Dow Jones Symphony - Home Dow Jones Newswires, 17 July 2017 03:58
Global Forex and Fixed Income Roundup: Market Talk
0758 GMT [Dow Jones] Currently trading at GBP 0.8750, the euro is expected to post further decline as it remains capped by the declining 50-period moving average at 0.8767 on a 30-minutes chart. Furthermore, the intraday RSI remains within its selling area between 50 and 30. Thus, as long as GBP 0.8780 is a resistance threshold, further weakness is likely towards GBP 0.8725 at first and towards the strong horizontal support at GBP 0.8695 in extension. A third target is set at GBP 0.8650. Only a rebound above the horizontal resistance at GBP 0.8780 would turn the outlook to bullish with a first alternative target set at the horizontal resistance at GBP 0.8815 and a second one set at GBP 0.8845. [This piece contains the opinions of Trading Central and does not constitute personalized investment advice or form part of any invitation or inducement to buy or sell any security. The author has been prohibited by Trading Central from purchasing or otherwise directly or indirectly acquiring any direct or indirect beneficial ownership of any instruments or markets for which Trading Central or its affiliates issues recommendations. To read more, visit bit.ly/1MehCU9.] ([email protected])
0756 GMT - The move higher in German yields has delivered some "interesting pockets of relative value" when considering KfW, says Citi rates strategist Michael Spies. With this in mind, Citi finds that bonds issued by KfW, the German government-owned development bank, increasingly offer value against is triple-A rated peers such as three-year EIB bonds and seven-year BNG bonds. ([email protected]; @EmeseBartha)
0752 GMT - The European Central Bank's corporate sector purchase program could be among the hardest-hit QE segments during the tapering process, RBC Capital Markets argues. Tapering is conditional on improving economic conditions, and the latter means better availability and price of credit for companies. Therefore, improving corporate financing conditions means the ECB could feel free to withdraw support from the sector. "This option is not appreciated enough by markets," RBC says. ([email protected], @tasosvos) (END)
0746 GMT - Citi sees China's GDP growth remaining strong in 2H, though not quite as much as the 6.9% seen in 1H. It now sees the metric rising 6.8% for the year, though a "slowdown in property investment could drag" on overall economic growth into year-end. Meanwhile, uncertainty remains on investment and trade, the investment bank adds. ([email protected]; @chester_yung) (END)
0741 GMT - India's vegetable oils imports rose 15% from a year earlier in June amid increased demand and lack of domestic availability, says the Mumbai-based Solvent Extractors' Association of India. Falling oilseed prices the past 5 years have "discouraged farmers to sow oilseeds. They may switch to cotton and other cash crops," notes the group's leader, BV Mehta. He added the association has asked the Indian government to raise vegetable-oil import taxes to protect farmers' interests. India's sugar millers also want higher import taxes to help domestic players. ([email protected])
0719 GMT - Chinese officials have long said the country's household income has outpaced GDP growth by a big margin. That may not be the case, says Tang Jianwei, an economist at Bank of Communications. More than half of the country's population (57%) live in cities, and their average disposable income rose 6.5% in 1H. But income growth in rural areas jumped 7.4%. As such, Tang estimates national growth should be around 6.9%. "That's a lot lower than the official figure of 7.3%." ([email protected])
0712 GMT - SGS looks unlikely to improve key credit metrics, like the adjusted net debt-to-Ebitda ratio, given potential acquisitions and the announced share buybacks, Vontobel credit analyst Marc Schulthess says after the Swiss firm's 1H results. Thankfully, net leverage is also unlikely to rise above 1.5 times, a level that would trigger a downgrade from Vontobel's current shadow rating of A with a stable outlook. Vontobel expects all SGS bonds it covers to perform in line with similarly rated peers.([email protected], @tasosvos) (END)
0709 GMT - Pearson's 22% stake sale of Penguin Random House will strengthen its credit, but the financial metrics of the acquirer, Bertelsmann, will weaken significantly, according to Moody's. Pearson can use proceeds to invest in digitalization and its restructuring plan. Still, the adjusted debt-to-Ebitda ratio may increase as Pearson will receive lower dividends from Penguin. Meanwhile, the deal is negative for Bertelsmann's credit, as the extra debt it will need to raise to finance the acquisition will push its debt-to-Ebitda ratio above the level that Moody's requires from a Baa1-rated name. ([email protected], @tasosvos) (END)
0707 GMT - The last think European Central Bank President Mario Draghi wants is a strong euro and tightened financial conditions for now, says Hussein Sayed, chief market strategist at FXTM. Since no changes are expected on current monetary policy, the tweaks in the statement and Mr. Draghi's tone "are all what matters to traders," he says. To start normalizing policy without disrupting markets is a "complicated process", and while the ECB wants to prepare investors for gradual wind-down of asset purchases, policymakers are likely to hint that rate hikes will remain low for a prolonged period, Mr. Sayed says. He prefers buying the euro on dips than selling on rallies, he says, targeting a year-end EUR/USD level of around $1.18, versus $1.1456 currently. ([email protected]; @EmeseBartha) (END)
0700 GMT - Cash inflows should support the 2018-maturing floating-rate note of NP3 Fastigheter, Swedbank says, even though it keeps its underweight recommendation on the Swedish real estate firm's debt. It expects NP3 to stick to its growth-first policy and keep leverage at the upper end of its targeted range. Swedbank needs to see an improvement in credit metrics and lower vacancy rates before changing its underweight. ([email protected], @tasosvos) (END)
0658 GMT - Telenor's 2Q results may have beat consensus expectations, but bond holders are unlikely to benefit much as valuations are already too expensive, UniCredit analyst Stephan Haber says. The bank keeps its marketweight recommendation on Telenor bonds, highlighting that the sale of its stake in VimpelCom allows it to pursue acquisitions or increase payments to shareholders, Mr. Haber says. The Norwegian telecom has outstanding bonds denominated in euros, U.S. dollars and Swedish kronor. ([email protected], @tasosvos) (END)
0658 GMT - As the Indian Parliament's monsoon session starts, Modi is trying to win over opposition leaders to ensure smooth passage of nearly 2 dozen bills. In previous sessions, more legislation got stuck amid disruptions in proceedings on varied issues. This time, too, the opposition is set to rake up issues relating to impacts from the new goods-and-services tax on businesses. Opponents are also going to try and corner the government on ongoing border issues with China and Pakistan. Modi hopes the lawmakers allow healthy debates and showcase the same spirit they did while supporting the new indirect taxation. "GST shows the good that can be achieved when all [political] parties come together and work for the nation," he adds. ([email protected])
MONDAY, JULY 17, 2017 TOP NEWS • China Q2 GDP growth tops forecasts on strong investment, consumption
China's economy grew faster than expected in the second quarter as industrial output and consumption picked up and investment remained strong, though analysts expect slower growth over the rest of the year as policymakers seek to reduce financial risk. The economy grew 6.9 percent in the second quarter from a year earlier, the same rate as the first quarter, the National Bureau of Statistics said. Analysts polled by Reuters had expected the economy to expand 6.8 percent in the April-June quarter. Factory output grew 7.6 percent in June from a year earlier, the fastest pace in three months, while fixed-asset investment expanded 8.6 percent in the first six months of the year, both beating forecasts.
