Market Roundup
- EUR/USD -0.09%, USD/JPY +0.42%, GBP/USD -0.48%, EUR/GBP 0.42%
- DXY 0.17%, DAX -0.18%, FTSE 0.03%, Brent -2.31%, Gold -0.31%
- UK economic data weakens, casting doubt on BoE rate hike talk
- Great Britain May Construction O/P Volume y/y, -0.3% vs forecast +1.1%, previous -0.6% revised -0.1%
- Great Britain May Industrial Output y/y, -0.2% vs forecast +0.2%, previous -0.8%
- Great Britain May Manufacturing Output y/y, +0.4% vs +1.0%, previous 0.0%
- UK house prices rise at slowest pace in more than 4 years – Halifax
- Great Britain Jun Halifax House price 3M/YY, 2.6% vs forecast 3.1%, previous 3.3%
- U.S. job growth seen accelerating; unemployment rate steady
- World leaders braced for tough talks with Trump on climate, trade
- Trudeau: G20 will tell Trump he should take lead on climate change
- Strong rise in German industrial output signals solid Q2 growth
- Germany May Industrial Output m/m, 1.2%, vs forecast 0.3%, previous 0.8%, revised 0.7%
- ECB should adjust policy carefully, flexibly: Coeure
- ECB taper fears leave euro zone bonds battered and bruised
- BOJ should steadily proceed with 'implicit' tapering - ex-BOJ Shirai
- Bank of Japan offers to buy unlimited amount of bonds to calm markets
- Japan May machinery orders seen bouncing, Trump poses risk longer term
- Oil prices fall 2 percent on signs market still oversupplied
- Gold edges down, set for biggest weekly drop in 2 months
- Japan May regular pay +0.9% y/y, best gain since ’00, total cash earnings +0.7%
- Japan end-June foreign reserves $1.2498 trillion, end-May $1.2518 trillion
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Labor Department releases nonfarm payrolls report for the month of June. The report is likely to show 179,000 jobs were added compared with an increase of 138,000 the previous month.
- (0830 ET/1230 GMT) The U.S. Bureau of Labor Statistics will release labor force participation rate for the month of June. The rate stood at 62.7 percent in the previous month.
- (0830 ET/1230 GMT) The U.S. Labor Department is expected to report that unemployment rate remains unchanged at 4.3 percent in June.
- (0830 ET/1230 GMT) The United States' average hourly earnings are likely to rise 0.3 percent in June after climbing 0.2 percent in the month before.
- (0830 ET/1230 GMT) The Statistics Canada releases employment report for June. The economy is likely to have added 10,000 jobs, compared to a rise of 54,500 jobs in the previous month, while the participation rate stood at 65.8 percent in May.
- (0830 ET/1230 GMT) Canada's unemployment rate is expected to remain steady at 6.6 percent in June.
- (0900 ET/1300 GMT) Mexico's statistics institute releases data on consumer prices in the month of June. Consumer prices are likely to have gained 0.27 percent after declining 0.12 percent in May. The core price index is expected to have increased 0.31 percent after edging up 0.28 percent in May.
- (1000 ET/1400 GMT) The Richard Ivey School of Business releases Canada's seasonally adjusted Purchasing Managers Index for the month of June. The index posted a reading of 53.8 in the prior month.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending June 30.
Key Events Ahead
- N/A The G20 International Summit, a two-day event, will take place in Hamburg, Germany.
- (1100 ET/1500 GMT) The U.S. Federal Reserve will issue its semi-annual Monetary Policy Report to the Congress
- (1145 ET/1545 GMT) FedTrade Operation 30-Year Ginnie Mae (max $1.05 bn)
FX Beat
DXY: The dollar gained across the board following a rebound in the U.S. Treasury yields, while investors awaited the highly influential U.S. non-farm payroll report. The greenback against a basket of currencies traded 0.2 percent up at 96.00, hovering towards a high of 96.51 touched on Wednesday, it’s highest since Jun. 28. FxWirePro's Hourly Dollar Strength Index stood at 17.84 (Neutral) by 1000 GMT.
