Market Roundup
- RBNZ – reduced OCR to 2.00 percent
- RBNZ says further policy easing may be needed
- RBNZ sees 90-day bank bill avg 2.0 pct march 2017 (pvs 2.2 pct)
- RBNZ says monetary policy to remain accommodative
- RBNZ sees 90-day bank bill avg 1.8pct June 2017 (pvs 2.1 pct)
- RBNZ says closely watching economic data
- RBNZ sees annual CPI +1.0pct Dec 2016 (pvs +1.3 pct)
- RBNZ says a decline in NZ$ is needed
- RBNZ sees TWI NZD at around 75.9 by Dec 2016
- RBNZ says additional monetary policy stimulus needed to move cpi inflation back into target band
- RBNZ says recently proposed changes to macro prudential policy should help mitigate house price risk
- RBNZ assistant governor mcdermott says if NZD higher than forecast, risk of more rate cuts increases
- New Zealand food price index jul -0.2% from +0.4%
- S.Korea c.bank keeps base rate unchanged at 1.25 pct (Reuters poll 1.25 pct)
- Singapore cbank says current monetary policy stance remains appropriate for 2016
- Australian treasurer says blocks sale of electricity network Ausgrid to Chinese bidders on national interest grounds
Economic Data Ahead
- (0245 ET/0645 GMT) France CPI (EU Norm) Final MM Jul
- (0245 ET/0645 GMT) France Inflation Ex-Tobacco Idx
- (0245 ET/0645 GMT) France Inflation Ex-Tobacco MM Jul
- (0245 ET/0645 GMT) France CPI (EU Norm) Final YY Jul
- (0400 ET/0800 GMT) Italy CPI (EU Norm) Final YY* Jul
- (0400 ET/0800 GMT) Italy Consumer Prices Final YY*
- (0400 ET/0800 GMT) Italy CPI (EU Norm) Final MM* Jul
- (0400 ET/0800 GMT) Italy Consumer Prices Final MM*
- (0500 ET/0900 GMT) Italy Trade Balance EU* bln EU Jun
- (0500 ET/0900 GMT) Italy Global Trade Balance* bln EU Jun
Key Events Ahead
No Significant Events Scheduled
FX Beat
DXY: The dollar index, against a basket of currencies edged up 0.1 percent at 95.73, pulling away from a low of 95.44 touched in the previous session.
EUR/USD: The euro edged down as the dollar made a modest recovery across the broad. The major rose to an early high of 1.1191, but it failed to regain the 1.1200 handle, trading marginally lower 1.1170. Data released overnight showed that U.S. JOLTS job opening for June rose to 5.624 million, surpassing consensus of 5.520 million, which help the dollar recover. However, the recovery mode is likely to remain fragile as investors doubt whether the Federal Reserve will raise interest rates this year. Inventors will continue to track broad market sentiment, amid lack of relevant data from the Eurozone. While U.S. weekly initial unemployment claims figures due later in the day could influence the major. Immediate support is seen at 1.1146 (10-DMA), break below could take it till 1.1113. On the higher side, resistance is located at 1.1200, break above targets 1.1233/ 1.1250.
USD/JPY: The dollar made a minor recovery, retreating from a low of 100.96 touched in the previous session. However, the bid tone around the yen remains strong as investors sentiments weakened amid declining equities and oil prices. The major trades 0.1 percent higher at 101.38, attempting to extend gains above the 101.00 handle. Trading will be subdued as the Japanese markets remain closed in observance of Mountain Day. Markets now await U.S. jobless claims and import/export data for further incentives on the major. Immediate support is located at 101.01 (Session Low), break below could drag it till 100.52. On the higher side, resistance is seen at 101.75 (5-DMA), break above targets 102.00.
GBP/USD: Sterling struggles to extend gains above the 1.3000 handle, as weak housing price figures hampered the bid tone around the British pound. Data released overnight by RICS showed that Britain's Housing Price Balance for July declined to 5 percent, missing forecast of 6 percent and previous 16 percent. On Wednesday, the major rose as high as 1.3093, however, it ran out of steam to close down at 1.3006. Sterling trades flat at 1.3008, attempting to sustain gains above the 1.3000 handle. Investor’s attention now shifts towards series of U.S. economic data and UK's CB Leading Economic Index for further cues on the pair. Immediate resistance is located at 1.3046, break above targets 1.3100. On the lower side, support is seen at 1.2955 (Aug -8 Low), break below could drag it till 1.2800.