• Round 1: Brexit talks start in Brussels with 20 months to go
Brexit Secretary David Davis launches a first round of negotiations on Britain's withdrawal from the European Union when he meets the EU's Michel Barnier for four days of talks between their teams in Brussels. A month after a first meeting where the two exchanged gifts inspired by a shared passion for hillwalking and spoke of the mountain of complexity they must climb, the Frenchman will press Davis to agree to Britain covering substantial British financial commitments and offer more detail on other British proposals. Davis and Barnier will shake hands for the cameras at the European Commission's Berlaymont headquarters at 0715 GMT before a first full session of talks.
• China property investment, sales ease in Q2 but remain resilient to curbs
China's real estate investment growth slowed slightly in the second quarter from the first, suggesting government curbs to rein in the red-hot property market are starting to hit speculators even though underlying demand remains resilient. Growth in property investment eased to 8.2 percent in April-June from a year earlier, compared to a 9.1 percent expansion in the first three months of the year, according to Reuters calculations based on data from the National Bureau of Statistics (NBS). The increase in the area of property sold also slowed to 14.1 percent in the second quarter year-on-year, from a 19.5 percent gain in the first quarter, Reuters calculation showed. It accelerated to 7.9 percent in June from a year earlier, compared to a 7.3 percent expansion in May, according to Reuters calculations based on NBS data.
• UK house prices stabilise, but buyers still wary – Rightmove
Asking prices for houses and apartments in England and Wales stabilised after a drop in June, but home-buyers remain cautious as wage growth falls behind inflation, a survey by property website Rightmove showed. The figures were based on property advertised between June 11 and July 8, covering the weeks after Prime Minister Theresa May unexpectedly lost her majority in parliament, creating uncertainty for investors who were already on edge about Britain's exit from the European Union. Rightmove said average asking prices for property sold on its website increased by a monthly 0.1 percent in July, a month that usually sees slight falls in prices. In annual terms, prices were up 2.8 percent compared with a 1.8 percent rise in June.
ANALYSIS Mortgage investors unfazed as Fed balance sheet plan looms
The Federal Reserve's plan for shrinking its massive balance sheet envisions a future with no holdings of mortgage bonds, a prospect that could present a significant headwind for an $8 trillion market the U.S. central bank now dominates.
CHINA'S GDP GROWTH
Draghi to speak softly after startling big stick at Sintra
No big changes are expected from the European Central Bank when it meets on Thursday, but a bit of tweaking may be on the cards.
Policymakers are likely to calibrate the language they use as they edge towards normalising policy after years of huge post-crisis stimulus.
The bank may drop a reference to its readiness to increase the size or duration of its asset-purchase programme before announcing in the autumn how and when it will start winding down its bond-buying.
But after the reaction to his June 27 speech in Sintra, Portugal, hinting at the possibility of changes to the central bank's aggressive stimulus, ECB President Mario Draghi will be wary of sparking another "taper tantrum".
His comments in Sintra sent the euro and bond yields sharply higher, and prompted some rowing back.
"We expect the gradual adjustments in Draghi's communication to continue next week," Nordea analysts said in a note.
"So far the ECB has had an implicit bias towards increasing the size of the asset-purchase programme, but this stance could change to a more neutral one, as the ECB will try to smooth the communication path towards the next tapering announcement in the fall."
Noting the nervous response to Draghi's Sintra speech and recent adjustments to the U.S. Federal Reserve's language, they added: "It will be just as interesting to see the market reactions before and after the meeting ... Draghi will need to pave the way for a tapering announcement later on without scaring the bond markets too much."
Half of analysts polled by Reuters now expect the ECB to announce in September that it will gradually wind down its asset buying, a process known as tapering, while a quarter see a one-off reduction and the remainder expect no change.
The Sept. 7 meeting will include new inflation and growth forecasts by the ECB's own staff.
Reuters reported on Friday that three sources had said the ECB is reluctant to set a firm date on which asset purchases will fall to zero so it can retain flexibility in case economic variables, particularly wage growth, fall short of expectations.
So far, the ECB has said its purchases are intended to run at their current pace until December 2017 "or beyond, if necessary", with a winding-down phase to follow.
INFLATION NOT PLAYING
While euro zone growth is on its best run since the start of the global financial crisis a decade ago and unemployment is falling faster than expected, anaemic wage growth continues to anchor inflation well below the ECB's near 2 percent target.
Current forecasts suggest inflation will remain weak at least until the end of 2019.
Analysts at Bank of America Merrill Lynch said the ECB would increasingly have to distinguish between extraordinary stimulus and regular interest rate policy in its communications, emphasising waning deflation risks to justify winding down its asset purchases but keeping rates low to reflect weak inflation.
"We think that to further habituate the market to this approach, next week Draghi will need to "assume Sintra", i.e. to continue to prepare the market for tapering -- in practice by removing the easing bias on QE as well -- while making it clear that "patience","persistence" and sustained monetary stimulus will still be needed," they wrote.
Bank of Japan policymakers meet on Wednesday and Thursday and are expected to keep monetary policy settings unchanged, reflecting a gradual economic uptick that is likely to see the bank's growth forecasts revised upwards.
Trade data on Thursday is expected to show Japanese exports rising for a seventh consecutive month, aided by a weak yen, underpinning the improvement in growth, although feeble inflation will keep the BoJ's stimulus measures in place.
With Bank of England policymakers split over whether to raise interest rates and at least one arguing for its 435 billion pound ($566.85 billion) quantitative easing programme to be unwound early, UK inflation figures on Tuesday will be closely scrutinised.
Retail sales figures on Thursday should also give an indication of whether consumers, whose wages have not matched a surge in inflation caused largely by the plunge in sterling following last year's Brexit vote, are feeling the squeeze.
