Market Roundup
- EUR/USD +0.59%, USD/JPY -0.07%, GBP/USD +0.11%, EUR/GBP +0.46%
- DXY -0.43%, DAX -0.41%, FTSE -0.01%, Brent +0.94%, Gold +0.50%
- ECB needs to keep policy adjustment gradual: Draghi
- Fed's Williams sees advanced economies stuck in low growth mode
- Ladbrokes/Paddy Power-Hammond new favourite to be next Tory leader
- UK retail sales recover from fall, but July seen tough - CBI
- Great Britain Jun CBI Distributive Trades, 12 vs forecast 2, previous 2
- Bank of England raises UK banks' capital requirements by 11.4 bln stg
- Swiss call time out in push on EU ties as Brexit talks begin
- U.S. Republican leaders work too buoy Senate healthcare bill
- Oil up on weaker dollar, supply glut caps gain
- Gold rebounds from 6-wk low as dollar sags ahead of Yellen speech
- China industrial profits quicken in May, seen fading as finance costs rise
Economic Data Ahead
- (0900 ET/1300 GMT) The S&P/Case-Shiller is expected to report that U.S. composite home price index of 20 metropolitan areas rose at an annualized rate of 5.9 percent in April, after posting a similar percentage gain in March.
- (0930 ET/1330 GMT) Brazil's current account surplus is likely to widen to $1.90 billion in May from $1.153 billion in the previous month.
- (1000 ET/1400 GMT) The Conference Board is likely to report that U.S. consumer confidence index declined to 116.0 in June from a reading of 117.9 recorded in May.
- (1000 ET/1400 GMT) Federal Reserve Bank of Richmond will publish it Manufacturing Index for June. The index is expected to rise to 4 from 1 in the prior month.
- (1630 ET/2030 GMT) API reports its weekly crude oil stock.
Key Events Ahead
- (1115 ET/1515 GMT) Federal Reserve Bank of Philadelphia President Patrick Harker speaks on the economic outlook and international trade before the European Economics and Financial Centre Distinguished Speakers Seminar, in London, England.
- (1300 ET/1700 GMT) Federal Reserve Chair Janet Yellen participates in "Global Economic Issues" conversation with Lord Nicholas Stern, president of the British Academy, in London, England.
- (1730 ET/2130 GMT) the Federal Reserve Bank of Minneapolis President Neel Kashkari participates in a town hall moderated question and answer session, in Houghton, Michigan.
FX Beat
DXY: The dollar tumbled across the board as investors remained cautious ahead of Federal Reserve Chair Janet Yellen's speech later in the day. The greenback against a basket of currencies traded 0.5 percent down at 96.88, having touched a low of 96.86 earlier, it’s lowest since June 15. FxWirePro's Hourly Dollar Strength Index stood at -75.10 (Slightly Bearish) by 1000 GMT.
EUR/USD: The euro rallied to a 2-week high after comments from European Central Bank President Mario Draghi highlighted a recovering economy. The central bank President said factors weighing on inflation in the Eurozone were temporary and that deflationary forces had been replaced with inflationary ones. The European currency traded 0.7 percent up at 1.1255, having touched a high of 1.1264 earlier, its highest since June 14. FxWirePro's Hourly Euro Strength Index stood at 125.95 (Highly Bullish) by 1000 GMT. On the higher side, any break above 1.1300 will drag the pair up till 1.13660/ 1.14350. The near term support stands at 1.11690 (21 EMA) in the daily chart and any break below will drag it till 1.1100/1.1050/1.1000.
USD/JPY: The dollar declined after rising to a 1-month high as investors turned cautious ahead of speeches by Federal Reserve officials for clues on whether the central bank will keep raising rates this year. The major traded down at 111.76, having hit a high of 112.07 earlier, its highest since May 24. FxWirePro's Hourly Yen Strength Index stood at -164.62 (Highly Bearish) by 1000 GMT. The pair is facing support at 108 and any break below will drag the pair down till 106.80. On the higher side, near term resistance is around 112.12 (May 24 high) will take the pair to next level till 113/114.35 likely.
GBP/USD: Sterling rose to a 1-week high after data showed CBI’s trends advanced at 12 in June, surpassing expectations and up from May’s 2. The Bank of England raised UK banks' capital requirements by 11.4 billion stg and highlighted the potential risks to financial stability associated with range of possible Brexit outcomes in the Financial Stability Report. Sterling traded 0.2 percent up at 1.2749, having hit a high of 1.2771 earlier, its highest since June 19. FxWirePro's Hourly Sterling Strength Index stood at -13.98 (Neutral) by 1000 GMT. On the lower side, the major support is around 1.2565 (200- day MA) and any break below will drag the pair till 1.2470 (61.8% retracement of 1.21088 and 1.30470)/1.2400 likely. The near term minor resistance is around 1.2772 (21- EMA) and any break above will take it till 1.2820/1.2870. Against the euro, the pound traded 0.5 percent down at 88.33 pence, hovering towards a 1-week low of 88.45 hit last week.
USD/CHF: The Swiss franc climbed to a near 2-week high as cautious tone ahead of speeches by Federal Reserve officials strengthened safe-haven assets. The major trades 0.7 percent up at 0.9657, having touched a low of 0.9653 earlier, its lowest since June 14. FxWirePro's Hourly Swiss Franc Strength Index stood at 96.27 (Slightly Bullish) by 1000 GMT. Technically the pair has been facing strong resistance around 0.98080 (May 30 high) and any close above will take the pair till 0.9845/0.9900. On the lower side, major support is around 0.9615 and any break below will drag it down till 0.9580/0.9520 (161.8% retracement of 0.9614 and 0.97393).
