Market Roundup
- EUR/USD -0.08%, USD/JPY -0.13%, GBP/USD +0.11%, EUR/GBP -0.18%
- DXY +0.09%, DAX -0.39%, FTSE +0.06%, Brent +0.42%, Gold -0.23%
- ECB says wages, consumer goods holding back inflation: bulletin
- EZ Jul Markit Comp final PMI, 55.7 vs forecast 55.8, previous 55.8
- EZ Jun Retail sales y/y, 3.1% vs forecast 2.6%, previous 2.6% revised 2.4%
- Great Britain Jul Markit/CIPS services PMI, 53.8 vs forecast 53.6, previous 53.4
- Germany Jul Markit Composite final PMI, 54.7 vs forecast 55.1, previous 55.1
- China welcomes U.S. seeking dialogue with North Korea
- In rare bipartisan display, U.S. Democrats back Trump on China trade probe
- China eyes widening yuan band amid reform pressures - sources
- China to report strong July economic data; trade numbers could fuel friction with US
- Japan hopes to hold economic talks with US in October - finmin
- MoF flow data week-ended July 29 – Japanese again good buyers of for-bonds
- Net Y1.067 trln bought, Y137.4 bln stocks bought too, Y30.7 bln bills sold
- Foreign investors mixed on Japanese assets
- Japan July PMI services 52.0, composite 51.8, June 53.3, 52.9, new orders eased
- Oil up on tighter U.S. market, but OPEC supplies weigh
- Gold prices fall as investors turn to risk assets
Economic Data Ahead
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have decreased by 2,000 to a seasonally adjusted 242,000 for the week ended Jul. 28 while continuing claims for the week ended Jul. 27 is expected to decline to 1.955 million from 1.964 million in the previous week.
- (0945 ET/1345 GMT) Financial firm Markit releases final U.S. composite PMI for the month of July. The index posted a final reading of 54.2 in the previous month.
- (0945 ET/1345 GMT) Markit Economics reports final U.S. services PMI for the month of July. The index posted a final reading of 54.2 in June.
- (1000 ET/1400 GMT) The Institute for Supply Management (ISM) is expected to report that U.S. non-manufacturing Purchasing Managers' index eased to a final reading of 57.0 in July from 57.4 in June.
- (1000 ET/1400 GMT) The United States is likely to report that factory orders increased 2.8 percent in June, after posting a fall of 0.8 percent in the prior month.
- (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending July 28.
Key Events Ahead
- (1145 ET/1545 GMT) FedTrade operation 15-year Fannie Mae / Freddie Mac (max $475 mn)
FX Beat
DXY: The dollar steadied versus some of its major peers as investors’ positioned themselves ahead of U.S. employment report. The greenback against a basket of currencies traded 0.1 percent up at 92.99, having touched a low of 92.55 on Wednesday, it’s lowest since May 3, 2016. FxWirePro's Hourly Dollar Strength Index stood at 29.24 (Neutral) by 1000 GMT.
EUR/USD: The euro slightly eased from 2-1/2-year peaks touched in the previous session as investors awaited U.S. jobs data that could provide further cues on the strength of the economy. However, the downside was limited as markets cheered on better-than-expected Eurozone's retail sales figures for June. The European currency traded 0.1 percent down at 1.1841, having touched a high of 1.1909 on Wednesday, its highest since Jan 5, 2015. FxWirePro's Hourly Euro Strength Index stood at 79.63 (Slightly Bullish) by 1000 GMT. The near term resistance is around 1.19100 and any break above will take the pair till 1.1925/1.1975 (2015 yearly high). On the lower side, 1.17850 (5- day MA) will be acting as near term support and any break below will drag it down till 1.17680 (23.6% Retracement of 1.13123 and 1.19098)/1.17200 (10- day MA).
USD/JPY: The dollar declined against the Japanese Yen's safe-haven as weaker Chinese services PMI print supported the prevalent risk-off environment. Investors now await U.S. ISM non-manufacturing PMI print for fresh trading impetus, ahead of tomorrow's official Non- farm payroll data. The major was trading 0.1 percent down at 110.61, having hit a low of 109.91 on Tuesday, its lowest since Jun 15. FxWirePro's Hourly Yen Strength Index stood at 11.10 (Neutral) by 1000 GMT. On the lower side, the pair is facing major support at 110 and any break below will drag the pair down till 108. The near term resistance is around 112 (21- day EMA) and any break above targets 112.98/114.
GBP/USD: Sterling rallied to a fresh 11-month high against the dollar after data showed UK services sector expanded stronger than expected in the month of July. The economy’s purchasing managers' index survey for the construction industry rose to 53.8, surpassing expectations of 53.6 and previous reading of 53.4, which provided some relief to those worried about an economic slowdown. Sterling traded 0.1 percent up at 1.3241, having hit a high of 1.3267 earlier, its highest since Sept. 16. FxWirePro's Hourly Sterling Strength Index stood at 42.70 (Neutral) by 1000 GMT. On the higher side, the pair is facing major resistance 1.32781 (161.8% retracement of 1.27747 and 1.19860) and break above targets 1.3300/1.3350. The downside remains capped at 1.3160 and any break below will drag it till 1.3097 (10- day MA)/1.3047 (21- day EMA)/1.3000. Against the euro, the pound was trading 0.3 percent up at 89.40 pence, having hit a near 2-week low of 89.88 the prior day.
