Market Roundup
- Turkish military coup late Friday: Quelled over weekend
- TRY/TOM -1.7% vs Friday’s 5.0% gain at 3.0200 close
- TRY/TOM matching volumes good early Monday: Exceeds full day avg
- USD/JPY +0.60%, GBP/USD +0.2%, EUR/USD +0.1%, EUR/CHF +0.20%
- DXY +0.05%, DAX -0.3%, Brent +0.17%, Iron -6.0%, FTSE250 +0.8%
- Japan’s SoftBank to buy ARM Holdings for GBP24.3bln
- Fitch says Japan post-election stimulus may raise fiscal risks
- SNB sight depos wk end Jul 15; Domestic and total higher
- Germany spokesman-Merkel has not spoken with Erdogan since weekend
- BoE’s Weale-Exploring question of how low rates can go: Warns on too low
- Weale-Not sure he would back an August rate cut
- Weale cited Swiss example where very low rates led to unforeseen circumstances
- UK Retail Footfall -2.8% yy in June, Biggest Drop since Feb 2014 – BRC
- UK Retail Footfall -4.6% yy in Wk of Jun 23 EU Vote, -3.4% yy in Week After
- Bank of England's Vlieghe Says there should be an Immediate Interest Rate Cut
- BOE's Vlieghe sees Period of Lower Growth in UK and Higher Inflation
- Turkish C/bank says Will Provide Unlimited Liquidity to Banks
- Turkish C/Bank: Commission on Daily Liquidity Options for Banks Will be Zero
- Turkish C/Bank: Will Closely Monitor Depth of Market and Price Developments
Economic Data Preview
- (0830 ET/1230 GMT) The Statistics Canada will release data on foreign investment in Canadian securities for the month of May.
- (1000 ET/1400 GMT) The National Association of Home Builders is expected to report that U.S. Housing Market Index stood unchanged at 60 for the month of July.
- (1000 ET/1400 GMT) The Conference Board Australia releases its Leading Indicator for the month of May. The index was at 0.5 percent in the prior month.
Key Events Ahead
- (1100 ET/1500 GMT) Treasury announces 4-week bills e: $45 bln.
- (1130 ET/1530 GMT) Tsy auctions $37 bln 3-mth and $32 bln 6-mth bills.
FX Beat
DXY: The dollar index, against a basket of currencies trades 0.1 percent lower at 96.60, with in the sight of a 4-month high of 96.79 touched last week.
EUR/USD: The euro edged up, as market sentiment recovered from the failed coup attempt in Turkey on Friday. The major attempted a minor recovery after having declined to 1.1024 following strong U.S. economic data on Friday. The pair trades between a narrow range as investors remain cautious ahead of European Central Bank's interest rate decision later in the week. The European currency was trading around 1.1053, within the sight of 1.1148 (Previous Session High). Any further bullishness only above 1.1090 (200 DMA) and any break above 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 Japanese yen neared its 3-week low, as improving risk sentiment following a failed attempted military coup in Turkey on Friday, drew investors back into higher-risk currencies. The greenback rose more than 1 percent earlier in the day to 106.10 and was last trading 0.5 percent higher at 105.70. The yen had declined more than 4 percent last week, recording its worst weekly performance since late 2009. The short term trend is slightly bullish as long as support 104.70 (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 104.70 and any break below 104.70 will drag the pair till 104.25/103.50.
GBP/USD: Sterling gained after Japan's Softbank agreed to buy chip designer ARM in a 24.3 billion pound deal and following Bank of England policymaker Martin Weale's comments. Markets cheered the deal on expectations that the inflows from the acquisition would help to reduce Britain's current account gap. Sterling touched an intraday high of 1.3291 after BoE's Weale stated that he was unsure to support an interest rate cut at next month's meeting. The British pound trades 0.5 percent higher at 1.3235, attempting to sustain gains above 1.3200 handle. The major intraday resistance 1.3500 and break above targets 1.3980. On the lower side major support is around 1.3200 and any violation below targets 1.3100/1.3050 level. The euro declined to 83.50 pence, down 0.1 percent on the day.
