Market Roundup
- USD/JPY -0.08%, GBP/USD +0.23%, EUR/USD +0.16%, AUD/USD +0.09%
- DXY -0.14%, DAX 0.08%, Brent -1.6%, Iron +3.98%, FTSE250 -0.15%
- Brexit could take 6-yrs to complete-Frgn Sec Hammond in the Guardian
- UK 3 now in the Labour Party leadership race-Smith, Eagle and Corbyn
- China customs spokesman-Trade situation will be severe this year
- Carney summer easing view places pressure on MPC colleagues-The Times
- EZ May Ind Output +0.5% y/y vs 2.0% previous, 1.4% exp
- Japan ChiefCabSec Suga - Not true govt considering helicopter money
- Australia political woes put NZD-AUD parity in view
- US CBO – US debt to rise faster than previously expected
- US ABS issuance frenzy met by strong investor demand
- Cleveland Fed Mester (in Sydney) – Heartened by US June job rebound
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Labor Department publishes import and export prices for the month of June. The import prices are likely to increase 0.5 percent after gaining 1.4 percent in May, its largest gain since March 2012, while export prices are expected to rise 0.3 percent after increasing 1.1 percent in the prior month.
- (1000 ET/1400 GMT) The Bank of Canada is likely to hold interest rates steady and present its quarterly monetary policy report.
- (1400 ET/1800 GMT) The U.S. government is expected to report a budget deficit of $53 billion for the month of June.
- (1030 ET/1430 GMT) The Energy Information Administration reports its Crude Oil Stocks for the week ending July 8.
- (1400 ET/1800 GMT) The Federal Reserve issues its Beige Book, a compendium of anecdotes on the health of the U.S. economy.
- (1500 ET/1900 GMT) Argentina releases inflation data for the month of June. Consumer prices increased 4.2 percent in May versus the previous month.
Key Events Ahead
- (0900 ET/1300 GMT) Dallas Fed chief Robert Kaplan speaks on "The U.S. and World Economy Today" before a moderated question-and-answer session hosted by the World Affairs Council of Greater Houston, in Houston, Texas.
- (1115 ET/1515 GMT) Bank of Canada Governor Stephen Poloz and Senior Deputy Governor Carolyn Wilkins will hold a press conference following the decision and the release of its monetary policy report.
- (1145 ET/1545 GMT) FedTrade ops 15-yr Fannie Mae/Freddie Mac max $675 mln.
- (1800 ET/2200 GMT) Philadelphia Fed President Patrick Harker will be speaking on the economic outlook before the 2016 World Class Summit: 10 Years to 2026, in Philadelphia.
FX Beat
DXY: The dollar index, against a basket of currencies trades flat at 96.43, within the sight of 4-month high of 96.79 touched earlier in the week.
EUR/USD: The euro recovered after declining on Eurozne's downbeat industrial production data. The major attempted a minor recovery on the back of improving risk sentiments, however, it continues to consolidate between a narrow range. Eurozone's industrial production w.d.a for May came in at 0.5 percent y/y against consensus of 1.4 percent, while industrial production s.a. declined 1.2 percent m/m from prior 1.4 percent gain. The pair trades 0.1 percent up at 1.1074, pulling away from an early low of 1.1042. Minor trend is weak as long as resistance 1.1130 holds. Any indicative break above 1.1130 will take it to next level till 1.1188/1.1235 in the short term. The short term trend reversal is only above 1.1188. On the lower side, any break below 1.10500 will drag it down till 1.100/1.0970/1.0910.
USD/JPY: The greenback erased early losses, after Japanese government trimmed its 2016 CPI projection to 0.4 percent as against 1.2 percent estimated in January. The major trades at 104.53, after retreating from an early low of 103.94. The pair continues to track sentiments around Japanese stimulus package talks, ahead of economic data from the U.S. and Fed official speeches. The short term trend is slightly bullish as long as support 102.85 (90 4H EMA) holds. The minor resistance is around 105 and any break above confirms minor trend reversal, a jump till 105.85/106.45 is possible. On the lower side minor support is around 102.85 and any break below 102.85 will drag the pair till 102/101.40.
GBP/USD: Sterling steadied against the dollar and euro as Theresa May was set to take over as Britain's prime minister, further easing political uncertainty triggered from Brexit vote. Investors now eye on who will be appointed as finance minister and the new prime minister's view on triggering Article 50, the procedure for exiting the European Union. Sterling was up 0.4 percent at 1.3297, having hit a high of 1.3336, its highest since July 4, touched earlier in the session. The major intraday resistance is at 1.3370 (90 4H EMA) and break above targets 1.3530/1.3980 On the lower side major support is around 1.3188 (55 4H EMA) and any violation below targets 1.3035/1.3000 level. The minor support is around 1.3250. Against the euro, the pound was trading higher at 83.35 pence, having rose to 83 pence, its highest since June 30.
