Market Roundup
- GBP/USD short market squeezed again: 1.3236 high
- EUR/USD -0.22%, GBP/USD +0.16%, USD/ZAR +0.5%
- DXY +0.04%, DAX +0.35%, Brent -1.34%, Iron +1.0%,
- USD/ZAR adds to late Tuesday rally to reach 14.1650
- Germany Detailed Q2 GDP 3.1% y/y vs 3.1% previous, 3.1% expected
- UK Jul Mtg Approvals37.662k vs revised 39.763 k
- Norway Jun Labor Force Survey 4.8% vs 4.7% previous, 4.7% expected
- Turkey rates should come down rapidly-Erdogan says
- Turkish tanks enter Syria-Military sources
- CBRC - China will not open Tsy futures mkt to bks soon
- Australia sees upturn in public investment, hse building booms
Economic Data Preview
- (0700 ET/1300 GMT) The Federal Housing Finance Agency releases its housing price index for the month of June. The index is expected to edged up to 0.3 percent from previous 0.2 percent in the previous month.
- (1000 ET/1400 GMT) National Association of Realtors is expected to show that U.S. existing home sales dropped 0.4 percent to an annual rate of 5.51 million units in July from a 5.57 million-unit pace in May.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending Aug 19.
- (1950 ET/2350 GMT) Japan's Ministry of Finance will report foreign bond investment for the week ending Aug 19.
- (1950 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic stocks for the week ending Aug 19.
Key Events Ahead
- (1145 ET/1545 GMT) FedTrade ops 15-yr Fannie Mae/Freddie Mac max $575 mln
- (1500 ET/1900 GMT) NY Fed releases MBS operation schedule for period start Aug 25, 2016
FX Beat
DXY: The dollar index, against a basket of currencies trades 0.1 percent up at 94.71, having touched a high of 94.80 earlier in the session.
EUR/USD: The euro slumped below the 1.1300 handle, as stronger-than-expected new home sales data released on Tuesday boosted the bid tone around the greenback. The major failed to benefit from upbeat final German GDP report for the second quarter of 2016, which came in line with consensus of 3.1 percent y/y. The European currency trades 0.3 percent lower at 1.1268, hovering towards an early low of 1.1256. On the lower side, 200 HMA will be acting as major support and any break below targets 1.1224 (100 day MA)/1.1175 (55 day EMA). Technically the pair has formed temporary top around 1.1370 and any bullishness can be seen only above that level. Any violation above 1.1370 will take it till 1.1435/1.1450.
USD/JPY: The major consolidates between a narrow range as investors focused on a gathering of central bankers for insights on the U.S. Federal Reserve interest rates hike this year. The greenback trades flat at 100.23 after rising to an early high of 100.51. Investors await release of U.S. existing home sales data for further momentum on the pair. The short term trend is slightly bearish as long as resistance100.95 (Aug 22nd high) holds. The major resistance is around 100.95 and any break above confirms minor trend reversal, a jump till 102/102.65/103.80 is possible. On the lower side, major support is around 99.50 and any break below 99.50 will drag the pair till 98.
GBP/USD: Sterling extended gains above the 1.3200 handle, as speculators reduced bets against the pound after recent upbeat data suggested that the economy was holding up surprisingly well after the Brexit fallout. Data released by British Bankers' Association (BBA) earlier in the session showed that Mortgage Approvals declined to 37.662K against consensus of 35.500K and previous 39.763K. Sterling rose 0.3 percent to a 3-week high of 1.3249, pulling away from a low of 1.3161 touched earlier in the session. Any break above 1.3185 confirms minor trend reversal, a jump till 1.3310 is possible. A minor weakness can be seen only below 1.31000.The minor support is around 1.3180/1.3130. Overall weakness is only below 1.3000 level. Against the euro, the pound trades 0.5 percent higher at 85.19 pence, having touched a 2-week high of 85.13 pence.
USD/CHF: The Swiss franc edged down, as the greenback recovered from recent lows across the broad. The greenback trades 0.2 percent higher at 0.9648, pulling away from a low of 0.9593 touched in the previous session. On the lower side, major support is around 0.9580 and any violation below 0.9580 will drag the pair down till 0.9520/0.9500/0.94450. The minor resistance is around 0.9650 and any break above targets 0.9730/0.9770. The pair should close above 0.9845 (200 day MA) for further bullishness.
AUD/USD: The Australian dollar edged up, pulling away from a low 0.7588 touched following weaker-than-expected Australian construction data release. The gains in the major remains capped as the U.S. dollar recovered across the broad ahead of Fed Chair Yellen speech o Friday. The Aussie trades flat at 0.7616, attempting to sustain gains. On the higher side any break above 0.7650 will take the pair till 0.7700/0.7760. The major support is around 0.7575 and break below will drag the pair till 0.7535/0.7480.
