Market Roundup
- EUR/USD +0.27%, USD/JPY +0.35%, GBP/USD +0.22%, EUR/GBP +0.13%
- DXY -0.07%, DAX -0.18%, FTSE -0.31%, Brent -0.04%, Gold -0.17%
- EZ Jun Producer prices y/y, 2.5% vs forecast 2.4%, previous 3.3% revised 3.4%
- Great Britain Jul Markit/CIPS cons PMI, 51.9 vs forecast 54.5, previous 54.8
- Trump close to decision on addressing Chinese trade practices
- China, BRICS trade ministers vow to fight protectionism
- BoJ Funo: Must maintain powerful monetary easing to hit price target
- Easy money allowing govt to maintain growth policy, allow structural reforms
- Big Japanese banks bulging at seams with pent-up cash – Nikkei
- Three of five top Japanese department stores see sales up in July - Nikkei
- Japan July monetary base up to record Y468.3444 trln, average +15.6% y/y
- Bearish cocktail knocks oil prices off recent highs
- Gold edges away from 7-week high as dollar steadies
Economic Data Ahead
- (0815 ET/1215 GMT) Payrolls processor ADP releases U.S. employment report for the month of July. The report is expected to show that private employer added 185,000 jobs as compared with 158,000 jobs in June.
- (0945 ET/1345 GMT) The NAPM-New York releases ISM-New York Index for the month of July. The index stood at 55.5 in the previous month.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending July 28.
- (1930 ET/ 2330 GMT) The Australian Industry Group (AiG) releases its Performance of Services Index for the month of June. The index stood at 54.8 in May.
- (1950 ET/2350 GMT) Japan's Ministry of Finance will report foreign bond investment for the week ending July 24.
- (1950 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic stocks for the week ending July 24.
Key Events Ahead
- (0945 ET/1345 GMT) FedTrade operation 30-year Fannie Mae / Freddie Mac (max $1.65 bn)
- (1100 ET/1500 GMT) Cleveland Fed chief Loretta Mester speaks on "Economic Outlook and Banking Supervision and Regulation" before the Community Bankers Association of Ohio Annual Convention, in Cincinnati, Ohio.
- (1530 ET/1930 GMT) San Francisco Fed President John Williams speaks on "Monetary Policy's Role in Fostering Sustainable Growth" before the Economic Club of Las Vegas, in Las Vegas.
FX Beat
DXY: The dollar rebounded versus the Japanese yen as investors’ awaited U.S. ADP non-farm employment data and the FOMC members Mester and Williams’ speech for further momentum. The greenback against a basket of currencies traded 0.1 percent down at 92.96, having touched a low of 92.78 on Monday, it’s lowest since May 3, 2016. FxWirePro's Hourly Dollar Strength Index stood at 87.79 (Slightly Bullish) by 1000 GMT.
EUR/USD: The euro rallied to a fresh 2-1/2 year high, as investors continued to cheer the latest upbeat Eurozone growth and inflation figures. Moreover, the major also benefited from cross-driven strength, as the EUR/GBP and EUR/CHF crosses jumped higher. The European currency traded 0.3 percent up at 1.1834, having touched a high of 1.1868 earlier, its highest since Jan 12, 2015. FxWirePro's Hourly Euro Strength Index stood at 58.58 (Bullish) by 1000 GMT. The pair has closed above major resistance at 1.17768 high made on Jul 27th, 2017 and any convincing break above 1.18500 will take it till 1.1880/ 1.1900/ 1.1975 (2015 yearly high). On the lower side, 1.17600 (5- day MA) will be acting as near term support and any break below will take it down till 1.17350 (23.6% retracement of 1.13123 and 1.18680)/1.1685 (10- day MA).
USD/JPY: The dollar extended previous session's rebound, underpinned by the positive tone around the U.S. Treasury bond yields and yesterday's strong rally in the U.S. equity markets. Investors focus now remains on the release of the U.S. ADP report, which might influence market expectations over Friday's headline NFP print. The major was trading 0.3 percent up at 110.74, having hit a low of 110.00 the day before, its lowest since Jun 15. FxWirePro's Hourly Yen Strength Index stood at 6.53 (Neutral) by 1000 GMT. On the lower side, the pair is facing major support at 110 and any break below will drag it down till 108. The near term resistance is around 112 (21- day EMA) and any break above targets 112.98/114.
GBP/USD: Sterling steadied near 11-month highs, despite the downbeat UK construction PMI release, which hit the lowest levels since August 2016. The economy's final Purchasing Managers' Index declined to 51.9 points in July, after having recorded 54.8 points in June and missing estimates of a 54.5 reading. Sterling traded 0.2 percent up at 1.3234, having hit an early high of 1.3244, its highest since Sept. 16. FxWirePro's Hourly Sterling Strength Index stood at 86.61 (Slight Bullish) by 1000 GMT. On the higher side, the pair is facing major resistance 1.3245 (161.8% retracement of 1.31260 and 1.29343) and break above targets 1.3300/1.3350. The downside remains capped by 10- day MA at 1.3060 and any break below will drag it till 1.3000/1.29435 (61.8% fibo). Against the euro, the pound traded 0.1 percent down at 89.42 pence, having hit a 1-week low of 89.75 on Monday.
