- Japan MoF flow data week-ended August 1 – Japanese buy net Y168.1 bln foreign stocks, Y119.8 bln bonds, volume large, sell Y7.2 bln bills; foreign investors sell net Y2.8 bln Japanese stocks, Y93.6 bln bills, buy Y263.9 bln bonds, stock volume massive, Y10.8 trln buys/sales.
- Australia July employment +38.5k, unemployment 6.3%, participation 65.1%, +10.0k, 6.0% and 64.8% eyed, full-time employment +12.4k.
- Philippines June budget balance at -72.7 billion peso.
- Thailand July consumer confidence index at 73.4 vs 74.4 in June.
- Japan June leading indicator increase to +1.2 vs previous -0.2.
- Japan June coincident indicator mm increase to +0.7 vs previous -1.8.
- Switzerland consumer sentiment at -19 points in Q3 compared to -6 points in Q2.
- Germany June industrial orders mm increase to 2.0 % (consensus 0.2 %) vs previous -0.2 %.
- (0430 ET/0830 GMT) UK June industrial output, +0.1% m/m, +2.2% y/y eyed; last +0.4%, +2.1%.
- (0430 ET/0830 GMT) UK June manufacturing output, +0.2% m/m, +0.4% y/y eyed; last -0.6%, +1.0%.
- (0700 ET/1100 GMT) UK BOE interest rate decision, previous 0.5%.
- (0700 ET/1100 GMT) UK Asset purchase facility, previous 375B.
- (0700 ET/1100 GMT) UK monetary policy meeting minutes.
- (0730 ET/1130 GMT) US July Challenger layoffs; last 44.84k.
- (0830 ET/1230 GMT) US weekly initial jobless claims, 273k eyed; last 267k.
Key Events Ahead
- N/A BOJ Policy Board begins two-day meeting.
- (0430 ET/0830 GMT) Spain E4-5 bln 4.1/1.15/4.65% 2018/20/25 Bono auctions.
- (0450 ET/0850 GMT) France E4.5-5.5 bln 4.25/6.0/5.75/4.0% 2023/25/32/60 OAT auctions.
- (0700 ET/1100 GMT) BOE MPC policy announcement/minutes, no changes eyed, bank rate 0.5%.
- (0700 ET/1100 GMT) BOE quarterly inflation report, updated economic forecasts.
- (0745 ET/1145 GMT) BOE Gov Carney press conference.
FX Recap
EUR/USD is supported above 1.0900 levels and currently trading at 1.0910 levels. It has made intraday high at 1.0934 and low at 1.0898 levels. The euro jumped to fresh daily highs after upbeat German factory data for June came in far better than anticipated. Industrial orders in the euro area’s number one economy grew 2.0% in June vs -0.3% in previous release. The pair keeps the weekly range below the 1.1000 handle, against a backdrop of a cautious tone from investors in light of relevant releases in the US economy and ahead of the critical Non-farm Payrolls due on Friday. Investors got an insight into Friday’s non-farm payrolls report overnight with the release of the Automatic Data Processing (ADP) employment figures, which showed 185,000 job gains for July, missing the expected gain of 216,000. US ISM non manufacturing PMI data released with positive numbers at 60.3 mm vs 56.0 previous release. 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 124.88 levels. It has made intraday low at 124.70 and currently trading at 124.77 levels. The US dollar edges slightly lower versus the Japanese currency in the mid-Asian session, with USD/JPY keeping range in the upper band of 124 handle as the US bulls take a breather after rallying to fresh two-month highs following stronger than expected US services sector data. The ADP employment change for July dropped sharply, from 237,000 in June to only 185,000 in July. This led to some losses for the greenback, although it managed to erase nearly all of them after services sector PMI for July printed 55.7 and ticked higher from June’s 55.2, surprising markets on the upside. Looking ahead, pair is likely to resume the upside ahead of weekly jobless claims due later today while Friday’s BOJ policy decision and US NFP may provide fresh direction for the pair. Initial resistance is seen at 125.68 and support is seen at 120.63 levels.GBP/USD is supported above $1.5600 levels. It made an intraday high at 1.5625 and low at 1.5595 levels. Pair is currently trading at 1.5623 levels. Today the Bank of England is set to convene on interest rates on August 6th and for the first time it will publish Monetary Policy Committee (MPC) minutes and the Inflation Report all at the same time. Although no change in the interest rates is expected, given the recent verbal hawkishness from the MPC members, including David Miles and BOE’s governor Mark Carney, sterling is likely to be boosted should the inflation forecast be accompanied by a solid