Market Roundup
- EUR/USD -0.22%`, USD/JPY +0.17%, GBP/USD +0.06%, EUR/GBP -0.31%
- DXY +0.14%, DAX +0.9%, FTSE +0.66%, Brent +0.67%, Gold -0.17%
- ECB's Gov. Draghi wants to delay policy debate until the Autumn
- EZ Q2 GDP flash qq 0.6% vs 0.6%, forecast 0.6%
- EZ Q2 GDP flash yy 2.2% vs 2.1%, forecast 2.1%
- U.S.-Japan conduct air drills as N. Korea watches "Yankees'" next move
- Great Britain Jun ILO Unemployment rate 4.4% vs 4.5%, forecast 4.5%
- Great Britain Jul Claimant count unemployment change -4.2k vs 5.9k, forecast 3.7k
- Gold treads lower ahead of Fed minutes
- Oil edges up on falling US crude stocks, but global glut weigh
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Department of Commerce is expected to report that housing starts increased to 1.220 million unit rate in July from 1.215 million unit rate in June.
- (0830 ET/1230 GMT) The U.S. building permits are likely to have decreased to a 1.25 million-unit pace in July from a 1.28 million-unit pace in June.
- (0830 ET/1230 GMT) The Statistics Canada will report foreign portfolio investment in domestic stocks for the month of June.
- (0830 ET/1230 GMT) The Statistics Canada will release investment in foreign securities figures for the month of June.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending August 11.
- (1845 ET/2245 GMT) The Statistics New Zealand will report its producer price index input and output data for the second quarter. PPI input rose 0.8 percent and output increased 1.4 percent during the first quarter.
- (1950 ET/2350 GMT) Japan's Ministry of Finance reports merchandise trade balance for the month of July. The economy's trade surplus is expected to rise to 392.0 billion yen after rising 439.9 billion yen in June.
- (1850 ET/2350 GMT) Japan's Ministry of Finance will report foreign bond investment for the week ending August 7.
- (1850 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic stocks for the week ending August 7.
Key Events Ahead
- (1145 ET/1545 GMT) FedTrade operation 15-year Fannie Mae / Freddie Mac (max $475 mn)
- (1400 ET/1800 GMT) The Federal Open Market Committee issues minutes of its July 25-26 policy meeting.
- N/A U.S., Mexican and Canadian officials meet in Washington D.C. for the first round of talks to renegotiate the North American Free Trade Agreement (NAFTA).
FX Beat
DXY: The dollar rallied versus most of its major peers as investors awaited the release of minutes from the U.S. Federal Reserve's last meeting in July for clues on the pace of potential interest rate hikes. The greenback against a basket of currencies traded 0.2 percent up at 93.99, having touched a high of 94.14 the day before, it’s highest since July 26. FxWirePro's Hourly Dollar Strength Index stood at 54.1 (Bullish) by 1000 GMT.
EUR/USD: The euro declined, extending losses for the third consecutive session, on the latest ECB headlines that cited Draghi will not deliver fresh policy message at Jackson Hole Symposium next month, diminishing investors’ expectations of a hawkish approach from the central bank. Investors seem to have ignored slightly upbeat Eurozone growth figures, which showed the economy advanced 0.6 percent on quarter in the three months to June, while on annualized basis, it grew by 2.2 percent, surpassing previous reading and forecast of 2.1 percent. The European currency traded flat at 1.1729, having touched a low of 1.1687 the day before, its lowest since Jul. 28. FxWirePro's Hourly Euro Strength Index stood at 15.90 (Neutral) by 0900 GMT. Immediate resistance is located at 1.1845 (July 31 High), a break above targets 1.1900. On the downside, support is seen at 1.1687 (Previous Session Low), a break below could drag it near 1.1638 (50.0% retracement 1.1370 and 1.1909).
USD/JPY: The dollar rallied to a near 2-week high as markets widely expected the Fed minutes to hint at September as the start time of the balance sheet normalization process and provide clues over the timing of next rate hike action this year. Moreover, easing geopolitical tensions between the U.S. and N. Korea and yesterday's better-than-expected US retail sales data continued to strengthen the greenback. The major was trading 0.2 percent up at 110.85, having hit an early high of 110.94, its highest since Aug. 4. FxWirePro's Hourly Yen Strength Index stood at -135.40 (Highly Bearish) by 0900 GMT. Immediate resistance is located at 111.38 (23.6% retracement of 112.19 and 108.90), a break above targets 111.71 (July 27 High). On the downside, support is seen at 110.12 (10-DMA), a break below could take it near 109.55 (Aug 9 Low).
GBP/USD: Sterling rebounded after falling to a fresh 1-month low as data released earlier showed wages rising faster than expected in the three months to June, closing the gap to headline inflation. The economy's unemployment rate in the three months to the end of June fell to 4.4 percent, its lowest since 1975, while claimant count change dropped by 4.2K during in July. Sterling traded 0.1 percent up at 1.2879, having hit a low of 1.2842 earlier, its lowest since July 12. FxWirePro's Hourly Sterling Strength Index stood at -110.00 (Highly Bearish) by 0900 GMT. Immediate resistance is located at 1.2963 (5-DMA), a break above could take it near 1.3050 (21-DMA). On the downside, support is seen at 1.2842 (Session Low), a break below targets 1.2811 (July 12 Low). Against the euro, the pound was trading 0.3 percent higher at 90.87 pence, having hit a 10-month low of 91.42 earlier in the day.
