Market Roundup
- EUR/USD +0.27%, USD/JPY +0.13%, GBP/USD +0.15%, EUR/GBP +0.14%
- DXY -0.16%, DAX -0.41%, FTSE +0.1%, Brent -1.43%, Gold -0.04%
- EZ Aug Sentix Index, 27.7 vs forecast 27.8, previous 28.3
- Great Britain Halifax House prices 3m/yy, 2.1% vs forecast 2.0%, previous 2.6%
- Germany Industrial output m/m, -1.1% vs forecast 0.2%, previous 1.2%
- China July FX reserves unexpectedly hit 9-month high as dollar weakens
- British election failure shakes confidence in May's Brexit strategy - ORB poll
- Sunday Telegraph said UK ready to pay 40 billion euros to leave EU
- Oil slides from 9-week highs as market looks to OPEC
- Gold hovers near lows, investors wary about U.S. rates
Economic Data Ahead
- (1000 ET/1400 GMT) The Fed releases its labor market conditions index (LMCI) for the month of July. The indicator posted a rise of 1.5 in the previous month.
- (1500 ET/1900 GMT) The U.S. Federal Reserve is likely to report that consumer credit declined to $15.54 billion in June from $18.41 billion the month before.
- (1901 ET/2301 GMT) The British Retail Consortium (BRC) will report its Like-for-Like Retail Sales for the month of July. The index rose at an annualized rate of 1.2 percent in June.
- (1850 ET/2350 GMT) Japan's Customs Office will release Trade Balance (BOP Basis) figures for the month of June. The economy posted a trade deficit of 115.1 billion yen in the earlier month.
Key Events Ahead
- (1145 ET/1545 GMT) St. Louis Fed President James Bullard gives a presentation on the U.S. economy and monetary policy before the America's Cotton Marketing Cooperatives 2017 Conference, in, Nashville, Tennessee.
- (1325 ET/1725 GMT) Minneapolis Fed chief Neel Kashkari participates in a moderated question-and-answer session at a Sioux Falls Rotary Club event, in Sioux Falls, South Dakota.
- (1430 ET/1830 GMT) FedTrade operation 30-year Fannie Mae / Freddie Mac (max $1.65 bn)
FX Beat
DXY: The dollar steadied across the board as strong employment data on Friday boosted expectations for more interest rate hikes from the Federal Reserve. The greenback against a basket of currencies traded 0.1 percent down at 93.39, having touched a high of 93.77 last week, it’s highest since July 28. FxWirePro's Hourly Dollar Strength Index stood at 120.70 (Highly Bullish) by 1000 GMT.
EUR/USD: The euro consolidated near the 1.1800 handle, after falling to a 4-day low in the previous session in response to the solid report from the U.S. labor market for the month of July. The European currency traded 0.2 percent up at 1.1799, having touched a high of 1.1909 on Wednesday, its highest since Jan 5, 2015. FxWirePro's Hourly Euro Strength Index stood at -35.47 (Neutral) by 1000 GMT. The near term resistance is around 1.1830 (support turned into resistance) any break above will take the pair till 1.1910. On the lower side, 1.17650 (55- M EMA) will be acting as near term support and any break below will drag it down till 1.1720/1.16500.
USD/JPY: The dollar rose, extending previous session losses as the yield on the benchmark 10-year Treasury rose nearly 1 basis point to 2.27 percent. The major was trading 0.1 percent up at 110.82, having hit a low of 109.84 the prior session, its lowest since Jun 15. FxWirePro's Hourly Yen Strength Index stood at 61.29 (Bullish) by 1000 GMT. On the lower side, the pair is facing major support at 110 and any break below will drag the pair down till 108. The upside remains capped by daily Tenken-Sen at 111.01 and any break above will take it till 111.38 (100- day MA), it should close above 100- day MA for further bullishness.
GBP/USD: Sterling retreated from an 11-day low against the dollar following the release of better-than-expected British house prices, which rose at an annualized pace of 2.1 percent in the three months to July. The major traded 0.2 percent up at 1.3054, having hit a high of 1.3267 on Thursday, its highest since Sept. 16. FxWirePro's Hourly Sterling Strength Index stood at -120.81 (Highly Bearish) by 1000 GMT. On the higher side, near term resistance is around 1.3083 (23.6% retracement of 1.32680 and 1.30250) and any break above will take the pair till 1.3160/1.3220. The near term support is around 1.3000 and any break below will drag it till 1.2930. Against the euro, the pound was trading 0.2 down at 90.42 pence, having hit a near 9-week low of 90.54 the prior session.
USD/CHF: The Swiss franc held firm near a 6-week low hit in the previous session as greenback rose on expectations for more interest rate hikes from the Federal Reserve this year. The major trades flat at 0.9724, having touched a high of 0.9763 last week, it’s highest since Jun. 20. FxWirePro's Hourly Swiss Franc Strength Index stood at 75.07 (Slightly Bullish) by 1000 GMT. The minor bullishness can be seen only above 0.9770 (Jun 15th, 2017 high) and any break above will take the pair till 0.9808 (May 30th, 2017 high)/0.9850. On the lower side, minor reversal can be seen below 0.9630 and any break below will drag it till 0.9595/0.9560 (61.8% retracement of 0.94385 and 0.9760)/0.9500.
