- UK Q2 prelim GDP +0.7% m/m vs 0.7% expected 0.4% previous.
- UK Q2 prelim GDP +2.6% y/y vs 2.6% expected 2.9% previous.
- EUR/GBP drops from 0.7129 to 0.7073 levels.
- GBP/USD climbs from 1.5528 to 1.5618 levels.
- Chinese regulator vows share support after markets tumble 8.5%.
- PBOC – Policy meeting in August will make adjustments as needed.
- As oil slumps, BOJ relies on yogurt, ketchup to hit price goal.
- Greek Finance Minister- Greece will respect & implement Euro Summit decisions.
- Rising German labour costs are beginning to undermine German competitiveness.
- Why the RBA has gone soft on expected growth, don’t expect another rate cut.
- China securities regulator to investigate Monday share dumping.
- (0830 ET/1230 GMT) Canada June Producer Prices, consensus -1.2% y/y, -1.3% previous.
- (0855 ET/1255 GMT) Redbook Same Store Sales Index previous +1.2% y/y.
- (0900 ET/1300 GMT) US May CaseShiller 20, +1.3% m/m nsa, +5.6% y/y eyed; last +1.1%, +4.9%.
- (0945 ET/1345 GMT) US July Markit services PMI flash, 55.0 eyed; last 54.8.
- (0945 ET/1345 GMT) US July Markit composite PMI flash; last 54.6.
- (1000 ET/1400 GMT) US July consumer confidence index, 100.0 eyed; last 101.4.
- (1000 ET/1400 GMT) US July Richmond Fed services/comp/mfg shipments indices; last 19, 6.
- (1030 ET/1430 GMT) US July Dallas Fed services revenues/serv outlook indices; last 13.2, 4.1.
Key Events Ahead
- (1145 ET/1545 GMT) Fed trade ops 30-yr F.Mae/Fr.Mac max $1.525bln.
- (1300 ET/1700 GMT) FOMC two-day meeting begins.
- (1330 ET/1730 GMT) BEA briefs media on annual GDP revisions due on July 30.
FX Recap
EUR/USD is supported below 1.1100 levels and currently trading at 1.1032 levels. It has made intraday high at 1.1098 and low at 1.1029 levels. The Euro has surrendered initial gains amidst thin trade and scarce volatility while a cautious tone amongst market participants is growing bigger in light of the FOMC meeting. The main focus will remain Wednesday’s conclusion of the FOMC meeting, which is not expected to bring any changes to monetary policy, but Fed Chair Janet Yellen might suggest some further hints as to when the main rate will be hiked. The September meeting is still in play. Furthermore, US GDP for the second quarter is due on Thursday and should post growth of 2.5%, returning to strong figures after Q1’s dismal -0.2%. Looking ahead, US macro data due later today may also influence the pair amid data-quiet European session ahead. Initial support is seen around at 1.0789 and resistance at 1.1195 levels. Option expiries are at 1.1000 (417M), 1.1030-40 (717M).USD/JPY is supported below 124.00 levels and posted a high of 123.77 levels. It has made intraday low at 123.06 and currently trading at 123.73 levels. The major erased loses and rebounded higher to session highs after the USD bulls jumped back into bids largely on profit-taking after the recent drop. The US dollar index, a virtual gauge of the greenback’s relative strength reversed previous losses and edged 0.10% higher to 96.72. Markets ignored the extended sell-off seen in Chinese equities on Tuesday which offers little support to the safe-haven appeal in yen. Near term resistance is seen at 124.57 and support is seen at 120.63 levels. Option expiries are at 122.50 (445M), 123.00 (250M), 123.40 (500M).GBP/USD is supported around $1.5600 levels. It made an intraday high at 1.5616 and low at 1.5527 levels. Pair is currently trading at 1.5598 levels. Pair was trading elevated on Monday despite better-than-expected US durable goods orders for June, ahead of Wednesday’s conclusion of the FOMC meeting. Pair stayed in a moderate rebound in July, increasing from the six-week bottom at $1.5328 seen July 8. However, sterling gave up most of its bullish momentum as the trading activity has been locked in a relatively narrow range for the last two weeks. UK economic growth in the second quarter accelerated in line with expectations, with an increase in services and the mining and quarrying sectors acting as the main upward drivers. The UK economy sped up to 0.7% in the second quarter, up from 0.4% a quarter before, and in line with expectations. Year-on-year growth came in at 2.6%, slightly less than estimated. 