Market Roundup
- GBP/USD 0.25%, USD/JPY -0.14%, EUR/USD 0.15%
- China Q2 c/a surpluse $59.4 bln, Q1 $48.1 bln – Xinhua.
- German Jun Industrial Orders m/m -0.4% vs 0 previous, 0.6 expected
- Austria, called ‘racist’ by Turkey, tells Ankara to be moderate
- Bank of Italy head says can’t rule out state aid for lenders
- Broadbent: Sterling’s drop after BoE stimulus small compared with Brexit vote
- Carney: UK not in a repeat of financial crisis – LBC radio
- Nissan says Brexit deal will determine future UK plan investment – BBC
- Another English soccer club sold to Chinese investment group, this time WBA
- SNB forex reserves CHF 615.353bn at end-July vs CHF 609.006bn at end-June
- UK Jul Halifax House Prices m/m -1% vs 1.3 previous, -0.2 expected
- UK Jul Halifax HousePrice 3M y/y 8.4% vs 8.4 previous, 8.5 expected
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Labor Department releases nonfarm payrolls data for July, which are likely to have added 180,000 jobs, after rising 287,000 in June.
- (0830 ET/1230 GMT) The U.S. Labor Department is expected to report that unemployment rate edged down 4.8 percent in July, compared to a rise of 4.9 percent in June.
- (0830 ET/1230 GMT) The United States average hourly earnings for July are likely to remain at 2.6 percent y/y, unchanged from June's reading.
- (0830 ET/1230 GMT) The United States releases trade balance figures for the month of June. The report is likely to show that the trade deficit widened to $43.1 billion from $41.1 billion in May.
- (0830 ET/1230 GMT) The Statistics Canada releases employment report for July. The economy probably added 10,000 jobs in July, compared to a decline of 700 jobs in June. The participation rate came in at 65.5 percent in the month of June.
- (0830 ET/1230 GMT) Canada's unemployment rate is expected to have edged up to 6.9 percent in July from 6.8 percent in June.
- (0830 ET/1230 GMT) The Statistics Canada is expected to report that international trade deficit narrowed to C$2.82 billion in June from C$3.28 billion in May.
- (1000 ET/1400 GMT) Canada's seasonally adjusted Ivey Purchasing Managers Index is expected to have dropped to 50.9 in July from prior 51.7.
- (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count.
- (1500 ET/1900 GMT) The U.S. Federal Reserve is likely to report that consumer credit declined to $17 billion in July from $18.56 billion in June.
Key Events Ahead
No Significant Event Scheduled
FX Beat
DXY: The dollar index, against a basket of currencies trades 0.2 percent lower at 95.59, reversing most of its previous session gains, as markets await for U.S. non-farm payroll data due later in the session.
EUR/USD: The euro reversed its previous session losses, as the dollar weakened across the broad ahead of the U.S. non-farm payroll data. The major had regained the 1.1200 handle earlier in the week; however, it failed to sustain gains following Eurozone's downbeat retail sales figures. The European currency trades 0.1 percent up at 1.1140, retreating from a low of 1.1113 touched in the previous session. Data released earlier in the day showed German factory orders for June declining 0.4 percent against projections of 0.6 percent gain. Markets focus now remains on U.S. non-farm payroll data, which are expected at 180,000 for the month of July, down from June's print of 287,000. The pair is facing minor resistance at 1.11580 and any slight break above targets 1.1200/1.1232 (100 DMA). It should break below 200 Day SMA for further weakness. Any break below 1.1075 will drag it to next level till 1.1000.
USD/JPY: The greenback failed to sustain gains, declining below the 101 handle. The Japanese yen gained largely on the back of BoJ and Japanese government fiscal stimulus disappointment, dragging the major to 3-week low in the week. The dollar struggled to recover despite strong ADP report on U.S. private sector employment released on Wednesday. It trades 0.2 percent lower at 100.97 yen, not far from 100.68 a level seen since July 11. Market attention remains on the much awaited U.S. non-farm payroll numbers, for fresh impetus on the pair. The short term trend is slightly weak as long as resistance 102.35 (7 day EMA) holds. The resistance is around 102.35 and any break above confirms minor trend reversal, a jump till 103/104 is possible. On the lower side major support is around 100 and any break below 100 will drag the pair till 98.
GBP/USD: Sterling recovered some ground against both the dollar and euro after declining on the Bank of England’s package of new stimulus for Britain's slowing economy. However, UK's downbeat Halifax House Price figures capped the recovery mode. Britain's Halifax House Price Index for the month of July declined 0.1 percent from 1.2 percent in June. Sterling gained 0.3 percent to 1.3149, pulling away from a low of 1.3102 touched post-BoE policy outcome. Any violation below 1.3100 will drag the pair down till 1.3060/1.3000 in the short term. On the higher side intraday bullishness can happen only above 1.3200. Overall bearish invalidation is only above 1.3375. Against the euro, the pound trades 0.1 percent up at 84.77 pence.
USD/CHF: The Swiss franc hit a 1-week low, as market sentiments were boosted by higher European equities. The greenback trades higher at 0.9743, extending its 2-days rally. Data released showed that the Swiss National Bank's foreign exchange reserves rose in July. The central bank held 615.353 billion Swiss francs in foreign currency at the end of July, compared with 609.006 billion francs in June, revised from earlier reported 608.811 billion. The major has broken minor resistance 0.9740 (7 Day EMA) and jumped till 0.9752. On the higher side any break above 0.97710 will take it to next level till 0.9860 in the short term. It should close above 0.9860 (200 DMA) for further bullishness. The minor support is around 0.9680, and break below 0.9630 will drag it down till 0.9580/0.9525. Further weakness can be seen only below 0.9500.
