Market Roundup
- US Retail Sales MM Jul 0.6%, f/c 0.5%, 0%-previous.
- US Retail Ex Gas/Autos Jul 0.4%, 0.2%-previous.
- US Business Inventories MM Jun 0.8%, f/c 0.3%, 0.3%-previous.
- US Initial Jobless Claims w/e 274k, f/c 270k, 269k-previous.
- U.S. crude oil hits 6-1/2-year low below $42 on glut worries, weak commodities hit EM.
- Atlanta Fed’s GDPNow: U.S. economy on track to grow 0.7 percent in 3rd quarter.
- Institutions concerned about Greek debt sustainability, projects debt/GCP ratio at 201% in ’16.
- ECB several members said it was too early to consider inflation expectations firmly anchored. Economic risk remains on the downside, sees growth risks from China, Fed rate hike.
- Mexico’s CB minutes show vote to hold rate steady split, 3 to hold, 1 to hike 25bps.
Looking Ahead – Economic Data (GMT)
- 22:45 New Zealand Retail Sales Volumes QQ* Q2 f/c 0.5%, 2.70%-previous
- 22:45 New Zealand Retail Qrtly Vs Yr Ago* Q2 f/c 5.2%, 5.10%-previous
- 03:00 New Zealand RBNZ Offshore Holdings* Jul 64.10%-previous
Looking Ahead – Events, Other Releases (GMT)
- 02:15 Australia RBA Gov Christopher Kent speaks on “Recent Labour Market Developments” at a luncheon hosted by the Economic Society of Australia
Currency Summaries
EUR/USD is likely to find support at 1.1060 levels and currently trading at 1.1136 levels. The pair has made session high at 1.1148 and hit lows at 1.1074 levels. Euro declined against US dollar on Thursday, after US retail sales data printed better than expected figures. U.S. retail sales rebounded in July as households boosted purchases of automobiles and a range of other goods, suggesting the economy was growing solidly early in the third quarter and bolstering the case for a Federal Reserve interest rate hike. After US data release the pair declined to hit daily lows at 1.1077 levels, in the late New York session the pair recovered some losses to trade at 1.1146 levels. Meanwhile, Greek Prime Minister Alexis Tsipras’s Syriza party looked set to split after the leader of its far-left faction called for a new movement to fight a bailout deal that lawmakers will vote on later on Friday. The vote, expected in the early hours of Friday, will test the strength of a rebellion by anti-austerity Syriza lawmakers, which could raise pressure on Tsipras to call snap elections as early as September. To the upside, immediate resistance can be seen at 1.1187. To the downside, immediate support level is located at 1. 1177 levels.
GBP/USD is supported in the range of 1.5568 levels and currently trading at 1.5609 levels. It reached session high at 1.5618 and dropped to session low at 1.5570 levels. The sterling slipped lower against US dollar, after series of economic data were released from US market. Sterling briefly visited 1.5575 levels before rebounding back to re-claim 1.5600 levels in late New York session. Markets are expecting an interest rate hike by Federal Reserve in September with chances of such a move currently at 48 percent, traders said in poll conducted recently. Some of those expectations were tempered after China devalued its currency earlier this week and reported weak economic data that sparked fears about global growth and disinflation. Against the dollar, sterling was 0.2 percent down at $1. in the day, the Cable found bids on after RICS housing data showed home prices rising in Britain that supported a view that consumer demand was holding up well. GBP rallied to 1.5636 levels and traded in range of 1.5610-30 range until US data releases. The Royal Institution of Chartered Surveyors said its monthly house price balance rose to +44 in July from +40 in June, the highest since July 2014. To the upside, immediate resistance can be seen at 1.5650. To the downside, immediate support level is located at 1.5580 levels.
