Market Roundup
- BOE - MPC expects economic activity likely to weaken in the near term based on early signs after Brexit vote
- BOE - MPC had initial exchange of views on "various possible packages of measures"
- BOE policymakers vote 9-0 to maintain stock of QE assets at 375 bln stg (poll 375 bln stg)
- Bank of England policymakers vote 8-1 to keep rates at 0.50 pct (Reuters poll 0.25 pct)
- Sterling gains as much as 2 percent vs euro, hits two-week high of 82.51 pence , from 84 pence per euro beforehand
- Sterling jumps 2 percent on day to $1.3471 after BOE keeps rates unchanged
- China's human resources ministry says china will keep urban registered unemployment rate within 5 pct in 2016-2020
- China's human resources ministry says will add more than 50 mln new urban jobs between 2016-2020
- Singapore exchange says market will not resume trading at 1600 hours and will not re-open today
Economic Data Ahead
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have increased 11,000 to a seasonally adjusted 265,000 for the week ending July 8, while continuing claims for the week ending July 15 is expected to have rose to 2.128 m from 2.124 m.
- (0830 ET/1230 GMT) The United States producer prices are likely to have gained by 0.3 percent in June, after posting a gain of 0.4 percent in the previous month.
- (0830 ET/1230 GMT) Canadian new home prices are expected to have edged up 0.2 percent in May from 0.3 percent in the previous month.
- (1030 ET/1430 GMT) The Energy Information Administration reports its Natural Gas Storage for the week ending July 8.
- N/A Bank of Mexico publishes the minutes of its latest monetary policy meeting.
- (1800 ET/2200 GMT) Chile's central bank will meets to set its benchmark interest rate, which is expected to stay on hold at 3.5 percent.
Key Events Ahead
- (1115 ET/1515 GMT) Atlanta Fed President Dennis Lockhart is scheduled to speak before the Global Interdependence Center Eighth Annual Rocky Mountain Economic Summit.
- (1315 ET/1715 GMT) Kansas City Fed President Esther George speaks on the U.S. economy before a business and community leaders luncheon hosted by the Kansas City Fed.
- (1820 ET/2220 GMT) St. Louis Fed President James Bullard speaks at a press conference.
- (1900 ET/2300 GMT) Dallas Fed President Robert Kaplan participates in a moderated question-and-answer session on "Economic Conditions and the Role of Monetary Policy" before the Official Monetary and Financial Institutions Forum.
FX Beat
DXY: The dollar index, against a basket of currencies trades 0.4 percent lower at 95.88, hovering towards a low of 95.83 touched earlier in the session.
EUR/USD: The euro rallied largely on the back of improving risk appetite amid easing political uncertainty from the recent ‘Brexit’ vote. The major trades 0.6 percent higher at 1.1156, hovering towards a peak of 1.1186 touched on July 5. Minor trend is weak as long as resistance 1.1188 holds. Any indicative break above 1.1188 will take the pair to next level till 1.1235/1.1280 in the short term. The short term trend reversal is only above 1.1188. On the lower side, any break below 1.10840 will drag it down till 1.1050/1.0970/1.0910.
USD/JPY: The Japanese yen slumped on speculation that the Bank of Japan could take steps to fund government spending directly. The greenback rose 1.2 percent to 105.76, just short of 106 handle. Earlier in the session, the major declined to a low of 103.97 after reports stated that Japan will not adopt helicopter money soon. The short term trend is slightly bullish as long as support 104.85 (200 4H EMA) holds. The minor resistance is around 106 and any break above confirms minor trend reversal, a jump till 106.81/107.25 is possible. On the lower side minor support is around 104.80 and any break below will drag the pair till 104.25/103.50.
GBP/USD: Sterling rose above $1.3400 handle, after Bank of England held interest rate unchanged at 0.05 percent against consensus of 0.25 percent and maintained stock of QE assets at 375 bln stg in line with forecast. The MPC revised its Q2 GDP growth forecast to 0.5 percent versus previous 0.3 percent. The policymakers expects the fall in sterling to provide some support for exports, however, economic activity likely to weaken in the near term after Brexit vote. Sterling trades 1.5 percent higher at 1.3348, having touched a high of 1.3477 following BoE's decision. The major intraday resistance 1.3500 and break above targets 1.3980. On the lower side major support is around 1.3190 (55 4H EMA) and any violation below targets 1.3035/1.3000 level. The minor support is around 1.3250. Against the euro, the pound trades 1.0 percent higher at 83.53 pence, after rising to high of 82.49 pence.