AUD/USD: The Australian dollar trimmed gains to trade flat at 0.7701 after rising as high as 0.7759 earlier in the session. The major came under fresh selling pressure due to heavy losses witnessed in the AUD/NZD cross, as the RBNZ rate cut boosted the New Zealand dollar. The Aussie was also weighed down by weak consumer inflation expectations for August which came in at 3.5 percent versus previous 3.7 percent. Investors will closely watch U.S. unemployment claims and import prices data due later in the day ahead of a Chinese macro figures scheduled for release during Friday's Asian session. Immediate support is seen at 0.7665 (5-DMA), break below targets 0.7650/ 0.7621. On the higher side, resistance is located at 0.7760, break above targets 0.7800.
NZD/USD: The New Zealand dollar rallied to its 1-year highs after the Reserve Bank of New Zealand cut interest rates by 25 basis points to a record low 2.0 percent, as widely expected. The RBNZ cut interest rates and indicated at least one more rate cut in the near term, disappointing some speculation on more aggressive easing. The Kiwi rose as high as 0.7338, its highest level since May 2015, however, it trimmed some gains to trade at 0.7247, still 1 percent up for the day. Markets will continue to digest the RBNZ rate cut news, ahead of U.S economic data and Chinese data flow due in the upcoming sessions. Immediate resistance is located at 0.7350, break above targets 0.7400. On the lower side, support is seen at 0.7157 (Aug 2-Low), break below could take it near 0.7100.
Equities Recap
Asian shares tumbled, reversing some of its recent gains as broad risk sentiment weakened after oil prices declined on increasing U.S. government stockpiles.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5 percent, having touched a 1-year high on Wednesday.
Australia's S&P/ASX 200 index lost 0.72 pct at 5,503.70 points and South Korea's KOSPI trades flat at 2,042.42 points.
Shanghai composite index edged up 0.1 percent at 3,021.79 points, while CSI300 index was trading 0.4 percent higher at 3,256.94 points.
Hong Kong’s Hang Seng was trading 0.5 percent higher at 22,615.68 points. Taiwan shares declined 0.8 pct at 9,131.83 points.
Commodities Recap
Crude oil prices eased as a rise in U.S. crude inventories and Saudi Arabian record production hampered market sentiments. International Brent crude oil was at $43.72 a barrel by 0355 GMT, down 0.05 percent. U.S. West Texas Intermediate crude was little changed at $41.48 per barrel.
Gold declined after rising slightly in the previous session, however, the losses in the metal were capped as lower expectations for a Fed rate hike weighed on the dollar. Spot gold fell 0.3 percent at $1,342.08 an ounce at 0402 GMT, having gained 0.4 percent on Wednesday. U.S. gold was also steady at $1,351.60 an ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 1.5126 percent, while 5-year was 0.005 bps higher at 1.0748 percent.
The Australian government bonds gained after data showed that Melbourne Institute’s (MI) inflation expectations weakened in August, while justifying the Reserve bank of Australia’s last week policy decision. The yield on the benchmark 10-year Treasury note fell 3 basis points to 1.853 percent and the yield on short-term 2-year note dipped 1 basis point to 1.445 percent.
The New Zealand 10-year bond yields fell after the Reserve bank of New Zealand slashed its official cash rate to a new record low of 2.00 percent in wake of depressing headline inflation and subdued economic growth. The yield on the benchmark 10-year bond fell 2-1/2 basis points to 2.135 percent and the yield on 7-year note also dipped 1-1/2 basis points to 1.855 percent.
Canadian government bond prices were mixed across a flatter maturity curve, with the 2-year bond flat to yield 0.508 percent and the benchmark 10-year rising 22 Canadian cents to yield 0.992 percent. The 10-year yield touched its lowest since July 11 at 0.965 percent.
