- Dollar supported as risk appetite makes modest return.
- DXY up from one month 95.926 low. Plays from 96.122 to 96.616 range.
- EUR/USD down 0.5% to 1.1107 from Wednesday’s 1.1215 high.
- EUR/GBP off 0.7170 one month peak. Plays in between 0.7106/0.7156 range.
- Sweden July CPI beats consensus, SEK up 1.3% vs EUR to 9.4655.
- China spot Yuan closes at 6.399 per dollar, down 0.2% fm previous close.
- PBOC sets USD/CNY mid-point at 6.4010, 6.3306 yesterday, last close 6.3870.
- China commerce ministry- Studying new measures to support trade.
- Japan PM advisor Hamada- China ill effects could be offset by more BOJ ease.
- Germany July CPI final 0.2% m/m, 0.2% y/y vs previous 0.2%/0.2%. 0.2%/0.2% expected.
- Germany July HICP final 0.3% m/m, 0.1% y/y vs previous 0.3%/0.1%. 0.3%/0.1% expected.
- Switzerland July Producer/import price -0.3% m/m, -6.4% y/y vs previous-0.1%/-6.1%.
- (0830 ET/1230 GMT) US Import Price Index (July) consensus -1.1% m/m, previous -0.1% m/m.
- (0830 ET/1230 GMT) US Export Price Index (July) consensus -0.3% m/m, previous -0.2% m/m.
- (0830 ET/1230 GMT) US Initial Claims (August 8 week) previous 270k.
- (0830 ET/1230 GMT) US Continued Claims (August 1 week) consensus 2.247 mn, previous 2.255 mn.
- (0830 ET/1230 GMT) US Retail Sales (July) consensus +0.5% m/m, previous -0.3% m/m.
- (0830 ET/1230 GMT) US Ex-Autos Retail Sales (July) consensus +0.4% m/m, previous -0.1% m/m.
- (0830 ET/1230 GMT) US Control Retail Sales (July) consensus +0.5% m/m, previous -0.1% m/m.
- (1000 ET/1400 GMT) US Business Inventories (June) consensus +0.3% m/m, previous +0.3% m/m.
- (1700 ET/2100 GMT) Chile Interest rate, Previous 3%, consensus 3%.
Key Events Ahead
- (1145 ET/1545 GMT) Fed Trade operation 30-year Ginnie Mae (max $1.075 bn).
- (1430 ET/1830 GMT) Fed Trade operation 15-year Fannie Mae / Freddie Mac (max $475 mn).
FX Recap
USD: The dollar inched higher 0.3 pct at 95.593 on Thursday from a one-month low against a basket of major currencies as the Yuan’s fall slowed. The dollar rose 0.3 pct to 124.56 yen and euro was half a percent down on the day at $1.1107 in a calmer market.EUR/USD is supported above 1.1100 levels and currently trading at 1.1117 levels. It has made intraday high at 1.1189 and low at 1.1107 levels. Consumer-price inflation in Germany hit 0.2% in July on a yearly basis, after the 0.3% rate a month before, while on a monthly basis prices grew 0.2%. Inflation figures were released also for France, where a 0.2% rate was recorded year-on-year for July, with a 0.4% fall on a monthly basis. Greece was in the spotlight as well as the country published its second-quarter GDP growth that showed a 1.5% expansion year-on-year, compared to estimates of a 0.6% fall. Meanwhile, the third bailout for Greece must now pass through parliament in Athens and then go to the euro zone’s national governments for approval. Equities in Europe were traded higher on Thursday, recovering from sharp falls, with shares of exporters rebounding as well, as traders relaxed over China’s currency moves. Ahead in the session, US retail sales will take centre stage followed by the weekly report on the labour market. Consensus sees retail sales rebounding sharply 0.5% during July, while Initial Claims are expected at 270K in the week ended on August 7. Initial support is seen around at 1.0789 and resistance at 1.1195 levels.USD/JPY is supported below 124.00 levels and posted a high of 124.59 levels. It has made intraday low at 124.07 and currently trading at 124.53 levels. The greenback keeps the upper edge over its Japanese counterpart in Asia as PBOC Yuan fix impact fades after the central bank’s official Yi Gang talked up currency and that now this FX development becomes a new normal. Moreover, the major also rebounded higher after the yen weakened following Japan’s PM Adviser Hamada hinted at further BOJ easing to counter the effects of Yuan devaluation. While worse than estimates Japan’s core machinery orders data also dampened the sentiment around the Japanese currency. Looking ahead, retail sales and weekly jobless claims from the US due for release later in the New York session, is expected to have major influence on the USD/JPY moves. Japan’s core machinery orders plunged 7.9% month-on-month in June, according to data from Japan’s Cabinet Office on Thursday, coming in weaker than the forecast decline of 5.3%. The poor outcome of today’s data will likely add to calls for the government and central bank to increase efforts to support the economy. 