Market Roundup
- Australia Q2 Wage price index, +0.5% vs +0.5%, and forecast +0.5%
- Australia Q2 Wage price index, +1.9% vs 1.9%, and forecast 1.9%
- Australia wage growth subdued; threatens spending, inflation
- New Zealand PM calls on c. bank to re-think mortgage lending restrictions
- ECB is not violating laws on monetary policy- Schaeuble
- IMF: China's focus on short-term targets puts mid-term growth at risk
- BOJ reduces purchase of 5-10 year JGBs from Y470 bln to Y440 bln
- Japan US Treasury holdings $1.091 trln in June, May $1.111 trln
- US Treasury yields up o/n before steadying, US data strong
- Quarterly profit climbs for nearly 70% of corporate Japan - Nikkei
- N. Korea delays Guam missile firing; U.S. says dialogue up to Kim
Economic Data Ahead
- (0430 ET/0830 GMT) Italy Q2 GDP prelim, 0.4% q/q, 1.4% y/y eyed; last 0.4%, 1.2%
- (0430 ET/0830 GMT) Great Britain Jun ILO Unemployment rate, 4.5% eyed, last 4.5%
- (0500 ET/0900 GMT) European Union Q2 GDP flash, 0.6% q/q, 2.1% y/y eyed; last 0.6%, 2.1%
Key Events Ahead
- (0535 ET/0935 GMT) Portugal E0.75-1.0 bln for 3-month auction
FX Beat
DXY: The dollar rallied across the board as the release of better-than expected US retail sales strengthened expectations of another Fed interest rate hike this year. The greenback against a basket of currencies traded flat at 93.79, having touched a high of 94.14 the day before, it’s highest since July 26. FxWirePro's Hourly Dollar Strength Index stood at 77.14 (Slightly Bullish) by 0500 GMT.
EUR/USD: The euro steadied after falling to a 3-week low in the previous session as better-than-expected U.S. retail sales figures released on Tuesday underpinned the greenback. The European currency traded flat at 1.1738, having touched a low of 1.1687 the day before, its lowest since Jul. 28. FxWirePro's Hourly Euro Strength Index stood at 69.30 (Bullish) by 0400 GMT. Investors’ attention will remain on Eurozone's preliminary gross domestic product Q2 figures, ahead of the U.S. housing starts, building permits, and FOMC latest policy meeting minutes. Immediate resistance is located at 1.1845 (July 31 High), a break above targets 1.1900. On the downside, support is seen at 1.1720 (61.8% retracement 1.1370 and 1.1909), a break below could drag it near 1.1638 (50.0% retracement 1.1370 and 1.1909).
USD/JPY: The dollar consolidated within a narrow range as investors’ refrained from placing big bets ahead of the FOMC July meeting minutes. On Tuesday, the major rose to a 1-week high as easing concerns over tensions between the U.S and North Korea and renewed expectations of another Fed interest rate hike this year underpinned the greenback. The major was trading flat at 110.65, having hit a high of 110.84 the prior day, its highest since Aug. 8. FxWirePro's Hourly Yen Strength Index stood at -126.12 (Highly Bearish) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of the U.S. housing starts, building permits and FOMC latest policy meeting minutes for further momentum. Immediate resistance is located at 110.87 (38.2% retracement of 112.19 and 108.90), a break above targets 111.38 (23.6% retracement of 112.19 and 108.90). On the downside, support is seen at 110.12 (10-DMA), a break below could take it near 109.55 (Aug 9 Low).
GBP/USD: Sterling traded near a 1-month low touched in the previous session after the UK inflation data released on Tuesday failed to meet the market estimates, dampening the expectations of a BoE rate hike before the end of the year. Investors now await the UK jobs report, which is expected to show claimant count change rose 7.2k last month versus a 5.9k increase seen in June, while the unemployment rate and hourly wages are likely to remain unchanged at 4.5 percent and 1.8 percent respectively. Sterling traded flat at 1.2970, having hit a low of 1.2846 on Tuesday, its lowest since July 12. FxWirePro's Hourly Sterling Strength Index stood at -30.52 (Neutral) by 0400 GMT. Investors’ focus will remain on UK labour market report, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2963 (5-DMA), a break above could take it near 1.3050 (21-DMA). On the downside, support is seen at 1.2846 (Previous Session Low), a break below targets 1.2811 (July 12 Low). Against the euro, the pound was trading flat at 91.22 pence, having hit a 10-month low of 91.32 the day before.