Dow Jones Symphony - Home Dow Jones Newswires, 18 July 2017 02:53
Global Forex and Fixed Income Roundup: Market Talk
0653 GMT - Mizuho estimates the fair value for the European Financial Stability Facility's coming new July 2027-dated bond at around 5 basis points below mid-swaps. This estimate, however, does not take into account a potential primary market concession, it says, noting that the slightly shorter May 2027-dated EFSF bond trades cheap versus the curve. The EFSF on Monday hired Goldman Sachs, LBBW and Nomura for a dual-tranche bond syndication, including the launch of the July 2027 bond and the tap of the February 2056-dated bond. The transaction is most likely to go ahead on Tuesday. The 10-year mid-swap is trading at 0.94%, according to VWD Market Manager.([email protected]; @EmeseBartha)
0626 GMT - The dollar's weakness during Asian trading today could get exaggerated once European action gets going, says Emmanuel Ng at OCBC Bank in Singapore. "I think the market's demeanor is still fairly negative towards the dollar," adding that any positive news for currencies could amplify forex volatility. The WSJ Dollar Index is down 0.4%, which would be a fresh 9-year low if maintained all the way through US trading. ([email protected]) (END)
0622 GMT - The now off-the-run February 2027 German government bond looks "uncomfortably stable" at around 0.5% ahead of the European Central Bank's monetary policy meeting Thursday, Commerzbank rates strategist Michael Leister says. Moves should be "patchy" and trading volume should be low given the light agenda before the ECB meeting. Apart from the German ZEW economic sentiment index released Tuesday, there is little on the European macroeconomic calendar until Thursday. On-the-run bund yields trade at 0.57% Tuesday, based on Tradeweb data. ([email protected], @tasosvos) (END)
0533 GMT - Total assets managed by the world's 100 largest alternative-investment managers jumped 10% last year to $4 trillion, according to the latest survey by consulting firm Willis Towers Watson. Almost all alternative assets experienced growth, with illiquid credit strategies more than doubling asset-wise to $360 billion. But assets in hedge-fund strategies slipped 11% to $675 billion, underscoring how high fees and poor performance continues to take a toll on that industry. Overall, real estate makes up some 35% of assets ($1.4 trillion) among the top 100 alternative managers. ([email protected]; @srussolillo)
0504 GMT - Some of Dalian Wanda Group's onshore bonds have extended their falls since yesterday, following news that the Chinese government is putting the brakes on the conglomerate's overseas deals. A 5-year bond due 2021 issued by Dalian Wanda Commercial Properties Co., the group's real estate unit, fell 2.6% at 93.50. The selling came after revelations yesterday that Chinese regulators met with executives at the country's big state-owned lenders on June 20 and advised them that 6 of Wanda's recent foreign transactions were at odds with government capital restrictions enacted last year. Banking regulators had previously asked lenders to review loans made to 5 big overseas deal makers, including Wanda, to assess whether their escalating debt posed a credit risk. ([email protected]) (END)
TUESDAY, JULY 18, 2017 TOP NEWS • China's property market slows, Beijing prices down for first time since 2015
Home property prices in Beijing fell for the first time in more than two years in June, while Shanghai further declined and Shenzhen stalled, pointing to significant cooling in China's biggest real estate markets, official data showed. In June, average new home prices in China's 70 major cities rose 10.2 percent from a year earlier, decelerating from May's 10.4 percent gain, according to Reuters calculations based on an official survey. On a monthly basis, new home prices rose 0.7 percent in June, the same as the previous month's reading, Reuters calculations based on data issued by the National Bureau of Statistics showed.
• As London feuds, full Brexit negotiations open in Brussels
Britain's Brexit minister pledged to "get down to work" as he kicked off a first full round of negotiations on Monday, but a year after Britons voted narrowly to leave the EU their government seemed at war with itself over the divorce terms. "It's time to get down to work and make this a successful negotiation," veteran anti-EU campaigner David Davis, the Brexit secretary, said after meeting the bloc's chief negotiator Michel Barnier before their teams began four days of talks. In Brussels, Davis acknowledged it was "incredibly important" to make progress, "that we negotiate through this and identify the differences so that we can deal with them and identify the similarities so that we can reinforce them".
• Bank of England to hold rates along bumpy road to Brexit
Above-target inflation won't push the Bank of England to tighten monetary policy this year or next as it waits to see if wage increases catch up with price rises and how divorce talks with the European Union pan out, a Reuters poll found. The medians in the poll of economists said the Monetary Policy Committee would hold Bank Rate at its record low of 0.25 percent until 2019. Those forecasters gave, on average, a near one-in-three chance of rates rising before this year is out. Financial markets have fully priced in a 25 basis point hike by May 2018 but the poll said rates will not rise until 2019, ending that year at 0.75 percent.
• China bank watchdog to tighten risk control amid regulatory shake-up
China's banking regulator will tighten control over risks in the financial markets, work more closely with the central bank and other regulators, and "resolutely follow" the leadership of a newly-formed financial stability committee, it said late on Monday. The China Banking Regulatory Commission's comments come after President Xi Jinping said on Saturday that the central bank would take a bigger role with a Financial Stability and Development Committee to be set up under the State Council. The China Banking Regulatory Commission said in the statement on its website it would strengthen controls to avoid financial risks, including those related to liquidity, credit and shadow banking. It said there was a "step-by-step" plan to reduce "chaos" in the market, without giving details.
• BOJ likely to push back timeframe for inflation target again
Faced with still-sluggish inflation even as the economy picks up steam, the Bank of Japan will delay again its projected timing for achieving the 2 percent inflation target, according to a majority of economists polled by Reuters. Inflation will accelerate gradually toward 1 percent later this year, say analysts, but it will still fall short of that both in this fiscal year and next, the poll predicted. In May, core consumer prices rose just 0.4 percent on a year ago. Twenty-seven of 33 analysts say the BOJ will push back its estimate of when it will meet its 2 percent inflation target, currently pegged to fiscal 2018. But a majority of analysts surveyed July 6-17 say the BOJ won't change the target.
