Market Roundup
- EUR/USD -0.52%, USD/JPY 0.28%, GBP/USD -0.49%, EUR/GBP -0.04%
- DXY 0.45%, DAX 0.68%, FTSE 0.67%, Brent 0.6%, Gold -0.47%
- Great Britain Jul PSNB Ex Banks -0.184B vs 6.249B, 0.950B forecast
- Great Britain Jul PSNB, mm GBP -0.760Bvs 5.673B, -0.2000B forecast
- Great Britain Jul PSNCR, mm -3.912B vs 18.387B
- German investor morale falls more than expected in August - ZEW
- UK factories' output expectations highest since March as orders rise - CBI
- Swiss trade surplus widens to CHF 3.51 bln in July
- Trump commits U.S. to open-ended Afghanistan war; Taliban vow 'graveyard'
- Japan urges pressure on North Korea as U.S. spells out choices
- Four suspected Barcelona attack plotters appear in court
- Oil prices rise on signs of tightening market
- Gold slides, palladium hits highest since 2001
Economic Preview Ahead
- (0830 ET/1230 GMT) Statistics Canada is expected to report that retail sales gained 0.3 percent in June after rising 0.6 percent in May. While excluding autos, retail sales are likely to remain unchanged, after falling 0.1 percent in the previous month.
- (0830 ET/1230 GMT) The Statistics Canada releases its New Housing Price Index (NHPI) for the month of June. The index rose 0.4 percent in May.
- (0900 ET/1300 GMT) Mexico's economy is likely to have expanded 0.6 percent in the second quarter from the previous three-month period, while on an annualized basis, the economy is expected to have grown 1.8 percent compared with a year earlier.
- (1000 ET/1400 GMT) Federal Reserve Bank of Richmond will publish it Manufacturing Index for August. The index posted a rise of 14 in the prior month.
- (1630 ET/2030 GMT) API reports its weekly crude oil stock.
Key Events Ahead
- (1145 ET/1545 GMT) FedTrade operation 15-year Fannie Mae / Freddie Mac (max $475 mn)
- (1400 ET/1800 GMT) Federal Reserve publishes minutes of discount rate meetings
FX Beat
DXY: The greenback rallied across the board on expectations that Federal Reserve Chair Yellen will offer some hawkish clues on the U.S. rate hike plans at the Jackson Hole Symposium commencing this week. The greenback against a basket of currencies traded 0.5 percent up at 93.56, having touched a high of 94.15 on Wednesday, it’s highest since July 26. FxWirePro's Hourly Dollar Strength Index stood at -81.17 (Slightly Bearish) by 1000 GMT.
EUR/USD: The euro declined, reversing most of its previous session gains, amid expectations that the European Central Bank's monetary policy message at a central bank conference this week will be a cautious one. On Friday, ECB President Mario Draghi is likely to refrain from delivering a new policy message, tempering any expectations for the ECB to start charting the course out of its quantitative easing stimulus programme. The European currency traded 0.5 percent down at 1.1753, having touched a high of 1.1828 the session before, its highest since Aug. 14. FxWirePro's Hourly Euro Strength Index stood at -3.20 (Neutral) by 1000 GMT. On the lower side, near term support is around 1.16575 (23.6% retracement of 1.08930 and 1.19103) and any break below will drag the pair till 1.15985/1.1500. The near term resistance is around 1.1850 and any break above will take it till 1.19103 (Aug 8th, 2017)/1.19391 (1.13% retracement of 1.19103 and 1.16880)/1.1200.
USD/JPY: The dollar rebounded, halting its 4-day losing streak in response to strengthening Treasury yields, amid expectations that the Fed Chair Yellen will offer some hawkish hints on the rate hike plans at the Jackson Hole Symposium commencing this Thursday. The major was trading 0.3 percent up at 109.26, having hit a low of 108.60 on Friday, its lowest since Apr. 19 2016. FxWirePro's Hourly Yen Strength Index stood at 84.51 (Slightly Bullish) by 1000 GMT. The pair is facing minor resistance at 109.77 (daily Tenkan-Sen) and any break above will take the pair till 110.27 (21- day EMA)/111.23 (100- day MA). The near term resistance is around 112 (21- day EMA) and any break above targets 112.98/114.
GBP/USD: Sterling fell to a fresh 6-week low against the dollar, as UK’s uncertain economic outlook continued to dampen expectations of a rise in Bank of England interest rates. Data released earlier showed, the economy's public sector net borrowing unexpectedly posted its first budget surplus for any July since 2002, providing some support to the major. Sterling traded 0.5 percent down at 1.2827, having hit a low of 1.2831 on Friday, its lowest since July 12. FxWirePro's Hourly Sterling Strength Index stood at -100.17 (Highly Bearish) by 1000 GMT. On the higher side, 1.2940 (23.6% retracement of 1.32680 and 1.28315) will be acting major resistance and any convincing break above will take the pair slightly till 1.2980/1.3028/ 1.3050). The near term support is around 1.28110 (Jul 12th low) and any break below will drag it till 1.27763 (38.2% fibo)/1.27000. Against the euro, the pound was trading flat at 91.63 pence, having hit a fresh 10-month low of 91.73 pence.
