Market Roundup
- BoJ Funo- Must maintain powerful monetary easing to hit price target
- Easy money allowing govt to maintain growth policy, allow structural reforms
- Big Japanese banks bulging at seams with pent-up cash -Nikkei
- Three of five top Japanese department stores see sales up in July -Nikkei
- Japan July monetary base up to record Y468.3444 trln, average +15.6% y/y
- Trump close to decision on addressing Chinese trade practices
- UK July BRC shop prices -0.4%, June -0.3%, upward pressures easing
- Small UK manufacturers in midst of export-led "sweet spot" -CBI
- New Zealand Q2 HLFS unemployment rate, 4.8% vs 4.9%, forecast 4.8%
- Q2 HLFS Job growth, -0.2% vs 1.2%, forecast 0.7%
- Australian services activity stays brisk in July -survey
Economic Data Ahead
- (0430 ET/0830 GMT) Great Britain Jul Markit/CIPS Cons PMI, 54.50 eyed; last 54.80
- (0500 ET/0900 GMT) Eurozone Jun Producer Prices, -0.10% m/m, 2.40% y/y eyed; last -0.40%, 3.30%
Key Events Ahead
- N/A ECB Governing Council meeting in Frankfurt
- (0510 ET/0910 GMT) Greece 26-wk, E625 mln auction
- (0530 ET/0930 GMT) Germany 10Y, E3.0 bln auction
FX Beat
DXY: The dollar retreated from recent lows versus its major peers as investors begin positioning for key U.S. employment report this week. The greenback against a basket of currencies traded flat at 93.06, having touched a low of 92.78 on Monday, it’s lowest since May 3, 2016. FxWirePro's Hourly Dollar Strength Index stood at 7.79 (Neutral) by 0500 GMT.
EUR/USD: The euro steadied above the 1.1800 handle after easing away from a 2-1/2-year peak set earlier in the week following upbeat U.S. core personal consumption expenditure data. The major was supported by expectations that the European Central Bank would eventually begin phasing out its easy policy. The European currency traded 0.2 percent up at 1.1826, having touched a high of 1.1845 on Monday, its highest since Jan 14, 2015. FxWirePro's Hourly Euro Strength Index stood at 144.80 (Highly Bullish) by 0400 GMT. Investors’ attention will remain on Eurozone's producer price index, ahead of the U.S. ADP employment change and FOMC members’ speeches. 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 1.1666 (61.8% retracement 1.1370 and 1.1845).
USD/JPY: The dollar rose, extending previous session's rebound amid higher Japanese equities and Treasury yields. However, worse-than expected U.S. ISM manufacturing PMI data and renewed weakness in oil prices could weigh down on the risk sentiment. The major was trading 0.4 percent up at 110.84, having hit a low of 110.00 the day before, its lowest since Jun 15. FxWirePro's Hourly Yen Strength Index stood at -59.07 (Slightly Bearish) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of the U.S. ADP employment change and FOMC members’ speeches 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 109.63 (June 7 Low), a break below could take it near 109.11 (June 12 Low).
GBP/USD: Sterling steadied above the 1.3200 handle after rising to an 11-month high in the previous session on data showing UK factory activity growth recovered from a seven-month low in July. Investors now cautiously await the announcement of the Bank of England policy decision and quarterly inflation report (QIR) due tomorrow for further cues on the monetary outlook. Sterling traded flat at 1.3206, having hit a high of 1.3244 on Tuesday, its highest since Sept. 16. FxWirePro's Hourly Sterling Strength Index stood at 65.71 (Bullish) 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 1.3300, a break above could take it near 1.3350. On the downside, support is seen at 1.3180 (78.6% retracement of 1.2816 and 1.3244), a break below targets 1.3077 (10-DMA). Against the euro, the pound traded 0.2 percent down at 89.55 pence, having hit a 1-week low of 89.75 on Monday.
