Market Roundup
- GBP/USD +0.4%, USD/JPY -0.09%, EUR/USD +0.04%, AUD/USD +0.35%
- DXY -0.07%, DAX +1.0%, Brent +0.5%, Iron +0.35%, Gold -0.3%
- UK May Trade Bal. –GBP9.88 bln vs revised-9.414 bln previous,-10.65 bln exp
- Japan MoF Asakawa – Market still volatile, eyeing impact of US NFP data
- Leadsom and May face off in UK PM race – Financial Times
- UK June GfK consumer confidence falls to -9 post-Brexit, -1 previous
- UK June BMO retail sales -3.6% y/y, biggest Jun fall in over 10-yrs
- UK June REC permanent staff hiring off, first time since Dec ’12
- New Zealand PM Key – C. bank should get on with housing measures – stuff.co.nz
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Labor Department releases nonfarm payrolls data for June, which are likely to added 175,000 jobs, after May's unexpected weak reading of just 38,000.
- (0830 ET/1230 GMT) The U.S. Labor Department is expected to report that unemployment rate edged up 4.8 percent in June, compared to a rise of 4.7 percent in May.
- (0830 ET/1230 GMT) The United States average hourly earnings for June are likely to remain at 0.2 percent, unchanged from May's reading.
- (0830 ET/1230 GMT) The statistics Canada releases employment report for June. The economy probably added 5,000 jobs in June, compared to an increase of 13,800 jobs in May. The participation rate came in at 65.7 percent in the month of May.
- (0830 ET/1230 GMT) Canada's unemployment rate is likely to have edged up to 7.0 percent in June from 6.9 percent in May.
- (0900 ET/1300 GMT) Mexico's statistics agency INEGI will release consumer confidence data for the month of June.
- (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count.
- (1500 ET/1900 GMT) The U.S. Federal Reserve is likely to show that the outstanding credit extended to American consumers rose to $16.00 billion in May from $13.42 billion in April.
Key Events Ahead
- (1145 ET/1545 GMT) FedTrade operation 30-year Ginnie Mae max $1.325 bln.
FX Beat
USD: The dollar index, against a basket of currencies declined to 96.12, having touched session's low of 96.02.
EUR/USD: The euro trimmed it gains after rising to a high of 1.1089. The recovery in the major was fragile as it failed to regain 1.1100 handle amid mixed sentiments prevailing in the market. The European currency trades at 1.1066, attempting to sustain above 1.1050. Markets will focus on much awaited U.S. non-farm payroll data for further cues on the major. The U.S. June employment report is expected to show job growth of 175,000 and a slight pick-up in wage growth, however, investors remain cautious given the unexpected negative surprise in May. The short term bearish trend from 1.1427 till 1.0911 will come to an end only if the pair breaks above 1.1188 level. Any break above 1.1188 would take it to next immediate resistance 1.1235 (21 day MA and also 61.8% retracement of 1.14279 and 1.0911)/1.13000. The minor resistance is around 1.1120/1.1150. On the lower side, the break below 1.1050 targets 1.1000/1.0970.
USD/JPY: The major traded between a narrow range as markets remained cautious ahead of U.S. Non-Farm Payroll report. The greenback trades at 100.46, having touched an early low of 100.24. Further losses in the pair could be limited as markets speculate potential FX intervention by the BoJ at or around recent lows near the 99.00 handle. The short term trend is slightly bearish as long as resistance 101.50 holds. The minor resistance is around 101.50 and any break above confirms minor trend reversal, a jump till 102/102.69/103.50 is possible. On the lower side minor support is around 100 and any break below will drag it till 98.80/98.
GBP/USD: Sterling steadied against the dollar and the euro as markets sentiment improved on rising European shares and oil prices. The major was supported by better-than-expected trade balance data (Non-EU) in May, which came in at -2.570 bln GBP against forecast -2.900 bln GBP, while goods trade balance was at -9.880 bln GBP versus consensus of -10.650 bln GBP. Markets now await Bank of England policy meeting next week, where it will decide whether to leave its benchmark interest rate at a record low of 0.5 percent, or to cut rates in an effort to strengthen the economy. Sterling gained 0.6 percent to 1.2983, just short of 1.3000 handle. On the higher side, major resistance is around 1.3012 and any break above 1.3012 will take the pair till 1.3235 (200 HMA)/1.3300. On the lower side any break below 1.2870 will drag it till 1.2790/1.2760. Against the euro, the pound was trading 0.4 percent higher at 85.27 pence.
