Market Roundup
- EUR/USD -0.05%, USD/JPY -0.46%, GBP/USD +0.18%, EUR/GBP -0.24%
- DXY -0.1%, DAX -1.21%, FTSE -0.79%, Brent +0.58%, Gold +0.56%
- EUR/CHF loses 1.6%: Low of 1.1272 in thin Europe trade
- N. Korea considers missile strike on Guam after Trump's 'fire and fury' warning
- Steady China factory inflation a boon for industrial profits, economic growth
- China says deleveraging efforts showing results but debt still too high
- Japan's econ minister pledges to stick to primary budget fiscal discipline target
- Italy Jun Industrial output y/y, 5.3% vs forecast 3.4%, previous 2.8& revised 2.7%
- Oil edges higher above $52 before U.S. inventory report
- Gold up on rising U.S.-North Korea tensions
Economic Data Ahead
- (0815 ET/1215 GMT) Canadian Mortgage and Housing Corp is expected to report that housing starts for July increased at a seasonally adjusted annualized rate of 205,000 units, compared with 212,700 in June.
- (0830 ET/1230 GMT) The U.S. Labor Department will release preliminary labor costs report for the second quarter. The indicator is expected to nudge up 1.2 percent after posting a gain of 2.2 percent in the previous quarter.
- (0830 ET/1230 GMT) The U.S. Labor Department is likely to report that preliminary non-farm productivity edged higher 0.7 percent in the second quarter, after remaining unchanged in the previous quarter.
- (0830 ET/1230 GMT) The Statistics Canada is likely to report that building permits dropped 2.0 percent in June, compared with a rise of 8.9 percent in May.
- (0900 ET/1300 GMT) Mexico releases its consumer prices for the month of July.
- (1000 ET/1400 GMT) The U.S. wholesale inventories are likely to have increased 0.6 percent in June, after posting similar gains in May.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending August 4.
- (1700 ET/2100 GMT) The Reserve Bank of New Zealand will announce its Interest Rate Decision and publishes its Monetary Policy Statement (MPS).
- (1845 ET/2145 GMT) The Statistics New Zealand will release Electronic Card Retail Sales figures for the month of July. The indicator remained flat in the previous month.
- (1901 ET/2301 GMT) The Royal Institution of Chartered Surveyors (RICS) will report Britain's Housing Price Balance for the month July. The indicator is expected to have increased to 8 percent from 7 percent in June.
- (1950 ET/2350 GMT) Japan's Ministry of Finance will report foreign bond investment for the week ending August 4.
- (1950 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic stocks for the week ending August 4.
- (1950 ET/2350 GMT) Japan's machinery orders are likely to have increased 3.7 percent for the month of June after posting a decline of 3.6 percent in May.
Key Events Ahead
- (1145 ET/1545 GMT) FedTrade operation 30-year Fannie Mae / Freddie Mac (max $1.65 bn)
- (1800 ET/2200 GMT) The Reserve Bank of New Zealand Governor gives a press conference.
FX beat
DXY: The dollar rose across the board as better-than-expected U.S. JOLTS job openings data boosted the prospects of the Fed hiking interest rate once again in 2017. The greenback against a basket of currencies traded flat at 93.60, having touched a high of 93.88 the day before, it’s highest since July 28. FxWirePro's Hourly Dollar Strength Index stood at 74.26 (Bullish) by 1100 GMT.
EUR/USD: The euro declined, extending losses from the previous session, as the greenback recovered following strong U.S. JOLTS job opening, which came in above market expectation. The European currency traded 0.1 percent down at 1.1737, having touched a low of 1.1715 the day before, its lowest since Jul. 26. FxWirePro's Hourly Euro Strength Index stood at -89.60 (Slightly Bearish) by 1000 GMT. The short term trend is still weak as long as resistance 1.18250 holds and overall bullish continuation can be seen above 1.1910. On the lower side, any convincing break below 1.17200 will drag the pair down till 1.1660 (21- day EMA)/1.15980 (23.6% retracement of 1.05694 and 1.19098).
USD/JPY: The dollar slumped to a fresh eight-week low below the 110.00 handle as latest bout of geopolitical tensions emerging from the Korean Peninsula sent investors seeking safety into traditional safe-haven assets. The major was trading 0.5 percent down at 109.79, having hit a low of 109.65 earlier, its lowest since Jun 15. FxWirePro's Hourly Yen Strength Index stood at 62.44 (Bullish) by 1000 GMT. On the lower side, any break below 109.85 Aug 4th low confirms minor weakness, a decline till 108.80/108.12 likely. The near term resistance is around 112 (21- day EMA) and any break above targets 112.98/114.
GBP/USD: Sterling steadied, halting its four-day losing streak on news report, via Bloomberg, of a merger deal between the US listed firm - Vantiv and UK's Worldpay for approximately EUR 10 billion. The major traded flat at 1.2998, having hit a low of 1.2952 the prior day, its lowest since July 20. FxWirePro's Hourly Sterling Strength Index stood at -78.88 (Slightly Bearish) by 1100 GMT. On the higher side, near term resistance is around 1.30460 (21- day EMA) and any break above will take the pair till 1.30750 (38.2% retracement of 1.32680 and 1.29525). The near term support is around 1.2945 (55- day EMA) and any break below will drag it till 1.2845 (61.8% fibo). Against the euro, the pound was trading 0.2 percent up at 90.30 pence, having hit a 10-month low of 90.87 the prior session.