AUD/USD: The Australian dollar eased, moving further away from last Thursday's 2-year high despite domestic data showing a surge in building approvals for new homes in June. Australia's building permits rose 10.9 percent from -5.4 percent in May, beating estimates of 1.5 percent. The Aussie trades 0.06 percent down at 0.7963, having hit a high of 0.8065 last week, it’s highest since May 15, 2015. FxWirePro's Hourly Aussie Strength Index stood at -56.18 (Bearish) by 0500 GMT. Investors will continue to digest upbeat domestic data, ahead of U.S. economic releases. Immediate support is seen at 0.7941 (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 tumbled to a 1-week low below the 0.7500 handle after domestic data showed surprisingly weaker employment and wage growth in the second quarter. The job creation rate fell by 0.2 percent in the three months to end-June, versus forecasts of a 0.7 percent rise, while quarterly wage inflation remained at a sluggish 0.4 percent, but was up 1.6 percent on an annual basis and in line with expectations. The Kiwi trades 0.5 percent down at 0.7431, having touched a low of 0.7415 earlier, its lowest level since July 26. FxWirePro's Hourly Kiwi Strength Index was at -96.23 (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 0.7500, a break above could take it near 0.7550. 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 rallied as technology stocks hit 17-year peaks offsetting losses in basic materials and energy, while the greenback bounced from 15-month lows on positions adjustments before US jobs data.
MSCI's broadest index of Asia-Pacific shares outside Japan steadied near its highest since late 2007.
Tokyo's Nikkei gained 0.5 percent to 20,093.04 points, Australia's S&P/ASX 200 index fell 0.4 percent to 5,747.30 points and South Korea's KOSPI climbed 0.3 percent to 2,429.19 points.
Shanghai composite index eased 0.06 percent to 3,290.64 points, while CSI300 index was trading 0.06 percent down at 3,768.20 points.
Hong Kong’s Hang Seng was trading 0.7 percent higher at 27,724.94 points. Taiwan shares added 0.8 percent to 10,519.27 points.
Commodities Recap
Crude oil prices declined, extending previous session losses, as rising U.S. fuel inventories and ongoing high supplies from producer cartel OPEC weighed on international prices. International benchmark Brent crude was trading 0.3 percent down at $51.25 per barrel by 0427 GMT, having hit a high of $52.90 on Tuesday, its strongest since May 25. U.S. West Texas Intermediate was trading 0.2 percent lower at $48.65 a barrel, after rising as high as $50.40 the day before, its strongest since May 25.
Gold prices eased, pulling away from a seven-week high struck in the previous session, as downbeat U.S. data weakened the prospect of the Federal Reserve pursuing an aggressive rate hike stance this year. Spot gold declined 0.2 percent at $1,265.50 per ounce at 0431 GMT, having hit a high of $1,274.03 on Tuesday, the highest since June 14. U.S. gold futures for December delivery fell 0.4 percent to $1,274.10 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.265 percent higher by 0.015 bps, while 5-year yield was 0.013 bps up at 1.812 percent.
The Japanese government bonds remained range-bound in the light of no important economic data or events ahead of a cabinet reshuffling by Prime Minister Shinzo Abe on August 3. The yield on the benchmark 10-year Treasury note hovered around 0.07 percent, the yield on long-term 30-year note flat at 1.09 percent and the yield on short-term 2-year too traded steady at -0.11 percent.
The Australian bonds remained flat as investors remained sidelined in any major trading activity ahead of the Reserve Bank of Australia’s (RBA) quarterly statement on Friday, which will provide updates on key economic indicators such as gross domestic product and inflation. The yield on the benchmark 10-year Treasury note hovered around 2.72 percent, the yield on 15-year note flat at 3.02 percent and the yield on short-term 2-year traded nearly 1 basis point lower at 1.81 percent.
The New Zealand bonds jumped at the time of closing after dairy prices fell at the country’s latest Global Dairy Trade (GDT) price auction. At the time of closing, the yield on the benchmark 10-year bond slumped 3 basis points to 3.03 percent, the yield on 7-year note plunged 4-1/2 basis points to 2.85 percent and the yield on short-term 2-year note ended 1-1/2 basis points lower at 2.11 percent.
The Canadian government bond prices were higher across the yield curve, with the two-year up 10.5 Canadian cents to yield 1.262 percent and the 10-year jumping 83 Canadian cents to yield 1.957 percent. The spread between lower Canadian and higher U.S. yields has narrowed sharply in recent months but turned wider on Tuesday.
