- GBP briefly higher after MPC minutes. GBP/USD hit 1.5647 before easing.
- EUR/GBP touched to 0.6992 before recovering to 0.7000 levels.
- BOE minutes show MPC voted 9-0 in July to keep interest rates unchanged at 0.5%.
- Bank of England minutes show “a number” of rate-setters edging towards hike.
- BOE Miles: “Very likely” CPI rise to target “quite sharply” Mortgage Strategy.
- Miles inflation rise seen towards end 2015/start 2016.
- Greek MPs due to vote on reform measures Wednesday.
- Japan to cut discretionary spending by 10% in 2016 budget.
- USD/JPY off after Kuroda Bangkok comments – no more QQE, CPI to accelerate.
- Japan govt says won’t meet FY 2020 fiscal discipline targets.
- (0800 ET/1200 GMT) Brazil CPI (July), previous 0.99%.
- (0900 ET/1300 GMT) Mexico’s retail sales y/y, previous 4.6%, consensus 4.9%.
- (0900 ET/1300 GMT) FHFA House Price Index (May) previous +5.3% y/y.
- (0930 ET/1330 GMT) Brazil Trade balance.
- (1000 ET/1400 GMT) Existing Home Sales (Jun) consensus 5.40 mn SAAR, previous 5.35 mn.
- (1500 ET/1900 GMT) Argentine Trade Balance.
- N/A Architecture Billings Index previous 51.9 – five-month high.
Key Events Ahead
- (1145 ET/1545 GMT) Fed Trade operation 30-yr Ginnie Mae (max $925 mn).
- (1145 ET/1545 GMT) Fed Trade operation 15-yr Fannie Mae/Freddie Mac (max $475 mn).
- (1215 ET/1615 GMT) Administration releases Social Security and Medicare Trustee reports.
- (1700 ET/2100 GMT) RBNZ rate verdict. 25bp OCR cut is consensus expectation.
FX Recap
USD: The dollar lost more ground on Wednesday after profit-taking drove its biggest decline in a month in the previous session, casting more doubt on whether it can rally further after a year of gains. By GMT 0804, the dollar was 0.1 percent lower on the day against both the euro and a basket of currencies at $1.0941 and 97.3292 respectively, having fallen back from a 3-month high of 98.151 on Tuesday.EUR/USD is supported above 1.0900 levels and currently trading at 1.0917 levels. It has made intraday high at 1.0965 and low at 1.0914 levels. Currency is trading modestly flat versus the US dollar in the mid-European session, keeping EUR/USD near the mid-point of 1.09 handle. The day started in slow motion, with no relevant data released in Europe or the US, and in fact, the EUR/USD extended its decline down. The major pared gains and trades muted as markets shift their focus towards today’s Greek vote on the second bailout deal offered by its creditors. While traders also diverted their interest to equity markets and the earnings season in another data-quiet trading session. Initial support is seen around at 1.0789 and resistance at 1.1083 levels. Option expiries are at 1.0820-25 (400M), 1.0900 (758M), 1.0950 (200M).USD/JPY is supported below 124.00 levels and posted a high of 123.88 levels. It has made intraday low at 123.56 and currently trading at 123.80 levels. Pair keeps losses as broad US dollar softness weighs on the major while yen bulls remain underpinned ahead of the Greek vote on the second reforms proposal submitted by Greek government on Tuesday. Meanwhile, US dollar index – a virtual measure of the greenback’s power against its six major peers – stood in red at 97.37. Also, markets continue to digest Tuesday’s hawkish comments from BOJ Kuroda which keeps the Japanese currency boosted against the US dollar. Markets look forward to today’s housing data from the US while Thursday JPY trade balance will be closely watched in absence of any other significant data releases due later this session. Near term resistance is seen at 124.57 and support is seen at 120.63 levels. Option expiries are at 123.00-10 (486M), 123.70-80 (350M), 124.80 (1BLN).GBP/USD is supported above $1.5600 levels. It made an intraday high at 1.5644 and low at 1.5546 levels. Pair is currently trading at 1.5610 levels. Sterling traded higher on Wednesday as the BoE minutes suggested that the rate-setters are edging towards voting for an interest rate rise, although the pair could not hold all its gains. The pound hit an intraday high of $1.5647 after the minutes were released before retreating to $1.5630, still up 0.5 percent on the day. Against the euro, it hit 69.92 pence, before easing to 70 pence, also up half a percent. The pair gained further upside momentum after the positive comments by MPC member D.Miles, stating that rate hikes will be gradual and UK inflation should return to the target by year-end. Initial support is seen at 1.5413 and resistance is seen around 1.5734 levels.NZDUSD is supported above 0.6600 levels and trading at 0.6609 levels and made intraday low at 0.6601 and high at 0.6643 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 third day in a row on Wednesday, 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 0.7400 levels and trading at 0.7406 levels. It has made intraday high at 0.7438 levels and low at 0.7371 levels. The Aussie went through a rollercoaster session in Asia, falling from session highs straight to lows. The primary cause of the downside move was the speech from the RBA’s Stevens who was positive about the effects of a weaker AUD. Earlier in the session, the Aussie was bolstered and spiked to 0.7439 high following upbeat Australia’s CPI data which showed that last quarter the CPI rose 0.7% after fuel prices were lifted back almost to levels seen before the drop in global oil prices last year. Initial support is seen at 0.7325 and resistance at 0.7647 levels. Option expiry is at 0.7400 (328M).
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