BONDS, EQUITIES, OTHER ASSET MARKETS
• US Treasury 10s up-down, now @2.304%, JGB 10s 0.071%, Bund 10s 0.574% • US-Japan-Germany respective 2s indicated 1.358%, -0.108%, -0.627% • JGBs firm as Nikkei, USDJPY fall; futures, 20s lead way higher • At 150.17, futures up 14 ticks on day; range 150.18/150.09 • Nikkei gaps down at open, from 20,081 to 19,943, at 20,000 -118 pts, 0.6% • AXJ mostly in red - SSEC 0.6%, HSI 0.2%, KOSPI 0.1%, STI sub-par • ASX -1.0% and Sensex -0.9% after its open, TWI and NZX50 both +0.1% • Dalian iron ore futures +5.5%, Tokyo rubber +0.9% • Oil prices stable as strong demand meets ongoing supply glut
Currency Summaries JPY • USD/JPY and a number of JPY crosses fall back on JPY buy-backs • Many Tokyo players surprised by surge in IMM CTA JPY shorts, reaction today • Reaction delayed on long Tokyo holiday, USD/JPY from 112.68 to 111.99 • Some bids on way down from around 112.25-35 previous support • Major gains in EUR, AUD helping to keep USD generally soggy, US yields too • Option expiries supportive? - 111.88-112.00 USD732 mln, 112.25 USD850 mln • USD/JPY support at 111.95, 111.85, 111.79 55/200/100-DMAs • EUR/JPY off early to 129.07 then surge to 129.55 on EUR/USD 1.1500 break • Support at 129.05-08 hourly Ichi cloud, view EZ yields to rise • AUD/JPY off early to 87.49 on long liquidation before surging to 88.60 • AUD/USD bid on AUD/USD break above 0.7850, AUD/JPY nearing 88.70 200-WMA • GBP/JPY heavy, off leg from 147.14 to 146.58, still near trend highs though • NZD/JPY from 82.53 to 81.70 on weak CPI, some bounce later but still heavy • AUD and EUR bias still up amongst Tokyo players, neutral to bearish others
EUR • EUR/USD opened Asia at 1.1479 and dipped to 1.1472 in quiet trading • Market heated up on report 2 more US Republican Senators won't back healthcare • USD sold off across the board and stops above 1.1500 were triggered in EUR/USD • It traded as high as 1.1537 before settling around 1.1525 into the afternoon • The next level of resistance is at the May 2016 high at 1.1616 • Reaction in FX market to reports US healthcare bill in jeopardy was strong • S&P futures and US Treasury yields barely reacted to the news • Political news tends to have short-lived reactions and this wasn’t surprising • Resistance at 1.1616 should hold ahead of key ECB meeting on Thursday
GBP • Cable up leg on broad EUR and AUD-led USD weakness, 1.3052 to 1.3100 • After leg up, on hold ahead of 1.3111-13 double top yesterday-Friday • Given Brexit and BoE MPC on hold, little reason to buy GBP, USD the focus • Tech support towards ascending 55-HMA at 1.3047 • EUR/GBP bid on EUR/USD strength, 0.8791 to 0.8822 • Resistance from descending 100-HMA now at 0.8814, 200-HMA 0.8825 above
AUD • AUD/USD opened Asia at 0.7800 and eased to 0.7786 when NZD fell on weak NZ CPI • Report Republicans won't have support to pass healthcare sent USD lower • AUD/USD was around 0.7810 when the RBA Minutes were released • RBA was more upbeat and revealed the new “neutral cash” rate as 3.5% • AUD/USD ripped higher and stops were triggered above 0.7850 • The AUD/USD traded to 0.7905 before fresh selling capped the move • Heading into the afternoon it was trading around 0.7885/90 • While RBA was more upbeat on global economy and jobs they were still neutral • Market may have overreacted to neutral rate as signaling imminent tightening • The RBA is still concerned about a rising AUD, property prices and low wages • Whatever the reason for the rise in the AUD/USD – it looks technically strong • There isn’t any resistance of note this side of 0.8000
Market Briefs • China Jun new home prices +0.7% m/m vs +0.7% in May • Yearly growth in Jun +10.2% vs May's +10.4% • China bank watchdog to tighten risk control amid regulatory shake-up • China FX regulator says will fend off risks of cross-border capital flows • Global funds scramble to be early birds in China's MSCI entry • Australia's c.bank sees more "positives" in domestic, world economy • NZ CPI, 0.0% m/m, 1.7% y/y vs f'cast 0.2%, 1.9% in Q2 • U.S. Republicans divided after second healthcare bill collapses • U.S. makes lower trade deficit top priority in NAFTA talks • BOJ likely to push back timeframe for inflation target again -Poll • London economy suffering "wobble" over Brexit worries - think tank
Looking Ahead - Economic Data (GMT) • 08:30 GB Jun CPI, 0.2% m/m/, 2.9% y/y eyed; last 0.3%, 2.9% • 08:30 GB Jun RPI, 0.3% m/m, 3.6% y/y eyed; last 0.4%, 3.7% • 08:30 GB Jun Core CPI, 0.2% m/m, 2.6% y/y eyed; last 0.3%, 2.6%
Looking Ahead - Events, Auctions, Other Releases (GMT) • 07:30 Swedish c.bank to publish the minutes of its July policy meeting • 13:30 BOE's Carney speaks at the unveiling of the new £10 note • N/A EU General Affairs Council meeting in Brussels See North American Open for a detailed listing of US/NorAm releases, events.
EUR/USD may falter as focus shifts to ECB from DC EUR/USD has made a fresh 14-month high above 1.1530, triggering stops above 1.1500, on reports indicating US Senate Republicans won’t muster enough internal support to pass their revised healthcare bill. While the news is clearly USD-negative, it would have been more surprising if the bill looked set to be approved. One lesson of the past 2 years is that political ups and downs have a very short-lived effect on the FX market - especially when the news is anticipated. The focus now shifts to Thursday’s ECB meeting. Draghi’s 'hawkish' speech in Sintra sent the 10-year bund yield soaring from 0.25% on June 27 to as high as 0.58% on July 10 - a reaction the ECB is unlikely to want repeated. Draghi may strike a more cautious tone on Thurs, even though he is likely to indicate that an adjustment of policy in the autumn is a strong possibility. A cautious ECB may be enough to cause EUR/USD to top out ahead of the 1.1616 trend high of May 2016.
RBA may regret revealing "new neutral" cash rate now The RBA's July meeting minutes were more upbeat than the market expected following the unchanged statement at that meeting. However it was the RBA's revised "new neutral" estimate of the cash rate that spurred the AUD'USD's 1%-plus surge. The estimate was revised down to 3.5% from what was believed to be around 5%. In other words, if the inflation rate rises to a sustainable 2.5% over the medium term, the RBA would likely embark on a tightening cycle towards 3.5%. Considering the extremely low wage growth in Australia, that is one big IF. It is highly unlikely the RBA revision of the neutral cash rate was a clarion call that a tightening cycle is at hand, but the FX market started to price in that possibility. The RBA has repeatedly said a higher exchange rate will complicate the current economic adjustment and it would have not have liked the move to 0.7900 in the wake of the minutes. Look for the RBA to clarify their outlook and even try to jawbone the currency lower as AUD/USD heads towards 0.8000.
