Market Roundup
- NZD/USD +0.75%, USD/JPY +0.2%, GBP/USD -0.3%
- Big Kiwi swings after RBNZ rate cut
- Sterling struggling again at 1-month lows
- EUR/GBP hits a 5-week high of 0.8611
- DXY+0.3%, DAX +0.6%, Brent +0.10%, Iron -1.72%
- RBNZ Cuts OCR 25bps to 2.0%
- RBNZ says further policy easing maybe needed
- RBNZ monetary policy to remain accommodative
- NZD/USD spikes to 0.7351 from 0.7187 then slips to 0.7245
- AUD/NZD loses a big figure before finding its feet
- UK Jul RICS House Survey +5 vs revised +15 previous, +6 expected
- Germany Aug TR IPSOS 55.3 vs 56.10 previous
- UK Aug TR IPSOS 49.2 vs 49.45 previous
- Sweden July CPIF +1.4% y/y vs 1.5% previous, +1.2% expected
- IEA cuts 2017 oil demand growth forecast by 0.1 mln BPD to 1.2 mln
Economic Data Ahead
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have decreased by 4,000 to a seasonally adjusted 265,000 for the week ending Aug 5, while continuing claims for the week ending July 29 is expected to have increased to 2.140 m from 2.138 m.
- (0830 ET/1230 GMT) The U.S. Labor Department publishes import and export price figures for the month of July. The import prices are likely to have decreased 0.3 percent after gaining 0.2 percent in June, while export prices are expected to stayed flat at zero after increasing 0.8 percent in the prior month.
- (0830 ET/1230 GMT) The Statistics Canada is likely to report that New Housing Price Index (NHPI) edged up 0.3 percent in June after rising to 0.7 percent in the prior month.
- (1000 ET/1400 GMT) The Conference Board releases Britain's Leading Economic Index for the month of July. The index declined 0.2 percent in the previous month.
- (1030 ET/1430 GMT) The Energy Information Administration reports its Natural Gas Storage for the week ending Aug 5.
- (1800 ET/2200 GMT) Chile's central bank will meets to set its benchmark interest rate, which is widely expected to hold it at 3.5 percent.
- (1830 ET/2230 GMT) The Business New Zealand will release its PMI index for the month of July. The index stood at 57.7 in the month of June.
- (1845 ET/2245 GMT) The Statistics New Zealand is likely to report that retail sales rose 1.0 percent for the second quarter after posting a gain of 0.8 percent in the previous quarter.
Key Events Ahead
- (1145 ET/1545 GMT) FedTrade ops 30-year Fannie Mae ; Freddie Mac max $2.075 bln.
FX Beat
DXY: The dollar index, against a basket of currencies rose 0.2 percent at 95.82, retreating from a low of 95.44 hit in the previous session.
EUR/USD: The euro declined, reversing most of its previous session gains, as the dollar attempted a minor recovery across the broad. The major came under renewed selling pressure as markets sentiment were hampered following dovish comments from the IEA and build up in U.S. crude oil inventories. The European currency trades 0.2 percent lower at 1.1149, pulling away from a high of 1.1191, touched earlier in the session. The short term bullishness can be seen only above temporary top formed at 1.12337 (Aug 2 High). Any violation above that level will take the pair to next immediate resistance 1.12668 (50% retracement of 1.16163 and 1.09115)/1.1300. On the lower side, support stands at 1.1150 and any indicative break below targets 1.1100/1.1079. The short term bearish invalidation is only above 1.1430 (Jun 26 High).
USD/JPY: The greenback consolidated between a narrow range as trading was subdued with the Japanese markets closed in observance of Mountain Day. The dollar rose to an early high of 101.49, however it failed to extend gains as the bullish momentum faded away. The major trades flat at 101.32, attempting to sustain gains above the 101.00 handle. The short term trend is slightly bearish as long as resistance102.65 holds. The major resistance is around 102.65 and any break above confirms minor trend reversal, a jump till 103/104 is possible. On the lower side, major support is around 100 and any break below 100 will drag the pair till 98.
GBP/USD: Sterling declined to a 1-month low below the 1.3000 handle as investors sentiments weakened following soft housing market data. Royal Institute of Chartered Surveyors report suggested that the British economy slowed in the month following the Brexit vote, as the house price growth and transactions gauges dropped to their lowest in years. Sterling trades 0.2 percent lower at 1.2976, having touched a low of 1.2935, its lowest since July 12. The short term trend is slightly weak as long as resistance 1.310 holds. From the current levels, 1.3100 level will be acting as major resistance any break above will take the pair to next level till 1.3170/1.3200. On the lower side 1.2930 seems to be major support and any break below targets 1.2900/1.2850. Minor bullishness can be seen only above 1.3200. Against the euro, the pound trades 0.1 percent lower at 85.96 pence.