NZD/USD: The New Zealand dollar regained the 0.7300 handle, despite the economy posting weaker-than-expected trade figures. New Zealand's trade balance data showed that the deficit expanded in the month of July to NZ$433 million, more than the NZ$350 million as anticipated. The Kiwi trades 0.3 percent higher at 0.7308, having touched a high of 0.7334 earlier in the session. Immediate resistance is located at 0.7350, break above targets 0.7400. On the lower side, support is seen at 0.7254 (10-DMA), break below could drag it till 0.7200.
Equities Recap
European shares edged up while the dollar reversed last week's losses as investors await Fed Chair Yellen speech for further clues on the U.S. interest rate hike this year amid continued uncertainty about the strength of the global economy.
MSCI's main global stock index was down 0.2 percent, while MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.4 percent, having gained more than 14 percent since late June.
The pan-European STOXX 600 index advanced 0.4 percent at 344.91 points, while the FTSEurofirst 300 index added 0.3 percent at 1,356.49 points.
Europe's Basic Resources index fell 1.6 percent, hit by copper prices hovering near 6-week lows.
Britain's FTSE 100 trades 0.2 percent down at 6,854.91 points, while mid-cap FTSE 250 index rose 0.1 pct at 18,016.07 points.
Germany's DAX gained 0.3 percent at 10,628.94 points; France's CAC 40 trades 0.4 percent higher 4,441.51 points.
Tokyo's Nikkei gained 0.61 pct at 16,597.30, Australia's S&P/ASX 200 index added 0.13 pct at 5,560.90 points and South Korea's KOSPI shed 0.3 percent at 2,049.93 points.
Shanghai composite index edged down 0.1 pct at 3,085.88 points and CSI300 index fell 0.4 pct at 3,329.86 points. Hong Kong's Hang Seng index slumped 0.8 pct at 22,820.78 points
Commodities Recap
Crude oil prices declined as an unexpected rise in U.S. crude stocks increased worries about the supply glut that has capped prices for the past two years. Global benchmark Brent crude was down at $49.43 a barrel at 0957 GMT, having touched an intraday low of $49.06. U.S. West Texas Intermediate crude was down 0.5 percent at $47.29 a barrel after declining to a low of $47.13 earlier in the session.
Gold edged down for the fourth straight day as investors await for clues from Fed Chair Yellen on whether the U.S. would hike interest rates this year. Spot gold was nearly flat at $1,336.95 an ounce at 1003 GMT. U.S. gold fell 0.4 percent to $1,340.70 an ounce.
Treasuries Recap
The US Treasuries saw range bound activity during a relatively quiet Wednesday session light on significant economic data. The yield on the benchmark 10-year Treasury note rose 1/2 basis point to 1.559 percent, the yield on 5-year note also climbed 1/2 basis point at 1.150 percent and the yield on short-term 2-year note dipped 1/2 basis point at 0.762 percent.
The UK gilts traded marginally lower, succumbing to thin trading activity during a relatively quiet session that witnessed data of little significance. The yield on the benchmark 10-year gilts rose nearly 2 basis points to 0.564 percent, the super-long 30-year bond yield jumped 1-1/2 basis points to 1.180 percent and the yield on short-long 2-year bond also climbed 1-1/2 basis points to 0.144 percent.
The German bunds traded nearly flat after data showed that the country’s second quarter gross domestic product (GDP) remained unchanged from the previous flash estimate. The yield on the benchmark 10-year bond hovered around -0.089 percent mark, the yield on long-term 30-year note remained steady at 0.411 percent and the yield on short-term 3-year bond stood unchanged at -0.636 percent.
The Japanese government bonds slumped following a surge in equities during a relatively quiet session. The benchmark 10-year bond yield rose 1 basis point to -0.077 percent, the super-long 30-year JGB yield climbed 1/2 basis point to 0.330 percent and the short-term 2-year JGB yield bounced 1 basis point to -0.193 percent.
The New Zealand government bonds closed lower as investors cashed in profits after relishing previous gains. The yield on the benchmark 10-year bond increased 2 basis points to 2.295 percent and the yield on 7-year note also ended ½ basis point higher at 1.965 percent and the yield on short-term 2-year note also bounced 1/2 basis point to 1.790 percent.
The Australian government bonds traded modestly lower following a surge in equities during a relatively quiet session. The yield on the benchmark 10-year Treasury note rose more than 1/2 basis point to 1.913 percent and the yield on short-term 2-year climbed nearly 1 basis point to 1.438 percent.
