Market Roundup
- EUR/USD -0.17%, USD/JPY -0.04%, GBP/USD -0.08%, EUR/GBP -0.06%
- DXY +0.14%, DAX +0.45%, FTSE +0.65%, Brent +0.54%, Gold -0.21%
- Great Britain Q2 GDP Prelim y/y, 1.7% vs forecast 1.7%, previous 2.0%
- Great Britain Jun BBA Mortgage Approvals, 40.200k, previous 40.347k revised 40.287k
- Fed expected to leave rates unchanged; balance sheet in focus
- UK's Hammond says cannot be complacent about growth
- Banks dealing EU sovereign debt may be dragged out of London
- Vital for Greece to keep up reforms to secure debt market access -IMF
- Brawl over Obamacare repeal returns to U.S. Senate floor
- BOJ's Nakaso: Japanese firms avoiding price hikes now but sentiment is changing
- China to convert all giant state companies into joint-stock firms by end-2017
- Oil prices rise as falling U.S. inventories stoke rebalancing hopes
- Gold drifts lower as dollar firms ahead of Fed
Economic Data Ahead
- (1000 ET/1400 GMT) The U.S. new home sales are expected to have increased 1.4 percent to 0.615 million units in June from 0.610 million the month before.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending July 21.
- (1400 ET/1800 GMT) The FOMC is due to conclude a two-day meeting and announce its decision on interest rates.
- (1950 ET/2350 GMT) Japan's Ministry of Finance will report foreign bond investment for the week ending July 17.
- (1950 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic stocks for the week ending July 28.
Key Events Ahead
- (11300 ET/1530 GMT) European Central Bank Executive Board member Sabine Lautenschläger's Speech.
FX Beat
DXY: The dollar eased against most of its major peers as investors remained cautious ahead of the Federal Reserve policy decision. The greenback against a basket of currencies traded flat at 94.10, having touched a low of 93.64 the prior day, it’s lowest since Jun. 24. FxWirePro's Hourly Dollar Strength Index stood at 28.98 (Neutral) by 1000 GMT.
EUR/USD: The euro consolidated within a narrow range for the second straight session as investors refrained from placing big bets ahead of the FOMC decision. The Fed is widely expected to hold interest rates unchanged and possibly hint that it will start winding down its massive holdings of bonds as early as September. The European currency traded flat at 1.1646, having touched a high of 1.1712 the prior day, its highest since Aug 20, 2015. FxWirePro's Hourly Euro Strength Index stood at 36.45 (Neutral) by 1000 GMT. The pair has formed shooting star in the daily chart and potential reversal zone is around 1.1740 (Aug 2015 high). Any break above will take it till 1.1745/1.18000. On the lower side, minor support is around 1.1589 (7- day MA) and any break below will drag it down till 1.1538 (200- H MA)/1.1480.
UD/JPY: The dollar failed to sustain early gains as investors digested the news that the U.S. Senate Republican plan to repeal and replace Obamacare had failed to get votes needed for approval. Moreover, optimistic comments delivered by the BoJ Deputy Governor Nakaso on the inflation outlook offered some support to the Japanese yen bulls. The major trading 0.1 percent down at 111.76, having hit a low of 110.62 on Monday, its lowest since Jun 15. FxWirePro's Hourly Yen Strength Index stood at -109.65 (Highly Bearish) by 1000 GMT. The pair formed a temporary top around 114.49 and it should close above 100- day MA for further bullishness. The near term resistance is around 112.50 and any break above targets 112.98/114.
GBP/USD: Sterling gained after the UK GDP first estimate revealed that the Britain's economy gathered some pace in the second quarter of this year. The economy's GDP figures came in at 0.3 percent q/q in the second quarter, surpassing previous reading and expectations of 0.2 percent growth. While on an annualized basis, the growth rate rose to 1.7 percent in Q2, in line with forecast. Sterling traded 0.2 percent up at 1.3052, having hit a high of 1.3057 on Monday, its highest since Jul. 18. FxWirePro's Hourly Sterling Strength Index stood at 77.49 (Slightly Bullish) by 1000 GMT. On the higher side, the pair is facing major resistance around 1.3130 and any break above confirms bullish continuation. On the lower side, near term support is around 1.2950 (21- day MA) and any break below will drag it till 1.2857 (daily Kijun-Sen)/1.28118 (Jul 12th low). Against the euro, the pound traded 0.3 percent up at 89.16 pence, having hit an 8-month low of 89.94 last week.
USD/CHF: The Swiss franc eased to a 6-day low as the greenback steadied near multi-month lows ahead of the Federal Open Market Committee monetary policy decision. The major trades 0.6 percent up at 0.9586, having touched a low of 0.9438 on Friday, it’s lowest since May 2, 2016. FxWirePro's Hourly Swiss Franc Strength Index stood at -162.12 (Highly Bearish) by 1000 GMT. In the daily chart, the pair is facing strong resistance around 0.9592 (21- EMA). Any break above will take it till 0.9700. On the lower side, major support is around 0.9440 and any daily close below will take it down till 0.9260 in the short term.
