Market Roundup
- USD/JPY -0.08%, EUR/USD -0.13%, GBP/USD -0.5%, NZD/USD -1.25%
- TRY/TOM +0.2% and significantly tighter range-2.9732-2.9884
- DXY +0.13%, DAX -1.33%, Brent -0.1%, Iron -5.15%
- RBA July minutes – Watching economic data closely
- RBA will make any adjustment to policy stance as needed
- RBA reiterates rising AUD to complicate economic rebalancing
- UK Jun CPI +0.5% y/y vs 0.3% previous, 0.4% exp
- UK Jun Core CPI +1.4% y/y vs 1.2% previous, 1.3% exp
- Germany Jul ZEW Current Conditions 49.8 vs 54.5 previous, 51.8 exp
- Germany Jul Zew Econ Sentiment -6.8 vs 19.2 previous, 9.0 exp
- UK’s creditworthiness under downward pressure after EU exit
- Turkish Econmin expects bold move from CBT in its rate cuts
- Canada off’l – Brexit to dominate G20 FinMin meeting
- US Tsy off’l – FX markets in line with fundamentals
- Fitch – Policymakers fuelling China’s mounting debt problems
- Greece’s EU/IMF lenders approve further easing of capital controls
Economic Data Preview
- (0830 ET/1230 GMT) The U.S. Commerce Department is expected to show that new housing projects increased to a seasonally adjusted annual pace of 1.17 million units in June from 1.16 million units in May.
- (0830 ET/1230 GMT) The U.S. building permits are likely to have increased to a 1.15 million-unit rate in June from 1.14 million units in May.
- (1000/1400) Mexico's central bank will report if it intervened in forex markets last week to support the peso.
- (1630 ET/2030 GMT) API reports its weekly crude oil stock.
Key Events Ahead
- (1005/1405) Bank of England Monetary Policy Committee member Dr Ben Broadbent speech.
- (1145 ET/1545 GMT) FedTrade ops 30-year Fannie Mae/Freddie Mac max $2.550 bln.
FX Beat
DXY: The dollar index, against a basket of currencies rose 0.4 percent to 96.98, it’s highest in 4-months.
EUR/USD: The euro declined following downbeat German and Eurozone's ZEW survey for the month of July. Economic sentiment in Germany dropped to -6.8 against forecast -.1 and previous 19.2, while in Eurozone it slumped to -14.7 versus consensus of 12.3 and prior 20.2. In addition German current conditions eased to 49.8 from 54.5 previous and 51.8 expected. The major trades 0.2 percent lower at 1.1045, reversing most of its gains from the previous session. Markets will closely watch U.S. housing starts and building permits report for further cues. Any further bullishness only above 1.10900 (200 DMA) and any break above 1.10900 will take the pair to next level at 1.1130/1.1188 (90 day EMA) in the short term. On the lower side, any break below 1.1050 targets 1.1000/1.0970/1.0915.
USD/JPY: The greenback edged up, attempting a minor recovery to sustain gains above the 106 handle. The major strengthened on the back of rising expectations of more monetary easing by the Bank of Japan, amid broad recovery in risk appetite. The trades at 106.21 yen, hovering towards 3-1/2-week high of 106.32 touched earlier in the session. The short term trend is slightly bullish as long as support 104.45 (200 4H EMA) holds. The minor resistance is around 106.31 and any break above confirms minor trend reversal, a jump till 106.80/107.25/108 is possible. On the lower side minor support is around 105.50 and any break below 105.50 will drag the pair till 104.70/104.45.
GBP/USD: Sterling came under renewed selling pressure, breaching below the 1.3200 handle, despite Britain's consumer price index rising more than expected in June. British consumer prices rose 0.5 percent compared with a year ago, surpassing expectations of 0.4 percent annual rise. Sterling edged up above 1.3200 after inflation data release, however, it failed to sustain gains, briefly dropping to 1.3180, down 0.5 percent. Fresh selling spurred following cautious remarks conveyed by BoE’s Prudential Regulation Authority head Sam Woods. He stated that there are risks to Britain's financial stability from emerging market economies. The major intraday resistance 1.3260 and break above targets 1.3350/1.3480. On the lower side major support is around 1.3100 and any violation below targets 1.3050/1.3000 level. Against the euro, the pound trades 0.4 percent lower at 86.64 pence.
USD/CHF: The Swiss franc declined for the third consecutive session, as the dollar strengthened across the broad. The greenback trades 0.1 percent higher at 0.9833, pulling away from a low of 0.9764 touched last week. The pair made a temporary top around 0.9894 and started to decline from that level. Any break above confirms minor trend reversal, a jump till 0.9960/1.000 is possible. On the lower side, major support is around 0.9780 and any indicative break below 0.9800 targets 0.9730 (21 D MA)/0.9680 in the short term.
