Market Roundup
- Stocks rebound, ignoring decline in Chinese markets.
- Oil up after 4-day loss; bets for drop in U.S. stockpiles.
- ECB approves Athens stock exchange reopening, timing undecided.
- Moody’s: EFSF’s creditworthiness resilient to any Greek debt restructuring, closely linked to creditworthiness of guarantors.
- US Consumer Confidence Jul 90.9, f/c 100, 99.8-previous.
- US Consumer Expectations Jul 79.9, 92.8-previous, lowest since Feb 2014.
- S&P cuts Brazil’s outlook to negative from stable.
- S&P says assumes Brazil will avoid a rating downgrade, may cut rating if government backtracks on policy.
Looking Ahead – Economic Data (GMT)
- 23:50 Japan Retail Sales YY Jun f/c 0.5%, 3%-previous
Looking Ahead – Events, Other Releases (GMT)
- No Significant Events
Currency Summaries
EUR/USD is supported around 1.1015 levels and currently trading at 1.1044 levels. It has made session high at 1.1064 and lows at 1.1020 levels. The pair rose from 1.1015 level to hit daily highs at 1.1060 after, US consumer confidence figures printed negative figures, which came negative at 90.9 against forecast of 100. U.S. dollar gained some ground later in the New York session against the euro, after traders took profits from gains and favored the greenback on expectations that the Federal Reserve could take a hawkish bias in a policy statement on Wednesday. To the upside, immediate resistance can be seen at 1.1130. To the downside, major support level is located at 1.1015.
GBP/USD is supported around 1.5524 levels and currently trading at 1.5598 levels. It has made session high at 1.5626 and low at 1.5575 levels. Sterling rose against the dollar on Tuesday’s New York session after US consumer confidence printed negative figures. The pair was also supported stronger UK GDP figures. Gross domestic product grew 0.7 percent on the quarter in the April-June period in line with forecasts after a first-quarter expansion of 0.4 percent. Second-quarter output was 2.6 percent higher than a year earlier, supporting a view that the Bank of England could start raising interest rates in the coming months. Sterling rose to a high of $1.5618 having traded at around $1.5575 beforehand, up 0.3 percent on the day. The focus now shifts to the Federal Reserve’s two-day policy meet that will end on Wednesday. To the upside, immediate resistance can be seen at 1.5645. To the downside, major support level is located at 1.5460.
USD/JPY is supported around 122.90 levels and currently trading at 123.63 levels. It has made session high at 123.75 and low at 123.49 levels. The pair traded in a very choppy range in the New York session on Tuesday. The pair retreated form 123.75 daily highs to reach lows at 123.50. The Chinese stock crisis had supported the Yen bulls of late but slowly bulls have vanished and bears are back. Shanghai shares closed 1.7 percent lower on Tuesday after plunging 8.5 percent on Monday. The plunge had led some traders to buy the safe-haven yen and close short bets against the euro, which in turn sent the currency higher. Tuesday’s less dramatic move in Chinese shares allowed the dollar to regain some ground. The dollar was up 0.29 percent against the yen at 123.60 after hitting a nearly two-week low of 123.01 on Monday. To the upside, immediate resistance can be seen at 123.75. To the downside, major support level is located at 123.00 levels. Overall trend of this pair is bullish in the long term.
USD/CAD is supported around 1.2905 levels and currently trading at 1.2934 levels. It has made session high at 1.3009 and low at 1.2910 levels. The pair slipped from 1.3006 levels to hit 1- week lows at 1.2930 in the late New York session. The Canadian dollar firmed against its U.S. counterpart on Tuesday as investors positioned themselves ahead of Wednesday’s Federal Reserve interest rate decision. The price of oil, a major Canadian export, remained under pressure amid a sell-off in Chinese stocks and concerns about oversupply, but was a touch higher after sliding earlier in the session. The U.S. central bank kicks off a two-day meeting on Tuesday and will issue its policy statement on Wednesday. Some expect the Fed to give a clearer signal as to when it will hike interest rates. A U.S. rate hike this year would be in divergence to the Bank of Canada, which has already cut rates by 25 basis points twice this year, and is expected to eventually drive the Canadian dollar toward even weaker levels. To the upside, immediate resistance can be seen at 1.2975. To the downside, major support level is located at 1.2900 levels.
Equity Recap
European equities ended the day on, surprisingly positive note, amid Chinese stock market concerns. The European equities bounced back to positive note after falling for five straight days, following the news of merger & acquisition (M&A) and corporate earnings.
The pan-European FTSEurofirst 300 closed down, up by 1 percent, Germany’s DAX closed down, up by 1 percent, FTSE 100 closed down up by 2.3 percent, and France’s CAC 40 closed down up by 0.8 percent. Meanwhile Switzerland SMI, closed at 9,283.50 pts up by 0.97 percent
U.S. stocks closed higher after 5-day losing streak, as focus shifted from Chinese stock crisis to corporate earnings and Wednesdays FOMC meeting. Dow Jones closed up 188.54 points, or 1.08 percent, at 17,629.13, S&P 500 closed up 25.61 points, or 1.24 percent, at 2,093.25, Nasdaq closed up 50.21 points, or 1.00 percent, at 5,089.98.
Treasury Recap
U.S. Treasuries fell on Tuesday, with analysts and traders citing a stabilization of Chinese equities prices and a new supply of issuance exacerbated by seasonally low trading volumes.
In midmorning trade, the 10-year U.S. benchmark Treasury traded down 8/32 of a point in price, lifting the yield, which moves in the opposite direction, to 2.25 percent.
The 30-year Treasury bond fell 17/32 of a point in price, lifting the yield up to 2.97 percent.
Commodity Recap
Gold firmed on Tuesday but remained near 5-1/2-year lows as markets braced for this week’s Federal Reserve meeting, at which policymakers are expected to give further clues on the timing of a U.S. rate increase.
Spot gold was up 0.2 percent at $1,095.28 an ounce at 2:26 p.m. EDT (1826 GMT), not far from Friday’s low of $1,077, its weakest since early 2010.
U.S. gold futures for August delivery settled down 20 cents an ounce at $1,096.40.
U.S. crude futures extend gains in post-settlement trade after API reports larger-than-expected crude stock draw for last week
U.S. crude prices were up 0.08 percent to $47.43 a barrel, after going as low as $46.68, while Brent crude lost 0.94 percent to $52.97, after sliding to as low as $52.28.
The material has been provided by InstaForex Company – www.instaforex.com