- Dollar regains as markets reprice chance of Fed easing
- Expectations of a Fed 50-basis-point cut reduce
- JGB futures touch 3-week low
- Sterling on defensive due to rate cut speculation
- Gold eased ahead of Powell testimony, FOMC minutes
- Oil prices rise as data shows bigger-than-expected fall in U.S. stockpiles
Economic Data Ahead
- (0430 ET/0830 GMT) UK Manufacturing production YY (May)
- (0430 ET/0830 GMT) UK Manufacturing production MM (May)
- (0430 ET/0830 GMT) UK industrial production YY (May)
- (0430 ET/0830 GMT) UK industrial production MM (May)
- (0430 ET/0830 GMT) UK Trade balance; non-EU (May)
- (0430 ET/0830 GMT) UK Total Trade balance (May)
- (0430 ET/0830 GMT) UK Goods Trade balance (May)
- (0430 ET/0830 GMT) UK Gross Domestic Product MM (May)
Key Events Ahead
- N/A ECB Non-Monetary Policy meeting
DXY: The dollar index held gains near a 3-week peak as the benchmark 10-year Treasury yield rose to 2.0752 percent, up from a 2-1/2-year low of 1.9390 percent recorded on July 3. The greenback against a basket of currencies traded 0.05 percent up at 97.50, having touched a high of 97.59 on Tuesday, its highest since June 19.
EUR/USD: The euro consolidated near a 3-week low hit in the previous session, as the greenback rallied across the board ahead of Fed chief Jerome Powell’s testimony to the U.S. Congress. Moreover, downbeat German factory activity data released earlier in the week further dented the bid tone around the major. The European currency traded flat at 1.1206, having touched a low of 1.1193 on Tuesday, its lowest since June 19. Investors’ attention will remain on the non-monetary policy ECB meeting, ahead of the U.S. wholesale investors and Fed Chair Powell's testimony. Immediate resistance is located at 1.1246 (23.6% retracement of 1.1412 and 1.1193), a break above targets 1.1304 (50.0% retracement). On the downside, support is seen at 1.1181 (June 18 Low), a break below could drag it below 1.1141 (May 21 Low).
USD/JPY: The dollar rallied to a near 1-1/2 month high as expectations for a 50 basis point (bps) rate cut at a Fed meeting later this month eased. However, investors expect a 25 bps cut due to weak inflation and worries about growing business fallout from the U.S.-China trade war. The pair was trading up at 108.89, having hit a high of 108.99 earlier, its highest since May 31. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. wholesale investors 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 108.46 (June 17 Low), a break below could take it lower at 107.81 (June 5 Low).
GBP/USD: Sterling plunged, extending losses for the fourth straight session, amid increasing Brexit worries and growing expectations of a Bank of England rate cut. Investors now await British gross domestic product and industrial output due later in the day and the BoE's financial stability report on Thursday that could help traders gauge whether the central bank will take a more dovish view of the economy. The major traded eased 0.1 percent to 1.2447, having hit a low of 1.2439 on Tuesday, it’s lowest since Jan. 3. Investors’ attention will remain on the UK manufacturing prod., industrial production, trade balance and gross domestic product figures, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2521 (23.6% retracement of 1.2783 and 1.2439), a break above could take it near 1.2611 (50% retracement). On the downside, support is seen at 1.2400, a break below targets 1.2363. Against the euro, the pound was trading 0.2 percent down at 90.02 pence, having hit a low of 90.05 earlier, it’s lowest since Jan. 11.
AUD/USD: The Australian dollar slumped to a 2-1/2 week low after data showed domestic consumer sentiment fell to a 2-year low that could prompt another rate cut from the Reserve Bank of Australia and pressure the government to offer more fiscal support. The Aussie trades 0.1 percent down at 0.6919, having hit a low of 0.6916 earlier, it’s lowest since June 21. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6901 (June 13 Low), a break below targets 0.6871 (May 22 Low). On the upside, resistance is located at 0.6994 (June 26 High), a break above could take it near 0.7048 (May 7 High).
NZD/USD: The New Zealand dollar tumbled to a near 3-week low as investors ponder how far the Reserve Bank of New Zealand will lower rates. The RBNZ is expected to cut interest rates again at its next meeting in August. The Kiwi trades 0.1 percent down at 0.6600, having touched a low of 0.6565 earlier, its lowest level June 21. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6648 (5-DMA), a break above could take it near 0.6726 (July 1 High). On the downside, support is seen at 0.6554 (June 21 Low), a break below could drag it below 0.6526 (June 3 Low).
Asian shares edged up as markets wondered if the Federal Reserve would confirm or confound expectations for U.S. policy easing this month.
MSCI's broadest index of Asia-Pacific shares outside Japan surged 0.2 percent.
Tokyo's Nikkei declined 0.2 percent to 21,533.48 points, Australia's S&P/ASX 200 index rose 0.4 percent to 6,689.80 points and South Korea's KOSPI rallied 0.3 percent to 2,058.78 points.
Shanghai composite index eased 0.5 percent to 2,914.60 points, while CSI 300 index traded 0.2 percent down at 3,784.55 points.
Hong Kong’s Hang Seng traded 0.3 percent higher at 28,196.00 points. Taiwan shares added 0.9 percent to 10,798.48 points.
Crude oil prices surged after an industry group reported that U.S. stockpiles fell for a fourth week in a row, easing concerns about oversupply amid global trade tensions. International benchmark Brent crude was trading 0.5 percent higher at $64.76 per barrel by 0601 GMT, having hit a low of $62.06 last week, its lowest since June 19. U.S. West Texas Intermediate was trading 0.5 percent up at $58.63 a barrel, after falling as low as $56.03 last week, its lowest since the June 20.
Gold prices eased as the greenback rallied on expectations of a less dovish U.S. Federal Reserve, ahead of a testimony from the Chairman Jerome Powell. Spot gold was trading 0.4 percent down at $1,392.54 per ounce by 0604 GMT, having touched a high of $1,437.66 last week, its highest since June 25. U.S. gold futures slipped 0.4 percent to $1,394.90 an ounce.
The Japanese government bonds futures touched a 3-week low, with the 10-year JGB futures easing 0.13 point at 153.58. The 10-year JGB yield rose 1 basis point to minus 0.135 percent. The 20-year JGB yield gained 1.5 basis points to 0.220 percent, while the 30-year JGB yield rose 1.5 basis points to 0.355 percent. The five-year JGB yield climbed 1 basis point to minus 0.220 percent. At the short end of the curve, two-year JGB yields rose 1 basis point to minus 0.190 percent.
The Australian government bonds slumped during Asian trading session ahead of the Reserve Bank of Australia’s (RBA) Assistant Governor Guy Debelle’s speech, due to be held on July 11 by 06:40GMT and most importantly, Federal Reserve Chair Jerome Powell’s scheduled testimony tomorrow, which shall guide markets thoroughly.The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped 2-1/2 basis points to 1.351 percent, the yield on the long-term 30-year bond surged 2 basis points to 1.977 percent and the yield on short-term 2-year traded 1-1/2 basis points higher at 0.981 percent.