EUR/USD: The euro edged down from an early high of 1.1427 as investors turn cautious and refrain from placing further bets ahead of the crucial U.S. labor market report, which could provide insights on the strength of the U.S. labor market. The European currency traded 0.1 percent down at 1.1410, having touched a low of 1.1312 on Wednesday, its lowest since Jun 28. FxWirePro's Hourly Euro Strength Index stood at 62.39 (Bullish) by 1000 GMT. On the higher side, temporary top formed at 1.1445 will be acting as near term resistance and any break above will take the pair till 1.1500/1.1560. Major intraday support level is around 1.1290 and any break below will drag the pair till 1.12600 (21- day EMA).
USD/JPY: The dollar rallied to a 7-week high after Bank of Japan increased its purchases of government bonds. The major was also bolstered by higher U.S. Treasury yields amid concerns that the Federal Reserve will begin unwinding its bond holdings later this year. The pair traded 0.4 percent up at 113.67, having hit a high of 113.84 earlier, its highest since May 16. FxWirePro's Hourly Yen Strength Index stood at -45.77 (Neutral) by 1000 GMT. The near term resistance is around 114.36 and any break above targets 115.50. The pair is facing minor support at 112.85 (7- day MA) and any break below will drag it till 111.75 (100- day MA).
GBP/USD: Sterling slumped to a 1-week low after data showed industrial output data unexpectedly contracted and goods trade deficit widened in May, raising doubts about the likelihood of the BoE hiking interest rates this year. The economy's manufacturing output edged down 0.2 percent, while goods trade deficit increased to 11.863 billion pounds from 10.595 billion pounds in April, posing fresh challenges for the economy. Sterling traded 0.6 percent down at 1.2889, having hit a low of 1.2887 earlier, its lowest since Jun. 28. FxWirePro's Hourly Sterling Strength Index stood at -142.44 (Highly Bearish) by 1000 GMT. The pair should break above 1.3050 for further bullishness and any violation above will take the pair till 1.3110 (113% retracement of 1.30475 and 1.25894)/1.3150/1.33150 (88.6% retracement of 1.3440 and 1.19040). On the lower side, near-term minor support is around 1.2900 and any break below will drag it down till 1.2846 (21- day EMA)/1.2810 (daily Kijun-Sen)/1.2758. Against the euro, the pound traded 0.5 percent down at 88.52 pence, having hit a 1-week low of 88.53 earlier.
USD/CHF: The Swiss franc edged down after rising for two consecutive sessions, as investors attention shifted on the U.S. non-farm payrolls report due later in the day. The major trades 0.2 percent up at 0.9628, having touched a low of 0.9597 earlier, it’s lowest since Jul. 3. FxWirePro's Hourly Swiss Franc Strength Index stood at 74.93 (Bullish) by 1000 GMT. The intraday major resistance is 0.96875 (61.8% retracement of 0.97780 and 0.95504) and any break above will take the pair till 0.9710/0.97708.It should break above 0.9808 for further bullishness. On the lower side, major support is around 0.9550 and any break below will drag it till 0.9520/0.9495 level.
AUD/USD: The Australian dollar gained, halting its 4-day losing streak after the release of AiG Construction Index showed growth in construction activity in June. However, weaker trading sentiment around equity markets and commodity bloc capped the upside in the major. The Aussie trades 0.2 percent up at 0.7592, having hit a low of 0.7571 on Wednesday, it’s weakest since Jul. 28. FxWirePro's Hourly Aussie Strength Index stood at -11.20 (Neutral) by 1000 GMT. On the lower side, near term support is around 0.7560 (38.2% retracement of 0.77120 and 0.75711) and any break below will drag the pair till 0.7530 (200- MA). The near term resistance is around 0.7750 and any break above targets 0.7800/0.7835.
