Market Roundup
- USD/JPY -0.35%, EUR/USD +0.13%, GBP/USD -0.03%
- USD/JPY 1.1 bln 101.00 option expiry for NY cut
- DXY -0.09%, DAX +0.3%, Brent +0.11%, Iron -2.1%, Gold +0.3%
- Russian Energy Min says consulting with Saudi to achieve market stability
- Japan’s Finmin negotiating with banks to lend to government at zero rates
- SNB w/e Aug 12 sight depos: Domestic bks fall, total rise
- Switzerland Jul Producer Prices -0.8% y/y vs -1.0% previous
- Japan FinMin Aso – Q2 consumer spending lacked strength, exports weak
- Aso-govt stimulus package to help address this, structural reforms needed too
- EconMin Ishihara – Concerned over EM slowdown, market developments
- EconMin Ishihara- Brexit fall-out, souring biz sentiment
- Japan Q2 GDP unch q/q, +0.2% AR, +0.2% and +0.7% forecast
- Japan megabanks seen taking 300 bln yen hit from subzero rates – Nikkei
- PBOC ViceGov – RMB development exceeding expectations, mkt driven
- Wall St banks ask Fed for 5 more years to comply with Volcker rule
- BoE Haldane–MPC not under illusions it can fully insulate vs l/t Brexit effects-Times
Economic Data Preview
- (0830 ET/1230 GMT) The Federal Reserve Bank of New York is expected to report that manufacturing activity in New York State have rose to 2.00 in August from 0.55 in July.
- (1000 ET/1400 GMT) The National Association of Home Builders is expected to report that U.S. Housing Market Index edged up to 60 in August from 59 in the prior month.
Key Events Ahead
- (0745 ET/1145 GMT) FedTrade ops 30-year Fannie Mae / Freddie Mac max $2.075 bln.
- (1630 ET/2030 ET) The Reserve Bank of New Zealand Governor Graeme Wheeler's Speech.
FX Beat
DXY: The dollar index, against a basket of currencies edged down to 95.64, having touched a high of 95.80 earlier in the session.
EUR/USD: The euro edged up, extending its post U.S. retail sales gains. The major touched an early low of 1.1153, however, it retreated to trade higher at 1.1172. European markets remain cautious ahead of a data-packed macro calendar ahead, underpinning the bid tone around the major. On Friday, the pair rallied as high as 1.1221 after weak U.S. retail sales data reduced expectations of December Fed rate hike. The major trades between a narrow range amid holiday-thinned markets. The short term bullishness can be seen only above temporary top formed at 1.12337 (Aug 2 High). Any violation above that level will take the pair to next immediate resistance 1.12668 (50% retracement of 1.16163 and 1.09115)/1.1300. On the lower side, support stands at 1.1150 and any indicative break below targets 1.1100/1.1079. The short term bearish invalidation is only above 1.1430 (Jun 26 High).
USD/JPY: The greenback's recovery mode ran out of steam, declining once again below the 101.00 handle. However, the major recovered some ground to trade 0.2 percent lower at 101.05, attempting to sustain gains above the 101.00 handle. The dollar rose to a high of 101.45 earlier in the session after Japan's GDP figures for the second quarter disappointed markets. Investors now await U.S. NAHB index, Empire State index and TIC flows figures due later in the NA session for further cues on the pair. The short term trend is slightly bearish as long as resistance102.65 holds. The major resistance is around 102.65 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 will drag it till 98.
GBP/USD: Sterling continues to remain under selling pressure as investors remain cautious head of the first round of national data on consumer and corporate reaction to Brexit vote. Markets expect the upcoming economic data to remain weak which will lead the Bank of England to ease monetary policy again in the coming months. Sterling trades 0.2 percent lower at 1.2888, having touched a high of 1.2944 earlier in the session. The short term trend is slightly weak as long as resistance 1.304 holds. From the current levels, 1.304 level will be acting as major resistance any break above will take the pair to next level till 1.3100/1.3170/1.3200. On the lower side, 1.2960 seems to be major support and any break below targets 1.2900/ 1.2850. Minor bullishness can be seen only above 1.3200. Against the euro, the pound trades at 0.3 percent lower at 86.60 pence, it lowest in 3-years.
