News

America’s Roundup: Dollar hits three-week high ahead of Powell, FOMC minutes, Wall Street drifts lower, Gold dips to one-week low, Oil rises on supply cuts, Mideast tensions; trade worries cap gains-July 10th,2019

Market Roundup

• Dollar regains composure as markets reprice chance of Fed easing

• Euro dips to 3-week lows on view of a dovish ECB under Lagarde

• Pound hits 6-month low on Brexit jitters, bets on BOE rate

• Turkish lira stabilizes after cbank governor fired by president

• US Feb JOLTS Job Openings, 7.323 mln, 7.470 mln forecast, 7.372 mln previous

• US w/e Redbook YY, 6.2%, 5.5% previous

• US w/e Redbook MM, -2.2%, -2.4% previous

• CA Mar House Starts, Annualized, 245. 7k, 210.0k forecast, 196.8k previous

• CA Feb Building Permits MM, -13.0%, -2.5% forecast, 16% previous 

Looking Ahead – Economic Data (GMT)

• 22:45 June New Zealand FPI (MoM)

• 23:50 June Japan PPI (MoM)

• 23:50 June Japan PPI (YoY)

• 00:30 July Australia Westpac Consumer Sentiment

Looking Ahead – Events, Other Releases (GMT)

• July 10 14:00 Federal Reserve Chair Jerome Powell (Feb. 2018 – Feb. 2022) is to testify on the economic outlook and recent monetary policy actions before the Joint Economic Committee, in Washington DC.

• July 10 14:00 Bank of Canada Monetary Policy Report  

• July 10 14:15 Bank of Canada Press Conference  

Currency Summaries

EUR/USD: The euro dropped to a three-week low against a broadly stronger dollar on Tuesday, as investors re-assessed their expectations of how much the Federal Reserve may cut interest rates this month. The common currency fell to a low of $1.1206, its lowest since mid-June.The dollar index, which measures the greenback against a basket of rival currencies, rose 0.14% to 97.50, a three-week high. Expectations of a 50-basis-point cut have reduced to 5.9% from a 25% chance seen last week. Investors also think there is a higher chance the Fed will not cut rates at the September meeting. Fed chief Jerome Powell’s comments during two days of testimony to Congress beginning on Wednesday will be watched to determine whether traders will continue to reduce bets for deep interest rate cuts. Immediate resistance can be seen at 1.1240 (5 DMA), an upside break can trigger rise towards 1.1279 (9 DMA).On the downside, immediate support is seen at 1.1158 (Lower Bollinger Bands), a break below could take the pair towards 1.1100 (Psychological level).

GBP/USD:The British pound fell towards its lowest levels in more than two years against dollar on Tuesday, as worsening economic outlook and rising fears about a no-deal Brexit under a new Prime Minister weighed on Pound. With a key $1.25 level against the dollar giving way in early Asian trade, traders quickly pushed the British currency down half a percent against the dollar to a level not seen since April 2017, barring a flash crash in early January. In the latest sign of economic weakness, sales at British retailers rose at their slowest average pace on record over the past year, a survey from the British Retail Consortium showed on Tuesday. Concerns about the worsening economic outlook in Britain – some analysts expect the economy contracted in the second quarter   encouraged Bank of England Governor Mark Carney to signal last week that the central bank may strike a more dovish tone at its August policy meeting.The pound was trading 0.36 % down versus the dollar at $1.2465 and within striking distance of an April 2017 low below $1.2409. Immediate resistance can be seen at 1.2526 (5 DMA), an upside break can trigger rise towards 1.2599 (21 DMA).On the downside, immediate support is seen at 1.2432 (Lower Bollinger Band), a break below could take the pair towards 1.2400 (Psychological level).

USD/CAD: The Canadian dollar weakened against its U.S. counterpart on Tuesday, as the greenback broadly climbed and as investors, who have recently turned bullish on the loonie, awaited an interest rate decision on Wednesday by the Bank of Canada. The Bank of Canada is widely expected to leave its benchmark interest rate on hold at 1.75%, despite expected policy-easing as soon as this month by the U.S. Federal Reserve. The central bank has said that there was evidence that a slowdown in the domestic economy was temporary. The U.S. dollar gained against a basket of major currencies as investors re-assessed their expectations of how much the Fed may cut interest rates this month. Fed Chief Jerome Powell is due to testify before Congress on Wednesday. At  (1945 GMT), the Canadian dollar was trading 0.2% lower at 1.3127 to the greenback. It was the third straight session that the currency has declined, after it notched last Thursday an eight-month high at 1.3038. Immediate resistance can be seen at 1.3100 (Psychological Level), an upside break can trigger rise towards 1.3194 (21 DMA).On the downside, immediate support is seen at 1.3093 (9 DMA), a break below could take the pair towards 1.3014 (Lower Bollinger Band).

USD/JPY: The dollar strengthened against the Japanese yen on Tuesday, as traders await clues in Federal Reserve Chairman Jerome Powell's testimony before Congress and minutes from the Fed's last policy meeting on possible rate cuts. The greenback has strengthened versus most major currencies in the aftermath of a government report last Friday that showed surprisingly strong domestic hiring in June. The 224,000 job gain last month scaled back bets the U.S.central bank would embark on a deep 50-basis point rate decrease at the end of the month, although traders are still positioned for a more modest 25 basis-point decrease. Further gains for the dollar hinge on any clues on possible rate cuts in Powell's two-part testimony before Congress that begins on Wednesday, and in the minutes of the Federal Open Market Committee's previous meeting last month. Strong resistance can be seen at 109.07 (Higher Bollinger Band), an upside break can trigger rise towards 109.90 (30th May).On the downside, immediate support is seen at 108.20 (9 DMA), a break below could take the pair towards 108.04 (21 DMA). 

Equities Recap

European dipped lower on Tuesday in what could be their third straight day of losses as German shares fell sharply due to a profit warning from chemicals giant BASF.

UK's benchmark FTSE 100 closed down by 0.17 percent, Germany's Dax ended down by 0.85 percent, France’s CAC finished the day down by 0.31 percent.

U.S. stocks ended  mixed on Tuesday, as investors fretted over a hit to company earnings from the protracted U.S.-China trade dispute and reined in expectations of a big interest rate cut by the Federal Reserve later this month..

Dow Jones closed down by 0.08 percent, S&P 500 ended up 0.10 percent, Nasdaq finished the day up by 0.54 percent.

Treasuries Recap

U.S. Treasury yields climbed on Tuesday amid reported progress in Washington’s trade talks with both Beijing and Brussels.

The 30-year Treasury bond yield was last up 1.7 basis points to 2.537%, approaching levels hit Friday following the report of stronger-than-expected employment growth in June. The 10-year yield was up 1.7 basis points to 2.051%, while at the short end, the two-year yield was up less than half a basis point.

Commodities Recap

Gold fell to a one-week low on Tuesday as the U.S. dollar rallied on expectations of a less aggressive interest rate cut by the Federal Reserve this month, while investors awaited Fed Chair Jerome Powell’s testimony on monetary policy.

Spot gold fell 0.4% to $1,390.21 per ounce at 10:42 a.m. EDT (1442 GMT). The session trough of $1,386.11 was its lowest since July 2. U.S. gold futures for August delivery shed 0.5% to $1,392.50 per ounce.

Oil futures rose on Tuesday as Middle East tensions and OPEC supply cuts kept global benchmark Brent crude above $64 a barrel, while gains were limited by the U.S.-China trade dispute that has dragged on the global economy and crimped oil demand.

Brent   settled up 5 cents to $64.16. U.S. West Texas Intermediate crude   settled up 17 cents to $57.83.


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