Market Roundup
- Japan foreign direct investment jumped to record $169.6 bln in ’16 -Nikkei
- Japan April-June GDP on track for 2.6% annual pace -Nikkei
- Japan July mfg PMI – final 52.1, 8-month low, flash 52.2, June final 52.4
- Brexit projected to push up banks’ costs 4% and capital needs 30% -FT
- British consumer morale steadies in July but at low levels -YouGov/Cebr
- China factory activity accelerates in July on strong export orders -Caixin
- Australia home prices jump anew in July, testing regulators
- Australia manufacturing still expanding in July -survey
- Trump fires communications director Scaramucci in new White House upheaval
- No. Korea can hit most of United States -U.S. officials
Economic Data Ahead
- (0315 ET/0715 GMT) Spain Jul Manufacturing PMI, 54.50 eyed, last 54.70
- (0345 ET/0745 GMT) Italy Jul Markit/ADACI Mfg PMI, 55.20 eyed, last 55.20
- (0350 ET/0750 GMT) France Jul Markit Mfg PMI, 55.40 eyed, last 55.40
- (0355 ET/0755 GMT) Germany Jul Markit/BME Mfg PMI, 58.30 eyed, last 58.30
- (0400 ET/0800 GMT) Eurozone Jul Markit Mfg Final PMI, 56.80 eyed, last 56.80
- (0400 ET/0800 GMT) Germany Jul Unemployment Total NSA, 2.52 mln eyed, last 2.47 mln
- (0400 ET/0800 GMT) Germany Jul Unemployment Rate SA, 5.70% eyed, last 5.70%
- (0430 ET/0830 GMT) Great Britain Jul Markit/CIPS Mfg PMI, 54.40 eyed, last 54.30
- (0500 ET/0900 GMT) Eurozone Q2 GDP Flash Prelim, 0.60% q/q, 2.10% y/y eyed; last 0.60%, 1.90%
Key Events Ahead
- (0500 ET/0900 GMT) RBNZ's Dep Gov Spencer will speak in Wellington
- (0530 ET/0930 GMT) Germany 2Y, E4.0 bln for auction
- (0530 ET/0930 GMT) UK 10Y, Stg2.250 bln auction
- (0535 ET/0935 GMT) Belgium 3-month, E1.3-1.7 bln auction
FX Beat
DXY: The dollar slumped across the board following the announcement that the U.S. President Trump removed Anthony Scaramucci from his job as communications director. The greenback against a basket of currencies traded flat at 92.89, having touched a low of 92.78 on Monday, it’s lowest since May 3, 2016. FxWirePro's Hourly Dollar Strength Index stood at -68.93 (Bearish) by 0500 GMT.
EUR/USD: The euro slightly edged down after rising to a 2-1/2 year high above the 1.1800 handle in the previous session, as investors remained cautious ahead of Eurozone's preliminary Q2 GDP report, which is expected to show the economy expanded 0.6 percent q/q and 2.1 percent in annualized terms. The European currency traded 0.1 percent down at 1.1828, having touched a high of 1.1845 on Monday, its highest since Jan 14, 2015. FxWirePro's Hourly Euro Strength Index stood at 90.92 (Slightly Bullish) by 0400 GMT. Investors’ attention will remain on Eurozone's preliminary gross domestic product figures and Markit manufacturing PMI, ahead of the U.S. personal consumption expenditure, personal spending and Markit manufacturing PMI data. Immediate resistance is located at 1.1850, a break above targets 1.1880. On the downside, support is seen at 1.1746 (78.6% retracement 1.1370 and 1.1845), a break below could drag it near 1.1660 (61.8% retracement 1.1370 and 1.1845).
USD/JPY: The dollar tumbled to a fresh 1-1/2 month low as U.S. political turmoil and doubts about whether there will be another Federal Reserve rate hike this year continued to weigh on the greenback. The major was trading 0.05 percent down at 110.19, having hit a low of 110.00 earlier, its lowest since Jun 15. FxWirePro's Hourly Yen Strength Index stood at -24.61 (Neutral) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of the U.S. personal consumption expenditure, personal spending and Markit manufacturing PMI data for further momentum. Immediate resistance is located at 110.47 (78.6% retracement of 112.19 and 110.00), a break above targets 110.84 (61.8% retracement of 112.19 and 110.00). On the downside, support is seen at 109.63 (June 7 Low), a break below could take it near 109.11 (June 12 Low).