USD/CHF: The Swiss franc rose, reversing most of its previous session losses, as prevalent risk-off environment supported safe haven assets. The major trades 0.1 percent down at 0.9702, having touched a high of 0.9726 last week, it’s highest since Jun. 27. FxWirePro's Hourly Swiss Franc Strength Index stood at -62.11 (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 0.9746 (89- EMA)/0.9808 (May 30th high)/0.9940 (200- day MA) is possible.
AUD/USD: The Australian dollar slumped to a 1-week low after data showed Australia's trade surplus narrowed more than expected in June, largely on account of a 1 percent drop in the exports. The Aussie trades 0.5 percent down at 0.7926, having hit a low of 0.7914 earlier, it’s weakest since July 26. FxWirePro's Hourly Aussie Strength Index stood at -65.78 (Bearish) by 1000 GMT. On the lower side, near term support is around 0.7865 (21- day EMA) and any break below will drag the pair till 0.7800/0.7760. The near term resistance is around 0.8070 and any break above targets 0.8100/0.8150.
Equities Recap
European shares edged up, lifted by the retail sector stocks, while the dollar against a basket of currencies steadied above 15-month lows ahead of U.S. employment report.
The pan-European STOXX 600 index climbed 0.05 percent to 378.81 points, while the FTSEurofirst 300 index added 0.06 percent to 1,488.56 points.
Britain's FTSE 100 trades 0.05 percent up at 7,415.67 points, while mid-cap FTSE 250 rose 0.1 percent to 19,858.12 points.
Germany's DAX fell 0.2 percent at 12,157.60 points; France's CAC 40 trades 0.2 percent higher at 5,118.27 points.
Commodities Recap
Crude oil prices rose, extending gains for the second consecutive session, lifted by signs of a tightening U.S. market, although high supplies from OPEC producers weighed on sentiment. International benchmark Brent crude was trading 0.6 percent up at $52.56 per barrel by 1013 GMT, having hit a high of $52.90 on Tuesday, its strongest since May 25. U.S. West Texas Intermediate was trading 0.4 percent higher at $49.74 a barrel, after rising as high as $50.40 on Tuesday, its strongest since May 25.
Gold prices declined to a 1-week low as the dollar rebounded from 15-month lows and as signs that the U.S. economy was strengthening turned investor focus on to risk assets. Spot gold fell 0.2 percent to $1,263.42 per ounce as of 1016 GMT, having touched a low of $1,256.79 earlier in the session, its lowest since July 27. U.S. gold futures for December delivery fell 0.9 percent to $1,266.30 per ounce.
Treasuries Recap
The U.S. Treasuries gained ahead of the initial jobless claims, scheduled for release later today, besides the ISM non-manufacturing PMI, due today. The yield on the benchmark 10-year Treasury, slipped nearly 1 basis point to 2.26 percent, the super-long 30-year bond yields down 1/2 basis point at 2.84 percent and the yield on short-term 2-year note also traded nearly 1 basis point lower at 1.36 percent.
The UK gilts jumped Thursday after the Bank of England (BoE) downgraded its growth and inflation forecasts of the economy, while maintaining the Bank rate unchanged at 0.25 percent at its monetary policy meeting held today. The yield on the benchmark 10-year gilts, slumped 4 basis points to 1.19 percent, the super-long 30-year bond yields hovered around 1.87 percent and the yield on the short-term 2-year plunged 2-1/2 basis points to 0.26 percent.
The Eurozone periphery bonds traded lower Thursday tracking a higher-than-expected reading of the region’s retail sales for the month of June. However, a 6-month low composite PMI for July cushioned deeper fall in bond prices. The benchmark German 10-year bond yields, which moves inversely to its price, rose nearly 1 basis point to 0.49 percent, the French 10-year bond yields also climbed nearly 1 basis point to 0.75 percent, Irish 10-year bond yields hovered around 0.78 percent, Italian flat at 2.01 percent, Netherlands 10-year bond yields higher by almost 1 basis point to 0.60 percent, Portuguese equivalents surged 1-1/2 basis points to 2.86 percent and the Spanish 10-year yields remained steady at 1.45 percent.
The Japanese bonds traded nearly flat Thursday as market observed little trading activity in the light of no important economic data or events. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, traded flat 0.071 percent, the yield on long-term 40-year note remained steady at 1.01 percent and the yield on short-term 3-year hovered around -0.113 percent.
The New Zealand bonds rallied sharply at the time of closing Thursday as investors poured into safe-haven assets amid ongoing global political disturbances and as investors remained muted in a silent trading session that witnessed data of little economic significance. At the time of closing, the yield on the benchmark 10-year bond, which moves inversely to its price, plunged 5 basis points to 2.98 percent, the yield on 7-year note slumped 4-1/2 basis points to 2.81 percent and the yield on short-term 2-year note also ended 4 basis points lower at 2.07 percent.
The Australian bonds gained Thursday as investors shifted to safe-haven assets buying after the country’s trade balance data disappointed by missing market expectations. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell nearly 3 basis points to 2.685 percent, the yield on 15-year note slid 2-1/2 basis points to 2.99 percent and the yield on short-term 2-year traded nearly 1-1/2 basis point lower at 1.792 percent.