Dow Jones Symphony - Home Dow Jones Newswires, 19 July 2017 02:32
Global Forex and Fixed Income Roundup: Market Talk
0632 GMT - For the 3rd session in 4, the Nikkei rose no more than 0.1% as the index continues to be stuck around 20000. Leaders today were so-called domestic-demand stocks, reflecting cautious market sentiment. Soap maker Kao gained 3.2% while Astellas Pharma rose 2.2%. Overall volumes were subdued ahead of Thursday's BoJ and ECB statements. Japan's central bank isn't expected to change its stimulus efforts amid anemic inflation expectations. Meanwhile, JGB yields have risen slightly today, with the 10-year up a half-basis point to 0.07%. The yen has been little changed in Asian trading, remaining just above Y112/dollar. ([email protected])
0629 GMT - The Australian dollar briefly touched a fresh 2-year high in late Asia trading, touching US$0.7947. The rise comes as Dalian iron ore futures rises as much as 4.3% to a 2.5-month high, and the Australia-U.S. 10-year bond spread remains near a 7-month high of 48 basis points. Thursday will see the currency buffeted by June employment data, while Reserve Bank of Australia Deputy Governor Guy Debelle speaks on Friday, with some in the markets hoping he could elaborate on the level of hawkishness at the RBA currently. ([email protected]; @JamesGlynnWSJ) (END)
0553 GMT - Talk about a round trip. Leveraged investors like hedge funds are now the most net bearish on the yen since the start of the year, according to the latest CFTC data, after briefly turning bullish overall during the spring. Leveraged investors held 72,248 more short than long futures and options contracts tied to the yen in the week ended July 11. Meanwhile, the total number of short contracts rose to 109,704 in the latest period, the most held by leveraged investors in 2 years. The stampede into bearish yen bets comes as the Bank of Japan releases its latest policy statement on Thursday. ([email protected]; @saumvaish)
0547 GMT - Focus Economics lowers it expectations of India's GDP growth by 0.1 percentage point to 7.2% in the current fiscal year, citing weaker manufacturing output ahead of the implementation of the goods and services tax. While GST is good for the economy in the longer term, it could hurt activity temporarily as businesses transition to the new system, it says. However, as the effects of the transition recede, growth will gain momentum. It predicts GDP to rise 7.5% next fiscal year. ([email protected]) (END)
0501 GMT - Amid increasing competition in Malaysia's banking industry, there's now talk that the country's smallest bank by assets, Alliance Financial (2488.KU), may be looking to merge with fifth-largest lender Hong Leong Bank (5819.KU). UOB KayHian says Alliance may be the buyer in the merger, instead of being the acquisition target. The broker says scale has always been a stumbling block for Alliance and without scale, the bank has to stay competitive by targeting niche segments. The merger can propel Alliance to become the fifth-largest lender in the country. But Alliance last week dismissed speculation that it was the subject of a merger. Officials at Hong Leong weren't immediately available to comment on the broker's report. UOB maintains a hold rating on Alliance with a target price of MYR4.10, from MYR4.20 previously. ([email protected]; @yantoultra) (END)
WEDNESDAY, JULY 19, 2017 TOP NEWS • Japan business mood steady at high levels as economy recovers -Reuters Tankan
Japanese manufacturers' and service providers' business confidence held steady at high levels in July, a Reuters poll found, underlining the central bank's upbeat view on the economy. The sentiment index for manufacturers stood at 26 in the poll of 549 large- and mid-sized firms, conducted between June 30 and July 13, in which 266 companies responded. The index matched the readings recorded in April and June, which were the highest since August 2007. It was seen improving to 28 in October. The Reuters Tankan service-sector index hovered at 33, unchanged from June's reading, which was the highest level since mid-2015. It was seen slipping to 31 in October.
• China c.bank to coordinate work of new financial oversight body
China's powerful central bank will be in charge of coordinating a new financial oversight body mandated by President Xi Jinping to get the country's often siloed regulators to work together to contain rising credit risks. PBOC said on Tuesday that it would "carry out the office duties" of the new body, indicating the committee's day-to-day operations might be conducted from the central bank. An unnamed PBOC official quoted by Xinhua on Tuesday said the committee's office will be based at the central bank. The new body's responsibilities include formulating plans for the development of the financial sector, ensuring regulatory cohesion, formulating rules and regulations to fill in regulatory gaps, and holding regulators accountable when supervision is lacking, Xinhua quoted the official as saying.
• U.S. import prices fall, but underlying inflation stabilizing
U.S. import prices fell for a second straight month in June amid further declines in the cost of petroleum products, suggesting inflation could remain benign in the near term. The Labor Department said on Tuesday that import prices decreased 0.2 percent last month after falling 0.1 percent in May. In the 12 months through June, import prices increased 1.5 percent. That was the smallest gain since last November and followed May's 2.3 percent increase. The year-on-year increase in import prices has slowed sharply since posting 4.7 percent in February, which was the biggest advance in five years. The report also showed export prices dropped 0.2 percent in June as falling vegetable, soybeans and fruit prices weighed on agricultural exports, after falling 0.5 percent in May.
• British firms raise marketing budgets despite Brexit uncertainty – survey
British companies increased their marketing budgets during the second quarter despite uncertainties about the economy as the UK looks to exit the European Union, a survey showed. The IPA Bellwether report showed that over 28 percent of its survey panel recorded an upward revision to their 2017/2018 marketing budgets during the second quarter, compared with around 15 percent that recorded a fall. The survey, conducted by IHS Markit on behalf of the Institute of Practitioners in Advertising, said on balance a net 13.1 percent of UK companies indicated they would increase their 2017/2018 marketing budgets in the second quarter, higher than the 11.8 percent in the first quarter.
• Japan purchases U.S. Treasuries again in May
Japan resumed purchases of U.S. Treasuries in May, retaining its status as United States' largest creditor, while China raised its stakes in U.S. government debt for a fourth straight month, U.S. Treasury Department data showed on Tuesday. Japan's holding of Treasuries grew to $1.111 trillion in May from $1.107 trillion in April. In March, Japan's holdings totaled $1.121 trillion. China's stake in U.S. government securities increased to $1.102 trillion, the second most behind Japan, from $1.092 trillion in April. Overall, foreign investors bought $46.37 billion in Treasuries, which was the most since June 2015 when they bought $72.01 billion. In April, they sold $22.53 billion in U.S. government debt.
COLUMN China's financial stability focus is good reason to give wide berth: James Saft
China’s all-powerful rulers are taking arguably needed steps to guard against financial risks which is exactly why investors should give the country a wide berth. China shares on Tuesday extended a two-day selloff, with many shares falling by the 10 percent limit, after news from a Communist Party meeting of a renewed focus on regulation and deleveraging.