USD/CHF: The Swiss franc declined, extending losses for the third straight session, as easing tensions between U.S. and North Korea underpinned riskier assets. The major trades up at 0.9729, having touched a high of 0.9758 on Tuesday, it’s highest since Aug. 8. FxWirePro's Hourly Swiss Franc Strength Index stood at 15.19 (Neutral) by 1000 GMT. The pair is facing support near 0.9692 (61.8% retracement of 0.9583 and 0.9758) and any close below will drag the pair till 0.9666 (5-DMA). On the higher side, near term major resistance is around 0.9783 (38.2% retracement of 1.03432 and 0.94385) and any break above will take it till 0.9845/0.9900.
AUD/USD: The Australian dollar recovered from a 1-month low hit in the previous session after data showed domestic wage price index rose in April-June, matching forecasts. The Aussie trades 0.5 percent up at 0.7854, having hit a low of 0.7807 on Tuesday, it’s weakest since July 18. FxWirePro's Hourly Aussie Strength Index stood at 131.09 (Highly Bullish) by 1000 GMT. Immediate support is seen at 0.7786 (July 18 Low), a break below targets 0.7750. On the upside, resistance is located at 0.7899 (10-DMA), a break above could take it near 0.7929 (21-DMA).
Equities Recap
European shares advanced, bolstered by miners and oil stocks, while the dollar rose to a near 2-week high against the yen ahead of the release of FOMC latest policy meeting minutes.
The pan-European STOXX 600 index rallied 0.7 percent to 378.94 points, while the FTSEurofirst 300 index climbed 0.7 percent to 1,488.88 points.
Britain's FTSE 100 trades 0.6 percent up at 7,430.70 points, while mid-cap FTSE 250 gained 0.7 percent to 19,824.52 points.
Germany's DAX rose 0.8 percent at 12,273.61 points; France's CAC 40 trades 0.9 percent higher at 5,188.65 points.
Commodities Recap
Crude oil prices edged up, extending previous session gains following a decline in U.S. crude inventories, however, markets were still restrained by general oversupply. International benchmark Brent crude was trading 0.5 percent up at $51.21 per barrel by 0931 GMT, having hit a low of $50.02 on Tuesday, its weakest since Jul. 25. U.S. West Texas Intermediate was trading 0.4 percent up at $47.85 a barrel, after falling as low as $47.61 the prior day, its weakest since July 25.
Gold prices declined, extending losses for the third consecutive session, as the dollar steadied, while investors awaited minutes from the U.S. Federal Reserve's last meeting in July for clues on the pace of potential interest rate hikes. Spot gold eased 0.05 percent to $1,270.09 per ounce by 0933 GMT, having touched a high of $1,288.86 an ounce on Friday, it highest level since June 7. U.S. gold futures for December delivery were down about 0.4 percent at $1,274.90 an ounce.
Treasuries Recap
The U.S. Treasuries lost ground as investors wait to watch the Federal Open Market Committee (FOMC) meeting minutes, scheduled to be released today by 18:00GMT. The yield on the benchmark 10-year Treasury, jumped nearly 2 basis points to 2.28 percent, the super-long 30-year bond yields surged 2 basis points to 2.86 percent and the yield on short-term 2-year note traded 1/2 basis point higher at 1.35 percent.
The UK gilts plunged Wednesday, after reading an upbeat employment report, released today, with the rate of unemployment declining to 4.4 percent, from previous 4.5 percent amid deeper fall in the number of unemployment claims for the month of July. The yield on the benchmark 10-year gilts, jumped 4 basis points to 1.13 percent, the super-long 30-year bond yields climbed 4-1/2 basis points to 1.78 percent and the yield on the short-term 2-year traded 2-1/2 basis points higher at 0.25 percent.
The German government bonds slumped Wednesday after the Eurozone’s Q2 GDP, released today, matched market consensus; however, on a y/y basis, it came in above what analysts had earlier anticipated. The German 10-year bond yields, which moves inversely to its price, jumped nearly 4 basis points to 0.46 percent, the yield on 30-year note also surged 4 basis points to 1.21 percent and the yield on short-term 2-year traded 2 basis points higher at -0.68 percent.
The Japanese government bonds traded lower in early Asian trading, tracking similar overnight movement in the U.S. Treasuries and as investors wait to watch the country’s trade balance data for the month of July, scheduled to be released today by 23:50GMT. The yield on the benchmark 10-year Treasury note, rose 1/2 basis point to 0.04 percent, the yield on long-term 30-year note jumped nearly 2 basis points to 0.86 percent and the yield on short-term 2-year hovered around -0.11 percent.
The New Zealand bonds gained at the time of closing after global dairy prices fell at the latest GlobalDairyTrade price auction held late Tuesday amid a silent trading session that witnessed data of little economic significance. At the time of closing, the yield on the benchmark 10-year Treasury note, jumped 5 basis points to 2.86 percent, the yield on 7-year note also climbed 4-1/2 basis points to 2.71 percent and the yield on short-term 2-year ended 3 basis points higher at 2.05 percent.
The Australian bonds slumped as the yield on benchmark US 10-year bonds climbed, rising 6 basis points to 2.27% after July's US advance retail sales data surprised to the upside. The yield on the benchmark 10-year Treasury note, rose 2 basis points to 2.685 percent, the yield on 15-year note also jumped 2 basis points to 2.985 percent and the yield on short-term 2-year traded nearly 3 basis points higher at 1.843 percent.