USD/CHF: The Swiss franc extended losses as the dollar regained 0.9800 handle. The greenback trades 0.3 percent higher at 0.9803, hovering towards a peak of 0.9836 touched end of last month. Data released earlier showed that Swiss economy's unemployment rate adj came in at 3.3 percent in line with previous. The short term decline from 0.9960 till 0.9512 will come to end if the pair closes well above 0.9840. On the higher side, major resistance is around 0.9840 and any indicative break above 0.9840 will take the pair till 0.9900/0.9960 in the short term. The minor resistance is at 0.9764/0.9805. Any short term weakness can be seen only below 0.9670 (21 DMA) and any violation below targets 0.9630/0.9580/0.9520.
AUD/USD: The Australian dollar reversed most of its previous session losses, supported by a recovery in commodity prices. The Aussie trades 0.5 percent higher at 0.7517, extending gains above the 0.7500 level. Markets have shrugged-off S&P’s downgrade on Australia’s sovereign credit outlook and now await U.S NFP report for further momentum. On the higher side any break above major resistance 0.7550 will take the pair till 0.7580/0.7635. The major support is around 0.7480 and break below will drag the pair till 0.7430/0.7370.
NZD/USD: The New Zealand dollar touched a 10-day high as markets still cheer on the diminishing expectations of an interest rate cut next month. The major was also supported by a minor-recovery in the oil prices, sending it closer towards 2016 high of 0.7298. The Kiwi trades 0.6 percent higher at 0.7268, pulling away from an early low of 0.7212. Immediate resistance is located at 0.7298 (Jun-24 High), break above could take the pair above 0.7300. On the lower side, support is seen at 0.7201 (5-DMA).
Equities Recap
European shares remained volatile as they struggled to gain momentum ahead of U.S. unemployment report, which will provide further insights on the economy's strength.
Europe's FTSEurofirst 300 index of leading shares was flat at 1,281 points and on course for its biggest weekly loss in five months, while STOXX Europe 600 added 0.5 pct.
MSCI's global stock index declined 0.1 percent, while MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.4 percent.
Germany's DAX gained 0.9 pct, France's CAC 40 rose 0.7 pct. Britain's FTSE 100 was down 0.1 pct, while FTSE 250 mid-cap index rose 1.2 pct.
Tokyo's Nikkei declined 1.11 pct at 15,106.98, Australia's S&P/ASX 200 index ended flat at 5,229.70 points and South Korea's KOSPI 200 lost 0.60 pct.
Shanghai composite index dropped 1.0 pct at 2,988.09 points, while CSI300 index edged down 0.6 pct at 3,192.28 points. Hong Kong's Hang Seng index closes down 0.7 pct at 20,564.17. points.
Commodities Recap
Crude prices rose from a 2-month low touched in the previous session, however, benchmark Brent was set for its biggest weekly decline since January. Brent crude oil was trading 0.3 percent higher at $46.65 per barrel by 1005 GMT, while U.S. crude was 0.5 percent up at $45.43 a barrel.
Gold price declined, but was on track for a sixth consecutive weekly gain, as investors remained cautious ahead of U.S. employment data due later in the day. Spot gold was trading down 0.3 percent at $1,356.21 an ounce by 1008 GMT, having gained about 1 percent so far this week. U.S. gold dropped 0.3 percent to $1,358.10 an ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 1.3881 percent up by 0.001 bps, while 5-year was 0.017 bps higher at 0.9765 percent.
Euro zone yields fell near record lows ahead of U.S. jobs data seen as unlikely to shift the rate path for U.S policymakers. German 10-year bond yields edged down to minus 0.17 percent, close to a minus 0.20 percent record low struck earlier this week. Italian bonds, shaken by worries over its banks and fragile government over the last week, saw yields fall 2 bps to 1.16 percent.
Japanese government bonds mostly firmed, sending the benchmark yield to a record low, as risk-averse investors continued to seek the safety of government debt. The 10-year JGB yield fell 0.5 basis point to minus 0.285 percent, after earlier notching a fresh low of minus 0.300 percent. The 2-year yield also touched a record low of minus 0.365 percent and was last down 1 basis point at 0.360 percent. But superlong JGB yields edged higher, with the 20-year yield added half a basis point to 0.040 percent after it dipped into negative levels earlier this week for the first time ever. The 30-year yield rose 2 basis points to 0.085 percent. September 10-year futures ended up 0.09 point at 153.67 after earlier scaling a record peak of 153.81.
Gilt futures opened at 130.03, up 20 ticks from the 129.83 settlement price. The 10-yr Gilt yield is down 1bp at 0.775%, in line with other core European government bonds, although 10-yr Bunds are slightly underperforming as the 10-yr yield is down 0.25bp on the day at -0.17%.
Australian government bond futures were a tad softer but within striking distance of record highs set earlier in the week. The 3-year contract was three ticks lower on the day at 98.530, not far from an all-time high of 98.600. The 10-year contract eased 1.5 ticks to 98.1100.
New Zealand government bond yields jumped, with the short-end rising as much as 5.5 basis points and flattening the yield curve.
