- BoJ Policy Board Ishida - Some concerns still over QQE systemic risks, no major financial imbalances/excessive risk-taking now, overseas economies to recover gradually but concerns over China, emerging economies, affect on Japan growth and inflation.
- Moody's - Japanese corporate cash pile continues to grow, CAPEX to pick up.
- Japan June industrial output +0.8% m/m, +0.3% eyed, July estimate +0.5% (previous estimate +0.6%), August +2.7%.
- MoF flow data week-ended July 25 - Japanese buy net Y216.6 bln foreign stocks, sell Y21.7 bln bonds, Y10.7 bln bills; foreign investors sell net Y82.1 bln Japanese stocks, buy Y684.3 bln bonds, sell Y364.8 bln bills.
- Japan June crude oil imports -9.7% y6/y, LNG -2.8%, total coal +0.8%.
- Australia June building approvals -8.2% m/m, -0.7% eyed, largest fall since September, private-sector houses +4.3%.
- Australia Q2 export prices -4.4% q/q, -8.9% y/y, import prices +1.4%, +1.3%.
- NZ June new dwelling consents -4.1% m/m, May unchanged, June still +2.0% y/y.
- (0300 ET/0700 GMT) Switzerland July KOF economic indicator, 90.3 eyed; last 89.7.
- (0300 ET/0700 GMT) Spain Q2 GDP - estimate, +1.0% q/q, +3.1% y/y eyed; last +0.9%, +2.7%.
- (0300 ET/0700 GMT) Spain July HICP - flash, unchanged y/y eyed; last unchanged.
- (0330 ET/0730 GMT) Sweden Q2 GDP, +0.7% q/q, +2.5% y/y eyed; last +0.4%, +2.5%.
- (0355 ET/0755 GMT) Germany July unemployment, -5k, 6.4% sa eyed; last -1k, 6.4%.
- (0355 ET/0755 GMT) Germany July unemployment, 2.76 mln nsa eyed; last 2.71 mln nsa, 2.79 mln sa.
- (0400 ET/0800 GMT) Norway June retail sales ex-autos, +0.9% m/m eyed; last -3.4%.
- (0400 ET/0800 GMT) Norway Q2 industry confidence index; last -3.0.
- (0500 ET/0900 GMT) Euro zone July economic sentiment index, 103.3 eyed; last 103.5.
- (0500 ET/0900 GMT) Euro zone July industrial sentiment index, -3.4 eyed; last -3.4.
- (0500 ET/0900 GMT) Euro zone July services sentiment index, 8.0 eyed; last 7.9.
- (0500 ET/0900 GMT) Euro zone July business climate index, 0.15 eyed; last 0.14.
- (0500 ET/0900 GMT) Euro zone July consumer confidence index, -7.1 eyed; last -5.6.
- (0500 ET/0900 GMT) Euro zone June unemployment, 11.1% eyed; last 11.1%.(0530 ET/0930 GMT) Belgium July CPI; last +0.15% m/m, +0.63% y/y.
- (0800 ET/1200 GMT) Germany Jul HICP - prelim, +0.3% m/m, +0.1% y/y eyed; last -0.2%, +0.1%.
- (0830 ET/1230 GMT) US Q2 GDP advance, +2.6% AR eyed; last -0.2%.
- (0830 ET/1230 GMT) US Q2 PCE prices, +2.0% AR eyed; last -2.0%.
- (0830 ET/1230 GMT) US Q2 core PCE, +1.6% AR eyed; last +0.8%.
- (0830 ET/1230 GMT) US Q2 GDP deflator, +1.5% AR eyed; last -0.1%.
- (0830 ET/1230 GMT) US weekly initial jobless claims, 270k eyed; last 255k.
Key Events Ahead
- (0400 ET/0800 GMT) ECB economic bulletin.
- (0500 ET/0900 GMT) Italy -75 and E2-2.5 bln 0.7% and 1.5% 2020 and 2025 BTP auctions.
- (0500 ET/0900 GMT) Italy -1.75 bln 0.304% 2022 CCTeu auction.
FX Recap
EUR/USD is supported below 1.1000 levels and currently trading at 1.0972 levels. It has made intraday high at 1.0958 and low at 1.0988 levels. The greenback posted moderate losses against the euro on Wednesday, following the highly awaited Federal Open Market Committee (FOMC) rate decision which saw the interest rate stay unchanged as widely expected. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run. Earlier the greenback suffered little damage after downbeat pending home sales in July, which showed an unexpected 1.8% drop, from the 0.9% seen previously. Initial support is seen around at 1.0789 and resistance at 1.1195 levels.
USD/JPY is supported above 124.00 levels and posted a high of 124.17 levels. It has made intraday low at 123.86 and currently trading at 124.10 levels The US Fed concluded its two-day policy meeting on Wednesday, leaving the key interest rate unchanged with only a small impact on the pair and drag the pair above 124.00 levels. Moreover, the latest comments by Bank of Japan (BOJ) Ishida policymaker also added to the yen weakness, pushing USD/JPY higher. BOJ Ishida noted that the Japanese policymakers should watch out for accumulating risks from the prevailing easy policy while raising concerns over exports and production recovery during summer. Today Japan released prelim industrial production data with positive numbers at 0.8% mm. Initial resistance is seen at 124.57 and support is seen at 120.63 levels.
