Market Roundup
- Eurozone lending figures mask growing divide
- Eurozone business growth stalls in July, outlook darkens: PMI
- UK's Johnson to appoint Brexiteer Cummings as a senior adviser: BBC
- German manufacturing recession deepens, weakest showing in 7 years: PMI
- UK mortgage approvals near two-year high in June: UK Finance
- Investors bet SNB will go more negative on interest rates after ECB
Economic Data Ahead
- (0945 ET/1345 GMT) Financial firm Markit releases U.S. preliminary Manufacturing PMI for the month of July. The index likely edged up to 51.0 after posted a final reading of 50.6 in the previous month.
- (0945 ET/1345 GMT) Financial firm Markit Economics is likely to report that preliminary U.S. service PMI business activity index rose to 51.7 in July after printing a final reading of 51.5 in May.
- (0945 ET/1345 GMT) Markit Economics will release preliminary U.S. composite PMI for the month of July. The index posted a final reading of 51.5 in the prior month.
- (1000 ET/1400 GMT) The U.S. new single-family home sales are expected to have surged 6.0 percent to a seasonally adjusted annual rate of 660,000 units in June. New home sales dropped 7.8 percent in May to a seasonally adjusted annual rate of 626,000 units.
- (1100 ET/1500 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending July 19.
Key Events Ahead
- No Significant Event Scheduled
FX Beat
DXY: The dollar index eased after rising to a near 2-month peak, amid expectations of a wave of policy stimulus by global central banks. The greenback against a basket of currencies traded 0.1 percent down at 97.62, having touched a high of 97.81 earlier, its highest since May 31.
EUR/USD: The euro slumped to a near 2-month low after data showed Eurozone business growth was much weaker than expected in July, weighed down by a deepening contraction in manufacturing. Investors now await the European Central Bank’s upcoming policy meeting, where it is expected to sound dovish. The European currency traded flat at 1.1152, having touched a low of 1.1126 earlier, its lowest since May 31. Immediate resistance is located at 1.1175 (23.6% retracement of 1.1281 and 1.1142), a break above targets 1.1212 (50.0% retracement). On the downside, support is seen at 1.1116 (May 30 Low), a break below could drag it below 1.1100.
USD/JPY: The dollar eased from a near 1-week peak after the International Monetary Fund lowered its global growth forecast for the second time this year and see the world economy expanding by 3.2 percent in 2019 and 3.5 percent next year. However, a deal to raise the U.S. government debt ceiling and a mildly positive tone around the Treasury bond yields limited losses. The major was trading 0.2 percent down at 108.04, having hit a high of 108.29 on Tuesday, its highest since July 17. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. Markit flash PMI's and new home sales. Immediate resistance is located at 108.53 (July 1 High), a break above targets 108.96 (July 9 High). On the downside, support is seen at 107.76 (July 5 Low), a break below could take it lower at 107.21 (July 19 Low).
GBP/USD: Sterling rose, halting a 3-day losing streak, as investors awaited Boris Johnson’s speech due later in the day after Britain’s Queen Elizabeth formally appoints him as prime minister. The major traded 0.5 percent up at 1.2505, having hit a low of 1.2417 on Tuesday, it’s lowest since July 17. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2547 (21-DMA), a break above could take it near 1.2578 (July 12 High). On the downside, support is seen at 1.2396 (July 16 Low), a break below targets 1.2373 (Jan. 3 Low). Against the euro, the pound was trading 0.5 percent up at 89.16 pence, having hit a high of 89.06 earlier, it’s highest since June 21.
USD/CHF: The Swiss franc edged up after falling to a near 1-week low earlier in the session, as investors’ see an increasing chance the Swiss National Bank to cut its deeply negative interest rates. The major trades flat at 0.9850, having touched a low of 0.9803 on Monday; it’s lowest since July 1. On the higher side, near-term resistance is around 0.9894 (July 16 High) and any break above will take the pair to next level till 0.9932 (July 5 High). The near-term support is around 0.9778 (July 1 Low), and any close below that level will drag it till 0.9738 (June 28 Low).
Equities Recap
European shares plunged, weighed down by losses in commodity-linked stocks, while sterling rose as investors remain unclear as to whether Boris Johnson will lead Britain to a no-deal EU exit or find a compromise.
The pan-European STOXX 600 index declined 0.3 percent at 390.60 points, while the FTSEurofirst 300 eased 0.3 percent to 1,535.84 points.
Britain's FTSE 100 trades 0.8 percent down at 7,492.30 points, while mid-cap FTSE 250 gained 0.2 to 19,790.13 points.
Germany's DAX rose 0.2 percent at 12,521.10 points; France's CAC 40 trades 0.5 percent lower at 5,578.41 point.
Commodities Recap
Crude oil prices declined after rallying for three consecutive sessions on rising tensions with Iran and as U.S. inventory data showed a much bigger than expected drop in crude stockpiles. International benchmark Brent crude was trading 0.8 percent lower at $63.71 per barrel by 1036 GMT, having hit a low of $61.26 on Thursday, its lowest since June 18. U.S. West Texas Intermediate was trading 0.7 percent down at $56.82 a barrel, after falling as low as $54.71 on Thursday, its lowest since the June 20.
Gold prices rose, reversing most of its previous session losses, as escalating tensions in the Middle East drove investors towards safe-haven assets. Spot gold was trading 0.6 percent up at $1,425.63 per ounce by 1043 GMT, having touched a high of $1,452.80 on Friday, its highest since May, 2013. U.S. gold futures were steady at $1,421.30 an ounce.
Treasuries Recap
The U.S. Treasuries surged during the afternoon session, ahead of the country’s new home sales figures for June set to rise after notable declines in the previous two months, not least taking support from lower interest rates. The yield on the benchmark 10-year Treasury yield slipped 1-1/2 basis points to 2.060 percent, the super-long 30-year bond yields also suffered 1-1/2 basis points to 2.592 percent and the yield on the short-term 2-year too traded nearly 1-1/2 basis points lower at 1.816 percent.
The German bunds gained during European session after the country’s manufacturing PMI for the month of July, disappointing market expectations, also falling from the previous reading on Tuesday. The German 10-year bond yields, which move inversely to its price, fell 1-1/2 basis points to -0.373 percent, the yield on 30-year note slumped nearly 2-1/2 basis points to 0.217 percent and the yield on short-term 2-year traded flat at -0.782 percent.
The Japanese government bond futures dipped, with the September 10-year JGB futures were down 0.03 point at 153.66. The five-year JGB yield was up half a basis point at minus 0.235 percent, while the 10-year yield was unchanged at minus 0.150 percent.
The Australian government bonds surged during Asian session amid a muted trading session that witnessed data of little economic significance ahead of the Reserve Bank of Australia’s Governor Philip Lowe’s speech, scheduled to be held on July 25 by 03:05GMT. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slumped 2 basis points to 1.294 percent, the yield on the long-term 30-year bond suffered 1 basis point to 1.933 percent and the yield on short-term 2-year plunged nearly 3-1/2 basis points to 0.914 percent.