REUTERS TANKAN, BOJ TANKAN
BONDS, EQUITIES, OTHER ASSET MARKETS
• US Tsy 10s at @2.272%, up tad from open, JGB10s 0.072%, Bund 10s 0.556%
• US-Japan-Germany respective 2s indicated 1.358%, -0.110%, -0.638%
• JGBs soften despite firmer USTs overnight; more supply ahead
• No BoJ ops for the rest of wk, MoF to reoffer off-the-run 5s to 15.5s Fri
• Today's re-offer auction for 1s to 5s good amid good demand for 3s
• At 150.14, futures off 3 ticks on day, range 150.22/150.12
• Nikkei small gap down open, up from 19,947 to 20,032, at 20,020 +20 pts
• AXJ mostly in black too - SSEC 0.8%, HSI 0.5%, STI 0.2%, TWI 0.4%
• ASX +0.7%, NZX50 above par, Sensex +0.6% but KOSPI -0.15%
• Crude futures off post-NYMEX settle on API inventory build
• Dalian iron ore +3.9%, Tokyo rubber +0.7%
Currency Summaries JPY
• USD/JPY and some JPY crosses fell back yesterday JPY buy-backs
• Many Tokyo players were spooked by the surge in IMM CTA JPY shorts
• Lower US and offshore yields added to the move, USD/JPY fell to 111.69
• USD/JPY has since steadied with the Asia range 111.88-112.14 so far
• 111.94/111.89/111.78 55/200/100-DMAs, 111.65 daily Ichi kijun supportive
• Headwinds above from large, USD733 mln option expiries at 112.15-25
• EUR/JPY soggy but in tight 129.22-48 range, 55-HMA 129.24, 100-HMA 129.22
• Feeling BoJ-ECB contrast could become sharper after BoJ-ECB decisions tom
• BoJ likely to maintain ultra-easy tack, may up econ fcst, tweak down CPI
• GBP/JPY 145.79-146.21, AUD/JPY 88.62-88, NZD/JPY 82.22-37, CAD/JPY 88.59-79
• All of latter relatively buoyant, AUD especially after post-RBA run up
• EUR/USD opened at 1.1556 after trading as high as 1.1583
• Lower US Treasury yields due to DC political uncertainty supported
• EUR/USD eased to 1.1536 in a quiet Asian session with light flows
• The 10-year Treasury yield edged 1 BP higher to 2.27 to steady the USD
• The EUR/USD will likely consolidate ahead of the ECB meeting Thursday
• Sellers are tipped ahead of 1.1600 while buyers camped ahead of 1.1490
• Key resistance at May 3, 2016 trend high at 1.1616
• Cable soggy in Asia though within tight, 1.3026-45 range
• BoE Gov Carney view inflation to remain high only somewhat supportive
• GBP/USD in approach to ascending 100-HMA at 1.3021, more support pre-1.3000
• EUR/GBP unmoving, few if any flows, Asia 0.8855-61
• Japan July Reuters Tankan mfg index +26, non-mfg +33, both unch m/m
• Mfg index eyed at +28 in October, non-mfg index at +31, mood steady at highs
• China c.bank to coordinate work of new financial oversight body
• U.S. officials will look for steps by China to open markets
• Big Australian banks told to hold more capital, on notice over mortgages
• Australia's economy to regain altitude after weather trouble -Poll
• Republican push to end Obamacare collapses in U.S. Senate
• U.S. puts new sanctions on Iran over ballistic missile program
• British firms raise marketing budgets despite Brexit uncertainty -survey
Looking Ahead - Events, Auctions, Other Releases (GMT)
• N/A Slovenian Finmin will meet European Competition Commissioner
• N/A BOJ holds Monetary Policy Meeting
• 09:30 DE 30Y 1.0 bln auction
• 09:30 GB 6Y 2.750 bln auction See North American Open for a detailed listing of US/NorAm releases, events.
USD/JPY down but not out in Tokyo; US yields key
USD/JPY has reversed half of its June 14-July 11 rally from 108.81 to 114.49, but is likely to find buyers on deeper falls towards the June low. While a number of players will continue to close out losing Trump reflation trades amid gridlock in Washington, US interest rates still hold the key. Granted, US yields are coming off in part on heightened risks, the lack of political movement and what seems to some toppish US stocks. But unless Wall St falls sharply from recent record highs and the economy turns abruptly lower, the Fed should still taper in the fall and possibly hike rates again by year-end. This has not been lost on Tokyo players and Japan Inc who have been busy issuing USD debt to fund US operations. Mega-issues from major financials & corporates over the past month will likely continue as they try to lock in medium to long-term funding before US rates move higher. Large dips in USD/JPY like the one in June have also attracted aggressive Japanese investor buys and this should remain the case.
BOJ to keep policy unchanged, may tweak forecasts
The BOJ will likely stand pat on its ultra-easy policy of QQE and YCC at the end of a 2-day meeting Thurs. While it recently intervened on the yield curve, this was likely a stop-gap measure as 10-year JGB yields spiked to 0.110% alongside rising UST yields. The BOJ communicated its will to hold the line at 0.110%, promising unlimited buys. Rates have since come off in both the US & Japan, reducing the need for aggressive YCC measures. That said, the BOJ will likely intervene again if the 10-year yield moves above 0.100%, given its stated target is around zero. The central bank could up its economic assessment, as the government did Friday, though the possibility of a slower Q3 may hamper such a move. As to the 2% inflation target, most see the BOJ extending the timeframe to achievement. Though inflation does look to be picking up, many in Tokyo still think 2% will be hard to achieve during Gov Kuroda's current term.