GBP/USD is supported around $1.5600 levels. It made an intraday high at 1.5609 and low at 1.5588 levels. Pair is currently trading at 1.5601 levels. UK retail sales slowed further in July as the overall balance of those retailers who saw their sales up and those down fell to 21%, down from 29% measured a month before, and below expectations of 29%. Moreover yesterday's FOMC comments helped the parity to stabilize around $0.56 levels. Initial support is seen at 1.5413 and resistance is seen around 1.5734 levels.
NZDUSD is supported below 0.6700 levels and trading at 0.6632 levels and made intraday low at 0.6619 and high at 0.6667 levels. The NZ dollar underperformed in the overnight session as the US Federal reserve remains on track for hiking rates this year. Changes to the FOMC statement were fairly minimal, with no clear new signal on when exactly the policy normalization process will begin, but September is still live for "lift-off" if the data comes in strong. The market reaction to the statement was relatively muted. The NZD/USD left the $0.67 area and gradually retraced below $0.6650. Initial support is seen at 0.6465 and resistance at 0.6789 levels.
AUD/USD is supported above 0.7300 levels and trading at 0.7314 levels. It has made intraday high at 0.7321 levels and low at 0.7284 levels. The Aussie remained under pressure today, trading in negative territory against the US dollar after the Federal Reserve decided to keep the main interest rate unchanged at a record low after its two-day meeting. Today Australia released major economic update of Building approvals, came in negative numbers at -8.2% mm vs 2.3% mm previous release. Initial support is seen at 0.7225 and resistance at 0.7647 levels.
Equity Recap
Most Southeast Asian stock markets gained on Thursday, led by Philippine shares, after the U.S. Federal Reserve said the domestic economy and job market continue to strengthen, leaving the door open for an interest rate increase as early as September.
The Philippines stock index was up 0.7 percent at 0513 GMT, Indonesia's Jakarta Composite index rose 0.2 percent, extending the rebound from a 16-month low hit on Tuesday, and Malaysia traded 0.3 percent firmer.
Vietnam lost 0.3 percent, led by large caps, but energy shares gained on rising oil prices. Thai markets were closed for a holiday on Thursday.
Taiwan stocks close up 1.0 pct at 8,651.49 points.
Australia's S&P/ASX 200 index closes up 0.85 pct at 5,672.20 points.
Tokyo's Nikkei average unofficially closes up 1.08 pct at 20,522.83.
Treasury Recap
JGB prices remain softer in quiet trading, with yields up 1bp to 2bp from yesterday in the 5-yr and longer zone. The current 5-yr JGBs saw relatively good two-way flow among domestic real money accounts. But other domestic investors are seen largely sidelined ahead of tomorrow's monthly JPY2.4tn 10-yr JGB auction. Today, the BoJ didn't offer to buy JGBs under its massive JGB purchase program. Tomorrow, the BOJ is widely expected to buy JPY375bn in the 1-yr to 5-yr zone, JPY425bn in the 3-yr to 5-yr zone, and JPY400bn in the 5-yr to 10-yr zone under the program. Weaker US TSY overnight and a rebound in the USD/JPY and Tokyo stocks today have some positive impact on JGBs.
Japan 03-month treasury discount bill auction lowest price 100.0010, average price 100.0011, bids accepted at lowest price 89.3386 pct.
The benchmark 10-year Indian bond rose to 99.46 rupees, yielding 7.80%, against 99.38 rupees and a yield of 7.81% at the previous close, as some investors stepped up purchases after the U.S. Fed refrained from providing a clear hint about the timing of a rate increase in the world's largest economy, traders said.
10-year US treasury yield at 2.314 percent vs US close of 2.277 percent on Wednesday.
New Zealand government bonds sold off in line with U.S. Treasuries, with yields as much as 8.5 basis points higher at the long end of the curve.
Australian government bond futures fell, with the three-year bond contract off 6 ticks at 98.040. The 10-year contract YTCc1 was also down 6 ticks to 97.1100.
Commodity Recap
Gold dipped towards its weakest level since early 2010 on Thursday after the Federal Reserve said the U.S. economy continues to strengthen, supporting a potential interest rate rise when the Fed meets again in September. Spot Gold dropped to $1,085.60 an ounce by 0630 GMT. It sank to as low as $1,077 last week, it is weakest since February 2010, after a selloff in New York and Shanghai and has since struggled to recover above $1,100.
Brent Oil may retest support at $52.30 per barrel as it failed to break resistance at $54. and resistance are identified respectively as the 161.8 percent and the 138.2 percent Fibonacci projection levels of a downward wave C, the third leg of a trend that developed from the May 6 high of $69.63. A break below $52.30 will confirm the extension of the wave C towards $51.03, the 176.4 percent level, while a break above $54.35 will lead to a gain to $55.62, the 123.6 percent level.
