Market Roundup
- USD/JPY +0.25%, GBP/USD +0.02%, EUR/USD +0.11%
- DXY -0.01%, DAX -0.3%, Brent -0.15%, Iron -0.10%
- Germany Flash Q2 y/y GDP 3.1% vs revised 1.5% Q1, 1.5% expected
- Germany Final Jul HICP 0.4% y/y vs 0.4% previous, 0.4% expected
- Germany Final Jul CPI 0.4% y/y vs 0.4% previous, 0.4% expected
- Germany Jul W/sale Price Idx -1.4% y/y vs -1.5% previous
- UK Jun Construction O/P -2.2% y/y vs revised -1.6% previous, -2.7% expected
- EZ Flash Q2 GDP 1.6% y/y vs 1.7% previous, 1.6% expected
- EZ Jun Ind. Prod. 0.4% y/y vs revised 0.3% previous, 0.7% expected
- U.K still largest single investor in U.S-CBI
- AUD/USD headed above 0.80 as yield hunt intensifies-AFR
- Small German cooperative bank to charge wealthy clients to deposit
- China July industrial output +6.0 pct y/y (Reuters poll +6.1 pct)
- China July retail sales +10.2 pct y/y (Reuters poll +10.5 pct)
- China stats bureau- inv growth is slowing, but structure is improving
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. producer price index is expected to have edged up 0.1 percent in July, after rising 0.5 percent in June. PPI excluding food and energy is likely to rise 0.2 percent after increasing 0.4 percent in June.
- (0830 ET/1230 GMT) The U.S. Commerce Department is expected to report that retail sales edged up 0.4 percent in July, after increasing 0.6 percent in June. Excluding autos, retail sales are expected to rise 0.2 percent, after advancing 0.7 percent in June.
- (0930 ET/1330 GMT) The Conference Board releases Britain's Leading Economic Index for the month of July. The index posted a decline of 0.2 percent in June.
- (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count.
Key Events Ahead
- (1115 ET/1515 GMT) New York Fed GDP Nowcast Q3 prev +2.6% q/q AR.
- (1145 ET/1545 GMT) FedTrade operation 30-yr Ginnie Mae (max $1.325 bln.
FX Beat
DXY: The dollar index, against a basket of currencies trades lower at 95.85, having touched a high of 95.99 earlier in the session.
EUR/USD: The euro edged up, recovering some of its previous session losses as Eurozone's gross domestic product for the second quarter came in line with consensus. Eurozone's preliminary seasonally adjusted GDP rose by 0.3 percent during the second quarter of 2016, while on yearly basis it was at 1.6 percent. Moreover, Eurozone's industrial production expanded by 0.6 percent in June against previous contraction of 1.2 percent. Despite the upbeat data, the gains in the major were capped as markets remained cautious ahead of U.S. economic releases, which could determine the Fed monetary policy outlook in the near-term. The short term bullishness can be seen only above temporary top formed at 1.1233. On the lower side, support is seen at 1.1150 and any indicative break below targets 1.1100/1.1079.
USD/JPY: The greenback rose, but failed to extend gains above the 102.00 handle as declining European shares and renewed selling in the oil prices, slightly strengthened the bid tone around the Japanese yen. The dollar trades 0.1 percent higher at 102.03, struggling to sustain gains above the 102 level. 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 100 will drag the pair till 98.
GBP/USD: Sterling hovered near 1-month low, struggling to regain the 1.3000 handle. The major attempted a minor recovery to 1.2978, however, it ran out of steam as market expect that weak economic data will lead the Bank of England to ease monetary policy again in the near term to cushion the economy from Brexit fallout. Sterling trades flat at 1.2961, having hit a 1-month low 1.2935 on Thursday. The short term trend is slightly weak as long as resistance 1.3100 holds. On the lower side 1.2850 seems to be major support and any break below targets 1.2800. Against the euro, the pound trades 0.1 percent lower at 86.03 pence.
USD/CHF: The Swiss franc edged down as the dollar strengthened on Fed interest rate hike expectations. The greenback trades at 0.9753, retreating from a low of 0.9736 touched earlier in the session. 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 0.9725 will take the pair near 0.9700. Minor weakness can be seen below 0.9630 and any violation below 0.9630 targets 0.9575/0.9520.
AUD/USD: The Australian dollar declined after hitting a 3-month high of 0.7759 in the previous session. Soft Chinese economic data and renewed expectations of Fed rate hike weakened the bid tone around the Aussie. The major trades 0.2 percent lower at 0.7678, hovering near an early low of 0.7670, however, it was on track to end the week 0.8 percent higher. On the higher side, resistance is seen at 0.7720 and any break above will take the pair till 0.7800/0.7840. The support is around 0.7660 and break below will drag it till 0.7630/ 0.7575.