Dow Jones Symphony - Home Dow Jones Newswires, 20 July 2017 03:32
Global Forex and Fixed Income Roundup: Market Talk
0732 GMT - Chinese stocks rose for a 3rd session, continuing to erase the memory of Monday's freakout, as small caps continued to climb amid fresh central-bank liquidity--though analysts are less optimistic about this rebound's sustainability. The PBoC unleashed CNY60 billion ($8.9 billion) on the money market today, putting the week's total at more than CNY430 billion. The Shanghai Composite rose 0.4% as industrial leaders in property, home appliances and alcohol rebounded sharply. Meanwhile, the Shenzhen Composite gained 0.5% and the ChiNext added 0.2%. Zhu Bin at Southwest Securities thinks while small caps that were whacked may rebound in the short-term, the overall market should continue to be range-bound. ([email protected])
0730 GMT - The Bank of Japan pushed back the time frame of its 2% inflation target to fiscal 2019, but is that target is still relevant for Japan, when its core inflation rate in May -- covering all prices except for fresh food -- was hovering at around 0.4%? BOJ governor Haruhiko Kuroda said that the 2% figure is a "global standard" as major countries share the 2% target, he said. "This target is necessary in order for a stable currency rate," he said, repeating that Japan will maintain the 2% goal. ([email protected]) (END)
0709 GMT - Spain's auction bonds trade "normal" on the Spanish yield curve, meaning that they trade roughly in line with bonds of other maturities, even though they turned more expensive in asset swap spread terms over the past week, say KBC Bank analysts. Given that the auction bonds trade without any particular outperformance or underperformance versus the curve, KBC analysts expect a straightforward, or "plain vanilla" auction. The Spanish Treasury auctions EUR4 billion to EUR5 billion January 2021, April 2022 and October 2027 bonds. ([email protected]; @EmeseBartha) (END)
0703 GMT - The drift lower in German bund yields ahead of the European Central Bank's meeting probably reflects market expectations that the ECB will want to avoid spooking markets again, even if it takes up the new narrative presented by President Mario Draghi in his speech in Sintra, Portugal, last month, say ING rates strategists. "This could be achieved by putting more focus on the 'persistence' and 'prudence' of their policy," ING strategists add. Overall it will be a "difficult balancing act" as the ECB cannot be too dovish as it should still be intending to prepare markets for tapering of its asset purchases starting next year, they say. The 10-year bund yield trades at 0.54%, according to Tradeweb. ([email protected] ; @EmeseBartha) (END)
0701 GMT - In its latest economic-outlook report the BoJ partly blamed the lack of Japan inflation on companies. The central bank says firms are trying to absorb higher labor costs through improving productivity rather than increasing prices. But Kuroda says there's likely to be "a limit to the actions that companies could take in order to absorb labor costs. The price-setting stance of companies will gradually become more active." ([email protected])
0700 GMT - Government bond auctions of Spain and France on Thursday are "less impressive" in risk-equivalent terms than the gross supply volume suggests but stretched valuations imply concessions for the French OATei linkers and the 10-year Spanish bond on offer, says Commerzbank rates strategist Michael Leister. At the first auction of the day, Spain will offer EUR4 billion to EUR5 billion January 2021, April 2022 and October 2027 bonds. Thereafter France auctions EUR6.5 billion to EUR7.5 billion February 2020, May 2022 and October 2022 OATs. At a separate, second auction France will offer EUR1.25 billion to EUR1.75 billion July 2027- and July 2047-dated OATeis--bonds indexed to eurozone inflation, as well as March 2028 OATi, which is linked to French inflation. ([email protected]; @EmeseBartha) (END)
0658 GMT - A likely victory for the presidential candidate of India's ruling Bharatiya Janata Party--who comes from a lower caste--could draw support from the community and strengthen the government's ability to push through reforms, says Capital Economics. The party performed well in recent state elections, further pointing to Modi's ability to potentially push through reforms. But is the prime minister willing to take bold, but potentially unpopular, steps ahead of 2019's elections? "The main constraint on policy action would then remain the appetite of Mr. Modi to pursue measures such as labor-market reform that, while positive for the long-run outlook, could be unpopular." ([email protected])
0657 GMT - The recent shift higher in the absolute levels of French government bonds presents an "attractive concession," say ING rates strategists ahead of France's bond auction on Thursday. They add that in particular the 5-6-year area of the French curve has underperformed. France's OAT auction partly covers this maturity segment, as the French Treasury Agency offers EUR6.5 billion to EUR7.5 billion February 2020, May 2022 and October 2022 OATs. ([email protected]; @EmeseBartha) (END)
0652 GMT - The 2Q figures of Volvo revealed "another encouraging quarter" with improving profitability, Danske Bank says in a note. And this improving profitability was one of the reasons S&P upgraded Volvo to BBB+ in late June. But this rating upgrade seems fully priced in senior and hybrid bonds, so it's too late for investors buy Volvo debt and benefit from it. What they can do instead is switch from euro-denominated Volvo bonds to Swedish krona debt in 2018 and 2019 maturities and get the spread pick-up, Danske Bank adds. ([email protected], @tasosvos) (END)
0650 GMT - Switzerland continues to shake off the effects of the strong franc. The June trade surplus was 2.7 billion francs ($2.8 billion). For the first six months of 2017, the trade surplus was 19 billion francs and exports were 110 billion francs, up from 105 billion francs in the first half of 2016.([email protected]) (END)
0639 GMT - Today's ECB meeting means greater upside risks than downside ones for the euro, says Marshall Gittler, a veteran forex analyst. If a timetable for winding down bond purchases--or at the very least mention the start of studying that question--comes today, he thinks the euro should rise even further. Even if there's silence on the issue, Gittler notes investors will likely assume that Draghi may elaborate on "normalizing" policy at the Jackson Hole conference next month. As such, any "disappointment may be muted," protecting the euro's downside. ([email protected]) (END)
0635 GMT - Subdued market liquidity and a crowded agenda Thursday makes volatility in bunds seem "assured," Commerzbank says in a note. Investors will have to digest current account data from the eurozone, while German PPI figures for June are already out. But more importantly, the European Central Bank's monetary policy decision and press conference are due. Commerzbank recommends buying during dips in 10-year German bonds, expecting ECB President Mario Draghi to "soothe concerns." Bund yields are quoted at 0.55% in early Thursday trading, according to Tradeweb. ([email protected], @tasosvos) (END)
THURSDAY, JULY 20, 2017 TOP NEWS • BOJ pushes back inflation target for 6th time, keeps policy steady The Bank of Japan kept monetary policy steady but once again pushed back the timing for achieving its ambitious inflation target, reinforcing views that it will lag well behind other major central banks in scaling back its massive stimulus programme. The BOJ pushed back by a year the timing for hitting its ambitious 2 inflation target. It now expects inflation will not reach that level until sometime in the fiscal year ending in March 2020. As widely expected, the BOJ maintained its short-term interest rate target of minus 0.1 percent and its 10-year government bond yield target of around zero percent. The central bank also kept intact guidance that it would keep buying government bonds so its holdings increase at an annual pace of 80 trillion yen. Separately, Ministry of Finance data showed that exports grew 9.7 percent year-on-year in June, versus a 9.5 percent annual gain expected by economists in a Reuters poll.
The European Central Bank is expected to lay the groundwork for an autumn policy shift when it meets today, emphasising improved growth while tempering expectations after previously setting off a mini tantrum in financial markets. A key discussion for the ECB may be whether policymakers should remove their pledge to increase the volume or duration of asset buys if the outlook worsens, a topic already discussed in June when further rate cuts were ruled out. Most analysts polled by Reuters expect no change but a sizable minority predicted a tweak in the bank's guidance with a compromise possible on axing a bias for increasing purchases but not in the case of the extension.
