Market Roundup
- EUR/USD -0.26%, USD/JPY 0.12%, GBP/USD -0.08%, EUR/GBP -0.21%
- DXY -0.22%, DAX 1.11%, FTSE 0.56%, Brent 0.40%, Gold 0.33%
- Defiant Erdogan casts Turkey currency crisis in religious, patriotic terms
- Germany to trump Japan again with world's largest current account surplus - Ifo
- Germany Jul Producer Prices YY, 3.0%, 3.0% forecast, 3.0% previous
- Germany Jul Producer Prices MM, 0.2%, 0.2% forecast, 0.3% previous
- EZ Jun Construction Output MM, 0.19%, 0.28% previous
- Brexit vote could "in theory" be reversed - EU minister Moscovici
- UK households upbeat about their income, worried over Brexit
- Iran tells EU to speed up efforts to save nuclear deal
Economic Data Ahead
- No major economic data releases
Key Events Ahead
- (0815 ET/1215 GMT) Bank of Canada Senior Deputy Governor Carolyn A. Wilkins' speech
- (1100 ET/1500 GMT) Federal Reserve Bank of Atlanta President Raphael Bostic speaks on the economic outlook before a fireside chat of the Johnson City, Kingsport, and Bristol Chamber of Commerce, in Kingsport, Tennessee.
- (1200 ET/1600 GMT) Bundesbank president Weidmann speaks in Frankfurt
FX Beat
DXY: The dollar rallied as investors awaited the release of Federal Reserve policy meeting minutes and the Jackson Hole symposium for fresh insights into the likely direction of U.S. monetary policy. The greenback against a basket of currencies trades 0.2 percent up at 96.30, having touched a high of 96.98 on Wednesday, its highest since July 2017. FxWirePro's Hourly Dollar Strength Index stood at -104.89 (Highly Bearish) by 1000 GMT.
EUR/USD: The euro declined after rising for three consecutive sessions, following head of German Bundesbank Jens Weidmann comments, stating that the European Central Bank is on course towards a less expansive monetary policy and the forecast inflation rate of 1.7 percent for 2020 in line with its medium-term stability targets. The European currency traded 0.3 percent down at 1.1404, having touched a low of 1.1301 on Wednesday, its lowest since July 2017. FxWirePro's Hourly Euro Strength Index stood at 102.48 (Highly Bullish) by 1000 GMT. Immediate resistance is located at 1.1465 (50.0% retracement of 1.1628 and 1.1301), a break above targets 1.1503 (50% retracement). On the downside, support is seen at 1.1366 (5-DMA), a break below could drag it till 1.1301 (August 15 Low).
USD/JPY: The dollar rose against the safe-haven Japanese yen on speculation that the United States and China might find a compromise to resolve their trade dispute. The major was trading 0.2 percent up at 110.65, having hit a high of 111.43 on Wednesday, its highest since August 8. FxWirePro's Hourly Yen Strength Index stood at -43.97 (Neutral) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of FOMC member Bostic's speech. Immediate resistance is located at 111.13 (50.0% retracement of 112.15 and 110.11), a break above targets 111.87 (August 3 Low). On the downside, support is seen at 110.11 (August 13 Low), a break below could take it lower 109.68 (June 27 Low).
GBP/USD: Sterling traded within narrow ranges as investors refrained from taking big positions, ahead of impending talks that may decide whether Britain gets a trade deal with the European Union before it separates from the bloc. The major traded flat at 1.2740, having hit a low of 1.2661 on Wednesday; it’s lowest since June. 2017. FxWirePro's Hourly Sterling Strength Index stood at -28.47 (Neutral) 1000 GMT. Immediate resistance is located at 1.2782 (23.6% retracement of 1.3173 and 1.2661), a break above could take it near 1.2857 (38.2% retracement). On the downside, support is seen at 1.2660, a break below targets 1.2610. Against the euro, the pound was trading 0.1 percent up at 89.54 pence, having hit a low of 89.77 on Friday, it’s lowest since August 6.