USD/CHF: The Swiss franc declined as the dollar gained across the broad amid modest risk on-market profile. The greenback trades flat at 0.9750, having touched session's high of 0.9765. The major should close above 0.9855 (200 DMA) for further bullishness. Any break above 0.9855 will take the pair to next level till 0.9960/1.000. On the lower side, any break below 0.9730 (100 DMA) will take the pair to next level till 0.9705 (61.8% retracement of 0.9830 and 0.9633)/0.9630. Minor weakness can be seen below 0.9630 and any violation below 0.9630 targets 0.9575/0.9520.
AUD/USD: The Australian dollar rose as high as 0.7759, however trimmed gains from its multi-month highs as heavy losses in the AUD/NZD cross following RBNZ rate cut weighed down the major. The pair was also supported by rising copper prices, which posted it’s the biggest rally in almost 2-weeks a day before. The Aussie trades 0.3 percent higher at 0.7718, attempting to regain the 0.7750 level. On the higher side any break above 0.7760 will take the pair till 0.7800/0.7840. The major support is around 0.7680 and break below will drag it till 0.7630/ 0.7575/ 0.7535.
NZD/USD: The New Zealand dollar advanced to its highest level since May 2015 after the Reserve Bank of New Zealand cut its interest rate by 25 basis points to a record low 2.0 percent, as widely expected. Some market participants anticipated the central bank to aggressively ease OCR by a 50 basis point as to depreciate the kiwi in order to combat deflation risks. The major trades 1 percent higher at 0.7250, having touched a 1-year high of 0.7338 following RBNZ's rate decision. Immediate resistance is located at 0.7350, break above targets 0.7400. On the lower side, support is seen at 0.7158 (Aug 10-Low), break below could take it till 0.7100.
Equities Recap
European shares edged up as investors digested upbeat corporate earnings reports, however, the gains were as capped as energy stocks came under pressure from falls in oil price.
The pan-European STOXX 600 index jumped 0.3 percent to 345.10 points, while the FTSEurofirst 300 index advanced 0.3 percent to 1,358.79 points.
Germany's DAX rose 0.5 pct at 10,707.51 points; France's CAC 40 climbed 0.7 pct at 4,481.20 points.
Britain's FTSE 100 trades 0.3 pct lower at 6,847.09 points, while mid-cap FTSE 250 index edged down 0.1 pct at 17,686.20 points.
Australia's S&P/ASX 200 index declined 0.72 pct at 5,503.70 points and South Korea's KOSPI rose 0.2 pct at 2,048.80 points.
Shanghai composite index lost 0.5 pct at 3,002.64 points, while CSI300 index shed 0.3 pct at 3,233.36 points. Hong Kong’s Hang Seng index added 0.4 pct at 22,580.55 points.
Commodities Recap
Crude oil prices edged up after declining to a 6-day lows as a rise in U.S. crude inventories and IEA’s 2017 oil demand growth forecast cut by 0.1 mln BPD to 1.2 mln, added to global oversupply worries. International benchmark Brent crude oil was 0.4 percent up at $44.03 per barrel at 0955 GMT, pulling away from a low of $43.45 touched earlier in the session. U.S. West Texas Intermediate crude was trading at $41.62 per barrel, up by 0.4 percent.
Gold declined as investors cashed in gains and the dollar recovered across the broad. On Wednesday, the metal rose as much as 1.3 percent, hitting a high of $1,357.19. Spot gold fell 0.1 percent to $1,344.44 an ounce at 1002 GMT, having touched session's low of $1340.04. U.S. gold fell 0.3 percent to $1,348.30 an ounce.
Treasuries Recap
The US Treasuries gains stalled as investors look ahead to a slightly greater flow of data on Thursday, highlighted by import prices and jobless claims, followed later by a 30-year bond auction later in the session. The yield on the benchmark 10-year Treasury note rose 2 basis points to 1.519 percent and the yield on short-term 2-year note climbed 1 basis point to 0.698 percent.
The UK gilts plunged as investors cashed in profits after relishing a long week rally. Also, the 10-year bond yields broke to new lows below the 0.60 percent mark, and 0.50 percent is possibly on the cards. The yield on the benchmark 10-year gilts increased 1 basis point to 0.542 percent and the yield on short-long 2-year bond climbed 4 basis points to 0.140 percent.
The German bunds traded nearly flat Thursday, succumbing to thin trading activity during a relatively quiet session that witnessed data of little significance. The yield on the benchmark 10-year bond hovered around -0.11 percent mark, the yield on short-term 30-year note dipped 1/2 basis point to 0.389 percent and the yield on short-term 2-year bond remained steady at -0.636 percent.
The New Zealand 10-year bond yields fell after the Reserve bank of New Zealand slashed its official cash rate to a new record low of 2.00 percent in wake of depressing headline inflation and subdued economic growth. The yield on the benchmark 10-year bond fell 2-1/2 basis points to 2.135 percent and the yield on 7-year note also dipped 1-1/2 basis points to 1.855 percent.
The Australian government bonds gained after data showed that Melbourne Institute’s (MI) inflation expectations weakened in August, while justifying the Reserve bank of Australia’s last week policy decision. The yield on the benchmark 10-year Treasury note fell 3 basis points to 1.853 percent and the yield on short-term 2-year note dipped 1 basis point to 1.445 percent.