• POLL-Major central banks to turn up policy heat despite low-burn inflation Expectations are firming for major central banks to turn further away from ultra-easy monetary policy despite scant evidence of a pickup in inflation, Reuters polls of more than 500 economists showed. The latest Reuters polls also underscore ongoing optimism about the world economy's momentum, with analysts particularly upbeat on Europe, as well as the economies of India and China which together have nearly 40 percent of the world's population. Polls reveal no change to growth forecasts or at best a slight upgrade for 26 of the 45 economies compared with previous months. Global growth forecasts, collected separately, have been rising gradually since late last year, with the latest pegging 2017 at 3.5 percent followed by 3.6 percent in 2018.
• Fitch says China's regulation pledge could signal shift away from high growth targets Fitch Ratings said China's renewed commitment to contain financial risks signals a possible shift away from high economic growth targets, though policymakers are likely to remain cautious about tightening too aggressively. Chinese regulators and officials emphasised their commitment to tighter financial regulations at the recent National Financial Work Conference. Tightening is likely to become more targeted as authorities try to limit the impact on economic growth, Fitch said. China will be wary of triggering a liquidity crunch through regulatory tightening, making an abrupt clampdown on shadow banking activities unlikely, the ratings agency said.
• U.S. homebuilding hits four-month high, supply constraints remain U.S. homebuilding surged to a four-month high in June, but construction activity remains constrained by rising lumber prices and labor and land shortages. Housing starts jumped 8.3 percent to a seasonally adjusted annual rate of 1.22 million units, the highest level since February, as both single-family and multi-family construction rebounded after a recent slump, the Commerce Department said on Wednesday. May's sales pace was revised up to 1.12 million units from the previously reported 1.09 million units. Economists had forecast groundbreaking activity rising to a 1.16 million-unit rate last month. Starts rose 2.1 percent on a year-on-year basis.
ANALYSIS Lure of long bonds to survive end of easy money Demand for long-dated bonds and the extra yield they offer has boomed over the past decade in an era of ultra-low interest rates. Yet now, even as central banks tighten policy, investors show little sign of retreating from the riskier debt.
• JGBs soften in quiet trade ahead of BoJ meeting decision • Early losses trimmed after BoJ stands pat as expected • T-bills firm on foreign demand overnight, widening in USD/JPY basis helps • At 150.13, futures unchanged from yesterday, range 150.14/150.06 • Nikkei +0.4%, SSEC +0.1%, HSI +0.3%, STI -0.1%, TWI -0.1% • ASX +0.7%, NZX50 -0.5%, KOSPI +0.1% • Light crude futures -0.1% • Dalian iron ore futs +1.0%, LME 24hr copper +0.3% Currency Summaries JPY • USD/JPY opened Asia at 112.01 and came under early pressure • It traded down to 111.77 amid broad USD pressure and Tokyo selling • USD/JPY edged higher late in the morning and moved back above 112.00 • It traded to session high at 112.13 after BOJ left policy unchanged • BOJ pushed out timetable of reaching 2% inflation to FY 2019 • Heading into the afternoon session the USD/JPY was around 112.10 • BOJ result was about as expected to market reaction was limited • It seems clear BOJ will continue QE efforts for a long time • This could leave JPY vulnerable as other central bks start to normalize policy EUR • EUR/USD opened Asia at 1.1513 after slipping 0.33% as longs pared back • The EUR/USD was sidelined in Asia as the AUD and JPY received most attention • The EUR/USD traded in a 1.1513/32 range and was 1.115 into the afternoon • Market is on the sidelines ahead of the ECB decision later today • No one expecting a policy change but guidance might be important • The consensus is for Draghi to tread cautiously to temper expectations • Risk is for a clear signal the ECB is ready to normalize policy • If ECB/Draghi errs on dovish side, EUR/USD could slip towards 1.1450 • A hawkish interpretation would push up Bund yields and EUR/USD • Key resistance at tend high at 1.1616 with sellers ahead of 1.1600 GBP • Cable holding tight 1.3018/1.3031 range thus far, last at 1.3021 • EUR/GBP marked time in Asia 0.8839/0.8852 ahead of ECB update Market Briefs • BOJ pushes back inflation target for 6th time, keeps policy steady • Cuts FY2017/18 inflation f'cast to +1.1% • Japan's Jun exports +9.7% y/y vs f'cast +9.5%; last 14.9% • Imports +15.5% y/y vs f'cast +14.6%; last 17.8% • China's regulation pledge could signal shift from high growth targets -Fitch • U.S., China fail to agree on trade issues, casting doubt on other issues • Australia unemployment rate steadied at 5.6% as 14,000 new jobs were added • Australia businesses report widespread upturn in Q2-survey • Asia growth outlook brightens on strong exports - ADB • ECB to lay groundwork for autumn policy shift, avoiding market tantrum • Republicans meet late into night as Trump demands new healthcare plan Looking Ahead - Economic Data (GMT) • 06:00 DE Jun Producer Prices, -0.1% m/m, 2.3% y/y eyed; last -0.2%, 2.8% • 08:30 GB Jun Retail Sales, 0.4% m/m, 2.5% y/y eyed; last -1.2%, 0.9% • 14:00 EZ Jul Consumer Confid. Flash, -1.1 eyed, last -1.3 Looking Ahead - Events, Auctions, Other Releases (GMT) • 06:30 BOJ gov Kuroda holds a news conference • 13:30 ECB's Draghi holds a press conference • N/A ECB Governing Council meeting in Frankfurt • 08:30 ES E2.0/1.5/1.0 bln for 4/5/10 yr auctions • 08:50 FR E2.5/4.0/1.0 bln for 3/5/5 yr auctions • 09:50 FR E0.6/0.5/0.6 bln for 10/11/30 YI auctions See North American Open for a detailed listing of US/NorAm releases, events. AUD bulls may do well to sell before Debelle The hawkish turn in market view since the RBA's minutes Tues, partly driven by the bank's disclosure of a "neutral policy" rate 200bps above the current cash rate, has taken on a life of its own in markets ever-vigilant for signs of withdrawal of central bank largesse. But that is surely not what the RBA was aiming for. While they have a reasonably upbeat assessment of the current state of Australia's economy, they have repeatedly said rates are on hold for the foreseeable future and they are one central bank known for clear communication. They are highly unlikely to cut down the green shoots of an expansion by raising rates any time soon, particularly when consumers are facing large hikes in electricity costs and do not need the extra burden of higher mortgage rates while wage growth remains low. Dep Gov Debelle speaks Fri on "Global Influences on Domestic Monetary Policy" followed by a Q&A; if he doesn't hose down the hawkish expectations, AUD will see another leg higher, which will surely prompt Gov Lowe to set the market straight when he speaks next Weds.