AUD/USD: The Australian dollar declined more than 1 percent to an 11-day low, as investors speculate Reserve Bank of Australia to ease monetary policy as early as next month. The major slumped below 0.7500 handle following RBA's July meeting minutes which suggested that the central bank left the door open for a move in August. The Aussie trades 1.3 percent lower at 0.7492, hovering towards session low of 0.7489. On the higher side resistance is around 0.7600, break above will take the pair till 0.7680/0.7725. The major support is around 0.7470 and break below will drag it till 0.7450.
NZD/USD: The New Zealand dollar hit a 3-week trough, as markets expect Reserve Bank of New Zealand could ease monetary policy at its August 11 meeting. The major started declining after the central bank imposed new requirements on a hot housing market, triggering speculations for an interest rate cut. The Kiwi trades 1.1 percent lower at 0.7037, having touched an early 3-week low of 0.7010. New Zealand trader’s now await Fonterra Global Dairy Trade auction, for further momentum on the major. Immediate support is seen at 0.7000, break below could take it to 0.6969. On the higher side, resistance is located at 0.7115 (Session High).
Equities Recap
European shares slumped to a 1-week low, dragged down by fall in oil prices and weak German and Eurozone's business confidence data, which missed forecast.
The pan-European STOXX 600 fell 0.8 percent after touching its lowest level since July 12, while the FTSEurofirst 300 was down 0.9 percent.
Britain's FTSE 100 declined 0.4 pct, mid-cap FTSE 250 index lost 0.3 pct, Germany's DAX dropped 1.3 pct and France's CAC 40 shed 1.0 pct.
Tokyo's Nikkei gained 1.37 pct at 16,723.31, Australia's S&P/ASX 200 index declined 0.18 pct at 5,448.50 points and South Korea's KOSPI eased 0.23 pct.
Shanghai composite index lost 0.2 pct at 3,036.60 points, while CSI300 index slumped 0.4 pct at 3,248.23 points. Hong Kong’s Hang Seng index dropped 0.6 pct at 21,673.20 points.
Commodities Recap
Oil prices declined as investors wary over a crude and refined fuel glut, overshadowing expectations of reduction in U.S. shale production and a likely draw in U.S. crude inventories. Brent crude dropped 0.2 percent to $46.84 a barrel as of 0955 GMT, while U.S. West Texas Intermediate crude fell 0.1 percent to $45.15 a barrel.
Gold edged up, reversing some of its losses from the previous session as investor's appetite for risky- assets weakened, which boosted the demand for the precious metal. Spot gold was up 0.3 percent at $1,332.00 an ounce by 0959 GMT, while U.S. gold was 0.1 percent higher at $1,330.80 an ounce.
Treasuries Recap
The US Treasuries surged higher across the board, alongside a sharp decline in equities and crude oil prices. The yield on the benchmark 10-year Treasury note fell nearly 4 basis points to 1.551 percent and the yield on short-term 2-year note dipped 1-1/2 basis points to 0.673 percent.
The Spanish government bonds gained as investors showed strong demand for a new 10-year Spanish bond. The yield on the benchmark 10-year bond fell 6 basis points to 1.184 percent, the yield on long-term 30-year note dipped 4-1/2 basis points to 2.296 percent and the yield on short-term 3-year note slid nearly 1 basis point to -0.050 percent.
The UK gilts climbed as risk appetite among investors dipped with crude oil and equities. The yield on the benchmark 10-year gilts fell 2-1/2 basis points to 0.800 percent, the yield on super-long 30-year bond dipped 2 basis points to 1.666 percent and the yield on short-term 2-year bonds slid 1/2 basis points to 0.171 percent.
The German bunds gained as investors poured into safe-haven instruments amid losses in riskier assets including crude oil and stocks. The yield on the benchmark 10-year bond fell 3 basis points to -0.047 percent, the yield on long-term 30-year note also dipped 3 basis points to 0.490 percent and the yield on short-term 2-year note slid nearly 1 basis point to -0.652 percent.
The Japanese government bonds traded nearly flat on Tuesday, 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 -0.228 percent mark and the short-term 2-year JGB yield rose nearly 1 basis point to -0.323 percent.
The New Zealand government bonds closed higher as investors remained cautious ahead of the Global Dairy Trade price index figure. The yield on benchmark 10-year bond fell 7 basis points to 2.275 percent, the yield on 7-year note also dipped 7 basis points to 2.025 percent and the yield on short-term 2-year note ended 7 basis points lower at 1.915 percent.
The Australian government bonds gained as the Reserve Bank of Australia in its July meeting minutes left hopes alive for future rate cut in August. The yield on the benchmark 10-year Treasury note fell 5 basis points to 1.950 percent and the yield on short-term 2-year note also dipped nearly 5 basis points to 1.592 percent.
