Market Roundup
- EUR/USD +0.35%, USD/JPY +0.01%, GBP/USD +0.13%, EUR/GBP +0.19%
- DXY -0.18%, DAX -0.74%, FTSE -0.69%, Brent +0.5%, Gold -0.01%
- Consumers, businesses likely spurred U.S. economic pickup in Q2
- U.S. Republican effort to gut Obamacare ends in defeat for Trump
- Germany Jul CPI prelim y/y, 1.7% vs forecast 1.5%, previous 1.6%
- Germany Jul HICP prelim y/y, 1.5% vs forecast 1.4%, previous 1.5%
- EZ Jul Economic sentiment, 111.2 vs forecast 110.8, previous 111.1
- EZ Jul Business climate 1.05 vs forecast 1.12, prev 1.15 revised 1.16
- EZ Jul Industrial sentiment, 4.5 vs forecast 4.3, previous 4.5
- EZ Jul Services sentiment, 14.1 vs forecast 13.2, previous 13.4 revised 13.3
- EZ Jul Consumer confidence final, -1.7 vs forecast -1.7, previous -1.70 revised -1.3
- EZ Jul Cons Inflation expectations, 11.7, previous 13.0
- China's urban unemployment rate stays below 4 pct for 2nd straight quarter
- UK's Hammond wants two-year market access Brexit deal, plus implementation phase-FT
- Japan's factory output seen rebounding in June as global demand picks up
- Achieving inflation target later, FY ’19 eyed, as already communicated
- Japan June core CPI +0.4% y/y, as eyed, Tokyo July core +0.2%, +0.1% eyed
- Tokyo July core CPI rise fastest since May ’15
- Japan June household spending +1.5% m/m, +2.3% y/y, -0.1% and +0.6% eyed
- BoJ July 19-20 minutes – Concerns over credibility, ETF buys
- Oil extends gains, on track for biggest weekly gains this year
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Commerce Department is expected to report that preliminary gross domestic product increased at an annual rate of 2.6 percent in the second quarter after surging at a 1.4 percent pace in the previous quarter.
- (0830 ET/1230 GMT) The U.S. Labor Department will release its employment cost index for the second quarter. The index is expected to have gained 0.6 percent after rising 0.8 percent in the prior quarter.
- (0830 ET/1230 GMT) The U.S. Commerce Department releases the preliminary personal consumption expenditures (PCE) price index for the second quarter. The index is expected to rise 1.2 percent after gaining 2.4 percent in the previous quarter, while core PCE is likely to increase 0.8 percent, lower than a 2.0 percent rise in the first quarter.
- (0900 ET/1300 GMT) Chile's manufacturing output is expected to fall to 1.1 percent in June from 1.45 percent a year earlier.
- (0830 ET/1330 GMT) The Statistics Canada is expected to report that gross domestic product increased 0.2 percent in May, unchanged from last month's reading.
- (1000 ET/1400 GMT) The University of Michigan is likely to report that U.S. consumer sentiment index for July remained unchanged at 93.1 from the previous month.
- (1000 ET/1400 GMT) Brazil's primary budget deficit is expected to narrow to 19.25 billion reais in June from a deficit of 30.70 billion reais in May.
- (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count.
Key Events Ahead
- (0945 ET/1345 GMT) FedTrade operation 15-year Fannie Mae / Freddie Mac (max $475 mn)
- (1320 ET/1720 GMT) The Federal Reserve Bank of Minneapolis President Neel Kashkari participates in a moderated Q&A session before a Woodbury Area/St. Paul Chamber of Commerce event, Oakdale, Minneapolis.
FX Beat
DXY: The dollar continued to weaken versus its major peers as investors’ cautiously awaited the second quarter U.S. economic growth data due later in the session. The greenback against a basket of currencies traded 0.2 percent down at 93.69, having touched a low of 93.15 the day before, it’s lowest since Jun. 23 2016. FxWirePro's Hourly Dollar Strength Index stood at -77.05 (Slightly Bearish) by 1000 GMT.
