Market Roundup
- Trump officials send mixed signals on China investment curbs, markets sink
- Rebound in South powers U.S. new home sales, dampens prices
- S&P raises Greece's rating after debt deal with Euro Zone
- New Zealand central bank to focus on making policy messages 'accessible' to public
- Erdogan wins sweeping new powers after Turkish election victory
Economic Data Ahead
- No major economic data releases
Key Events Ahead
- (0530 ET/0930 GMT) Member of the Monetary Policy Committee Ian McCafferty Speech at the Official Monetary and Financial Institutions Forum
- (0800 ET/1200 GMT) Introductory remarks by ECB Vice President Luis de Guindos at the Bond Market Contact Group (BMCG) organized by the ECB in Frankfurt
FX Beat
DXY: The dollar index steadied after falling to a 2-week low earlier in the session after White House trade and manufacturing adviser Peter Navarro stated that any investment restrictions proposed by the Trump administration would target China and not other countries. The greenback against a basket of currencies trades 0.05 percent up at 94.30, having touched a low of 94.17 earlier, its lowest since June 14. FxWirePro's Hourly Dollar Strength Index stood at -145.93 (Highly Bearish) by 0500 GMT.
EUR/USD: The euro rallied to a near 2-week peak amid improved regional economic growth data and new assurances by Italian politicians that their nation would not leave the Eurozone. However, regional political instability in Germany over migration dispute limited the upside. The European currency traded 0.1 percent up at 1.1714, having touched a high of 1.1719 earlier, its highest since June 14. FxWirePro's Hourly Euro Strength Index stood at 123.16 (Highly Bullish) by 0500 GMT. Investors’ attention will remain on the Richmond Fed Manufacturing index and FOMC Bostic and Kaplan speech. Immediate resistance is located at 1.1732 (June 5 Low), a break above targets 1.1750 (May 24 Low). On the downside, support is seen at 1.1674 (21-DMA), a break below could drag it till 1.1624 (5-DMA).
USD/JPY: The dollar slumped to a fresh 2-week low against the Japanese yen, as worries about an intensifying war between the United States and its trade partners continued to dampen risk appetite. The major was trading 0.1 percent down at 109.59, having hit a low of 109.36 earlier, its lowest since June 11. FxWirePro's Hourly Yen Strength Index stood at -1.91 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the Richmond Fed Manufacturing index and FOMC Bostic and Kaplan speech. Immediate resistance is located at 110.90 (June 15 High), a break above targets 111.08 (June 18 High). On the downside, support is seen at 109.19 (June 8 Low), a break below could take it lower 108.95 (May 24 Low).
GBP/USD: Sterling surged, extending gains for the fourth straight session, as markets now see more than a 50 percent likelihood of the Bank of England hiking interest rates in August by 25 basis points and a 90 percent chance of a rate hike happening by the end of 2018. The major traded 0.05 percent up at 1.3283, having hit a high of 1.3314 on Friday; it’s highest since June 14. FxWirePro's Hourly Sterling Strength Index stood at 36.97 (Neutral) 0500 GMT. Investors’ attention will remain on BoE MPC member Haskel and McCafferty's speech, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3307 (21-DMA), a break above could take it near 1.3389. On the downside, support is seen at 1.3223 (5-DMA), a break below targets 1.3150 (June 19 Low). Against the euro, the pound was trading 0.05 percent down at 88.13 pence, having hit a low of 88.19 pence earlier, it’s lowest since June 14.
AUD/USD: The Australian dollar steadied as President Donald Trump denied plans to restrict Chinese investment in U.S. technology, while administration officials offered conflicting signals on exactly what was planned. The Aussie trades 0.05 percent up at 0.7415, having hit a high of 0.7443 on Friday; it’s highest since June 18. FxWirePro's Hourly Aussie Strength Index stood at 28.40 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7345 (June 21 Low), a break below targets 0.7328 (May 28, 2017, Low). On the upside, resistance is located at 0.7446 (10-DMA), a break above could take it near 0.7500.
NZD/USD: The New Zealand dollar declined, extending losses from the previous session, ahead of the Reserve Bank of New Zealand's policy review on Thursday, where it is widely expected to reaffirm its steady bias. The Kiwi trades 0.2 percent down at 0.6886, having touched a low of 0.6825 on Thursday, its lowest level since Dec. 8. FxWirePro's Hourly Kiwi Strength Index was at 52.93 (Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6931 (10-DMA), a break above could take it near 0.6966 (21-DMA). On the downside, support is seen at 0.6818 (Oct. 27 Low), a break below could drag it below 0.6780 (Nov. 17 Low).
Equities Recap
Asian shares tumbled as an escalating trade war between the United States and other major economies steered investors away from riskier assets.
MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.4 percent.
Tokyo's Nikkei rose 0.05 percent to 22,342.00 points, Australia's S&P/ASX 200 index eased 0.2 percent to 6,197.60 points, and South Korea's KOSPI plunged 0.3 percent to 2,350.92 points.
Shanghai composite index declined 1.01 percent to 2,830.38 points, while CSI300 index was trading 1.3 percent down at 3,514.10 points.
Hong Kong’s Hang Seng was trading 0.2 percent lower at 28,892.50 points. Taiwan shares shed 0.4 percent to 10,742.17 points.
Commodities Recap
Crude oil prices declined, extending previous session losses as plans by producer cartel OPEC to increase output continued to hurt investor sentiment. International benchmark Brent crude was trading 0.05 percent down at $74.80 per barrel by 0514 GMT, having hit a low of $72.44 last week, its lowest since May 2. U.S. West Texas Intermediate was trading 0.1 percent up at $68.27 a barrel, after falling as low as $63.62 last week, its lowest since April 10.
Gold prices edged lower, weighed by prospects of rising U.S. interest rates, however, escalating trade tensions between the United States and other major economies limited downside. Spot gold was 0.2 percent down at $1,263.18 an ounce by 0520 GMT, having touched a low of $1,261.18 on Thursday, its lowest since Dec. 19, 2017. U.S. gold futures for August delivery were 0.2 percent lower at $1,266 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.894 percent higher by 0.02 bps, while 5-year yield was 0.02 bps up at 2.763 percent.
The Australian government bond yields fell, with government 10-year paper returning 2.63 percent compared to 2.85 percent just a couple of weeks ago. The three-year bond futures were up 1 tick at 97.895, while the 10-year contract gained half a tick to 97.3650.
The yields on New Zealand government bonds were down around 2 basis points across the curve.
The Canadian government bond prices were higher across a flatter yield curve in sympathy with safe-haven assets such as Treasuries, with the 10-year \rising 27 Canadian cents to yield 2.094 percent. The 10-year yield touched its lowest since March 29 at 2.082 percent.
