year Treasuries fell 2-1/2 basis points to 2.94 percent, the super-long 30-year bond yields plunged nearly 3-1/2 basis points to 3.07 percent and the yield on the short-term 2-year traded nearly 1 basis point lower at 2.66 percent.
The German bunds jumped during European session after the country’s unemployment change for the month of July missed market expectations, while the jobless rate remained unchanged at 5.2 percent. The German 10-year bond yields, which move inversely to its price, slumped nearly 2 basis points to 0.43 percent, the yield on 30-year note plunged nearly 2-1/2 basis points to 1.08 percent and the yield on short-term 2-year slipped nearly 1 basis point to -0.59 percent.
The New Zealand bonds closed lower as investors wait to watch the country’s employment report for the second quarter of this year, scheduled to be released today by 22:45GMT. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, jumped 3 basis points to 2.79 percent, the yield on the long-term 20-year note also surged 3 basis points to 3.09 percent while the yield on short-term 2-year closed 1-1/2 basis points to 1.84 percent.
The Japanese government bonds jumped after the Bank of Japan (BoJ) remained on hold at its monetary policy decision, unveiled early today but decided to remain flexible on interest rates, depending on the economic situation. According to a report from Nikkei, however, the BoJ is unlikely to consider an adoption of policy tightening at its upcoming meeting, based on views of five key central bank watchers. The yield on Japan’s benchmark 10-year bond, which moves inversely to its price, slumped 1-1/2 basis points to 0.06 percent, the yield on the long-term 30-year plunged nearly 6 basis points to 0.77 percent and the yield on short-term 3-year remained close to 1/2 basis point lower at -0.10 percent.
The Australian government bonds slumped as investors cashed in profits ahead of major central banks’ monetary policy decisions scheduled this week. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, rose 4-1/2 basis points to 2.700 percent, the yield on the long-term 30-year Note also jumped 4 basis points to 3.173 percent and the yield on short-term 2-year traded 2basis points higher at 2.042 percent.
