Market Roundup
- Eurozone banks expect loan demand to rise in the third quarter: ECB
- Britain's grocery sales decline for the first time since June 2016: Kantar
- BoE's Saunders says Brexit might stop rate hikes - Bloomberg
- Japan keeps the view of moderate economic recovery in July
- Spain's Socialists to lose first confidence vote after Podemos declines support
- Oil edges further above $63 on Mideast tensions
- Gold prices ease on profit-taking
Economic Data Ahead
- (0900 ET/1300 GMT) The Federal Housing Finance Agency releases its housing price index for the month of May. The index is likely to rise 0.3 percent, after gaining 0.4 percent in April.
- (1000 ET/1400 GMT) National Association of Realtors is likely to report that U.S. existing home sales rose 0.2 percent to an annual rate of 534,000 million units in June.
- (1000 ET/1400 GMT) Federal Reserve Bank of Richmond will publish its Manufacturing Index for July. The index posted a rise of 3 in the prior month.
- (1000 ET/1400 GMT) The European Commission releases Eurozone's preliminary Consumer Confidence reading for the month of July. The index posted a final reading of -7.2 in the previous month.
- (1630 ET/2030 GMT) API reports its weekly crude oil stock.
Key Events Ahead
- No Significant Events Scheduled
FX Beat
DXY: The dollar index advanced to a 2-week peak as investors waited for the outcome of the U.S. Federal Reserve's policy meetings next week. The Fed is widely expected to lower its target range of 2.25 percent - 2.50 percent by 25 basis points at a meeting ending July 31. The greenback against a basket of currencies traded 0.2 percent up at 97.52, having touched a high of 97.57 earlier, its highest since July 9.
EUR/USD: The euro plunged to a 7-week low, as the European Central Bank is widely expected to signal a dovish policy stance at Thursday’s meeting. The selling pressure further intensified after the ECB in its quarterly lending survey stated that eurozone banks expect loan demand to rise in the third quarter while they keep corporate lending and mortgage credit standards unchanged. The European currency traded 0.3 percent down at 1.1180, having touched a low of 1.1180 earlier, its lowest since June 3. Investors’ attention will remain on the EZ prelim consumer confidence, ahead of the U.S. housing price index and existing home sales. Immediate resistance is located at 1.1216 (38.2% retracement of 1.1281 and 1.1180), a break above targets 1.1241 (61.8% retracement). On the downside, support is seen at 1.1160 (June 3 Low), a break below could drag it below 1.1148 (May 22 Low).
USD/JPY: The dollar rallied to a near 1-week peak after U.S. President Donald Trump and congressional leaders reached a deal on a 2-year extension of the debt limit, easing fears of a government default later this year. The major was trading 0.2 percent up at 108.13, having hit a high of 108.20 earlier, its highest since July 17. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. housing price index and existing home sales. Immediate resistance is located at 108.32 (July 17 High), a break above targets 108.63 (July 5 High). On the downside, support is seen at 107.53 (July 3 Low), a break below could take it lower at 107.10 (June 26 Low).
GBP/USD: Sterling tumbled, extending losses for the third straight session, after Bank of England policymaker, Michael Saunders, stated that Brexit might prevent the central bank from raising interest rates. The major traded 0.2 percent down at 1.2455, having hit a low of 1.2417 earlier, it’s lowest since July 17. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2522 (July 9 High), a break above could take it near 1.2578 (July 12 High). On the downside, support is seen at 1.2396 (July 16 Low), a break below targets 1.2373 (Jan. 3 Low). Against the euro, the pound was trading 0.1 percent up at 89.74 pence, having hit a high of 89.54 on Monday, it’s highest since July 15.
USD/CHF: The Swiss franc eased, reversing most of its previous session gains, as the greenback surged on expectations for a smaller U.S. Federal Reserve rate cut next week. The major trades 0.1 percent up at 0.9830, having touched a low of 0.9803 on Monday; it’s lowest since July 1. On the higher side, near-term resistance is around 0.9884 (July 1 High) and any break above will take the pair to next level till 0.9932 (July 5 High). The near-term support is around 0.9778 (July 1 Low), and any close below that level will drag it till 0.9738 (June 28 Low).
Equities Recap
European shares extended gains for the third straight session, boosted by gains in the auto stocks and a wave of central bank easing.
The pan-European STOXX 600 index gained 0.7 percent at 390.44 points, while the FTSEurofirst 300 rallied 0.8 percent to 1,537.88 points.
Britain's FTSE 100 trades 0.4 percent up at 7,564.88 points, while mid-cap FTSE 250 gained 0.5 to 19,743.59 points.
Germany's DAX rose 1.2 percent at 12,440.88 points; France's CAC 40 trades 0.6 percent higher at 5,598.86 point.
Commodities Recap
Crude oil prices declined amid signs of faltering demand, although rising tensions in the Middle East after Iran’s seizure of a British tanker last week limited losses. International benchmark Brent crude was trading 0.2 percent lower at $63.17 per barrel by 1024 GMT, having hit a low of $61.26 on Thursday, its lowest since June 18. U.S. West Texas Intermediate was trading 0.05 percent down at $56.15 a barrel, after falling as low as $54.71 on Thursday, its lowest since the June 20.
Gold prices declined, extending losses for the third straight session on profit-taking, while the greenback strengthened ahead of the U.S. Federal Reserve meeting next week. Spot gold was trading 0.4 percent down at $1,419.16 per ounce by 1026 GMT, having touched a high of $1,452.80 on Friday, its highest since May 2013. U.S. gold futures slipped 0.8 percent to $1,415.40 an ounce.
Treasuries Recap
The U.S. Treasuries gained during the afternoon session, ahead of economically significant data by the end of this week, with major focus on the country’s first estimate of Q2 GDP on Friday and a host of debt auctions through this week. The yield on the benchmark 10-year Treasury yield rose 1 basis point to 2.052 percent, the super-long 30-year bond yields hovered around 2.575 percent and the yield on the short-term 2-year traded 2 basis points higher at 1.833 percent.
The German bunds jumped during European session ahead of the country’s manufacturing PMI for the month of July, scheduled to be released on July 24 by 07:30GMT and the European Central Bank’s (ECB) monetary policy meeting, due to be held on the following day by 11:45GMT for further direction in the debt market. The German 10-year bond yields, which move inversely to its price, slumped nearly 2 basis points to -0.338 percent, the yield on 30-year note suffered 1-1/2 basis points to 0.260 percent and the yield on short-term 2-year traded nearly 1 basis point down at -0.779 percent.
The Japanese government bond prices rose, with the 10-year JGB futures rising 0.04 point to 153.64. The 10-year JGB yield fell 0.5 basis point to minus 0.145 percent. The two-year JGB yield was flat at minus 0.205 percent. The 30-year JGB yield was flat at 0.375 percent.
The Australian government bonds surged during Asian session of the second trading day of the week amid a muted trading session that witnessed data of little economic significance ahead of the Reserve Bank of Australia’s Governor Philip Lowe’s speech, scheduled to be held on July 25 by 03:05GMT. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slumped nearly 2 basis points to 1.321 percent, the yield on the long-term 30-year bond also suffered 2 basis points to 1.956 percent and the yield on short-term 2-year traded nearly flat at 0.957 percent.