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 1.5636 and low at 1.5607 levels. Pair is currently trading at 1.5622 levels. The British pound keeps its range play intact, although edges slightly higher in the mid-European session, lifting GBP/USD once again for a test of key barrier near 1.5635 levels. Ahead in a day, market will focus on US data for the further directions. 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 0.6576 levels and made intraday low at 0.6570 and high at 0.6641 levels. The kiwi came under pressure after Standard and Poor’s rating agency placed Fonterra’s rating on credit watch negative. However, another Yuan intervention weakened the US dollar on speculation it might postpone the Fed’s rate hike into 2016. Meanwhile, markets now await key US economic release later today for further momentum on the pair while NZ retail sales data due tomorrow will also be closely watched. Initial support is seen at 0.6465 and resistance at 0.6789 levels.AUD/USD is supported above 0.7300 levels and trading at 0.7335 levels. It has made intraday high at 0.7409 levels and low at 0.7330 levels. The expected inflation rate (30-per-cent trimmed mean measure), reported in the Melbourne Institute Survey of Consumer Inflationary Expectations, rose by 0.3 percentage points to 3.7 per cent in August from 3.4 per cent in July. Initial support is seen at 0.7225 and resistance at 0.7647 levels.
Equity Recap
European shares rallied on Thursday after PBOC said there was no basis for further yuan depreciation after devaluation this week that has seen the currency slide around 4 percent.The pan-European FTSEurofirst index of leading 300 blue-chips rose 1.4 percent to 1,537.35 with national benchmark euro zone indexes broadly in line with that rise. UK’s FTSE climbed 0.4 pct, France’s CAC rose 1.7 pct and Germany’s DAX jumped 1.6 pct in early deals.The MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.6 percent. Tokyo’s Nikkei Average closed up 0.99 pct at 20,595.55 points. Shanghai Composite Index ended up 1.8 pct at 3,954.56 points, while China’s CSI300 Index rose 1.5 pct at 4,075.46 points.
Commodities Recap
Oil prices rose as lower U.S. crude stocks and optimistic global demand projections overrode concerns about a glut of supply. Benchmark North Sea Brent crude oil was up 60 cents at $50.26 a barrel by 0855 GMT. U.S. crude was trading at $43.50 per barrel, up 20 cents.Gold fell as the dollar firmed, but the metal remained near a three-week peak as a weaker Chinese yuan raised doubts about the pace of expected interest rate hikes by the U.S. Fed. Spot gold was off 0.4 percent at $1,120.80 an ounce by 0635 GMT, after earlier peaking at $1,126.31, its loftiest since July 20. U.S. gold for December delivery slipped 0.3 percent to $1,120.40 an ounce.
Treasuries Recap
JGB prices ended the day lower in very quiet trading, sending yields up 2.5bp on the day in the 10-yr to 30-yr zone. Weaker US TSY bonds overnight and higher Tokyo stocks today dampened JGB sentiment after yesterday’s rally. Today, the BoJ didn’t offer to buy JGBs under its massive JGB purchase program, because the MoF conducted a monthly JPY2.5tn 5-yr JGB auction. Except for the 5-yy JGB auction, the majority of domestic real money accounts stayed on the sidelines, according to JGB traders.Yields on German 10-year bonds were 2 basis points higher at 0.64 percent while benchmark U.S. 10-year yields were 3 bps up at 2.16 percent in European trade, following a lacklustre auction on Wednesday.UK Gilts opened 37 ticks lower than the settlement of 118.32, as expected, as external core markets sold off after the PBoC commented that it sees no reason to further devalue the yuan. 10-year cash broke resistance from recent lows at 1.82% and 1.84%.New Zealand government bond yields were as much as 4 bps higher. Australian government bond futures fell sharply as the need for safe havens receded a little. The 3-year bond contract came off 7 ticks to 98.050, while the 10-year contract lost 9 ticks to 97.2150.
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