Market Roundup
- USD/JPY +0.6%, GBP/USD +0.08%, EUR/USD +0.21%
- GBP/USD big swings within 1.3342-1.3449 in Europe
- DXY -0.13%, DAX -0.4%, Brent -1.01%, Iron +0.5%, FTSE250 -0.7%
- UK May Construction Output -1.9% y/y vs revised -0.6% previous, -3.5% exp
- EZ Trade Bal. NSA E24.6 bln vs 27.5bln previous, 23.0 bln exp
- EZ Jun Final Inflation 0.1% y/y vs 0.1% previous, 0.1% exp
- BoE’s Haldane Material easing of policy needed in August
- Haldane right to use sledgehammer if doubts over policy efficacy
- S&P - Global corporate defaults rise to 100 issuers
- Japan draws up work reforms to boost growth - Nikkei
- China June industrial output +6.2% y/y, retail sales +10.6%, +5.9/10% eyed
- China June net FX sales CNY97.7 bln, end-June FX deposits $656.2 bln
Economic Data Preview
- (0830 ET/1230 GMT) The U.S. Commerce Department is likely to report that retail sales edged up 0.1 percent in June, after increasing 0.5 percent in May. Excluding autos, retail sales are expected to stay unchanged at 0.4 percent in June.
- (0830 ET/1230 GMT) The United States Labor Department releases its consumer price index data for the month of June. The consumer price index increased 0.3 percent after rising 0.2 percent in May.
- (0830 ET/1230 GMT) Statistics Canada releases manufacturing sales data for the month of May. Manufacturing sales are likely to decline 0.7 percent after gaining 1.0 percent in April.
- (0915 ET/1315 GMT) The United States' industrial output is likely to have rebounded 0.2 percent in June after declining 0.4 percent in May.
- (1000 ET/1400 GMT) The United States' business inventories in May are expected to have increased 0.1 percent.
Key Events Ahead
- (1400 ET/1800 GMT) Federal Reserve Bank of Minneapolis President Neel Kashkari and Federal Reserve Bank of St. Louis President James Bullard participate in a facilitated discussion before the Official Monetary and Financial Institutions Forum, in St. Louis.
FX Beat
DXY: The dollar index, against a basket of currencies trades lower at 96.03, hovering towards a low of 95.83 touched in the previous session.
EUR/USD: The euro rose following the release of final Eurozone CPI report for the month of June. Eurozone's consumer price index came in at 0.2 m/m percent and 0.1 percent y/y, in line with consensus. While core- CPI stood at 0.9 percent in line with forecasts and previous, reflecting easing deflationary pressure in the economy. The major trades 0.1 percent higher at 1.1131, hovering towards a high of 1.1148 touched earlier in the session. Investors now eye U.S. economic release, which includes - inflation report, retail sales and industrial production data for the month of June, along with prelim consumer sentiment for the month of July. Minor trend is weak as long as resistance 1.1188 holds. Any indicative break above 1.1188 will take the pair to next level till 1.1235/1.1280 in the short term. The short term trend reversal is only above 1.1188. On the lower side, any break below 1.1084 will drag it till 1.1050/1.0970/1.0910.
USD/JPY: The greenback rose above the 106 handle, however, it failed to sustains gains and retreated from 3-weeks high. The major trades 0.4 percent higher at 105.76 and on track for its best weekly performance since February '99. The pair strengthened on growing expectations that Japan's government and central bank will provide stimulus for financing government spending. Focus now remains on the overall risk sentiment, ahead of series of economic data from U.S. The short term trend is slightly bullish as long as support 104.70 (200 4H EMA) holds. The minor resistance is around 106.80 and any break above confirms minor trend reversal, a jump till 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 retreated from an early 2-week high, after Bank of England's chief economist Andrew Haldane stated that the central bank requires to come up with a package of mutually-complementary monetary policy easing measures to stimulate the economy. The major was also weighed down by downbeat construction output data in May, which came in at -2.1 percent against consensus of -1 percent. On yearly basis, it stood at -1.9 percent versus forecast -3.5 percent. The British pound trimmed gains to 1.3369, after rising to a 2-week high of 1.3480, still 0.2 percent up for the day and on track for its best week since 2009. The major intraday resistance is at1.3500 and break above targets 1.3980. On the lower side major support is around 1.3316 (14 4H EMA) and any violation below targets 1.3200/1.3100 level. Against the euro, sterling trades flat at 83.31 pence.
USD/CHF: The Swiss franc gained for the third consecutive session, sending the dollar below the 0.9800 handle. The greenback trades 0.2 percent lower at 0.9789, hovering towards a low of 0.9764 struck in the previous session. The major 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 0.9760 and any indicative break below 0.9800 targets 0.9730 (21 day MA)/0.9680 in the short term.