USD/CHF: The Swiss franc eased, reversing most of its previous session gains, as the greenback steadied across the board amid improving risk sentiment. The major trades 0.4 percent up at 0.9661, having touched a high of 0.9765 on Wednesday, it’s highest since Aug. 8. FxWirePro's Hourly Swiss Franc Strength Index stood at 19.92 (Neutral) by 1000 GMT. The pair is facing near term support at 0.95800 and any close below will drag the pair till 0.9550/0.9500/0.94370. On the higher side, upside capped at 0.9783 (38.2% retracement of 1.03432 and 0.94385) and any break above will take the pair till 0.9845/0.9900.
AUD/USD: The Australian dollar tumbled as investors remained cautious ahead of the annual central banking conference in Jackson Hole. The Aussie trades 0.5 percent down at 0.7901, having hit a high of 0.7962 on Wednesday, it’s strongest since Aug. 04. FxWirePro's Hourly Aussie Strength Index stood at 15.46 (Neutral) by 1000 GMT. On the lower side, near term support is around 0.7800 and any break below will drag the pair till 0.7760 (61.8% fibo)/0.7688 (89- day EMA). The near term resistance is around 0.8070 and any break above targets 0.8100/0.8150.
Equities Recap
European shares rose, as a rally in iron ore prices boosted basic resources sector shares, while the greenback rebounded versus a basket of currencies as investors focused on the annual central banking conference in Jackson Hole this week.
The pan-European STOXX 600 index rallied 0.5 percent to 374.74 points, while the FTSEurofirst 300 index climbed 0.6 percent to 1,472.23 points.
Britain's FTSE 100 trades 0.6 percent up at 7,365.87 points, while mid-cap FTSE 250 gained 0.4 percent to 19,719.09 points.
Germany's DAX rose 0.7 percent at 12,154.33 points; France's CAC 40 trades 0.5 percent higher at 5,114.00 points.
Commodities Recap
Crude oil prices rose, strengthened by indications that supply may be tightening gradually, especially in the United States. International benchmark Brent crude was trading 0.3 percent up at $51.84 per barrel by 1028 GMT, having hit a high of $52.93 on Friday, its strongest since Aug. 8. U.S. West Texas Intermediate was trading 0.2 percent at $47.61 a barrel, after rising as high as $48.71 last week, its highest since Aug. 14.
Gold prices declined, weighed down by a stronger dollar, while investors remained cautious ahead of an annual central banking meeting in Jackson Hole later this week. Spot gold was down 0.4 percent at $1,285.60 an ounce by 1031 GMT, having touched a high at $1,300.80 per ounce in the previous session, its highest since Nov. U.S. gold futures for December delivery fell 0.6 percent to $1,289.10 per ounce.
Treasuries Recap
The U.S. Treasuries slumped as investors wait to watch the Federal Open Market Committee (FOMC) member Kaplan’s speech, scheduled to be held on August 23 by 13:05GMT. Also, markets remain focused to observe the speeches from the upcoming Jackson Hole Symposium, scheduled to be held on August 24 for detailed insight into debt trading. The yield on the benchmark 10-year Treasury, jumped nearly 2-1/2 basis points to 2.20 percent, the super-long 30-year bond yields climbed nearly 1-1/2 basis points to 2.77 percent and the yield on short-term 2-year note traded 2 basis points higher at 1.32 percent.
The UK gilts traded flat as investors wait to watch the country’s 5-year auction, scheduled to be held on August 23. Also, the second-quarter gross domestic product, due to be released on August 24 by 08:30GMT will add further direction to the debt market. The yield on the benchmark 10-year gilts, hovered around 1.07 percent, the super-long 30-year bond yields traded flat at 1.73 percent and the yield on the short-term 2-year remained tad lower at 0.21 percent.
The German government bonds traded flat after the Eurozone’s July CPI, released today, matched market consensus at 1.3 percent y/y. Further, the core CPI also came in line with estimates, at 1.2% y/y, both unchanged from previous as well. The German 10-year bond yields, which moves inversely to its price, slipped nearly 1 basis point to 0.43 percent, the yield on 30-year note hovered round 1.18 percent and the yield on short-term 2-year traded flat at -0.70 percent.
The Japanese government bonds remained narrowly mixed Tuesday, as investors wait to watch the country’s consumer price inflation for the month of July, scheduled to be released on August 24. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1/2 basis point to 0.04 percent, the yield on long-term 30-year traded fell 1 basis point to 0.84 percent and the yield on short-term 2-year also hovered around -0.13 percent.
The New Zealand bonds closed flat Tuesday as investors remained side-lined in any major trading activity and as market participants look forward to the release of the country’s trade balance for the month of July, scheduled on August 23. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 3-1/2 basis points to 2.88 percent, the yield on 7-year note plunged 3 basis points to 2.73 percent and the yield on short-term 2-year ended 2-1/2 basis points lower at 2.04 percent.
The Australian bonds traded nearly flat Tuesday as investors await cues from the Federal Reserve’s Jackson Hole Economic Policy Symposium scheduled for this Friday in Wyoming. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, traded tad higher at 2.65 percent, the yield on 15-year note remained steady at 2.95 percent and the yield on short-term 2-year rose nearly 1 basis point to 1.82 percent.