AUD/USD: The Australian dollar advanced to a 1-week high as a rebound in oil prices and broad-based U.S. dollar weakness boosted the bid tone around the major. The Aussie trades 0.3 percent up at 0.7605, having hit a high of 0.7624 earlier, it’s strongest since June 19. FxWirePro's Hourly Aussie Strength Index stood at 82.16 (Slightly Bullish) by 1000 GMT. On the lower side, near term support is around 0.7530 (200- day MA) and any break below will drag the pair till 0.7440 (61.8% retracement of 0.7320 and 0.7635)/0.7385 (61.8% retracement of 0.71599 and 0.77493) /0.7325/0.7300. The near term resistance is around 0.7650 and any break above targets 0.7700/0.7745.
Equities Recap
European shares tumbled as a drop in autos stocks offset gains among basic resources sector, while the dollar eased versus its major peers ahead of Fed Chair Janet Yellen's speech.
The pan-European STOXX 600 index declined 0.5 percent to 387.03 points, while the FTSEurofirst 300 index lost 0.4 percent to 1,523.58 points.
Britain's FTSE 100 trades 0.03 percent down at 7,444.86 points, while mid-cap FTSE 250 eased 0.7 percent to 19,540.11 points.
Germany's DAX fell 0.3 percent at 12,730.52 points; France's CAC 40 trades 0.4 percent lower at 5,274.52 points.
Commodities Recap
Crude oil prices rallied for a fourth consecutive session, as investors covered short positions, however, concerns over a supply glut capped the upside. International benchmark Brent crude was trading 0.9 percent up at $46.32 per barrel by 0957 GMT, having hit a high of $46.45 earlier, its strongest since Jun. 21. U.S. West Texas Intermediate traded 0.7 percent up at $43.76 a barrel, after falling as low as $42.03 on Wednesday, its lowest since Nov 8.
Gold prices rebounded from its lowest level in nearly six weeks, supported by a softer dollar ahead of the Federal Reserve Chair Janet Yellen's speech later in the day. Spot gold rose 0.6 percent to $1,250.47 per ounce at 1001 GMT, having hit a low of $1,235.26 on Monday, its lowest since May 16. U.S. gold futures for August delivery rose 0.5 percent to $1,252.20 an ounce.
Treasuries Recap
The U.S. Treasuries plunged ahead of the Federal Reserve Chair Janet Yellen’s speech, besides, FOMC member Harker’s speech, scheduled for later today. The yield on the benchmark 10-year Treasury, jumped 2 basis points to 2.16 percent, the super-long 30-year bond yields surged 1-1/2 basis points to 2.71 percent and the yield on short-term 2-year note traded 2 basis points higher at 1.37 percent.
The UK gilts slumped after the Bank of England (BoE) released its Financial Stability Report (FSR) for the month of June. The yield on the benchmark 10-year gilts, rose nearly 1/2 basis point to 1.00 percent, the super-long 30-year bond yields also climbed 1/2 basis point to 1.68 percent and the yield on the short-term 2-year traded nearly 2 basis points higher at 0.25 percent.
The Eurozone periphery bonds plunged after reading the European Central Bank (ECB) President Mario Draghi’s speech. Markets are looking forward to the release of benchmark German consumer price inflation for the month of June, due on June 29 for further direction in the debt market. The benchmark German 10-year bond yields, jumped 3-1/2 basis points to 0.28 percent, the French 10-year bond yields, also surged 3-1/2 basis points to 0.64 percent, Irish 10-year bond yield traded tad higher at 0.68 percent,
Italian equivalent climbed nearly 2 basis points to 1.91 percent, Netherlands 10-year bonds yield traded nearly 3-1/2 basis points higher at 0.48 percent, Portuguese equivalents rose 2 basis points to 2.94 percent while the Spanish 10-year yields traded 1 basis point higher at 1.38 percent.
The Japanese government bonds were pushed slightly higher across the curve, following hopes of a fall in the country’s retail sales for the month of May, scheduled to be released on June 29. The benchmark 10-year bond yield, fell nearly 1 basis point to 0.04 percent, the long-term 30-year bond yields also slipped close to 1 basis point to 0.80 percent and the yield on the short-term 2-year note slumped nearly 2 basis points to -0.12 percent.
The New Zealand bonds closed slightly on the upside after witnessing a softer trade surplus for the month of May, undershooting market expectations, released earlier today. At the time of closing, the yield on the benchmark 10-year bond, slumped 1-1/2 basis points to 2.78 percent, the yield on 7-year note also slipped 1-1/2 basis points to 2.69 percent and the yield on short-term 2-year note traded flat at 1.99 percent.
The Australian bonds remained upbeat in thin trading activity that witnessed data of little economic significance and as the country’s weekly consumer confidence edged slightly lower for the second straight week in a row. The yield on the benchmark 10-year Treasury note, plunged nearly 2 basis points to 2.37 percent, the yield on 15-year note slumped close to 3 basis points to 2.72 percent and the yield on short-term 2-year traded 1-1/2 basis points lower at 1.66 percent.
