• Asia roundup: antipodeans at multi-week lows on monetary easing concerns, Euro off 2-year low on less dovish ECB, investors’ eye U.S. prelim Q2 GDP - Friday, July 26th, 2019

    Source: FxWire Pro - Media Round Ups / 28 Jul 2019 06:46:16   America/New_York

    Market Roundup

    • Dollar near 2-week high vs yen as traders trim rate cut views
       
    • Euro rallies as ECB holds interest rate steady
       
    • Gold off 1-week high on robust U.S. data
       
    • Oil rises on Iran tensions and as U.S. inventory decline
       

    Economic Data Ahead

    • (0245 ET/0645 GMT) France producer prices MoM June
       
    • (0245 ET/0645 GMT) France consumer confidence July
       
    • (0400 ET/0800 GMT) Italy Trade Balance non-EU June
       
    • (0400 ET/0800 GMT) Italy consumer confidence June
       
    • (0400 ET/0800 GMT) Italy business confidence June

    Key Events Ahead

    • No Significant Event Scheduled

    FX Beat

    DXY: The dollar index edged up, hovering towards a near 2-week peak scaled in the previous session, as a surge in U.S. capital goods orders tempered expectations for global monetary easing. Investors now focus on U.S. consumer spending data to gauge the underlying strength of the economy. The greenback against a basket of currencies traded flat at 97.81, having touched a high of 97.92 earlier, its highest since May 31.

    EUR/USD: The euro steadied after falling to an over 2-year low in the previous session, after European Central Bank held interest rates steady, but appeared certain to cut interest rate in September. ECB President Mario Draghi sounded slightly optimistic about his outlook on the eurozone economy but noted that a rebound in the second half was less likely due to stubbornly low inflation. The European currency traded flat at 1.1148, having touched a low of 1.1101 on Thursday, its lowest since May 2017. Investors’ attention will remain on data out of Eurozone economies, ahead of the U.S. prelim gross domestic product and personal consumption expenditures prices. Immediate resistance is located at 1.1171 (23.6% retracement of 1.1281 and 1.1101), a break above targets 1.1213 (61.8% retracement). On the downside, support is seen at 1.1126 (July  24 Low), a break below could drag it below 1.1100.

    USD/JPY: The dollar held firm near a 2-week peak, as investors slashed expectations for aggressive Federal Reserve interest rate cuts ahead of key U.S. economic data due later in the day. On Thursday, the pair rallied after data showed that new orders for key U.S.-made capital goods surged 1.9 percent in June, while weekly U.S. jobless claims number declined to a three-month low last week, indicating strength in the labor market.  The major was trading flat at 108.62, having hit a high of 108.75 on Thursday, its highest since July 10. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. prelim gross domestic product and personal consumption expenditures prices. Immediate resistance is located at 108.96 (July 9 High), a break above targets 109.54 (Jan. 29 High). On the downside, support is seen at 108.46 (78.6% retracement of 107.21 and 108.75), a break below could take it lower at 108.11 (21-DMA).

    GBP/USD: Sterling consolidated within narrow ranges, as Boris Johnson became Britain's new prime minister, but uncertainty about Britain's negotiations to leave the European Union still persisted. The major traded flat at 1.2445, having hit a low of 1.2417 on Tuesday, it’s lowest since July 17. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2520 (July 16 High), a break above could take it near 1.2578 (July 12 High). On the downside, support is seen at 1.2417 (July 23 Low), a break below targets 1.2396 (July 16 Low). Against the euro, the pound was trading 0.1 percent 89.56 pence, having hit a high of 88.91 on Thursday, it’s highest since June 21.

    AUD/USD: The Australian dollar plunged to an over 2-week low after Reserve Bank of Australia Governor Philip Lowe on Thursday underlined the bank’s easing bias. Earlier in the week, Westpac brought forward the timing of its forecast for the next rate cut by the RBA to October, from November previously. The Aussie trades 0.2 percent down at 0.6941, having hit a low of 0.6939 earlier, it’s lowest since July 10. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6920 (July 9 Low), a break below targets 0.6903 (June 21 Low). On the upside, resistance is located at 0.7000 (21-DMA), a break above could take it near 0.7047 (July 4 High).

    NZD/USD: The New Zealand dollar slumped to a 2-week trough, as the Reserve Bank of New Zealand is expected to cut rates to 1.25 percent in August, and to 1 percent by February next year. Data released earlier in the week showing domestic business confidence declined to its lowest level in nine years in the second quarter supported Westpac Bank's forecast of two rate cuts by RBNZ by end of this year. The Kiwi trades 0.2 percent down at 0.6653, having touched a low of 0.6651 earlier, its lowest level July 11. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6691 (21-DMA), a break above could take it near 0.6738 (July 16 High). On the downside, support is seen at 0.6640 (July 11 Low), a break below could drag it below 0.6602 (July 5 Low).

    Equities Recap

    Asian shares tumbled on mixed U.S. earnings reports, while the euro rebounded from a 2-year low after the European Central Bank held interest rates steady.

    MSCI's broadest index of Asia-Pacific shares outside Japan plunged 0.2 percent.

    Tokyo's Nikkei declined 0.6 percent to 21,635.80 points, Australia's S&P/ASX 200 index fell 0.3 percent to 6,795.80 points and South Korea's KOSPI slumped 0.5 percent to 2,063.76 points.

    Shanghai composite index rose 0.1 percent to 2,939.71 points, while CSI 300 index traded 0.1 percent up at 3,854.50 points.

    Hong Kong’s Hang Seng traded 0.5 percent lower at 28,458.40 points. Taiwan shares shed 0.5 percent to 10,891.98 points.

    Commodities Recap

    Crude oil prices surged, supported by rising tensions between the West and Iran and a huge decline in U.S. crude stockpiles, although lingering worries about slowing economic growth that could reduce fuel demand limited upside. International benchmark Brent crude was trading 0.6 percent higher at $63.44 per barrel by 0418 GMT, having hit a high of $64.64 on Wednesday, its highest since July 17. U.S. West Texas Intermediate was trading 0.5 percent up at $56.18 a barrel, after rising as high as $57.62 on Wednesday, its highest since the July 17.

    Gold prices rebounded following a sharp decline in the previous session, while investors awaited U.S. economic growth data due later in the day that could provide clues about the Federal Reserve’s monetary policy meeting. Spot gold was trading 0.2 percent up at $1,416.35 per ounce by 0422 GMT, having touched a low of $1,410.77 on Thursday, its lowest since July 17 and was on track for its first weekly decline in three. U.S. gold futures edged 0.2 percent higher to $1,417.10 an ounce.

    Treasuries Recap

    The Japanese government bond prices were flat, but benchmark futures contracts were on course for their second weekly gain. The 10-year JGB futures edged up 0.01 point to 153.75, while for the week, benchmark futures were up 0.12 point. The 10-year JGB yield was flat at minus 0.155 percent. The benchmark two-year JGB yield was flat at minus 0.215 percent. At the long end of the curve, the 40-year JGB yield was flat at 0.390 percent.

    The Australian government bonds remained flat during Asian session amid a muted trading day that witnessed data of little economic significance. Investors will now remain focused on the United States’ gross domestic product (GDP) for the second quarter of this year, scheduled to be released today by 12:30GMT for further direction in the debt market. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slipped nearly 1 basis point to 1.232 percent, the yield on the long-term 30-year bond traded flat at 1.893 percent and the yield on short-term 2-year hovered around 0.884 percent.

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