USD/CHF: The Swiss franc eased, halting its 2-days winning streak as the greenback rebounded versus its major peers following a recovery in the U.S. Treasury yields. The major trades 0.3 percent up at 0.9690, having touched a high of 0.9726 on Friday, it’s highest since Jun. 27. FxWirePro's Hourly Swiss Franc Strength Index stood at -61.26 (Bearish) by 1000 GMT. Minor trend is bullish as long as support 0.9590 holds and any break below will drag the pair down till 0.9550/0.9500. The major trend line resistance is around 0.97250 and any close above will take it till 0.975 (89- EMA)/0.9808 (May 30th high)/0.9940 (200- day MA) is possible.
AUD/USD: The Australian dollar edged down amid a slump in iron ore prices and a rebound in greenback from its lowest level in 15 months. The Aussie trades down at 0.7965, having hit a high of 0.8065 last week, it’s highest since May 15, 2015. FxWirePro's Hourly Aussie Strength Index stood at -96.65 (Slightly Bearish) by 1000 GMT. On the lower side, near term support is around 0.7930 (Jul 28th, 2017 low) and any break below will drag the pair till 0.7875 (38.2% retracement of 0.75711 and 0.80656)/0.7802 (21- day EMA). The near term resistance is around 0.8070 and any break above targets 0.8100/0.8150.
Equities Recap
European shares declined, weighed down by a fall among mining stocks and banks, while the dollar against a basket of currencies steadied near 15-month lows amid positive tone around the U.S. Treasury bond yields.
The pan-European STOXX 600 index slumped 0.3 percent to 379.10 points, while the FTSEurofirst 300 index lost 0.3 percent to 1,489.14 points.
Britain's FTSE 100 trades 0.3 percent down at 7,399.71 points, while mid-cap FTSE 250 eased 0.2 percent to 19,838.89 points.
Germany's DAX fell 0.2 percent at 12,231.12 points; France's CAC 40 trades 0.3 percent lower at 5,112.51 points.
Commodities Recap
Crude oil prices steadied after declining more than 1 percent in the previous session on the back of rising U.S. inventories, an outage at a major European refinery and increasing OPEC production. International benchmark Brent crude was trading 0.6 percent up at $51.73 per barrel by 0952 GMT, having hit a high of $52.90 on Tuesday, its strongest since May 25. U.S. West Texas Intermediate was trading 0.6 percent higher at $49.06 a barrel, after rising as high as $50.40 the day before, its strongest since May 25.
Gold prices declined, extending losses for the third straight session as investors took profits after downbeat U.S. data propelled prices to a seven-week high the day before. Spot gold fell 0.1 percent to $1,266.07 per ounce at 0955 GMT, having hit a high of $1,274.03 on Tuesday, the highest since June 14. U.S. gold futures for December delivery declined 0.6 percent to $1,272.30 per ounce.
Treasuries Recap
The U.S. Treasuries plunged as investors wait to watch the country’s ADP non-farm employment data for July, due later today, besides the FOMC members Mester and Williams’ speech, due by 16:00 and 19:30GMT respectively. The yield on the benchmark 10-year Treasury, jumped 2-1/2 basis points to 2.27 percent, the super-long 30-year bond yields surged 2 basis points to 2.87 percent and the yield on short-term 2-year note traded nearly 1 basis point higher at 1.35 percent.
The UK gilts slumped Wednesday after investors largely shrugged off the downbeat lower-than-expected reading of July’s construction PMI. The yield on the benchmark 10-year gilts jumped 2 basis points to 1.23 percent, the super-long 30-year bond yields up nearly 1 basis point to 1.84 percent and the yield on the short-term 2-year traded nearly 1-1/2 basis points higher at 0.28 percent.
The Eurozone periphery bonds lost Wednesday as investors wait to watch the benchmark Germany’s 10-year auction, scheduled to be held later today. The benchmark German 10-year bond yields rose 1 basis point to 0.49 percent, the French 10-year bond yields climbed 1-1/2 basis points to 0.76 percent, Irish 10-year bond yields hovered around 0.79 percent, Italian jumped 2-1/2 basis points to 2.04 percent, Netherlands 10-year bond yields higher by 1-1/2 basis points at 0.61 percent, Portuguese equivalents surged 5-1/2 basis points to 2.89 percent and the Spanish 10-year yields traded 2-1/2 basis points higher at 1.47 percent.
The Japanese government bonds remained range bound in the light of no important economic data or events ahead of a cabinet re-shuffling by Prime Minister Shinzo Abe on August 3. The yield on the benchmark 10-year Treasury note hovered around 0.07 percent, the yield on long-term 30-year note flat at 1.09 percent and the yield on short-term 2-year too traded steady at -0.11 percent.
The New Zealand bonds jumped at the time of closing after dairy prices fell at the country’s latest Global Dairy Trade (GDT) price auction. At the time of closing, the yield on the benchmark 10-year bond slumped 3 basis points to 3.03 percent, the yield on 7-year note plunged 4-1/2 basis points to 2.85 percent and the yield on short-term 2-year note ended 1-1/2 basis points lower at 2.11 percent.
The Australian bonds remained flat as investors remained sidelined in any major trading activity ahead of the Reserve Bank of Australia’s (RBA) quarterly statement on Friday, which will provide updates on key economic indicators such as gross domestic product and inflation. The yield on the benchmark 10-year Treasury note hovered around 2.72 percent, the yield on 15-year note flat at 3.02 percent and the yield on short-term 2-year traded nearly 1 basis point lower at 1.81 percent.