wage growth forecast, justifying monetary tightening markets shrugged off upbeat UK manufacturing PMI data which continued its expansion in July. Market will also eye for UK manufacturing production data. Initial support is seen at 1.5413 and resistance is seen around 1.5734 levels.NZDUSD is supported below 0.6600 levels and trading at 0.6545 levels and made intraday low at 0.6504 and high at 0.6547 levels. New Zealand’s labour market took a turn for the worse in the June quarter, with job growth unable to meet population growth, pushing the unemployment rate higher. More bad news arrived for New Zealand overnight after Fonterra’s fortnightly Global Dairy Trade (GDT) auction saw prices take another dive, with the GDT index sliding a further 9.3%, following the previous decline of 10.7%. Today is data thin calendar for the New Zealand. Initial support is seen at 0.6465 and resistance at 0.6789 levels.AUD/USD is supported below 0.7400 levels and trading at 0.7327 levels. It has made intraday high at 0.7389 levels and low at 0.7320 levels. Among the Asian currencies, Aussie extends losses for the second straight losses as the bulls remained unimpressed by above estimates Australia’s jobs data. Job growth in Australia far outpaced expectations – rising by 38,500 in July compared with the market forecast of 10,000, with the participation rate jumping from 64.8% to 65.1%. However, unemployment grew by a staggering 40,100 and the jobless rate rose from a revised 6.1% in June to 6.3% last month, according to the Australian Bureau of Statistics. Initial support is seen at 0.7225 and resistance at 0.7647 levels.
Equity Recap
Asian markets were trading in mixed directions on Thursday, with Japan outperforming while Chinese and Australian stocks sank ahead of tomorrow’s all-important US non-farm payrolls report.The Indian market has opened flat with a positive bias. The Sensex gained 23.31 points at 28246.39 and the Nifty rose 5.75 points to 8573.70.Japan’s benchmark Nikkei 225 index rose 0.83% to 20,785.12 points in morning trade, while Tokyo’s broader Topix gauge rallied 1.15% to 1,685.54 points.Hong Kong’s benchmark Hang Seng index fell 0.55% to 24,379.11 points at the opening bell, and mainland China’s benchmark Shanghai Composite plunged 1.31% to 3,647.75 points at the same time.Korea’s benchmark Kospi index inched up 0.18% to 2,033.37 points this morning in Seoul.The benchmark Australian S&P/ASX 200 index traded 0.78% lower at 5,629.60 points in Sydney, with Australia’s biggest lenders suffering sharp losses early on in the trading day.New Zealand’s benchmark S&P/NZX 50 index rose 0.22% to 5,951.79 points this afternoon in Wellington.Australia’s S&P/ASX 200 Index closes down 1.15 pct at 5,608.90 points.Tokyo’s Nikkei average closes up 0.24 pct at 20,664.44.
Treasury Recap
BOJ offers to lend Y1.2 trln of JGBs on spot basis through 8/7 as a secondary source of JGBs (Offer in the morning).Japan 03-month treasury discount bill auction lowest price 100.0010, average price 100.0013, bids accepted at lowest price 43.4472 pct.BOJ offers to supply 800 bln yen in funds at a fixed rate for 8/10-11/9 at all offices.10-year US treasury yield at 2.262 percent vs US close of 2.268 percent on Wednesday.New Zealand government bond yields were up to 6 basis points higher.Australian government bond futures fell, with the three-year bond contract off 1 tick at 98.010. The 10-year contract was down 2.5 ticks to 97.1350
Commodity Recap
Oil was flat on Thursday after closing the prior session lower following the latest stockpiles report, with US crude futures trading around the psychological level of $45 per barrel. Investors are waiting for US jobs data, due out on Friday, which is expected to impact the US dollar. A stronger currency would curb demand for oil as it makes the commodity more expensive in other currencies.Gold struggled to pull away from a 5-1/2-year low on Thursday after more upbeat U.S. economic data bolstered prospects that the Federal Reserve could lift interest rates as soon as next month. Spot gold was flat at $1,084.71 an ounce by 0213 GMT. The metal has been stuck below $1,100 since breaching that support level after a deep rout in late July that pushed it as far as $1,077, its weakest since February 2010.
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