AUD/USD: The Australian dollar tumbled, extending losses for the fifth consecutive sessions, as weakness in oil prices ahead of OPEC and non-OPEC member meeting undermined the bid tone around the major. The Aussie trades 0.2 percent down at 0.7911, having hit a low of 0.7891 on Friday, it’s weakest since July 26. FxWirePro's Hourly Aussie Strength Index stood at -78.09 (Slightly Bearish) by 1000 GMT. On the lower side, near term support is around 0.7870 (21- day EMA) and any break below will drag the pair till 0.7800/0.7760. The near term resistance is around 0.8070 and any break above targets 0.8100/0.8150.
Equities Recap
European shares declined, weighed down by large losses in individual stocks, while the dollar steadied versus a basket of currencies as investors focused on inflation data due this week.
The pan-European STOXX 600 index lost 0.2 percent to 381.39 points, while the FTSEurofirst 300 index eased 0.2 percent to 1,501.24 points.
Britain's FTSE 100 trades 0.1 percent up at 7,516.59 points, while mid-cap FTSE 250 declined 0.05 percent to 19,963.30 points.
Germany's DAX fell 0.4 percent at 12,251.28 points; France's CAC 40 trades 0.1 percent higher at 5,209.19 points.
Commodities Recap
Crude oil prices edged lower, drifting away from 9-week highs, as worries lingered over high production from OPEC and the United States. International benchmark Brent crude was trading 1.2 percent down at $51.72 per barrel by 1027 GMT, having hit a high of $52.90 on Tuesday, its strongest since May 25. U.S. West Texas Intermediate was trading 1.2 percent lower at $48.91 a barrel, after rising as high as $50.40 on Tuesday, its strongest since May 25.
Gold prices declined, hovering towards a near two-week lows, with the dollar remaining supported by expectations of monetary tightening in the United States following stronger-than-expected jobs data last week. Spot gold was trading 0.2 percent down at $1,256.45 per ounce at 1031 GMT, having touched a low of $1,254.08 on Friday, its lowest since July 26. U.S. gold futures for December delivery fell 0.1 percent to $1,263.10 per ounce.
Treasuries Recap
The U.S. Treasuries remained steady ahead of FOMC members Bullard and Kashkari’s speech, scheduled to be held today by 15:45GMT and 17:25GMT respectively, besides the 3-year note auction, due on August 8. The yield on the benchmark 10-year Treasury, rose nearly 1 basis point to 2.27 percent, the super-long 30-year bond yields hovered around 2.84 percent and the yield on short-term 2-year note traded nearly flat at 1.36 percent.
The UK gilts traded nearly flat Monday as investors remained sidelined in any major trading activity amid lack of economically significant data. Also, investors are closely eyeing the country’s manufacturing production for the month of June for further direction in the debt market. The yield on the benchmark 10-year gilts, slid 1/2 basis point to 1.17 percent, the super-long 30-year bond yields fell nearly 1 basis point to 1.81 percent and the yield on the short-term 2-year hovered around 0.25 percent.
The Eurozone periphery bonds traded narrowly mixed Monday as investors wait to watch the benchmark German 5-year auction, scheduled to be held on August 9 by 09:35GMT. Also, Germany’s consumer price led-inflation index (CPI) for the month of June, due on August 11 will provide further direction to the debt market. The benchmark German 10-year bond yields, which moves inversely to its price, hovered around 0.48 percent, the French 10-year bond yields flat at 0.75 percent, Irish 10-year bond yields rose nearly 1/2 basis point to 0.77 percent, Italian down 1/2 basis point to 2.01 percent, Netherlands 10-year bond yields steady at 0.59 percent, Portuguese equivalents slumped 1-1/2 basis points to 2.85 percent and the Spanish 10-year yields traded nearly flat at 1.47 percent.
The Japanese government bonds traded flat at the start of the trading week Monday as investors wait to watch the country’s 30-year auction, scheduled to be held on August 8 amid a silent week that will witness no data of any economic significance. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, hovered around 0.07 percent, the yield on long-term 30-year note traded flat at 0.87 percent and the yield on short-term 2-year too traded steady at -0.10 percent.
The New Zealand bonds gained at the time of closing Monday as investors wait to watch the Reserve Bank of New Zealand’s (RBZN) monetary policy decision scheduled to be unveiled on August 9. Further, the central bank Governor Wheeler’s speech, following the meeting, will add further guidance to the debt market. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1 basis point to 2.94 percent, the yield on 7-year note also slid 1 basis point to 2.78 percent and the yield on short-term 2-year too ended 1 basis point lower at 2.06 percent.
The Australian extended their sell-off Monday, tracking similar trend in U.S. Treasuries after the latter’s labor market report showcased some relief to the otherwise uninspiring set of economic data that weighed on the financial markets. Also, investors shifted their interests toward riskier assets, including equities and crude oil, which sent bond prices lower. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped nearly 3-1/2 basis points to 2.66 percent, the yield on 15-year note climbed 3 basis points to 2.96 percent while the yield on short-term 2-year traded 1 basis point higher at 1.79 percent.
