• Europe roundup: Dollar index eases on Trump interest rate comments, Yen gains on BOJ policy tweak prospects, European shares tumble - Monday, July 23rd, 2018

    Source: FxWire Pro - Media Round Ups / 23 Jul 2018 07:58:12   America/New_York

    Market Roundup

    • EUR/USD -0.15%, USD/JPY -0.22%, GBP/USD -0.02%, EUR/GBP -0.16%
    • DXY 0.1%, DAX -0.16%, FTSE -0.35%, Brent 1.44%, Gold -0.12%
    • BOJ policy tweak prospects jolt Japanese markets, yen
    • G20 calls for stepped-up trade dialogue; no agreement on path forward
    • German economy showed improved momentum in Q2: Bundesbank
    • UK households' mood boosted by easing inflation squeeze - IHS Markit
    • China says it won't devalue currency to bolster exports
    • Oil steady after G20 warns of risks to growth
    • Gold steady as dollar softens on Trump interest rate comments

    Economic Data Ahead

    • (0830 ET/1230 GMT) The Federal Reserve Bank of Chicago will release its Chicago Fed National Activity Index (CFNAI) for the month of June. The index stood at -0.15 in the prior month.
    • (0830 ET/1230 GMT) Statistics Canada releases wholesale trade data for the month of May. The indicator came in at 0.1 percent in the previous month.
    • (1000 ET/1400 GMT) National Association of Realtors is expected to report that U.S. existing home sales rose 0.5 percent to an annual rate of 5.44 million units in June after easing 0.4 percent to 5.43 million units in 5.43
    • (1000 ET/1400 GMT) The European Commission releases Eurozone's preliminary Consumer Confidence reading for the month of July. The index posted a final reading of -0.5 in the prior month.

    Key Events Ahead

    • (1300/1700) Bank of England Monetary Policy Committee member Dr Ben Broadbent speech

    FX Beat

    DXY: The dollar index steadied after falling to an over 1 week earlier on reports that Trump was worried the Federal Reserve will raise interest rates twice more this year. The greenback against a basket of currencies trades 0.1 percent down at 94.43, having touched a low of 94.21 earlier, its lowest since July 11. FxWirePro's Hourly Dollar Strength Index stood at -63.16 (Bearish) by 1000 GMT.

    EUR/USD: The euro declined, reversing early session gains, as investors expect European Central Bank President Draghi to shrug off trade war fears and reiterate commitment to end QE program in December on Thursday. The European currency traded 0.1 percent down at 1.1710, having touched a high of 1.1749, its highest since July 11. FxWirePro's Hourly Euro Strength Index stood at -74.27 (Slightly Bearish) by 1000 GMT. Immediate resistance is located at 1.1762 (June 10 High), a break above targets 1.1801 (June 13 High). On the downside, support is seen at 1.1671 (21-DMA), a break below could drag it till 1.1600.

    USD/JPY: The dollar slumped to a 2-week low against the Japanese yen following reports the Bank of Japan was debating moves to scale back its massive monetary stimulus. The BoJ is scheduled to hold its next monetary policy meeting on July 30 and 31. The major was trading 0.3 percent down at 111.12, having hit a low of 110.75 earlier, its lowest since July 9. FxWirePro's Hourly Yen Strength Index stood at 106.62 (Highly Bullish) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, as U.S. existing home sales and Chicago Fed National Activity Index. Immediate resistance is located at 111.50, a break above targets 111.87 (Jan 11 High). On the downside, support is seen at 110.50 (July 3 low), a break below could take it lower 109.96.

    GBP/USD: Sterling rose, extending previous session gains, as the greenback was undermined by U.S. President Donald Trump's comments lamenting the dollar's recent strength. The major traded 0.1 percent up at 1.3137, having hit a low of 1.2957 on Thursday; it’s lowest since Sept. 2017. FxWirePro's Hourly Sterling Strength Index stood at 5.68 (Neutral) 1000 GMT. Immediate resistance is located at 1.3187 (21-DMA), a break above could take it near 1.3244 (July 12 High). On the downside, support is seen at 1.2957 (July 19 Low), a break below targets 1.2910. Against the euro, the pound was trading 0.1 percent up at 89.14 pence, having hit a low of 89.57 on Friday, it’s lowest since March 7.