Equities Recap
European shares slumped and were set to end the week flat in wake of oil weakness, a rise in bond yields and anticipation of tighter monetary policy.
The pan-European STOXX 600 index eased 0.3 percent to 379.35 points, while the FTSEurofirst 300 index lost 0.3 percent to 1,491.87 points.
Britain's FTSE 100 trades 0.1 percent up at 7,346.10 points, while mid-cap FTSE 250 declined 0.2 percent to 19,321.47 points.
Germany's DAX fell 0.2 percent at 12,358.74 points; France's CAC 40 trades 0.3 percent lower at 5,125.40 points.
Commodities Recap
Crude oil prices declined by more than 2 percent after data showed U.S. production rose last week, raising doubt on efforts by producers to reduce oversupply. International benchmark Brent crude was trading 2.06 percent down at $46.97 per barrel by 1002 GMT, having hit a low of $46.73 earlier, its weakest since Jun. 29. U.S. West Texas Intermediate traded 2.2 percent lower at $44.31 a barrel, after falling as low as $44.18, its weakest since Jun 28.
Gold prices slumped and were poised for its biggest weekly loss in two months on the back of a firmer U.S. dollar and rising Treasury yields, while investors awaited the U.S. non-farm payrolls data later in the day. Spot gold edged lower 0.2 percent to $1,221.56 per ounce at 1015 GMT, having dropped 1.6 percent this week and set for its biggest weekly fall since the week of May 5. U.S. gold futures for August delivery fell 0.2 percent to $1,221.30 per ounce.
Treasuries Recap
The U.S. Treasuries slumped as investors remained cautious ahead of the country’s employment report for the month of June, scheduled to be released later today. The yield on the benchmark 10-year Treasury, rose 1 basis point to 2.38 percent, the super-long 30-year bond yields also climbed nearly 1 basis point to 2.91 percent and the yield on short-term 2-year note traded 1/2 basis point higher at 1.41 percent.
The UK gilts jumped Friday after the country’s manufacturing production for the May disappointed. Also, the Bank of England Governor Mark Carney’s speech, due later today will provide further direction to the debt market. The yield on the benchmark 10-year gilts, fell 1 basis point to 1.31 percent, the super-long 30-year bond yields also slipped 1 basis point to 1.93 percent and the yield on the short-term 2-year traded 2 basis points lower at 0.34 percent.
The Eurozone periphery bonds jumped Friday after energy prices witnessed massive downturn during the European session, following a rise in output in the United States. The benchmark German 10-year bond yields, which moves inversely to its price, fell 1 basis point to 0.52 percent, the French 10-year bond yields also slipped nearly 1 basis point to 0.92 percent, Irish 10-year bond yields traded 1/2 basis point lower at 0.96 percent, while Italian climbed 1 basis point to 2.28 percent, Netherlands 10-year bond yields remained flat at 0.76 percent, Portuguese equivalents jumped 2 basis points to 3.07 percent while the Spanish 10-year yields remained steady at 1.67 percent.
The New Zealand bonds closed lower Friday following a massive rout in the global debt market after minutes from the European Central Bank’s (ECB) June meeting showed that the possibility of a potential withdrawal of monetary stimulus. At the time of closing, the yield on the benchmark 10-year bond, which moves inversely to its price, slumped 4-1/2 basis points to 2.98 percent, the yield on 7-year note also plunged 4-1/2 basis points to 2.87 percent and the yield on short-term 2-year note ended 3 basis points lower at 2.05 percent.
The Australian 10-year bond yields surged to near 2-month high on the last trading day of the week as the shift underway in global fixed income markets continues after minutes from the European Central Bank’s (ECB) June meeting showed that the committee members had discussed the potential of monetary stimulus withdrawal. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 8 basis points to 2.67 percent, the yield on 15-year note also surged 8 basis point to 3.02 percent and the yield on short-term 2-year traded nearly 3-1/2 basis points higher at 1.74 percent.