AUD/USD: The Australian dollar rose to a 3-week high as investors ignored Reserve Bank of Australia's dovish economic outlook. The Aussie rose as high as 0.7663 and was last trading at 0.7659, 0.4 percent up for the day. The major was on course to end the week 0.7 percent higher despite the RBA slashing its policy rate to a record low 1.5 percent on Tuesday. On the higher side, any break above 0.7670 will take the pair to next level till 0.7725/0.7750. On the downside, the support is around 0.7535 (21 day EMA) and break below will drag it till 0.7480/ 0.7420/ 0.7380.
NZD/USD: The New Zealand dollar regained the 0.7200 handle as broad weakness in the US dollar and rising commodity prices provided support to the pair's recovery mode. The Kiwi trades 0.5 percent higher at 0.706, attempting to sustain gains above the 0.7200. Investors will closely watch U.S payrolls data due later in the session and Reserve Bank of New Zealand’s policy decision next week, for further momentum on the major. Immediate is located at 0.7200, break above could take it till 0.7256. On the downside, support is seen at 0.7135 (10-DMA), break below targets 0.7100.
Equities Recap
European shares gained as the Bank of England's stimulus package strengthened the British equities to a 1-year high, while markets remained cautious ahead of highly influential U.S. non-farm payroll data.
MSCI's world stocks index rose 0.2 percent, while MSCI's broadest index of Asia-Pacific shares outside Japan extended gains to 1.1 percent, and were on course for a 0.8 percent weekly gain.
The pan-European STOXX 600 index gained 0.2 percent, while the FTSEurofirst 300 index added 0.1 percent to 1,333.32 points.
Germany's DAX rose 0.1 pct at 10,237.17 points, France's CAC 40 gained 0.5 pct, Britain's FTSE 100 was climbed 0.4 pct, while mid-cap FTSE 250 index advanced 1.0 pct.
Tokyo's Nikkei ended flat at 16,254.45, Australia's S&P/ASX 200 index gained 0.40 pct at 5,497.90 points and South Korea's KOSPI 200 rose 0.9 pct at 2,017.94 points.
Shanghai composite index declined 0.2 pct at 2,976.70 points and was poised for a 0.1 percent weekly gain. CSI300 index edged up 0.1 pct at 3,205.11 points and ended the week 0.3 percent higher. Hong Kong’s Hang Seng index added 1.4 pct at 22,146.09 points.
Commodities Recap
Crude oil prices reversed gains, halting a 2-day short-covering rally as market sentiments were weighed down by crude and refined product oversupply. International Brent crude oil was trading at $44.04 per barrel, down 0.2 percent by 0932 GMT. U.S. West Texas Intermediate crude was trading 0.2 percent lower at $41.71 per barrel.
Gold extended gains and was on track for a second consecutive weekly gain as the dollar weakened ahead of the U.S. jobs data due later in the day. Spot gold was up 0.1 percent at $1,362.32 an ounce by 0935 GMT, having ended the previous session 0.2 percent higher and has gained about 1 percent so far this week. U.S. gold rose 0.2 percent to $1,370 an ounce.
Treasuries Recap
The US Treasuries little changed as markets await the July employment report in an attempt to predict the central bank's likely step to hike interest rates in the upcoming monetary policy meeting. The yield on the benchmark 10-year Treasury note fell 1/2 basis point to 1.497 percent and the yield on short-term 2-year note hovered around 0.650 percent.
The UK gilts continued to rally after the Bank of England lowered its key interest rate by 25 basis points to 0.25 percent in its monetary policy meeting, concluded on August 4. The yield on the benchmark 10-year gilts fell 1 basis point to 0.637 percent (new record low), the yield on super-long 40-year bond also dipped 1-1/2 basis points to 1.324 percent (fresh record low) and the yield on short-long 3-year bond slid 1 basis point to 0.114 percent.
The German bunds traded narrowly mixed as investors awaited the United States employment report for July in an attempt to estimate the Fed's most likely step. The yield on the benchmark 10-year bond rose 1 basis point to -0.090 percent and the yield on short-term 3-year note slid 1 basis point to -0.616 percent.
The Japanese government bonds rallied as the Bank of England lowered its bank rate to 0.25 percent with additional quantitative easing. The yield on the benchmark 10-year bonds, which moves inversely to its price, fell nearly 1 basis point to -0.081 percent and the short-term 2-year JGB yield dipped 2 basis points to -0.188 percent.
The New Zealand government bonds closed higher as investors sought refuge in the safe-haven instruments ahead of the Reserve Bank of New Zealand (RBNZ) monetary policy decision. The yield on the benchmark 10-year bond fell 1-1/2 basis points to 2.200 percent, the yield on 7-year note also dipped 1-1/2 basis points to 1.925 percent and the yield on short-term 2-year note ended 1-1/2 basis points lower at 1.805 percent.
The Australian government bonds gained following a dovish economic assessment from the Reserve Bank of Australia’s statement of monetary policy. The yield on the benchmark 10-year Treasury note fell 7-1/2 basis points to 1.890 percent and the yield on short-term 3-year note dipped 1 basis point to 1.437 percent.
