- Dollar index touches 3 month peak at 98.151.
- EUR/USD near 3 month low. Plays from 1.0812 to 1.0868 levels.
- GBP treads water as BoE minutes eyed for rate hike clues.
- Creditors aim to complete Greek aid talks by August 6.
- Chinese concerns dampen Japanese business sentiment.
- Greece submits bill needed to start rescue talks.
- UK Osborne asks govt departments to find 20 bln pounds of savings.
- Switzerland June Trade 3578mln vs previous 3409mln revised.
- UK June PSNB 8.584bln vs previous 8.352bln revised 8.600bln expected.
- UK June PSNCR 13.914bln vs previous 11.919bln revised.
- Australia’s RBA sets steady rate course, seeks lower AUD.
- BOJ Minutes- A few think impact of QQE may be weakening.
- Japan govt cuts factory output assessment due to inventory adjustment.
- BOJ soothes government concern over fewer policy meetings.
- (0855 ET/1255 GMT) US Redbook m/m and y/y, previous 0.3%, 1.4%.
Key Events Ahead
- N/A Annual revision for Industrial Production and Capacity Utilization – G.17.
- (1145 ET/1545 GMT) Fed Trade operation 30-yr Fannie Mae/Freddie Mac (max $1.625 bn.
FX Recap
The US dollar inched higher further on a week of gains due to US rate hike expectations, reaching a five-week high against the yen at 124.30 and a three-month peak at 98.151 against a basket of currencies.EUR/USD is supported above 1.0800 levels and currently trading at 1.0858 levels. It has made intraday high at 1.0865 and low at 1.0810levels. The European currency managed to book gains after the European open following a choppy Asian session. Greece’s repayments to the ECB and IMF supported the euro, but from a longer perspective gains are capped by a strong dollar. Indebted Greece repaid about €6.8 billion to the ECB and IMF, helping smooth the path to debt relief negotiations. Initial support is seen around at 1.0789 and resistance at 1.0896 levels. Option expiries are at 1.0800 (2.1BLN), 1.0850 (1.36LN), 1.0900 (1.0BLN).USD/JPY is supported above 124.00 levels and posted a high of 124.46 levels. It has made intraday low at 124.16 and currently trading at 124.34 levels. Japanese stocks led gains in Asia on Tuesday, with the local bourses opening for the first time this week, while gold miners were down sharply in Australia as prices tumbled overnight. Renewed yen weakness had a positive impact on Japan’s stock markets on Tuesday. Near term resistance is seen at 124.57 and support is seen at 120.63 levels. Options expiries are at 122.60 (344M), 123.00 (380M), 125.00 (210M).GBP/USD is supported below $1.5600 levels. It made an intraday high at 1.5589 and low at 1.5528 levels. Pair is currently trading at 1.5551 levels. The UK currency eased from its intraday high and slid well below the 1.56 threshold on start of the week. Public sector net borrowing excluding banks in June came in higher than expected at £9.4 billion, but still the lowest borrowing June figure since 2008 and £0.8 billion lower than last year as tax receipts continued to grow, figures from the Office for National Statistics (ONS) showed on Tuesday. Initial support is seen at 1.5413 and resistance is seen around 1.5734 levels. Option expiry is at 1.5400 (322M).NZDUSD is supported above 0.6600 levels and trading at 0.6614 levels and made intraday low at 0.6554 and high at 0.6616 levels. The New Zealand dollar was pushed higher after the PM expressed caution about the scale of the currency’s recent fall. Traders said the kiwi had recovered some ground after PM John Key said the currency’s 25 pct fall over the last year had been faster than expected. While the RBNZ is widely expected to follow up last month’s rate cut with another on Thursday. The New Zealand dollar had a solid start to the week, rising for the second day in a row on Tuesday, with the much-awaited Reserve Bank of New Zealand cash-rate decision pending. Initial support is seen at 0.6465 and resistance at 0.6645 levels.AUD/USD is supported above 0.7350 levels and trading at 0.7372 levels. It has made intraday high at 0.7384 levels and low at 0.7340 levels. The Australian dollar eased on Tuesday as minutes from the RBA’s July 7 meeting reiterated the bank’s stance that depreciation in the Australian dollar is both necessary and likely. Although the exchange rate against the US dollar was close to levels last seen in 2009, the decline in the Australian dollar had been more modest in terms of a basket of currencies. The Australian economy has suffered sub-trend growth in recent years due to the winding down of the mining-investment boom, as a consequence of the sharp drop in global commodity prices over the last two years. Initial support is seen at 0.7325 and resistance at 0.7647 levels. Option expiry is at 0.7350 (610M).
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