Posted at 11 July 2019 / Categories Market Roundups
Market Roundup
Economic Data Ahead
Key Events Ahead
FX Beat
DXY: The dollar index tumbled to a 6-day low as a dovish tone in U.S. Federal Reserve Chairman Jerome Powell's testimony and the minutes from the Fed’s previous policy meeting indicating many policymakers thought more stimulus would be needed soon stoked speculation of aggressive rate cuts this year. The greenback against a basket of currencies traded 0.2 percent down at 96.88, having touched a high of 97.59 on Tuesday, its highest since June 19.
EUR/USD: The euro rallied, extending previous session rebound after data showed annual inflation in Germany accelerated in June, but remained below the European Central Bank’s target. Investors now await the ECB's latest policy meeting minutes, where chief Mario Draghi took a sharp dovish stance. The European currency traded 0.2 percent up at 1.1270, having touched a high of 1.1280 earlier, its highest since July 5. Investors’ attention will remain on the ECB monetary policy meeting accounts, ahead of the U.S. unemployment benefit claims, consumer price index and Fed Chair Powell's testimony. Immediate resistance is located at 1.1304 (50.0% retracement of 1.1412 and 1.1193), a break above targets 1.1366 (78.6% retracement). On the downside, support is seen at 1.1207 (July 5 Low), a break below could drag it below 1.1181 (June 18 Low).
USD/JPY: The dollar plunged to a near 1-week low after Federal Reserve Chairman Jerome Powell bolstered expectations the Fed would cut U.S. interest rates soon. On Wednesday, Powell in his testimony to Congress highlighted broad global weakness that was clouding the U.S. economic outlook amid uncertainty about the fallout from the trade conflict with China and other countries. The pair was trading 0.3 percent down at 108.14, having hit a high of 108.99 on Wednesday, its highest since May 31. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. unemployment benefit claims, consumer price index and Fed Chair Powell's testimony. Immediate resistance is located at 109.08, a break above targets 109.62 (May 31 High). On the downside, support is seen at 107.56 (June 28 Low), a break below could take it lower at 107.10 (June 26 Low).
GBP/USD: Sterling surged, extending gains above the 1.2500 handle as the greenback eased across the board. However, Britain’s economic gloom and a fast-approaching Brexit deadline limited the upside. The major traded rose 0.5 percent to 1.2557, having hit a low of 1.2439 on Tuesday, it’s lowest since Jan. 3. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2571 (38.2% retracement of 1.2783 and 1.2439), a break above could take it near 1.2652 (61.8% retracement). On the downside, support is seen at 1.2443 (July 10 Low), a break below targets 1.2400. Against the euro, the pound was trading 0.2 percent up at 89.77 pence, having hit a low of 90.10 on Wednesday, it’s lowest since Jan. 11.
USD/CHF: The Swiss franc extended gains for the third straight session, as the greenback eased on U.S. Federal Reserve Chairman Jerome Powell's dovish remarks. The major trades 0.3 percent down at 0.9861, having touched a high of 0.9951 on Tuesday; it’s highest since June 19. On the higher side, near-term resistance is around 0.9959 (June 12 High) and any break above will take the pair to next level till 0.9999 (June 17 High). The near-term support is around 0.9834 (July 3 Low), and any close below that level will drag it till 0.9791 (June 20 Low).
Equities Recap
European shares advanced, halting a 4-day losing streak, as U.S. Federal Reserve Chair Jerome Powell’s dovish comments cemented hopes of an interest rate cut this month.
The pan-European STOXX 600 index gained 0.2 percent at 387.83 points, while the FTSEurofirst 300 surged 0.1 percent to 1,526.33 points.
Britain's FTSE 100 trades 0.05 percent up at 7,530.41 points, while mid-cap FTSE 250 rose 0.2 to 19,462.66 points.
Germany's DAX declined 0.05 percent at 12,368.49 points; France's CAC 40 trades 0.1 percent higher at 5,574.40 points.
Commodities Recap
Crude oil prices rallied to a 6-week high as oil rigs in the Gulf of Mexico were evacuated ahead of a storm, while an incident with a British tanker in the Middle East highlighted tensions in the region. International benchmark Brent crude was trading 1.3 percent higher at $67.44 per barrel by 1022 GMT, having hit a high of $67.63 earlier, its highest since May 30. U.S. West Texas Intermediate was trading 0.9 percent up at $60.80 a barrel, after rising as high as $60.91 earlier, its highest since the May 23.
Gold prices surged to a more than 1-week peak as the greenback eased after dovish remarks from the U.S. Federal Reserve Chairman Jerome Powell boosted the case for an interest rate cut later this month. Spot gold was 0.2 percent up at $1,421.56 per ounce by 1026 GMT, having touched a high of $1,427.06 earlier, its highest since July 3. U.S. gold futures jumped 0.9 percent to $1,424.80 an ounce.
Treasuries Recap
The U.S. Treasuries flattened during the afternoon session, ahead of the Federal Reserve Chair Jerome Powell’s second testimony, scheduled to be held today by 14:00GMT, besides, the country’s consumer price inflation (CPI) data for June and a host of FOMC speeches, all scheduled for later today. The yield on the benchmark 10-year Treasury yield hovered around 2.065 percent, the super-long 30-year bond yields edged 1-1/2 basis points higher to 2.586 percent and the yield on the short-term 2-year traded steady at 1.812 percent.
The German bunds slipped during European session after the country’s consumer price inflation (CPI) for the month of June, released early today, remained unchanged ahead of the European Central Bank’s (ECB) account of monetary policy meeting for the month of June scheduled to be released in a short while today. The German 10-year bond yields, which move inversely to its price, jumped nearly 2-1/2 basis points to -0.281 percent, the yield on 30-year note also surged 2-1/2 basis points to 0.334 percent and the yield on short-term 2-year traded flat at -0.722 percent.
The Australian government bonds remained tad higher during Asian trading session tracking a similar movement in the U.S. Treasuries after Federal Reserve Chair Jerome Powell put out a dovish testimony in front of the House Financial Services Committee, indicating a greater probability of a 25bps cut at the July FOMC meeting. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slipped 1-1/2 basis points to 1.337 percent, the yield on the long-term 30-year bond remained flat at 1.977 percent and the yield on short-term 2-year suffered 2-1/2 basis points to 0.955 percent.