Market Roundup
- MoF flow data wk-ended Jul 29 –Japanese again good buyers of for-bonds
- Net Y1.067 tln bought, Y137.4 bln stocks bought too, Y30.7 bln bills sold
- Foreign investors mixed on Japanese assets, see
- Japan Jul PMI svcs 52.0, comp 51.8, Jun 53.3, 52.9, new orders eased
- Japan's Aso: will stay on as finmin to continue economic, fiscal policy
- China Jul Caixin svcs PMI, 51.5 vs 51.6
- China issues rules to curb state firms' overseas investment risks
- Bank of England set to stay on hold as Brexit risks loom
- Australia new vehicle sales notch another record in Jul -industry
- New Zealand commodity prices fall 0.8% in Jul -ANZ bank
- New Zealand job ads fall 1% in Jul from Jun -ANZ survey
- In rare bipartisan display, U.S. Democrats back Trump on China trade probe
Economic Data Ahead
- (0315 ET/0715 GMT) Spain Jul Services PMI, 58.30 eyed, last 58.30
- (0345 ET/0745 GMT) Italy Jul Markit/ADACI Svcs PMI, 54.10 eyed, last 53.60
- (0350 ET/0750 GMT) France Jul Markit Comp PMI, 55.70 eyed, last 55.70
- (0355 ET/0755 GMT) Germany Jul Markit Comp Final PMI, 55.10 eyed, last 55.10
- (0400 ET/0800 GMT) Eurozone Jul Markit Comp Final PMI, 55.80 eyed, last 55.80
- (0430 ET/0830 GMT) Great Britain Jul Markit/CIPS Serv PMI, 53.60 eyed, last 53.40
- (0500 ET/0900 GMT) Eurozone Jun Retail Sales, 0.10% m/m, 2.60% y/y eyed; last 0.40%, 2.60%
Key Events Ahead
- (0430 ET/0830 GMT) Spain 2YI, E0.50 bln auction
- (0430 ET/0830 GMT) Spain E1.0/1.0/1.0 for 5/9/24 yr auctions
- (0450 ET/0850 GMT) France E3.50/1.50/1.50 bln for 9/10/31 yr auctions
- (0700 ET/1100 GMT) BOE announces rate decision, also to release inflation report
FX Beat
DXY: The dollar steadied after falling to multi-month lows versus its major peers in the previous session, however, the recovery appears fragile on doubts about whether there will be another U.S. interest rate rise this year. The greenback against a basket of currencies traded flat at 92.92, having touched a low of 92.55 on Wednesday, it’s lowest since May 3, 2016. FxWirePro's Hourly Dollar Strength Index stood at -18.56 (Neutral) by 0500 GMT.
EUR/USD: The euro eased after rising to a 2-1/2 year high in the previous session as the greenback rebounded from recent lows. The European currency traded 0.1 percent down at 1.1846, having touched a high of 1.1909 on Wednesday, its highest since Jan 5, 2015. FxWirePro's Hourly Euro Strength Index stood at 105.80 (Highly Bullish) by 0400 GMT. Investors’ attention will remain on Eurozone's retail sales, ahead of the U.S. unemployment benefit claims, ISM non-manufacturing PMI and Factory orders. Immediate resistance is located at 1.1930, a break above targets 1.1980. On the downside, support is seen at 1.1792 (78.6% retracement 1.1370 and 1.1909), a break below could drag it near 1.1702 (61.8% retracement 1.1370 and 1.1909).
USD/JPY: The dollar eased, halting its 2-day winning streak as political turmoil gripping Washington and uninspiring U.S. economic data added to the uncertainty about the pace of future Federal Reserve policy tightening. The major was trading 0.1 percent down at 110.67, having hit a low of 109.91 on Tuesday, its lowest since Jun 15. FxWirePro's Hourly Yen Strength Index stood at -64.54 (Bearish) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of the U.S. unemployment benefit claims, ISM non-manufacturing PMI and Factory orders for further momentum. Immediate resistance is located at 111.08 (50.0% retracement of 112.19 and 110.00), a break above targets 111.35 (38.2% retracement of 112.19 and 110.00). On the downside, support is seen at 110.21 (July 31 Low), a break below could take it near 109.63 (June 7 Low).