GBP/USD: Sterling rallied to a fresh 10-month high above the 1.3200 handle, as investors eagerly awaited the release of the UK’s manufacturing PMI due later in the day. Moreover, the recent series of downbeat U.S. fundamentals combined with the less hawkish Fed outcome also continued to support the British currency. Sterling traded 0.1 percent up at 1.3223, having hit a high of 1.3234 earlier, its highest since Sept. 16. FxWirePro's Hourly Sterling Strength Index stood at 85.59 (Slightly Bullish) by 0500 GMT. Investors’ focus will remain on the developments surrounding the Brexit negotiations, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3300, a break above could take it near 1.3350. On the downside, support is seen at 1.3146 (78.6% retracement of 1.2816 and 1.3234), a break below targets 1.3060 (10-DMA). Against the euro, the pound traded 0.2 percent up at 89.45 pence, having hit a 1-week low of 89.75 the prior day.
AUD/USD: The Australian dollar extended gains above the 0.8000 handle after Reserve Bank of Australia left interest rate unchanged at record lows of 1.5 percent, as widely expected. Moreover, better-than-expected release of China Caixin manufacturing PMI and rising crude oil prices supported the upside in the major. The Aussie trades 0.2 percent up at 0.8019, having hit a high of 0.8065 on Thursday, it’s highest since May 15, 2015. FxWirePro's Hourly Aussie Strength Index stood at 24.73 (Neutral) by 0500 GMT. Investors will continue to digest Chinese data and RBA decision, ahead of U.S. economic releases. Immediate support is seen at 0.7955 (10-DMA), a break below targets 0.7877 (61.8% retracement of 0.7571 and 0.8065). On the upside, resistance is located at 0.8050, a break above could take it near 0.8100.
NZD/USD: The New Zealand dollar eased, after rising for two consecutive sessions, as investors turned cautious ahead of second-quarter employment data due on Wednesday. Economists expect jobs growth of around 0.7 percent and a slight dip in unemployment to 4.8 percent. The Kiwi trades 0.1 percent down at 0.7504, having touched a high of 0.7558 on Thursday, its highest level since May 14 2015. FxWirePro's Hourly Kiwi Strength Index was at 6.24 (Neutral) 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, led by gains in financials and energy shares, while the greenback fell to fresh 15-month lows amid U.S. political uncertainty.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 0.5 percent, led by gains in financials and energy shares, while Tokyo's Nikkei .N225 rose 0.2 percent.
MSCI's broadest index of Asia-Pacific shares outside Japan rallied 0.5 percent.
Tokyo's Nikkei gained 0.3 percent to 19,984.39 points, Australia's S&P/ASX 200 index advanced 0.8 percent to 5,767.10 points and South Korea's KOSPI climbed 0.7 percent to 2,420.30 points.
Shanghai composite index rose 0.1 percent to 3,277.31 points, while CSI300 index was trading 0.3 percent up at 3,749.74 points.
Hong Kong’s Hang Seng was trading 0.7 percent higher at 27,507.22 points. Taiwan shares added 0.1 percent to 10,437.29 points.
Commodities Recap
Crude oil prices extended gains for the seventh consecutive session, supported by strong fuel demand, however, ongoing high supplies from producer cartel OPEC capped the upside. International benchmark Brent crude was trading 0.2 percent up at $52.77 per barrel by 0438 GMT, having hit a high of $52.87 on Monday, its strongest since May 25. U.S. West Texas Intermediate was trading 0.2 percent higher at $50.26 a barrel, after rising as high as $50.38 the day before, its strongest since May 25.
Gold prices held firm near seven-week highs, supported by political uncertainty and a slump in dollar, after recording their biggest monthly gain in five months in July. Spot gold was trading 0.1 percent at $1,270.12 per ounce at 0447 GMT, having hit a high of $1,270.93 the prior day, its highest since June 14. U.S. gold futures for August delivery were also almost unchanged at $1,267.50 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.301 percent higher by 0.009 bps, while 5-year yield was 0.013 bps up at 1.845 percent.
The Japanese bonds traded nearly flat as market observed little trading activity in the light of no important economic data or events. Also, the BoJ maintained bond buying programme plan unchanged. The yield on the benchmark 10-year Treasury note traded flat 0.079 percent, the yield on long-term 40-year note up 1/2 basis point to 1.10 percent and the yield on short-term 3-year traded steady at -0.111 percent.
The Australian bonds slumped ahead of the RBA’s Monetary Policy decision, and it is expected to remain optimistic in its outlook for the economy, while leaving its key interest rate unchanged at record low 1.50 percent. The yield on the benchmark 10-year Treasury note rose 3 basis points to 2.725 percent, the yield on 15-year note also jumped 3 basis points to 3.026 percent and the yield on short-term 2-year traded nearly 1 basis point higher at 1.821 percent.
The Canadian government bond prices were mixed across a steeper yield curve, with the two-year price up 2.5 Canadian cent to yield 1.315 percent and the 10-year falling 23 Canadian cents to yield 2.056 percent. The 10-year yield touched its highest since November 2014 at 2.065 percent.