EUR/USD: The euro rose, regaining the 1.1700 handle amid renewed broad based U.S. dollar selling and better than expected Eurozone economic data. Eurozone's economic sentiment rose to 111.2 in July from 111.1 in June and 109.2 in May, boosted by more optimism in the services sector. The European currency traded 0.3 percent up at 1.1708, having touched a high of 1.1776 on Thursday, its highest since Jan 14, 2015. FxWirePro's Hourly Euro Strength Index stood at 152.41 (Highly Bullish) by 1000 GMT. The pair has formed a temporary top at 1.17767 and any break above will take the pair till 1.18000/1.1845. On the lower side, minor support is around 1.1643 (7- day MA) and any break below will drag it down till 1.1600 (10 – day MA)/1.14896 (61.8% retracement of 1.13123 and 1.17767).
USD/JPY: The dollar declined, reversing most of its previous session gains amid a fresh wave of global risk aversion and stalled post-FOMC greenback recovery. However, the major trimmed losses as investors awaited the second quarter U.S. economic growth data, which is expected to show a growth of 2.6 percent in Q2 versus 1.4 percent growth seen in the first quarter. The major was trading flat at 111.22, having hit a low of 110.62 on Monday, its lowest since Jun 15. FxWirePro's Hourly Yen Strength Index stood at 2.79 (Neutral) by 1000 GMT. The pair formed a temporary top around 114.49 and should close above 100- day MA for further bullishness. The near term resistance is around 112 (21- day EMA) and any break above targets 112.98/114.
GBP/USD: Sterling steadied near a 10-month peak against the dollar on comments from the UK finance minister about a transitional leaving deal with the European Union. Philip Hammond's remarks led investors to bet on a lower chance of a hard Brexit, which gave some support to the British currency. Sterling traded 0.1 percent up at 1.3078, having hit a high o 1.3158 on Thursday, its highest since Sept. 16. FxWirePro's Hourly Sterling Strength Index stood at 54.83 (Bullish) by 1000 GMT. On the higher side, the pair has broken major resistance 1.3130 confirms major trend reversal, a jump till 1.3220/1.3245 (161.8% retracement of 1.31260 and 1.29343). The downside is capped by 7- day MA at 1.3030 and any break below will drag it till 1.3000/1.2977 (21- day EMA). Against the euro, the pound traded 0.1 percent down at 89.46 pence, having hit a 1-week high of 88.91 the day before.
USD/CHF: The Swiss franc fell to a 1-month low against the dollar, weighed down by EUR/CHF cross driven weakness and mild greenback recovery. The Swiss currency slumped to its lowest level since 2015 versus the euro as investors grew more optimistic about euro-denominated assets after recent upbeat comments from policymakers. The major trades 0.5 percent up at 0.9697, having touched a high of 0.9721 earlier, it’s highest since Jun. 27. FxWirePro's Hourly Swiss Franc Strength Index stood at -39.25 (Neutral) by 1000 GMT. The break of 0.9700 resistance confirms that bottom has formed at 0.94385 and a further jump till 0.9808 (May 30th high)/0.9940 (200- day MA) is possible. On the lower side, any further bearish continuation can happen only below 0.9437 level and break below will drag it down till 0.92835 (161.8% retracement of 0.94385 and 0.97210).
AUD/USD: The Australian dollar declined, having retreated from a 2-year peak in the previous session on profit-taking. The Aussie trades 0.2 percent down at 0.7948, having hit a high of 0.8065 the prior day, it’s highest since May 15, 2015. FxWirePro's Hourly Aussie Strength Index stood at -56.35 (Neutral) by 1000 GMT. On the lower side, near term support is around 0.7919 (10- day MA) and any break below will drag the pair till 0.7875 (38.2% retracement of 0.75711 and 0.80656)/0.7802 (21- day EMA). The near term resistance is around 0.8070 and any break above targets 0.8100/0.8150.
Equities Recap
European shares slumped, led lower by tech stocks, while the dollar against a basket of currencies continued to decline ahead of highly influential U.S. Q2 GDP figures.