USD/CHF: The Swiss franc recovered after declining to a near 6-week low earlier in the session. The greenback trades 0.4 percent lower at 0.9847, pulling away from an early high of 0.9894, a level last seen on June 3. The short term trend is bullish as long as support 0.9804 (7 day EMA) holds. Any violation below 0.9805 will drag the pair down till 0.9740/0.9702 (21 DMA) level. The short term weakness only below 0.9702.Break below 0.9702 targets 0.9670/0.9630 level. On the higher side break above 0.9885 will take the pair till 0.9960/1.000 in the short term.
AUD/USD: The Australian dollar edged up on the back of improving risk-sentiments after slumping below the 0.7600 handle. The major declined to a low of 0.7577 after Australia Westpac consumer confidence index fell to 99.1 in July from 102.2 in the previous month. However, the Aussie bulls provided support, taking it above the 0.7600 handle. The pair trades flat at 0.7631, within the sight of 0.7657 (Previous Session High). On the higher side any break above major resistance 0.7650 will take it till 0.7680/0.7725.The major support is around 0.7580 and break below will drag it till 0.7530/0.7480.
NZD/USD: The New Zealand dollar failed to extend gains above the 0.7300 handle, however, it attempted a minor recovery after declining to an early low of 0.7238. The weakness in the major comes in as oil prices dropped more than one percent after the International Energy Agency warned about a global supply glut. The Kiwi trades flat at 0.7289, hovering just below the 0.7300 level. Immediate support is seen at 0.7214 (10-DMA), while on the upside, resistance is located at 0.7324 (2016 High).
Equities Recap
European shares hovered towards their highest levels this year as the prospect of stimulative economic policy reduced immediate fears over Britain's vote to leave the European Union.
Europe's FTSEurofirst 300 Index gained 0.2 pct, while STOXX 600 rose 0.3 pct.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.7 percent, within the reach of 2016 highs touched on April 21.
Britain's FTSE 100 and mid-cap FTSE 250 index both rose 0.2 percent, Germany's DAX trades flat at 0.06 pct and France's CAC climbed 0.3 pct.
Tokyo's Nikkei gained 0.84 pct at 16,231.43, Australia's S&P/ASX 200 index rose 0.70 pct at 5,390.80 points and South Korea's KOSPI 200 added 0.64 pct.
Shanghai composite index added 0.4 pct at 3,060.69 points, while CSI300 index ended up 0.3 pct at 3,282.87 points. Hong Kong's Hang Seng index increased 0.5 pct at 21,322.37 points.
Commodities Recap
Crude oil declined more than one percent after the International Energy Agency warned that a global supply glut continued to hamper oil prices, combined with data showing weekly gain in U.S. crude stocks. Global benchmark Brent oil was down 1.3 percents at $47.58 a barrel at 1036 GMT, while U.S. crude traded at $46.12 a barrel, 1.0 percent down.
Gold edged up, reversing some of its losses, after declining to a near 2-week low, as improved risk appetite supported global equities rally. Spot gold was up 0.4 percent at $1,338.26 per ounce by 1044 GMT after touching $1,327.45, its lowest since July 1. while U.S. gold nudged up 0.5 percent to $1,341.60 an ounce, after falling 1.6 percent in the previous session.
Treasuries Recap
The U.S. Treasuries surged as investors continue to seek sovereign debt as a shelter from the fallout of the Brexit vote last month, despite June employment report posted the largest non-farm payrolls increase in the past eight months. The yield on the benchmark 10-year Treasury note fell 3 basis points to 1.483 percent and the yield on short-term 2-year note dipped nearly 1 basis point to 0.677 percent.
The German bund yields continue to rally after Germany issued a 10-year bond at a negative interest for the first time today in the Eurozone area, selling more than 4 billion Euros with a yield of -0.05 percent. The yield on the benchmark 10-year bond fell more than 2 basis points to -0.116 percent and the yield on short-term 2-year note dipped 1/2 basis point to -0.673 percent.
The UK gilts rallied as investors were cautious ahead of the Bank of England policy decision. The yield on the benchmark 10-year gilts fell 4 basis points to 0.788 percent, the yield on super-long 30-year bonds also dipped 4 basis points to 1.635 percent and the yield on short-term 2-year bonds slid nearly 4 basis points to 0.159 percent.
The Japanese government bonds traded nearly flat, succumbing to thin trading activity during a relatively quiet session that saw little data of much significance. The yield on the benchmark 10-year bonds hovered around -0.271 percent mark and the short-term 2-year JGB yield remained steady at -0.347 percent.
The New Zealand government bond yields ended lower after the data showed that country’s food prices rose in June, led by seasonal gains in vegetables. The yield on benchmark 10-year bond rose 1 basis point to 2.355 percent in the end session, the yield on 7-year note jumped 1 basis point to 2.100 percent and the yield on short-term 2-year note ended 1/2 basis point higher at 2.075 percent.
The Australian government bonds continue to trade lower on renewed risk appetite in global markets. Also, investors were optimistic over last week’s US employment report, which showed robust growth in June. The yield on the benchmark 10-year Treasury note rose 4 basis points to 1.996 percent and the yield on short-term 2-year note jumped more than 1 basis point to 1.657 percent.