USD/CHF: The Swiss franc rose, rebounding from a 2-1/2 week low hit in the previous session as escalating US-North Korea tensions boosted the bid tone around safe-haven assets. The major trades 1.0 percent down at 0.9642, having touched a low of 0.9611 earlier, it’s lowest since Jul. 27. FxWirePro's Hourly Swiss Franc Strength Index stood at 92.24 (Slightly Bullish) by 1100 GMT. . The pair has taken support near 0.96500 (21- day EMA) and any break below will drag the pair till 0.9600/0.9560 in the short term. On the higher side, near term major resistance is around 0.97708 (Jun 15th high) and any convincing break above will take it till 0.9808/0.9845 (61.8% fibo).
AUD/USD: The Australian dollar tumbled, extending losses for the seventh consecutive session as weak domestic home loan growth data and weaker-than-expected Chinese July CPI figures undermined the Aussie bulls' sentiment. The major trades 0.3 percent down at 0.7890, having hit a low of 0.7855 earlier, it’s weakest since July 18. FxWirePro's Hourly Aussie Strength Index stood at 15.01 (Neutral) by 1100 GMT. On the lower side, near term support is around 0.7850 and any break below will drag the pair till 0.7800/0.7760 (61.8% fibo). The near term resistance is around 0.8070 and any break above targets 0.8100/0.8150.
Equities Recap
European shares declined on rising global geopolitical tensions, while the Swiss franc was on track for its biggest single-day rise in more than 2 1/2 years against the euro.
The pan-European STOXX 600 index fell 1.01 percent to 378.84 points, while the FTSEurofirst 300 index shed 1.03 percent to 1,489.66 points.
Britain's FTSE 100 trades 0.8 percent down at 7,478.26 points, while mid-cap FTSE 250 declined 0.8 percent to 19,793.91 points.
Germany's DAX eased 1.2 percent at 12,142.70 points; France's CAC 40 trades 1.6 percent lower at 5,137.72 points.
Commodities Recap
Crude oil prices rose on expectations that a U.S. inventory report would show crude stocks dropped for a sixth week, although gains were capped by doubts about compliance with OPEC-led supply cuts. International benchmark Brent crude was trading 1.0 percent up at $52.46 per barrel by 1136 GMT, having hit a high of $52.90 last week, its strongest since May 25. U.S. West Texas Intermediate was trading 1.04 percent up at $49.45 a barrel, after rising as high as $50.40 last week, its strongest since May 25.
Gold prices rose, extending previous session gains as geopolitical tension between United States and North Korea send investors out of equities and into the safety of safe-haven assets. Spot gold rose 0.7 percent to $1,268.44 per ounce at 1140 GMT, having touched a low of $1,251.46 on Tuesday, its lowest since July 26. U.S. gold futures for December delivery rose 0.9 percent to $1,273.50 per ounce.
Treasuries Recap
The U.S. Treasuries jumped on renewed tensions along the Korean Peninsula after North Korea threatened to strike US military installations on the island of Guam after the US flew B-1B bombers over the Korean Peninsula Tuesday in a show of force. The yield on the benchmark 10-year Treasury, slumped 3-1/2 basis points to 2.24 percent, the super-long 30-year bond yields plunged nearly 4 basis points to 2.83 percent and the yield on short-term 2-year note traded 2 basis points lower at 1.34 percent.
The UK gilts surged Wednesday after tensions mounted over the Korean Peninsula, raising worries of a nuclear attack on the US, as is threatened by North Korea, including targeting the US Pacific island territory of Guam, the latest salvo in an increasingly aggressive back-and-forth between Pyongyang and Washington. The yield on the benchmark 10-year gilts, slid 1/2 basis point to 1.17 percent, the super-long 30-year bond yields fell nearly 1 basis point to 1.81 percent and the yield on the short-term 2-year hovered around 0.25 percent.
The Eurozone periphery bonds jumped in mid-European trading session Wednesday after investors flocked safe-haven instruments, following threats by North Korea that it will launch nuclear attacks on the U.S. after the US flew B-1B bombers over the Korean Peninsula Tuesday in a show of force. The benchmark German 10-year bond yields, which moves inversely to its price, hovered around 0.48 percent, the French 10-year bond yields flat at 0.75 percent, Irish 10-year bond yields rose nearly 1/2 basis point to 0.77 percent, Italian down 1/2 basis point to 2.01 percent, Netherlands 10-year bond yields steady at 0.59 percent, Portuguese equivalents slumped 1-1/2 basis points to 2.85 percent and the Spanish 10-year yields traded nearly flat at 1.47 percent.
The Japanese 10-year government bond yields struck a 6-week high Wednesday after investors poured into safe-haven assets, following growing tensions over the Korean Peninsula as the country prepares to go into a long holiday starting Friday on account of Mountain Day. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, hovered around 0.07 percent, the yield on long-term 30-year note traded flat at 0.87 percent and the yield on short-term 2-year too traded steady at -0.10 percent.
The New Zealand bonds gained at close as investors wait to read the Reserve Bank of New Zealand’s (RBNZ) monetary policy decision scheduled to be unveiled today by 21:00GMT. Further, the central bank Governor Wheeler’s speech, following the meeting, will add further guidance to the debt market. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1 basis point to 2.83 percent, the yield on 7-year note also slid 1 basis point to 2.68 percent and the yield on short-term 2-year too ended 1 basis point lower at 2.01 percent.
The Australian bonds slumped Wednesday, tracking firmness in the U.S. Treasuries, after the overnight 3-year note auction showed up strongly. Markets will now look forward to the Reserve Bank of Australia (RBA) Governor Philip Lowe’s speech, scheduled to be held on August 10 for further direction in the bond market. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 1-1/2 basis points to 2.65 percent, the yield on 15-year note climbed 1 basis point to 2.94 percent while the yield on short-term 2-year hovered around 1.79 percent.