    USD/CHF: The Swiss franc rallied to a 2-week peak as worries over trade tensions lingered following Washington's threat last week to impose tariffs on $500 billion of Chinese imports. The major trades 0.1 percent down at 0.9913, having touched a low of 0.9901 earlier, it’s lowest since July 9. FxWirePro's Hourly Swiss Franc Strength Index stood at 68.68 (Bullish) by 1000 GMT. On the higher side, near-term resistance is around 0.9970.and any break above will take the pair to next level till 1.0040. The near-term support is around 0.9984 (July 6 Low) and any close below that level will drag it till 0.9857 (July 9 Low).

    Equities Recap

    European shares declined in early deals, as worries over trade tensions lingered, while the Japanese yen rallied to near two-week highs as comments by U.S. President Donald Trump criticized the greenback's strength.

    The pan-European STOXX 600 index slumped 0.2 percent at 384.94 points, while the FTSEurofirst 300 index plunged 0.3 percent to 1,506.82 points.

    Britain's FTSE 100 trades 0.4 percent down at 7,647.31 points, while mid-cap FTSE 250 declined 0.4 percent to 20,833.75 points.

    Germany's DAX fell 0.2 percent at 12,535.71 points; France's CAC 40 trades 0.5 percent lower at 5,371.24 points.

    Commodities Recap

    Crude oil prices rose over 1 percent as worries over production losses were outweighed by concerns that trade disputes would reduce economic growth and undermine global energy demand.  International benchmark Brent crude was trading 1.4 percent up at $73.97 per barrel by 1014 GMT, having hit a low of $71.19 on Wednesday, its lowest since April 17. U.S. West Texas Intermediate was trading 1.2 percent higher at $68.85 a barrel, after falling as low as $67.08 on Tuesday, its lowest since June 22.

    Gold prices declined as the greenback rebounded from near 2-week lows, as markets continued to price in a strong, steady rate hike path for the US Federal Reserve. Spot gold declined 0.1 percent at $1,229.83 an ounce by 1023 GMT, having hit a low of $1,211.45 on Thursday, its lowest since early July 2017. U.S. gold futures for August delivery were nearly unchanged at $1,231 an ounce.

    Treasuries Recap

    The U.S. Treasury yields disappointed during late European session, following a decline in equities after trade war worries intensified with President Donald Trump hurling attacks over counter countries over the last week. The yield on the benchmark 10-year Treasuries lost a little over 1 basis point to 2.88 percent, the super-long 30-year bond yields also slipped nearly 1 basis point to 3.02 percent and the yield on the short-term 2-year traded nearly 1-1/2 basis points lower at 2.58 percent.

    The German bund prices suffered ahead of the country’s manufacturing PMI for the month of July, scheduled to be released on July 24 by 07:30GMT. The German 10-year bond yields, which move inversely to its price, rose 1 basis point to 0.38 percent, the yield on 30-year note also edged higher by 1 basis point to 1.04 percent and the yield on short-term 3-year traded tad higher at -0.49 percent.

    The New Zealand bonds closed Monday’s session on a lower note amid a muted trading session that witnessed data of no major economic significance. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, jumped nearly 2-1/2 basis points to 2.83 percent, the yield on the long-term 20-year note also surged 2-1/2 basis points to 3.13 percent and the yield on short-term 2-year closed 1-1/2 basis points higher at 1.86 percent.

    The Japanese 10-year government bond yields hit a 6-month high as investors’ speculation rose over a possible change in the monetary policy by the Bank of Japan (BoJ) ahead of the central bank’s two-day meeting on July 30-31. The yield on Japan’s benchmark 10-year bond, which moves inversely to its price, jumped 5 basis points to 0.08 percent, the yield on the long-term 30-year surged 8-1/2 basis points to 0.76 percent and the yield on short-term 2-year remained 2 basis points higher at -0.10 percent.

    The Australian bonds gained after President Donald Trump questioned Federal Reserve interest rate hikes and strong dollar. The yield on Australia’s benchmark 10-year Note, which moves inversely to it price, fell 5 basis points to 2.628 percent, the yield on the long-term 30-year Note also dipped 5 basis points to 3.096 percent and the yield on short-term 2-year down 2 basis points to 2.048 percent.

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