AUD/USD: The Australian dollar declined after data released earlier showed domestic consumer prices rose less than expected in the second year this year. The Aussie trades 0.2 percent lower at 0.7920, having hit a high of 0.7987 on Thursday, it’s highest since May 19, 2015. FxWirePro's Hourly Aussie Strength Index stood at -36.81 (Neutral) by 1000 GMT. On the lower side, near term support is around 0.7860 (10- day MA) and any break below will drag the pair till 0.7770 (21-day EMA)/0.7730 (61.8% retracement of 0.75711 and 0.79878). The near term resistance is around 0.8000 and any break above targets 0.8100.
Equities Recap
European shares rallied, strengthened by strong results from energy firms and autos companies, while the greenback steadied near a 13-month low as investors trimmed some short bets before the Federal Reserve policy decision.
The pan-European STOXX 600 index advanced 0.6 percent to 383.01 points, while the FTSEurofirst 300 index rallied 0.6 percent to 1,505.63 points.
Britain's FTSE 100 trades 0.6 percent up at 7,478.58 points, while mid-cap FTSE 250 gained 0.5 percent to 19,738.58 points.
Germany's DAX rose 0.5 percent at 12,319.78 points; France's CAC 40 trades 0.8 percent higher at 5,204.21 points.
Commodities Recap
Crude oil prices declined after rising to a near eight-week high in the previous session, on expectations of a drawdown in U.S. stocks and slowing signs of shale oil production. International benchmark Brent crude was trading 0.4 percent down at $50.50 per barrel by 1011 GMT, having hit a high of $50.89 on Tuesday, its strongest since Jun. 1. U.S. West Texas Intermediate traded 0.5 percent down at $48.26 a barrel, after rising as high as $48.64 the prior day, its strongest since Jun 1.
Gold prices tumbled, extending losses for the third straight session, as the dollar steadied above multi-month lows, with investors waiting for the Federal Reserve's statement for clues on the U.S. monetary policy outlook. Spot gold fell 0.2 percent to $1,247.04 per ounce at 1015 GMT, having hit a high of $1,258.76 an ounce on Monday, it highest since June 15. U.S. gold futures for August delivery fell 0.61 percent to $1,244.50 per ounce.
Treasuries Recap
The U.S. Treasuries gained ahead of the country’s 5-year auction, besides the Federal Open Market Committee (FOMC) monetary policy meeting, scheduled to be held today at 17:00GMT and 18:00GMT respectively. The yield on the benchmark 10-year Treasury, fell nearly 1-1/2 basis points to 2.31 percent, the super-long 30-year bond yields also slumped 1-1/2 basis points to 2.89 percent and the yield on short-term 2-year note traded tad lower at 1.39 percent.
The UK gilts climbed after investors moved into safe-haven assets, following the release of the country’s gross domestic product (GDP) for the second quarter of this year, which failed to push markets higher. The yield on the benchmark 10-year gilts, slumped 2-1/2 basis points to 1.23 percent, the super-long 30-year bond yields plunged a little over 2 basis points to 1.86 percent and the yield on the short-term 2-year also traded 2 basis points lower at 0.29 percent.
The Eurozone periphery bonds jumped in silent trading session that witnessed data of little economic significance. Also, the German and Eurozone consumer price inflation indices, scheduled for release on July 28 will add further direction to the debt market. The benchmark German 10-year bond yields, which moves inversely to its price, slipped 1/2 basis point to 0.56 percent, the French 10-year bond yields also slipped 1/2 basis point to 0.81 percent, Irish 10-year bond yields slumped nearly 2 basis points to 0.86 percent, Italian flat at 2.13 percent, Netherlands 10-year bond yields traded tad lower at 0.68 percent, Portuguese equivalents flat at 2.97 percent while the Spanish 10-year yields traded 1-1/2 basis points higher at 1.56 percent.
The Japanese bonds plunged as investors moved to riskier assets including crude oil and stocks. Energy prices rallied on Saudi Arabia's pledge to limit crude exports to help curb global oversupply. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1 basis point to 0.77 percent, the yield on 20-year note also jumped more than 1/2 basis point to 0.591 percent and the yield on short-term 3-year traded nearly 1 basis point higher at -0.072 percent.
The New Zealand bonds gained at the time of closing after reading the better-than-expected improvement in the country’s trade balance for the month of June, released early today. At the time of closing, the yield on the benchmark 10-year bond, which moves inversely to its price, fell 1 basis point to 3.00 percent, the yield on 7-year note also slipped 1 basis point to 2.86 percent while the yield on short-term 2-year note ended 1/2 basis point lower at 1.97 percent.
The Australian bonds slumped despite consumer prices were surprisingly soft last quarter and core inflation rate stayed below target for a sixth straight quarter. Also, the found refuge in the riskier asset following rise in commodities prices. The yield on the benchmark 10-year Treasury note, rose more than 4 basis points to 2.74 percent, the yield on 15-year note also jumped nearly 5 basis points to 3.04 percent and the yield on short-term 3-year traded 1/2 basis point higher at 2.03 percent.