USD/CHF: The Swiss franc gained on Switzerland’s upbeat producer/ import price data. The economy's producer/ import prices for the month of June came in at -1.0 percent y/y against previous -1.2 percent, while on month on month basis it stood at 0.1 percent against prior 0.4 percent. The greenback declined 0.7 percent to 0.9780, drifting away from a high of 0.9898 touched in the previous session. The short term trend is weak as long as resistance 0.9900 holds. On the lower side, major support is around 0.9800 and any indicative break below 0.9800 targets 0.9740/0.9680 in the short term.
AUD/USD: The Australian dollar extending gains above the 0.7600 handle, largely supported by mixed employment report and recovery in oil prices. The Aussie trades 0.5 percent higher at 0.7647, retreating from a low of 0.7591 touched earlier in the session. On the higher side any break above major resistance 0.7650 will take the pair till 0.7680/0.7725. The major support is around 0.7580 and break below will drag it till 0.7530/0.7480.
NZD/USD: The New Zealand dollar declined after RBNZ announced the release of its new monthly economic outlook report next week, well before the next policy review on Aug. 11. The Kiwi dropped nearly 1 percent sending the major below 0.7200 handle. However, it regained some ground to trade above 0.7200 at 0.7208, supported by recovery in oil prices. Immediate support is seen at 0.7164 (20-DMA), while resistance is located at 0.7324 (2016 High).
Equities Recap
World shares touched 8-month high after talks on more stimulus from the Bank of Japan boosted risk sentiments.
MSCI's 46-country All World index and EM stocks neared 8-month highs, while MSCI's broadest index of Asia-Pacific shares outside Japan hovered near its highest level.
The pan-European STOXX Europe 600 and the FTSEurofirst 300 indexes were up 1.0 percent and 1.1 percent respectively. Germany's DAX advanced 1.4 pct and France's CAC 40 gained 1.0 pct.
Britain's FTSE 100 climbed 0.9 pct, while FTSE 250 mid-cap index added 0.8 pct.
Tokyo's Nikkei rose 0.95 pct at 16,385.89, Australia's S&P/ASX 200 index gained 0.39 pct at 5,409.40 points and South Korea's KOSPI 200 edged up 0.12 pct.
Shanghai composite index and CSI300 index both rose 0.2 pct at 3,054.02 points and 3,276.76 points, respectively. Hong Kong's Hang Seng index added 1.1 pct at 21,561.06 points.
Commodities Recap
Oil prices edged up from sharp losses, however, investors remain cautious as record-high stocks and worries over slowing economic growth dampened sentiment. Brent crude oil was up 0.4 percents at $46.81 a barrel by 1057 GMT. U.S. crude was also gained 0.4 percents at $45.25.
Gold declined more than 1 percent in the previous session, as the dollar strengthened against the yen and equity shares hovered near 8-month highs. Spot gold was down 1.1 percent at $1,329.38 per ounce by 1059 GMT, after declining to an early low of $1,324.54.
Treasuries Recap
The U.S Treasuries continue to trade lower after the Bank of England kept its policy rate unchanged at 0.5 percent. Also, expectations of new stimulus in Japan lowered demand for safe-haven assets. The yield on the benchmark 10-year Treasury note rose more than 4 basis points to 1.507 percent and the yield on short-term 2-year note also jumped more than 1 basis point to 0.681 percent.
The UK gilts slumped as the benchmark FTSE 100 stock index jumped to 11-month high. The yield on the benchmark 10-year gilts rose 2 basis points to 0.768 percent, the yield on super-long 30-year bonds also jumped 2 basis points to 1.620 percent and the yield on short-term 2-year bonds bounced nearly 1 basis point to 0.133 percent.
The German bund yields plunged as investors cooled on safe-haven instruments amid gains in riskier assets including crude oil and equities. The yield on the benchmark 10-year bond rose more than 1 basis point to -0.131 percent and the yield on long-term 30-year note climbed 2 basis points to 0.438 percent.
The Japanese government bonds traded nearly flat on Thursday, succumbing to thin trading activity during a relatively quiet session that saw little data of much significance. The yield on the benchmark 10-year bonds hovered around -0.27 percent mark and the short-term 2-year JGB yield remained steady at -0.35 percent.
The Australian government bonds gained after data showed that the country’s unemployment rate ticked higher in June. The yield on the benchmark 10-year Treasury note fell nearly 6 basis points to 1.930 percent and the yield on short-term 2-year note dipped 2-1/2 basis points to 1.623 percent.