GBP/USD: Sterling steadied near an 11-month high against the dollar as investors’ awaited the Bank of England's monetary policy decision, where it is expected to keep interest rates at a record low once again. Sterling traded flat at 1.3219, having hit a high of 1.3250 on Wednesday, its highest since Sept. 16. FxWirePro's Hourly Sterling Strength Index stood at 109.28 (Highly Bullish) by 0400 GMT. Investors’ focus will remain on BoE policy decision, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3300, a break above could take it near 1.3350. On the downside, support is seen at 1.3181 (78.6% retracement of 1.2816 and 1.3250), a break below targets 1.3097 (10-DMA). Against the euro, the pound was little changed at 89.63 pence, having hit a near 2-week low of 89.88 the prior day.
AUD/USD: The Australian dollar tumbled to a 1-week low after domestic data released showed the trade surplus narrowed more than expected in June, largely on account of a 1 percent drop in the exports. The economy's trade surplus came-in at AUD 856 million against expectations of AUD 1800 million, while the previous month’s figure was revised lower to AUD 2024 million from AUD 2471 million. The Aussie trades 0.4 percent down at 0.7935, having hit a low of 0.7914 earlier, it’s weakest since July 26. FxWirePro's Hourly Aussie Strength Index stood at -4.43 (Neutral) by 0500 GMT. Investors will continue to digest downbeat domestic trade data, ahead of U.S. economic releases. Immediate support is seen at 0.7914 (Session Low), a break below targets 0.7877 (61.8% retracement of 0.7571 and 0.8065). On the upside, resistance is located at 0.8050, a break above could take it near 0.8100.
NZD/USD: The New Zealand dollar slumped to a 2-week low as downbeat Chinese services PMI and also recent series of weak NZ fundamentals continued to weigh on the Kiwi bull's sentiment. China's July Caixin services PMI came-in at 51.5, missing the estimate of 51.9 and previous reading of 51.6. The Kiwi trades 0.4 percent down at 0.7398, having touched a low of 0.7392 earlier, its lowest level since July 20. FxWirePro's Hourly Kiwi Strength Index was at -84.41 (Slightly Bearish) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7450, a break above could take it near 0.7500. On the downside, support is seen at 0.7380 (50.0% retracement of 0.7201 and 0.7558), a break below could drag it till 0.7422 (61.8% retrace).
Equities Recap
Asian shares tumbled, led by falls in South Korean tech shares, while the greenback steadied after slumping to a 15-month low versus a basket of currencies in the previous session.
MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.9 percent.
Tokyo's Nikkei fell 0.3 percent to 20,029.80 points, Australia's S&P/ASX 200 index lost 0.3 percent to 5,729.30 points and South Korea's KOSPI slumped 1.8 percent to 2,384.65 points.
Shanghai composite index eased 0.5 percent to 3,269.24 points, while CSI300 index was trading 0.8 percent down at 3,731.60 points.
Hong Kong’s Hang Seng was trading 0.3 percent lower at 27,529.89 points. Taiwan shares shed 0.5 percent to 10,459.88 points.
Commodities Recap
Crude oil prices dipped as a rally that had boosted prices by almost 10 percent since early last week lost momentum despite renewed signs of a gradually tightening U.S. market. International benchmark Brent crude was trading 0.3 percent down at $52.14 per barrel by 0424 GMT, having hit a high of $52.90 on Tuesday, its strongest since May 25. U.S. West Texas Intermediate was trading 0.3 percent lower at $49.40 a barrel, after rising as high as $50.40 on Tuesday, its strongest since May 25.
Gold prices tumbled, drifting further away from seven-week highs hit earlier this week, as the dollar strengthened on expectations the U.S. Federal Reserve could trim its bond holdings in September. Spot gold declined 0.3 percent to $1,262.05 per ounce by 0427 GMT, having hit a high of $1,274.03 on Tuesday, the highest since June 14. U.S. gold futures for December delivery dropped 0.8 percent to $1,268.70 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.260 percent lower by 0.002 bps, while 5-year yield was 0.005 bps down at 1.815 percent.
The Japanese bonds traded nearly flat as market observed little trading activity in the light of no important economic data or events. The yield on the benchmark 10-year Treasury note traded flat 0.071 percent, the yield on long-term 40-year note remained steady at 1.01 percent and the yield on short-term 3-year hovered around -0.113 percent.
The Australian bonds gained as investors shifted to safe-haven assets buying after the country’s trade balance data disappointed by missing market expectations. The yield on the benchmark 10-year Treasury note fell nearly 3 basis points to 2.685 percent, the yield on 15-year note slid 2-1/2 basis points to 2.99 percent and the yield on short-term 2-year traded nearly 1-1/2 basis point lower at 1.792 percent.
The Canadian government bond prices were broadly higher across the yield curve, with the two-year up 10 Canadian cents to yield 1.257 percent and the 10-year rising 18 Canadian cents to yield 1.937 percent.
