Market Roundup
- EUR/USD 0.06%, USD/JPY 0.21%, GBP/USD -0.35%, EUR/GBP 0.43%
- DXY 0.05%, DAX 0.11%, FTSE 0.03%, Brent 0.57%, Gold 0.02%
- Trump warned Tehran a U.S. attack was imminent, called for talks - Iranian officials
- Fed's Bullard says he dissented at Fed meeting on concerns over weak inflation, growth
- Bank of England's Carney dismisses Johnson claim on no-deal Brexit
- UK budget deficit widens, underscoring Brexit constraints on next finance minister
- EU Jun Markit Mfg Flash PMI, 47.8, 48.0 f'cast, 47.7 prev
- EU Jun Markit Services Flash PMI, 53.4, 52.9 f'cast, 52.9 prev
- EU Jun Markit Composite Flash PMI, 52.1, 51.8 f'cast, 51.8 prev
- Germany Jun Markit Mfg Flash PMI, 45.4, 44.5 f'cast, 44.3 prev
- Germany Jun Markit Services Flash PMI, 55.6, 55.4 f'cast, 55.4 prev
- Germany Jun Markit Composite Flash PMI, 52.6, 52.5 f'cast, 52.6 prev
- Italian PM sees difficult talks with EU, hopes to avoid debt procedure
Economic Data Ahead
- (0830 ET/1230 GMT) Statistics Canada is expected to report that retail sales gained 0.2 percent in April after rising 1.1 percent in May. While excluding autos, retail sales are likely to have risen 0.3 percent, after advancing 1.7 percent in the previous month.
- (0945 ET/1345 GMT) Financial firm Markit releases U.S. preliminary Manufacturing PMI for the month of June. The index is likely edged down to 50.4 after posted a final reading of 50.5 in the previous month.
- (0945 ET/1345 GMT) Financial firm Markit Economics is likely to report that preliminary U.S. service PMI business activity index rose to 51.0 in January after printing a final reading of 50.9 in May.
- (0945 ET/1345 GMT) Markit Economics will release preliminary U.S. composite PMI for the month of June. The index posted a final reading of 50.9 in the prior month.
- (1000 ET/1400 GMT) National Association of Realtors is likely to report that U.S. existing home sales rose 1.2 percent to a seasonally adjusted annual rate of 525,000 million units in May.
- (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count.
Key Events Ahead
- N/A The U.S. Federal Reserve is scheduled to release the initial results for its 2019 stress test of bank books.
- (1200 ET/1600 GMT) Federal Reserve Bank of Cleveland President Loretta Mester and Federal Reserve Board Governor Lael Brainard are expected to participate in a conference titled "Fed Listens: Town Hall Discussion with Federal Reserve Leadership" hosted by the Federal Reserve Bank of Cleveland in Cincinnati, Ohio.
- (1530 ET/1930 GMT) Federal Reserve Bank of San Francisco President Mary Daly is set to host "Zip Code Economies" podcast launch, focusing on Twelfth District: "At a time when society seems more divided than ever, how are people building bridges at the community level?", in San Francisco, California.
FX Beat
DXY: The dollar index plunged to a 2-week low, as a Federal Reserve Open Market Committee meeting this week opened the door to rate cuts in the United States. The greenback against a basket of currencies traded 0.1 percent down at 96.57, having touched a low of 96.50 earlier, its lowest since June 7. FxWirePro's Hourly Dollar Strength Index stood at -70.29 (Bearish) by 1000 GMT.
EUR/USD: The euro steadied near a 1-week peak after data showed euro zone business activity picked momentum this month despite worries about slowing global growth and the impact of trade wars. The European currency traded 0.05 percent up at 1.1305, having touched a high of 1.1317 on Thursday, its highest since June 12. FxWirePro's Hourly Euro Strength Index stood at 58.51 (Bullish) by 1000 GMT. Immediate resistance is located at 1.1330 (June 10 High), a break above targets 1.1361 (March 19 High). On the downside, support is seen at 1.1268 (June 13 Low), a break below could drag it below 1.1226 (June 4 Low).
USD/JPY: The dollar rebounded from a 5-1/2 month low as investors shifted attention to whether the United States and China can resolve their trade row at a Group of 20 leaders summit in Japan next week. The pair was trading 0.2 percent up at 107.52, having hit a low of 107.04 earlier, its lowest since Jan. 3. FxWirePro's Hourly Yen Strength Index stood at -39.86 (Neutral) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. Markit prelim PMI's, existing home sales and speeches by Fed's Clarida and Brainard. Immediate resistance is located at 107.68 (38.2% retracement of 108.72 and 107.04), a break above targets 108.08 (61.8% retracement). On the downside, support is seen at 106.88 (Apr. 17, 2018), a break below could take it lower at 106.26 (Mar. 29, 2018).
