- U.S.-China trade talks in focus
- Oil falls after 'constructive' talks on Iran's nuclear deal
- Gold gains as markets eye Fed meeting
- Profits earned by China’s industrial firms contracted in June
Economic Data Ahead
- (0400 ET/0800 GMT) Italy Producer Price Index MoM June
- (0400 ET/0800 GMT) Italy Producer Price Index YoY June
- (0430 ET/0830 GMT) UK Net Lending to individuals MoM June
- (0430 ET/0830 GMT) UK Consumer Credit June
- (0430 ET/0830 GMT) UK Mortgage Approvals June
Key Events Ahead
- No Significant Event Scheduled
DXY: The dollar index rallied as better-than-expected U.S. GDP data last week cemented expectations that the Fed will go for a smaller interest rate cut of 25 basis points, rather than 50 basis points. The greenback against a basket of currencies traded 0.1 percent up at 98.02, having touched a high of 98.09 on Friday, its highest since May 31.
EUR/USD: The euro consolidated within narrow ranges near recent lows, after the European Central Bank signaled last week that it is likely to cut interest rates deeper into negative and adopt more easing measures in September to support the struggling euro zone economy. The European currency traded flat at 1.1127, having touched a low of 1.1101 on Thursday, its lowest since May 2017. Investors’ attention will remain on data out of Euro zone economies, ahead of the U.S. Dallas Fed Manufacturing Business Index. 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 1.1101 (July 25 Low), a break below could drag it below 1.1070.
USD/JPY: The dollar plunged after rising to an over 3-week peak in the previous session on data that showed U.S. gross domestic product increased at a 2.1 percent annualized rate in the second quarter, above forecast of 1.8 percent, cementing expectations that the Fed will go for a smaller interest rate cut of 25 basis points, rather than 50 basis points. The major was trading 0.05 percent down at 108.57, having hit a high of 108.82 on Friday, its highest since July 10. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. Dallas Fed Manufacturing Business Index. 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 108.20 (61.8% retracement of 107.21 and 108.82), a break below could take it lower at 108.01 (50% retracement).
GBP/USD: Sterling slumped, extending losses for the third straight session, after Britain's senior ministers stated the government is working on the assumption that the European Union will not renegotiate its Brexit deal and is ramping up preparations to leave the bloc on October 31 without an agreement. The major traded 0.1 percent down at 1.2365, having hit a low of 1.2361 earlier, it’s lowest since March 2017. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2412 (23.6% retracement of 1.2578 and 1.2361 ), a break above could take it near 1.2471 (50% retracement). On the downside, support is seen at 1.2340 (March 21, 2017, Low), a break below targets 1.2280 (March 1, 2017, Low). Against the euro, the pound was trading 0.2 percent down 89.98 pence, having hit a high of 88.91 on Thursday, it’s highest since June 21.
AUD/USD: The Australian dollar tumbled to an over 1-month low after data released on Saturday showed profits earned by China's industrial firms contracted in June after a brief gain the previous month. The Aussie trades down at 0.6907, having hit a low of 0.6902 earlier, it’s lowest since June 20. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6878 (June 20 Low), a break below targets 0.6831 (June 18 Low). On the upside, resistance is located at 0.6975 (5-DMA), a break above could take it near 0.7047 (July 4 High).
NZD/USD: The New Zealand dollar declined to a near 3-week low, as the Reserve Bank of New Zealand is likely to cut its rates to 1.25 percent in August, and to 1 percent by February next year. The Kiwi trades 0.05 percent down at 0.6629, having touched a low of 0.6626 earlier, its lowest level July 10. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6664 (23.6% retracement of 0.6790 and 0.6626), a break above could take it near 0.6708 (50% retracement). On the downside, support is seen at 0.6602 (July 5 Low), a break below could drag it below 0.6565 (July 10 Low).
Asian shares declined as investors turned cautious ahead of the U.S. and China trade negotiations in Shanghai this week, their first in-person talks since a G20 truce last month.
MSCI's broadest index of Asia-Pacific shares outside Japan plunged 0.4 percent.
Tokyo's Nikkei declined 0.2 percent to 21,616.80 points, Australia's S&P/ASX 200 index rose 0.5 percent to 6,825.80 points and South Korea's KOSPI slumped 1.8 percent to 2,030.67 points.
Shanghai composite index eased 0.1 percent to 2,941.44 points, while CSI 300 index traded 0.1 percent down at 3,855.84 points.
Hong Kong’s Hang Seng traded 1.4 percent lower at 27,983.76 points. Taiwan shares shed 0.1 percent to 10,885.73 points.
Crude oil prices declined after Iran described emergency talks on a multi-party nuclear agreement with a group of signatories as constructive, indicating an easing of tensions in the Middle East. International benchmark Brent crude was trading 0.1 percent lower at $63.23 per barrel by 0456 GMT, having hit a high of $64.64 on Wednesday, its highest since July 17. U.S. West Texas Intermediate was trading 0.1 percent down at $56.10 a barrel, after rising as high as $57.62 on Wednesday, its highest since the July 17.
Gold prices rose, extending previous session gains ahead of this week’s U.S. Federal Reserve monetary policy meeting, which is expected to lead to a cut in U.S. interest rates. Spot gold was trading 0.1 percent up at $1,420.04 per ounce by 0459 GMT, having touched a low of $1,410.77 on Thursday, its lowest since July 17. U.S. gold futures gained 0.3 percent to $1,423.20 an ounce.
The Australian government bonds jumped during Asian session of the first trading day of the week as investors wait to watch the country’s consumer price inflation (CPI) for the second quarter of this year, scheduled to be released on July 31 by 07:00GMT. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slumped 3 basis points to 1.208 percent, the yield on the long-term 30-year bond plunged nearly 3-1/2 basis points to 1.865 percent and the yield on short-term 2-year too suffered 3 basis points to 0.859 percent.