AUD/USD: The Australian dollar retreated from a 1-month low hit in the previous session after data showed domestic wage price index rose just 0.5 percent in April-June, matching forecasts and compared with an upwardly revised 0.6 percent the previous quarter. The Aussie trades 0.2 percent up at 0.7836, having hit a low of 0.7807 on Tuesday, it’s weakest since July 18. FxWirePro's Hourly Aussie Strength Index stood at 28.61 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7786 (July 18 Low), a break below targets 0.7750. On the upside, resistance is located at 0.7899 (10-DMA), a break above could take it near 0.7929 (21-DMA).
NZD/USD: The New Zealand dollar eased to a fresh 1-month low as the U.S. dollar rallied across the board following the release of better-than expected U.S. retail sales data. Moreover, a further drop in New Zealand’s dairy prices also added to the selling pressure around the major. The Kiwi trades flat at 0.7236, having touched a low of 0.7223 earlier, its lowest level since July 12. FxWirePro's Hourly Kiwi Strength Index was at -60.52 (Bearish) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7295 (78.6% retracement of 0.7558 and 0.7223), a break above could take it near 0.7341 (10-DMA). On the downside, support is seen at 0.7220, a break below could drag it till 0.7200.
Equities Recap
Asian shares gained as tensions in the Korean peninsula eased, while the greenback rose after strong U.S. retail data put a Federal Reserve rate hike back on the agenda.
MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.1 percent.
Tokyo's Nikkei rallied 0.05 percent to 19,757.75 points, Australia's S&P/ASX 200 index gained 0.2 percent to 5,770.90 points and South Korea's KOSPI climbed 0.5 percent to 2,345.77 points.
Shanghai composite index eased 0.3 percent to 3,241.08 points, while CSI300 index was trading 0.3 percent down at 3,692.91 points.
Hong Kong’s Hang Seng was trading 0.6 percent higher at 27,348.85 points. Taiwan shares shed 0.5 percent to 10,257.62 points.
Commodities Recap
Crude oil prices firmed after rebounding from a 3-week low hit in the previous session following a decline in U.S. crude inventories, however, general oversupply capped the upside. International benchmark Brent crude was trading 0.2 percent up at $51.05 per barrel by 0406 GMT, having hit a low of $50.02 on Tuesday, its weakest since Jul. 25. U.S. West Texas Intermediate was trading 0.1 percent up at $47.73 a barrel, after falling as low as $47.61 the prior day, its weakest since July 25.
Gold prices steadied near a 6-day low as the dollar weakened slightly, with investors waiting for the release of minutes from the U.S. Federal Reserve's last meeting in July for clues on the pace of potential interest rate hikes. Spot gold was 0.1 percent up at $1,272.78 per ounce by 0410 GMT, having touched a high of $1,288.86 an ounce on Friday, it highest level since June 7. U.S. gold futures for December delivery fell 0.13 percent to $1,278.00 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.2080 percent higher by 0.021 bps, while 5-year yield was 0.017 bps up at 1.7576 percent.
The Japanese government bonds traded lower in early Asian trading Wednesday, tracking similar overnight movement in the U.S. Treasuries and as investors wait to watch the country’s trade balance data for the month of July, scheduled to be released today by 2350 GMT. The yield on the benchmark 10-year Treasury note rose 1/2 basis point to 0.04 percent, the yield on long-term 30-year note jumped nearly 2 basis points to 0.86 percent and the yield on short-term 2-year hovered around -0.11 percent.
The Australian bonds slumped as the yield on benchmark US 10-year bonds climbed, rising 6 basis points to 2.27% after July's US advance retail sales data surprised to the upside. The yield on the benchmark 10-year Treasury note rose 2 basis points to 2.685 percent, the yield on 15-year note also jumped 2 basis points to 2.985 percent and the yield on short-term 2-year traded nearly 3 basis points higher at 1.843 percent.
The Canadian government bond prices were lower across a steeper yield curve in sympathy with U.S. Treasuries. The two-year fell 3.5 Canadian cents to yield 1.243 percent and the 10-year declined 25.5 Canadian cents to yield 1.907 percent.