The pan-European STOXX 600 index fell 1.1 percent to 378.02 points, while the FTSEurofirst 300 index eased 1.04 percent to 1,485.47 points.
Britain's FTSE 100 trades 0.7 percent down at 7,387.89 points, while mid-cap FTSE 250 gained 1.02 percent to 19,675.55 points.
Germany's DAX declined 0.8 percent at 12,118.00 points; France's CAC 40 trades 1.4 percent lower at 5,116.25 points.
Commodities Recap
Crude oil prices edged higher to fresh two-month highs and were on track to post the strongest weekly gains this year as signs of an easing oversupply boosted market sentiment. International benchmark Brent crude was trading 0.2 percent up at $51.68 per barrel by 1016 GMT, having hit a high of $51.80 earlier, its strongest since May 31. U.S. West Texas Intermediate was trading 0.1 percent lower at $49.05 a barrel, after rising as high as $49.21 the prior day, its strongest since May 31.
Gold steadied after retreating from a more than six-week high touched in the previous session, as investors awaited U.S. second-quarter gross domestic product data due later in the session for cues on the health of the U.S. economy. Spot gold was trading flat at $1,258.81 per ounce at 1020 GMT, having hit a high of $1,265.16 an ounce on Thursday, it highest since June 15. U.S. gold futures for August delivery fell 0.1 percent to $1,258.50 per ounce.
Treasuries Recap
The U.S. Treasuries lost on hopes that the country’s Q2 GDP, scheduled to be released later today, will witness an upward expansion, compared to that in the previous quarter and ahead of the FOMC member Neel Kashkari’s speech, also due later today. The yield on the benchmark 10-year Treasury, rose 2 basis points to 2.33 percent, the super-long 30-year bond yields climbed nearly 1 basis point to 2.93 percent and the yield on short-term 2-year note traded 1-1/2 basis points higher at 1.37 percent.
The UK gilts slumped Friday as investors booked in profits on the last trading day of the week and as investors stayed away from safe-haven assets in muted trading activity ongoing Brexit negotiations. The yield on the benchmark 10-year gilts, jumped nearly 3 basis points to 1.23percent, the super-long 30-year bond yields rose 1-1/2 basis points to 1.86 percent and the yield on the short-term 2-year also traded nearly 1 basis point higher at 0.26 percent.
The German bonds gained Friday ahead of the preliminary July HICP inflation data, which is forecast to ease marginally to 1.5 percent in July from 1.6 percent in June. The benchmark German 10-year bond yields, which moves inversely to its price, jumped 3 basis points to 0.56 percent, the yield on long-term 30-year note surged nearly 4 basis points to 1.34 percent and the yield on short-term 3-year traded 1-1/2 basis points higher at -0.56 percent.
The Japanese bonds climbed after the country’s consumer price-led inflation index (CPI) for the month of June, matched market expectations. At the same time, the country’s jobless rate also trended lower, adding to further sluggishness in the debt market. The yield on the benchmark 10-year Treasury note, rose nearly 1 basis point to 0.08 percent, the yield on 30-year note also climbed nearly 1 basis point to 0.87 percent and the yield on short-term 2-year hovered around -0.11 percent.
The New Zealand bonds reversed gains at the time of closing as investors moved away from safe-haven instruments in a mild trading session that witnessed data of little economic significance. At the time of closing, the yield on the benchmark 10-year bond, jumped 2 basis points to 3.00 percent, the yield on 7-year note also climbed 2 basis points to 2.85 percent while the yield on short-term 2-year note ended tad higher at 2.13 percent.
The Australian bonds traded lower on the last trading day of the week, tracking similar movement in the U.S. counterpart, weighed down by government and corporate debt supply, and as investors evaluated the Federal Reserve's statement that it is closer to paring its balance sheet. The yield on the benchmark 10-year Treasury note, rose nearly 1 basis point to 2.70 percent, the yield on 15-year note hovered around 3.00 percent and the yield on short-term 2-year traded 1-1/2 basis points higher at 1.82 percent.