USD/JPY is supported around 124.25 levels and currently trading at 124.45 levels. It peaked to hit session high at 124.56 and made session lows at 124.25 levels. The U.S. dollar recovered on Thursday after China’s central bank said there was no basis for further yuan depreciation. After hitting a roughly 1-week low against Japanese yen, the U.S. dollar rose against Japanese yen. Japanese yen weakness against US dollar was fueled by weak Japanese data of late. On the data front, U.S. retail sales increased 0.6 percent last month, broadly in line with economists’ expectations, while June retail sales were revised higher. The data boosted expectations that the Fed would raise rates in September for the first time in nearly a decade. The dollar was last up 0.13 percent against the yen at 124.37. To the upside, immediate resistance can be seen at 124.47. To the downside, immediate support level is located at 124.00 levels.
USD/CAD is supported at 1.3025 levels and is trading at 1.3069 levels. It has made intraday high at 1.3090 and lows at 1.3025 levels. The Canadian dollar softened against a rebounding U.S. currency on Thursday as economic data helped drive the greenback higher and as China soothed concern that its devaluation of the yuan might spur a currency war. Another retreat in oil prices added to the pressure on the loonie with Canada being a major oil exporter. The loonie, which was weaker than many of its key currency counterparts, remained range-bound, trading between $1.2960 and C$1.3064 on Thursday. On the data front, New home prices in Canada rose by the most in nearly a year in June. The new housing price index rose by 0.3 percent, the biggest monthly increase since August 2014 and topping economists’ forecasts for a gain of 0.1 percent. Compared with the year before, prices were up 1.3 percent. . To the upside, immediate resistance can be seen at 1.3075. To the downside, immediate support level is located at 1.3045 levels.
Equities Recap
European stock markets slipped lower on Thursday, surrounded by China’s devaluation of its currency and Greek parliament vote for a third bailout early on Friday. UK’s benchmark FTSE 100 closed, down by 0.1 percent, the pan-European FTSEurofirst 300 closed, up by 0.9 percent, Germany’s Dax closed, up by 0.7 percent, France’s CAC closed, up by 1.1 percent, Italy’s FTSE MIB closed, up by 1.6 percent. Meanwhile, Spain’s IBEX 35 was up by 0.3 percent at close.
US stocks closed slightly lower on Thursday, amid positive US retail sales. Dow Jones closed, up by 0.04 percent, S&P 500 closed, down by 0.13 percent, Nasdaq closed, down by 0.21 percent.
Treasuries Recap
U.S. Treasuries yields rose on Thursday as global markets steadied on Chinese reassurances there was no reason for the yuan to drop further and on strong U.S. retail sales data that lifted expectations policymakers will soon raise interest rates.
As investors shifted to riskier holdings, yields on German Bunds and other top-quality government bonds rose. German 10-year bond yields were 4 basis points higher at 0.64 percent.
Yields on the comparable 10-year U.S. Treasury were last up 6 basis points at 2.187 percent, reflecting a drop in price of 15/32.
The 30-year Treasury was off 25/32 in price and yielding 2.8573 percent after a government auction of $16 billion of 30-year bonds.
The five-year Treasury, a maturity especially sensitive to Federal Reserve interest rate policy shifts, was last down 10/32 in price and yielding 1.5691 percent as bets rose on a September rate increase.
Commodities Recap
Gold fell 1 percent on Thursday, snapping five sessions of gains, as the dollar strengthened on the back of upbeat U.S. data and concerns eased over further losses in the yuan after the devaluation of the currency by China.
Spot gold was down 1 percent at $1,114.26 an ounce at 2:53 p.m. EDT (1853 GMT), while U.S. gold futures for December delivery settled down 0.7 percent at $1,115.60 an ounce.
U.S. oil prices tumbled more than 3 percent to a 6-1/2-year low under $42 a barrel on Thursday as data showing a big rise in key U.S. stockpiles intensified worries over a growing global glut.
U.S. crude settled down $1.07 at $42.23 a barrel, after setting a session bottom at $41.91, its lowest since March 2009 when the financial crisis was wreaking havoc on oil prices.
Global crude benchmark Brent settled down 44 cents, or almost 1 percent, at $49.22, ahead of Friday’s expiry of its front-month contract. Brent’s premium to U.S. crude hit a three-week high of nearly $7.
The material has been provided by InstaForex Company – www.instaforex.com