AUD/USD: The Australian dollar extended gains on the back of improved risk sentiment, boosted by better-than-expected Chinese data. The Aussie trades 0.3 percent higher at 0.7651, having touched an early high of 0.7676, a level last seen on May 3. Markets now await series of U.S. economic data, ahead of RBA minutes of its latest policy meeting scheduled on Tuesday. On the higher side any break above major resistance 0.7650 will take the pair till 0.7680/0.7725. The major support is around 0.7580 and break below will drag it till 0.7530/0.7480.
NZD/USD: The New Zealand dollar slumped below the 0.7200 handle, as markets still continue to digest RBNZ's unexpected announced to issue a brief update on its economic assessment on Thursday 21. The major failed to gain momentum despite China posting better-than-expected GDP and Industrial Production data. The Kiwi trades 0.4 percent lower at 0.7168, having recovered some ground from an early of 0.7141. The pair is likely to continue to trade lower as markets now speculate some sort of easing announcement from the RBNZ. Immediate support is seen at 0.7115 (Jul-7 Low), break below could drag it lower 0.7100. On the upside, resistance is located at 0.7219 (10-DMA), break above targets 0.7250.
Equities Recap
World shares rose to an 8-month high, strengthened by upbeat Chinese data, however, European shares edged down after an attack by a gunman in the south of France killed at least 84 people.
MSCI's 46-country All World stocks index was at its highest since early November after a 2.7 percent gain on the week, while MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.9 percent, and was set to gain more than 5 percent for the week.
The pan-European STOXX 600 and FTSEurofirst 300 index both were was down 0.4 pct. Germany's DAX dropped 0.3 pct and France's CAC fell 0.5 pct.
Britain's FTSE 100 declined 0.1 pct, while mid-cap FTSE 250 index lost 0.5 pct.
Tokyo's Nikkei rose 0.68 pct at 16,497.85 and Australia's S&P/ASX 200 index added 0.34 pct at 5,429.90 points.
South Korea's KOSPI gained 0.43 pct, while Hong Kong's Hang Seng index climbed 0.5 pct at 21,659.25 points.
Shanghai composite index and CSI300 index both ended flat at 3,054.30 points and 3,276.28 points, respectively. On weekly basis, Shanghai composite index gained 2.2 pct, while CSI300 index added 2.6 pct.
Commodities Recap
Crude oil prices rose after declining below $47 a barrel level, attempting a minor recovery amid persistent global glut of crude oil and refined products. Brent crude futures were up 0.7 percents at $47.50 a barrel at 1218 GMT. U.S. West Texas Intermediate futures were down 50 cents at $45.18 a barrel.
Gold prices dropped and were set for the first weekly loss since May as world equity shares rallied to highest levels since November on better-than-expected Chinese data, boosting risk sentiment across the board. Spot gold trades flat at $1,334.44 per ounce by 1033 GMT, while U.S. gold inched up 0.1 percent to $1,333.30 an ounce.
Treasuries Recap
The U.S. Treasuries complex traded nearly flat as investors await consumer inflation and retails data. On Thursday, Treasuries saw renewed selling, weighed down in part by stronger than expected producer prices data for June, coupled with maintained improvement in jobless claims. The yield on the benchmark 10-year Treasury note hovered around 1.537 percent mark and the yield on short-term 2-year note remained steady at 0.673 percent.
The UK gilts slumped on Friday after the Bank of England surprised investors by keeping its bank rate unchanged. The yield on the benchmark 10-year gilts rose 3 basis points to 0.825 percent, the yield on super-long 30-year bonds also jumped 3 basis points to 1.650 percent and the yield on short-term 2-year bonds bounced 3 basis points to 0.176 percent.
The German bund yields jumped as investors risk appetite bounced after the shock of Brexit vote last month. The yield on the benchmark 10-year bond rose 1-1/2 basis points to -0.023 percent, the yield on the long-term 30-year note climbed nearly 2 basis points to 0.494 percent and the yield on short-term 2-year note climbed nearly 1 basis point to -0.648 percent.
The Japanese government bonds traded lower as traders seen squaring their positions ahead of a long holiday weekend. The yield on the benchmark 10-year bonds rose 4 basis points to -0.223 percent, yield on super-long 30-year note bounced 5 basis points to 0.188 percent and the short-term 2-year JGB yield jumped more than 2-1/2 basis points to -0.326 percent.
The New Zealand 10-year bond yield ended nearly flat as investors await second quarter consumer inflation data and RBNZ brief update on the economic outlook. The yield on benchmark 10-year bond hovered around 2.355 percent mark, the yield on 7-year note remained flat at 2.105 percent and the yield on short-term 2-year note ended 1 basis point lower at 2.020 percent.
The Australian government bonds slumped following US trend, after reading stronger-than-expected producer prices data for June, coupled with maintained improvement in jobless claims. The yield on the benchmark 10-year Treasury note rose nearly 6 basis points to 2.003 percent and the yield on short-term 2-year note jumped 3 basis points to 1.665 percent.
