Market Roundup
- Japan-US may link currency, trade in economic dialogue - Nikkei
- Japan may reverse course, issue more government bonds – Nikkei
- Japan June industrial output +1.6% m/m, +1.7% eyed, May -3.6%
- Output eyed at +0.8% m/m in July, previous forecast -0.1%, August at +3.6%
- China Jul official mfg PMI, 54.5 vs Jun 51.7, forecast 51.6
- Jul official services PMI, 54.5 vs Jun 54.9
- MSCI warns Chinese companies about suspending trading of shares
- UK companies' optimism on economy slips to six-month low - Lloyds
- Australia new homes sales fall sharply in Jun -Industry survey
- NZ business confidence drops in Jul -ANZ bank
- Trump urges Republican senators not to give up on healthcare
- Trump and Japan's Abe talk about "grave and growing" No. Korea threat
Economic Data Ahead
- (0400 ET/0800 GMT) Italy Jun Unemployment Rate, 11.30% eyed, last 11.30%
- (0430 ET/0830 GMT) Great Britain Jun BOE Consumer Credit, 1.50 bln eyed, last 1.73 bln
- (0430 ET/0830 GMT) Great Britain Jun Mortgage Approvals, 65.00k eyed, last 65.20k
- (0500 ET/0900 GMT) Eurozone Jun Unemployment Rate, 9.20% eyed, last 9.30%
- (0500 ET/0900 GMT) Eurozone Jul Inflation Flash, 1.30% eyed, last 1.30%
Key Events Ahead
- (0600 ET/1000 GMT) Bank of Spain Gov Luis Linde speaks in a conf. in Asturias
- (0855 ET/1255 GMT) France E3.0-3.4/1.0-1.4/0.9-1.3 bln for 3/6/12 month auctions
FX Beat
DXY: The dollar consolidated near recent lows versus its major peers as deepening U.S. political uncertainty and weak U.S. data raised doubts whether there will be another Federal Reserve rate hike this year. The greenback against a basket of currencies traded 0.2 percent up at 93.44, having touched a low of 93.15 on Thursday, it’s lowest since Jun. 23 2016. FxWirePro's Hourly Dollar Strength Index stood at -46.20 (Neutral) by 0500 GMT.
EUR/USD: The euro slightly edged down after rising to a 2-1/2-year high last week as U.S. political uncertainty and uninspiring U.S. data added to doubts about whether there will be another Federal Reserve rate hike this year. Investors now await Eurozone inflation data, which is expected to show the consumer price index rose 1.3 percent y/y against the previous figure of 1.3 percent. The European currency traded 0.1 percent down at 1.1735, having touched a high of 1.1776 on Thursday, its highest since Jan 14, 2015. FxWirePro's Hourly Euro Strength Index stood at 35.11 (Neutral) by 0400 GMT. Investors’ attention will remain on Eurozone's CPI figures, ahead of the U.S. pending home sales, Chicago purchasing managers index and Dallas Fed manufacturing business index. Immediate resistance is located at 1.1780, a break above targets 1.1830. On the downside, support is seen at 1.1688 (78.6% retracement 1.1370 and 1.1776), a break below could drag it near 1.1620 (61.8% retracement 1.1370 and 1.1776).
USD/JPY: The dollar declined to a 1-1/2 month low after data released on Friday showed U.S. economic growth picked up to 2.6 percent in the second quarter, matching expectations, but growth in the first quarter was revised down to 1.2 percent. The major was trading 0.1 percent down at 110.52, having hit a low of 110.30 earlier, its lowest since Jun 15. FxWirePro's Hourly Yen Strength Index stood at 69.51 (Bullish) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of the U.S. pending home sales, Chicago purchasing managers index and Dallas Fed manufacturing business index for further momentum. Immediate resistance is located at 111.00, a break above targets 111.90 (78.6% retracement of 114.49 and 110.30). On the downside, support is seen at 110.00, a break below could take it near 110.77 (June 13 Low).
GBP/USD: Sterling steadied near its highest levels in 10 months against the dollar, supported by hopes that Britain will exit the European Union under a transitional deal. Moreover, broad based dollar weakness on weak U.S. economic data boosted the bid tone around the major. Sterling traded flat at 1.3128, having hit a high of 1.3158 on Thursday, its highest since Sept. 16. FxWirePro's Hourly Sterling Strength Index stood at 12.66 (Neutral) by 0400 GMT. Investors’ focus will remain on the developments surrounding the Brexit negotiations, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3150, a break above could take it near 1.3180. On the downside, support is seen at 1.3085 (78.6% 1.2816 and 1.3158), a break below targets 1.3044 (10-DMA). Against the euro, the pound traded flat at 89.41 pence, having hit a 1-week high of 88.91 last week.