GBP/USD: Sterling declined, halting a 3-day rally, as Brexiteer Boris Johnson moved closer to becoming British prime minister triggering worries that his government would make a no-deal Brexit more likely. The major traded 0.3 percent down at 1.2663, having hit a high of 1.2727 on Thursday, it’s highest since Jun. 12. FxWirePro's Hourly Sterling Strength Index stood at -122.17 (Highly Bullish) 1000 GMT. Immediate resistance is located at 1.2763 (June 7 High), a break above could take it near 1.2813 (May 21 High). On the downside, support is seen at 1.2628 (Jun. 20 Low), a break below targets 1.2580 (Jun. 14 Low). Against the euro, the pound was trading 0.5 percent down at 89.31 pence, having hit a high of 88.72 on Thursday, it’s highest since Jun. 7.
USD/CHF: The Swiss franc steadied after rising to a 5-1/2 week peak in the previous session, as worries about a threatened U.S. military strike against Iran and a global trade conflict undermined risk sentiment. The major trades flat at 0.9816, having touched a low of 0.9791 on Thursday; it’s lowest since Jan. 10. FxWirePro's Hourly Swiss Franc Strength Index stood at 118.29 (Highly Bullish) by 1000 GMT. On the higher side, near-term resistance is around 0.9878 (38.2% retracement 1.0014 and 0.9791) and any break above will take the pair to next level till 0.9920 (June 10 High). The near-term support is around 0.9788 (Jan 8 Low), and any close below that level will drag it till 0.9737 (Sept. 28 2018 Low).
Equities Recap
European shares declined, weighed down by rising tensions between the United States and Iran, while investors await a G20 summit in Japan next week for progress from the United States and China on resolving the differences.
The pan-European STOXX 600 index slumped 0.05 percent at 386.08 points, while the FTSEurofirst 300 tumbled 0.2 percent to 1,518.78 points.
Britain's FTSE 100 trades 0.05 percent down at 7,424.36 points, while mid-cap FTSE 250 eased 0.2 to 19,347.25 points.
Germany's DAX rose 0.2 percent at 12,377.48 points; France's CAC 40 trades 0.4 percent lower at 5,557.15 points.
Commodities Recap
Crude oil prices rallied to 2-week peaks on fears of a U.S. military attack on Iran that would disrupt flows from the Middle East, which provides more than 20 percent of the world's oil output. International benchmark Brent crude was trading 0.3 percent higher at $64.72 per barrel by 0952 GMT, having hit a high of $65.04 earlier, its highest since May 31. U.S. West Texas Intermediate was trading 0.1 percent up at $57.21 a barrel, after rising as high as $57.75 earlier, its highest since the May 30.
Gold prices surged to a near 6-year high and were poised for its best week in more than three years on dovish signals from major central banks and rising tensions in the Middle East. Spot gold was 0.1 percent up at $1,388.52 per ounce by 1002 GMT, having touched a high of $1,411.75, its highest since Sept. 4 2013. U.S. gold futures were steady at $1,396.30 an ounce.
Treasuries Recap
The U.S. Treasuries plunged during the afternoon session, amid a muted trading session that witnessed data of little economic significance. The yield on the benchmark 10-year Treasury yield jumped nearly 4 basis points to 2.038 percent, the super-long 30-year bond yields surged nearly 2 basis points to 2.544 percent while the yield on the short-term 2-year struck nearly 6 basis points higher to 1.786 percent.
The German bunds slumped during European trading session after the country’s manufacturing PMI for the month of June and the eurozone’s composite PMI for the similar period, both exceeded market expectations, also rising from that in May. The German 10-year bond yields, which move inversely to its price, jumped 3 basis points to -0.292 percent, the yield on 30-year note surged 3-1/2 basis points to 0.284 percent and the yield on short-term 2-year traded 3 basis points higher at -0.716 percent.
The Australian government bond yields continued to track losses in the United States counterpart after the Federal Reserve on Wednesday in its monetary policy meeting, signalled further rate cuts on the way despite keeping on hold. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, fell 1 basis point to 1.278 percent, the yield on the long-term 30-year bond suffered 1-1/2 basis points to 1.897 percent and the yield on short-term 2-year slumped nearly 2-1/2 basis points to 0.912 percent.