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 0.6661 levels and made intraday low at 0.6597 and high at 0.6681 levels. Absolutely dry Asian session with Asian equities extending their sell-off tracking negative close on Wall Street overnight amid China turmoil. While Chinese markets extended in the red for the third straight session, albeit recovered heavy losses seen at open. The Kiwi led the rally, correcting higher towards 0.6650 levels after falling to fresh six-year lows recently. Initial support is seen at 0.6465 and resistance at 0.6722 levels.AUD/USD is supported above 0.7300 levels and trading at 0.7313 levels. It has made intraday high at 0.7325 levels and low at 0.7256 levels. Unwinding US dollar positions ahead of the FOMC statement lifted the Aussie above the $0.73 handle. The gains are offset, however, by a sharp fall on Chinese equity markets, raising the sense of nervousness on financial markets. On the flip side, the gains are offset by a sharp fall in the Shanghai equity market, and the consequent fall on global equity markets, with further falls in commodity prices, which has left a sense of nervousness across financial markets, while bears watch closely. Initial support is seen at 0.7225 and resistance at 0.7647 levels. Option expiries are at 0.7300 (491M), 0.7325 (341M).
Equity Recap
Stocks rose on Tuesday, with Europe snapping a five-day losing streak as investors shrugged off further weakness in commodity markets and Chinese shares to focus on more encouraging merger activity and earnings.The FTSEuroFirst 300 index of leading European shares was up 0.5 percent at 1,537 points in the early trading. Germany’s DAX, France’s CAC 40 and Britain’s FTSE 100 were all up around 0.5 percent too.MSCI’s broadest index of Asia-Pacific shares outside Japan ended the day 0.2 percent higher after falling nearly 1 percent early on, touching its lowest level since July 9. Tokyo’s Nikkei ended 0.1 percent lower. The Shanghai market benchmark closed 1.7 percent lower.
Commodity Recap
Oil prices dropped for a fifth straight session on Tuesday to their lowest in almost six months, as a rout in Chinese equities cast further doubt over the outlook for crude demand in the world’s top commodities consumer. Brent fell 78 cents to $52.69 a barrel by 0821 GMT, having hit a session low of $52.28, its lowest since early February, bringing the losses for July to nearly 18 percent. U.S. crude was last down 36 cents at $47.03 a barrel after ending the previous session down 75 cents.Gold hovered near its weakest level since early 2010 on Tuesday, reflecting investor hesitation to bid up bullion amid growing expectations of a near-term hike in U.S. interest rates. Spot gold rose 0.3 percent at $1,096.96 an ounce by 0615 GMT. Bullion fell to as low as $1,077 on Friday, its cheapest since February 2010, stretching its losing run to a fifth week.
Treasuries Recap
Bond yields edged higher, with the 10-year U.S. Treasuries yield up 2 basis points at 2.25 percent and similar rises in UK and German yields.Sep UK Gilts are around 12 ticks lower on the data to trade last at 116.50. Sellers will be looking at Friday’s high on 10-year cash yields as the next target at 1.983%. Screens are currently marked at 1.962%.JGB prices ended the day mostly unchanged from yesterday in relatively active trading amid a lack of the BOJ’s buying operations. JGBs saw relatively good two-way flow in the 5-yr to 20-yr zone. But yields moved in a very narrow range of 1bp or less, finishing the day at their intraday highs. Ten-year Japanese bond yields held firm at 0.40 percent, from 0.55 percent two weeks earlier.New Zealand government bonds dropped with yields as much as 5.5 bps higher. Yields on the 10-year bond hit a 3-month low of 3.25 percent at one point. Australian bond futures dipped, with the 3-year contract off 2 ticks at 98.120. The 10-year contract was a tick lower at 97.2050.
The material has been provided by InstaForex Company – www.instaforex.com