USD/CHF: The Swiss franc nudged up against the dollar, amid risk-off market profile. The greenback trades lower at 0.9737, hovering towards a low of 0.9708 touched in the previous session. The Swiss currency benefited from lower-than-expected decline in PPI data for the month of July, which came in at -0.1 percent versus previous 0.1 percent. The major should close above 0.9855 (200 DMA) for further bullishness. Any break above 0.9855 will take the pair to next level till 0.9960/1.000. On the lower side, any break below 0.9705 (61.8% retracement of 0.9830 and 0.9633) will take it till 0.9630 and any violation below 0.9630 targets 0.9575/0.9520. Overall bullish invalidation is only below 0.9500.
AUD/USD: The Australian dollar rose, reversing some of its previous session losses. The Australian dollar trades 0.3 percent higher at 0.7667, pulling away from a 6-day low of 0.7636 touched earlier in the session. Investors now await the Reserve Bank of Australia's August meeting minutes due on Tuesday for further clues on its monetary policy outlook. The movements in the major will be driven by broad based sentiment, ahead of U.S. economic data. On the higher side, any break above 0.7760 will take the pair till 0.7800/0.7840. The major support is around 0.7630 and break below will drag it till 0.7630/0.7575/0.7535.
NZD/USD: The New Zealand dollar gained, recovering most of its previous session losses. The Kiwi trades 0.2 percent higher at 0.7203, hovering away from an early low of 0.7164. The major is likely to rise, extending gains above the 0.7200 handle as the greenback continues to remain weak across the broad. Market will closely watch U.S. economic data and the Reserve Bank of New Zealand Governor Graeme Wheeler's speech for further momentum on the pair. Immediate resistance is located at 0.7250, break above targets 0.7300. On the lower side, support is seen at 0.7158, break below could take it near 0.7110.
Equities Recap
World shares hovered near one-year peaks, while European shares rose to their highest level in 7-weeks, boosted by firmer healthcare stocks.
The pan-European STOXX 600 index added 0.4 percent at 347.45 points, while the FTSEurofirst 300 index also 0.4 percent up at 1,368.68 points.
Britain's FTSE 100 trades 0.3 percent higher at 6,937.74 points, while mid-cap FTSE 250 index edged up 0.1 pct at 17,939.06 points.
Germany's DAX advanced 0.7 percent at 10,789.25 points; France's CAC 40 traded 0.6 percent up at 4,526.00 points.
MSCI's broadest index of Asia-Pacific shares outside Japan reversed early losses to edge up 0.2 percent.
Tokyo's Nikkei lost 0.30 pct at 16,869.56 and Australia's S&P/ASX 200 index gained 0.24 pct at 5,544.10 points.
Shanghai composite index gained 2.4 pct at 3,125.20 points, while CSI300 index added 3.0 pct at 3,393.42 points. Hong Kong’s Hang Seng index climbed 0.7 pct at 22,932.51 points.
Commodities Recap
Crude oil prices rose to new highs for the month of August, as increasing expectations of potential producer action in an oversupplied market, strengthened market sentiments. Brent crude oil was at $47.20 per barrel at 0926 GMT, after rising to a high of $47.63 a barrel for the month and 11.3 percent above the last close in July. U.S. West Texas Intermediate crude rose to a high of $45.12 a barrel before slipping to $44.64 a barrel, still up 0.1 percent from its last close and has gained more than 7 percent in August.
Gold rose as soft U.S. retail sales data released on Friday lowered speculation of a near-term interest rate hike by the Federal Reserve. Spot gold was up about 0.4 percent at $1,339.35 an ounce at 0931 GMT, pulling away from a low of $1333.20 touched in the previous session. U.S. gold was up 0.2 percent at $1,345.80 an ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 1.5051 percent down by 0.01 bps, while 5-year was 0.007 bps lower at 1.0941 percent.
German Bunds were at a deeply sub zero -0.17 percent as the week got started and Spanish yields were under 1 percent at 0.92 percent having falling over 60 bps in the last couple of months.
Gilts opened 15 ticks lower than the settlement of 132.80 but soon regained a bid in light of thin seasonal markets and more general caution ahead of July CPI tomorrow and the resumption of the APF.
Yields on British 10-year gilts have more than halved to all-time lows of 53 basis points (bps), having been up at 1.39 percent just before the Brexit vote.
The Japanese government bond prices declined, after a report highlighted the side effects of negative interest rates and clouded the outlook for the Bank of Japan's easy monetary policy.
The benchmark 10-year JGB yield was up 2.5 basis points at minus 0.085 percent, while the 20-year yield edged up half a basis point to 0.250 percent.
Australian government bond futures were also higher, with the 3-year bond contract up 1 tick at 98.62, while the 10-year contract rose 1.5 ticks to 98.095.
New Zealand government bonds gained, sending yields 3.5 basis points lower across the curve.