NZD/USD: The New Zealand dollar edged down after rising as high as 0.7338, its highest since May 2015 following Reserve Bank of New Zealand policy easing on Thursday. The major came under renewed selling pressure triggered by weak China data release; however, higher oil prices limited the losses. The Kiwi trades 0.1 percent lower at 0.7197, having touched a high of 0.7228 earlier in the session. Immediate support is located at 0.7177 (10-DMA), break below could take it near 0.7150/ 0.7110. On the higher side, resistance is seen at 0.7230, break above targets 0.7300.
Equities Recap
World stocks were on course for their fourth week of gains in five, while European shares were subdued having briefly touched post-Brexit vote high in early deals.
MSCI's 46-country 'All World' index hovered at a 1-year high, while MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 percent and was on track to gain 1.9 percent for the week.
The pan-European STOXX 600 index was little changed at 346.79 points, while the FTSEurofirst 300 index was flat at 1,365.56 points.
Britain's FTSE 100 trades 0.1 pct higher at 6,920.25 points, while mid-cap FTSE 250 index advanced 0.7 pct at 17,940.08 points.
Germany's DAX edged down 0.1 pct at 10,725.66 points; France's CAC 40 traded flat at 4,502.24 points.
Tokyo's Nikkei rose 1.10 pct at 16,919.92, Australia's S&P/ASX 200 index gained 0.26 pct at 5,522.20 points and South Korea's KOSPI added 0.1 pct at 2,050.47 points.
Shanghai composite index gained 1.6 pct at 3,050.67 points and was up 2.5 pct for the week. CSI300 index added 1.9 pct at 3,294.23 points and ended the week 2.8 pct higher.
Hong Kong’s Hang Seng index climbed 0.8 pct at 22,766.91 points and was 2.8 pct up for the week.
Commodities Recap
Crude oil prices extended gains, touching a 3-week high, on rising expectations the exporters will talk about ways to reduce the supply glut at an upcoming meeting. Brent crude oil trades
0.2 percent higher at $46.04 per barrel by 1018 GMT, having hit a 3-week high of $46.62 earlier in the session. U.S. West Texas Intermediate crude were at $43.50 a barrel, up 0.1 percent after rising to $44.14 per barrel, its highest since July 25.
Gold remained flat, hovering near previous session lows, as the dollar strengthened on expectations of Federal Reserve rate hike this year. Spot gold was little changed at $1,337.61 an ounce by 0636 GMT, however, was on track for a weekly gain. U.S. gold declined 0.4 percent at $1,344.1 an ounce.
Treasuries Recap
The US Treasuries gained as investors remained cautious ahead of retails sales and producer price index. The yield on the benchmark 10-year Treasury note fell 3 basis points to 1.542 percent and the yield on short-term 2-year note dipped 1-1/2 basis points to 0.738 percent.
The UK gilts plunged as investors poured into safe-haven instruments amid losses in riskier assets including equities and crude oil. Also, traders cashed in profits after relishing a long week rally. The yield on the benchmark 10-year gilts increased 2 basis points to 0.556 percent, the super-long 40-year bond yield jumped 3 basis points to 1.135 percent and the yield on short-long 2-year bond climbed 2 basis points to 0.162 percent.
The German bunds traded nearly flat as investors witnessed a mixed bag of economic results, which limited the space to move the market in any particular direction. The yield on the benchmark 10-year bond hovered around -0.092 percent mark, the yield on short-term 30-year note remained steady at 0.412 percent and the yield on short-term 2-year bond stood flat at -0.624 percent.
The Japanese government bonds traded narrowly mixed Friday, succumbing to thin trading activity during a relatively quiet session that witnessed data of little significance. The benchmark 10-year bond yield fell 1/2 basis point to -0.102 percent, the super-long 30-year JGB yield also dipped nearly 3 basis points to 0.363 percent, the 5-year JGB yield bounced 1 basis point to -0.183 percent and the short-term 2-year JGB yield climbed 1/2 basis point to -0.195 percent.
The New Zealand bonds gained after the Reserve bank of New Zealand lowered its official cash rate (OCR) to a new record low of 2 percent in wake of depressing headline inflation and subdued economic growth. The yield on the benchmark 10-year bond fell 3 basis points to 2.160 percent and the yield on 7-year note also dipped 3 basis points to 1.870 percent and the yield on short-term 2-year note slid 2-1/2 basis points to 1.765 percent.
The Australian government bonds slumped as crude oil prices bounced on hopes that the oil producing countries at an upcoming meeting discuss ways of stabilizing the global energy market. The yield on the benchmark 10-year Treasury note rose 6 basis points to 1.908 percent and the yield on short-term 2-year note jumped 2-1/2 basis points to 1.458 percent.