USD/CHF: The Swiss franc declined against the dollar as risk sentiment improved in the market. The greenback rose 0.2 percent to 0.9829, pulling away from a low of 0.9764 touched last week. The major has taken support near 90 day EMA and slightly jumped from that level. It has made a temporary top around 0.9894 and started to decline from that level. The short term trend is weak as long as resistance 0.9900 holds. On the lower side, major support is around 0.9780 and any indicative break below 0.9800 targets 0.9730 (21 DMA)/0.9680 in the short term
AUD/USD: The Australian dollar edged down, as investors remain cautious ahead of Reserve Bank of Australia's July policy meeting minutes. The major was also weighed down by weak oil prices, which declined by more than 1 percent. The Aussie trades flat at 0.7591, having touched a high of 0.7676 in the previous session. On the higher side any break above major resistance 0.7680 will take the pair till 0.7725/0.7750. The major support is around 0.7580 and break below will drag it till 0.7530/0.7480.
NZD/USD: The New Zealand dollar continues to decline on expectations of Reserve Bank of New Zealand easing after the central bank surprisingly announced to issue a brief update on its economic assessment this week. The major came under selling pressure, after data showed that New Zealand's CPI rose at a slightly lower than expected pace of 0.4 percent in the second quarter of 2016, which spurred speculation of an additional rate-cut by the central bank at its next meeting on August 11. The Kiwi trades 0.2 percent lower at 0.7100, after dropping to 0.7068 earlier in the session. Immediate support is seen at 0.7040 (Jun-29 Low), break below could take it till 0.7000 handle. On the higher side, resistance is located at 0.7197, break above would take it over 0.7200 handle.
Equities Recap
European shares advanced on the back of SoftBank Group's $32 billion deal to buy British chip designer ARM Holdings.
The pan-European STOXX 600 index rose 0.2 percent, while the FTSEurofirst 300 gained 0.1 percent.
MSCI's broadest index of Asia-Pacific shares outside Japan added 0.3 percent, having reached its highest in almost 9-months last week.
Germany's DAX trades flat, France's CAC 40 lost 0.2 percent and Britain's FTSE 100 gained 0.3 pct.
Australia's S&P/ASX 200 index ended up 0.58 pct at 5,461.30 points and South Korea's KOSPI added 0.10 pct.
Shanghai composite index and CSI300 index both declined 0.4 pct at 3,043.56 points and 3,262.02 points, respectively. Hong Kong's Hang Seng index soared 0.7 pct at 21,803.18 points.
Commodities Recap
Oil prices declined despite markets shrugging off the impact of the attempted coup in Turkey. Brent crude futures dropped 1.1 percents to $47.36 a barrel by 1022 GMT, while U.S. crude futures eased by 1.2 percents to $45.69 a barrel.
Gold dropped nearly 1 percent as the demand for safe-haven assets faded with a coup attempt in Turkey failing to deter risk sentiments. Spot gold declined as low as $1,323.68, and was down 0.8 percent to $1,326.40 an ounce by 1025 GMT, while U.S. gold was up 0.2 percent to $1,329.50 an ounce.
Treasuries Recap
The US Treasuries gained as the stocks prices rally petered out and risk aversion rose following a failed coup in Turkey. The yield on the benchmark 10-year Treasury note fell 2 basis points to 1.573 percent and the yield on short-term 2-year note also dipped 2 basis points to 0.686 percent.
The UK gilts traded mixed on Monday, succumbing to thin trading activity during a relatively quiet session that saw little data of much significance. The yield on the benchmark 10-year gilts fell 1-1/2 basis points to 0.818 percent, the yield on super-long 30-year bond hovered around 1.688 percent mark, the yield on 15-year bond rose 1-1/2 basis points to 1.375 percent and the yield on short-term 2-year bonds bounced 1/2 basis points to 0.169 percent.
The German bunds gained as investors remain cautious ahead of the European Central Bank policy decision, scheduled to take place on Thursday. The yield on the benchmark 10-year bond fell 2 basis points to -0.017 percent, the yield on long-term 30-year note also dipped 2 basis points to 0.510 percent and the yield on short-term 2-year note slid 1 basis point to -0.650 percent.
Japanese markets are closed on account of Ocean Day
The New Zealand government bonds closed higher after data showed that the second quarter consumer inflation rose lower-than-expected, creating pressure on the central bank for a further policy easing in the upcoming policy meeting. The yield on benchmark 10-year bond fell 1 basis point to 2.355 percent, the yield on 7-year note also dipped 1 basis point to 2.085 percent and the yield on short-term 2-year note ended 1 basis point lower at 1.975 percent.
The Australian government bonds plunged Monday, following US trend, after reading stronger-than-expected retail sales data for June, coupled with maintained improvement in consumer inflation. The yield on the benchmark 10-year Treasury note rose nearly 3 basis points to 2.005 percent and the yield on short-term 2-year note hovered around 1.640 percent.