USD/CHF: The Swiss franc eased as the greenback surged ahead of the release of minutes of the Federal Reserve's August policy meeting on Wednesday. The major trades 0.1 percent up at 0.9961, having touched a high of 0.9982 on Wednesday, it’s highest since August 6. FxWirePro's Hourly Swiss Franc Strength Index stood at -103.64 (Highly Bearish) by 1000 GMT. On the higher side, near-term resistance is around 1.0010 (July 20 High) and any break above will take the pair to next level till 1.0043 (July 19 High). The near-term support is around 0.9935 (21-DMA) and any close below that level will drag it till 0.9915 (August 3 Low).
Equities Recap
European shares rallied as risk-averse sentiment eased ahead of planned trade talks between the United States and China later this week.
The pan-European STOXX 600 index advanced 0.5 percent at 383.13 points, while the FTSEurofirst 300 index surged 0.5 percent to 1,497.67 points.
Britain's FTSE 100 trades 0.4 percent up at 7,592.07 points, while mid-cap FTSE 250 gained 0.7 percent to 20,588.31 points.
Germany's DAX rose 1.01 percent at 12,333.20 points; France's CAC 40 trades 0.6 percent higher at 5,379.32 points.
Commodities Recap
Crude oil prices gained, underpinned by an expected fall in supply from Iran due to U.S. sanctions, however, concerns over slowing global economic growth limited upside. International benchmark Brent crude was trading 0.4 percent up at $72.08 per barrel by 1020 GMT, having hit a low of $70.28 on Wednesday, its lowest since April 10. U.S. West Texas Intermediate was trading 0.05 percent higher at $65.98 a barrel, after falling as low as $64.45 on Thursday, its lowest since June 21.
Gold prices rose after tumbling to a 19-month low last week, as investors cautiously awaited the U.S.-China trade talks. Spot gold was 0.3 percent up at $1,187.14 an ounce as of 1024 GMT, having hit a low of $1160.07 on Thursday, its lowest since early January 2017. U.S. gold futures were up 0.7 percent at $1,191.60 an ounce.
Treasuries Recap
The U.S. Treasuries surged amid a comeback in trade talks with China over tariffs. It will be a quiet start to the coming week in the US too, with the first important diary entries being Wednesday’s release of the minutes from this month’s FOMC meeting and existing home sales data for July. The yield on the benchmark 10-year Treasuries slumped nearly 1-1/2 basis points to 2.85 percent, the super-long 30-year bond yields plunged close to 2 basis points to 3.01 percent and the yield on the short-term 2-year traded nearly 1 basis point lower at 2.612 percent.
The German bunds slipped during European session as investors wait to watch the country’s 10-year auction, scheduled to be held on August 22, besides, the manufacturing PMI for the month of August, due on the following day. The German 10-year bond yields, which move inversely to its price, rose 1/2 basis point to 0.30 percent, the yield on 30-year note also climbed 1/2 basis point to 0.97 percent and the yield on short-term 2-year hovered around -0.62 percent.
The New Zealand bonds ended tad higher as investors await to watch the GlobalDairyTrade (GDT) price auction and retail sales for the second quarter of this year, both scheduled to be released on August 21. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, remained tad lower at 2.600 percent, the yield on the long-term 20-year note also slipped nearly 1/2 basis point to 2.92 percent and the yield on short-term 2-year also closed 1/2 basis point lower at 1.72 percent.
The Japanese government bonds traded slightly higher on the first trading day of the week as geopolitical tensions continued to bother investors’ sentiments, leading to a rise in demand for safe-haven bonds, thus weighing on bond yields. The yield on the benchmark 10-year JGB note, which moves inversely to its price, hovered around 0.095 percent, the yield on the long-term 30-year note remained tad lower at 0.85 percent and the yield on short-term 2-year slipped nearly 1/2 basis point to -0.129 percent.
The Australian government bonds rallied across the curve during early Asian session as investors risk appetite remained sour ahead of U.S.-China trade talks this week. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, fell 2 basis points to 2.531 percent (lowest since December 2017), the yield on the long-term 30-year bond also dipped 2 basis points to 3.026 percent and the yield on short-term 2-year remained 1 basis point lower at 1.989 percent.