AUD/USD: The Australian dollar consolidated within a narrow range as lower than expected Chinese NBS manufacturing and non-manufacturing data offset better than estimated TD Securities inflation reading. However, a rise in copper prices supported the bid tone around the major. The Aussie trades flat at 0.793, having hit a high of 0.8065 on Thursday, it’s highest since May 15, 2015. FxWirePro's Hourly Aussie Strength Index stood at 1.12 (Neutral) by 0500 GMT. Investors will continue to digest Chinese data, ahead of U.S. economic releases. Immediate support is seen at 0.7935 (10-DMA), a break below targets 0.7877 (61.8% retracement of 0.7571 and 0.8065). On the upside, resistance is located at 0.8000, a break above could take it near 0.8050.
NZD/USD: The New Zealand dollar eased following the release of below estimates Chinese data and poor NZ business confidence report. China July NBS manufacturing and non-manufacturing PMI prints came in lower than the estimate, while New Zealand ANZ Business Confidence fell to 19.4 in July from previous 24.8. The Kiwi trades 0.1 percent down at 0.7505, having touched a high of 0.7558 on Thursday, its highest level since May 14 2015. FxWirePro's Hourly Kiwi Strength Index was at 76.65 (Slightly Bullish) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7580, a break above could take it near 0.7620. On the downside, support is seen at 0.7481 (78.6% retracement of 0.7201 and 0.7558), a break below could drag it till 0.7422 (61.8% retrace).
Equities Recap
Asian shares rose, despite the release of weaker-than-estimated Chinese manufacturing and non-manufacturing data, while the greenback steadied near 13-month lows weighed down by U.S. political uncertainty.
MSCI's broadest index of Asia-Pacific shares outside Japan recovered early losses to rise 0.1 percent.
Tokyo's Nikkei eased 0.03 percent to 19,955.00 points, Australia's S&P/ASX 200 index advanced 0.5 percent to 5,731.50 points and South Korea's KOSPI lost 0.2 percent to 2,395.76 points.
Shanghai composite index rose 0.6 percent to 3,273.66 points, while CSI300 index was trading 0.5 percent up at 3,740.26 points.
Hong Kong’s Hang Seng was trading 1.02 percent higher at 27,250.67 points. Taiwan shares added 0.04 percent to 10,427.33 points.
Commodities Recap
Crude oil prices rose, having hit a two-month high in the prior session on tightening U.S. crude market and the threat of sanctions against OPEC-member Venezuela. International benchmark Brent crude was trading 0.2 percent up at $52.37 per barrel by 0431 GMT, having hit a high of $52.64 on Friday, its strongest since May 25. U.S. West Texas Intermediate was trading 0.3 percent higher at $49.87 a barrel, after rising as high as $50.01 earlier, its strongest since May 30.
Gold prices eased after rising to a near seven-week high earlier as tensions on the Korean peninsula supported the demand for the safe-haven metal. Spot gold was trading 0.1 percent down at $1,267.83 per ounce at 0440 GMT, having hit a high of $1,270.91 in early trade, its highest since June 14. U.S. gold futures for August delivery rose 0.1 percent to $1,269.8 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.281 percent lower by 0.005 bps, while 5-year yield was 0.002 bps down at 1.827 percent.
The Japanese bonds remained flat at the start of the trading week Monday after the country’s industrial production, release later yesterday, rebounded during the month of June. The yield on the benchmark 10-year Treasury note remained tad higher at 0.07 percent, the yield on the 30-year note climbed nearly 1 basis point to 0.87 percent and the yield on short-term 2-year hovered around -0.11 percent.
The Australian bonds gained as investors remained cautious ahead of the Reserve Bank of Australia monetary policy meeting scheduled to be held on Tuesday at 04:30 GMT. The yield on the benchmark 10-year Treasury note fell 1/2 basis point to 2.69 percent, the yield on 15-year note also slumped 1 basis point to 2.99 percent and the yield on short-term 2-year traded nearly 2 basis points lower at 1.81 percent.
The New Zealand bonds ended flat as investors wait to watch the country’s GlobalDairyTrade price auction, scheduled to be held on August 1. At the time of closing, the yield on the benchmark 10-year bond hovered around 3.00 percent, the yield on 7-year note flat at 2.84 percent while the yield on short-term 2-year note ended 1 basis point lower at 2.12 percent.
