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Tadhg Gaelach

Tadhg Gaelach

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WEDNESDAY, JULY 26, 2017
TOP NEWS
Japanese firms avoiding price hikes now but sentiment is changing: BOJ's Nakaso
Bank of Japan Deputy Governor Hiroshi Nakaso said the services sector has streamlined operations to avoid passing labour costs on to consumers, but there are signs that companies will raise prices in the future. Nakaso, in a speech to business leaders in Hiroshima, western Japan, also expressed confidence that inflation will reach the BOJ's 2 percent price target around fiscal 2019 and said the BOJ should stick with its quantitative easing programme.

IMF sees negligible rise in costs from moving London clearing after Brexit
The International Monetary Fund said that it foresaw only a modest increase in transaction costs if clearing and other financial activities are moved from the City of London to the European Union after Brexit. The IMF said that although it was too early to evaluate the impact of the two-year Brexit talks that formally started in March, financial institutions were likely to make decisions "well ahead of the actual separation". The IMF encouraged the EU to strengthen its financial supervision and regulation to handle the greater volume of financial transactions that may occur in the continent after Britain leaves the EU.

Greece prepares for end of bailout era with comeback bond
Greece successfully sold debt to private investors for the first time in three years on Tuesday, making a significant first step towards financial independence when its third international bailout ends next year. Greek Finance Minister Euclid Tsakalotos hailed the successful sale, saying it was "a beginning" and a sign of confidence in the country's economy. "There will be a second and a third (market foray), to approach August 2018 with confidence and emerge from the bailouts," he said.

Australia inflation surprisingly soft, lengthens odds on rate hike
Australian consumer prices were surprisingly soft last quarter and core inflation rate stayed below target for a sixth straight quarter, a reminder of just why interest rates in the country are at record lows and set to remain there for months to come. Underlying inflation rose 0.5 percent in the second quarter, from the first. The annual rate of 1.8 percent was again short of the Reserve Bank of Australia's (RBA) long-term target band of 2 percent to 3 percent. Meanwhile, Governor Philip Lowe said, the RBA welcomes a recent pick up in the labour market, although subdued wages and high household debt means policy rates will stay lower for longer.



COLUMN
5 years after "whatever it takes", a mixed picture for Draghi: McGeever

Exactly five years ago, three words in unscripted remarks by European Central Bank president Mario Draghi altered the course of the euro zone and financial markets around the world.



U.S. CONSUMER CONFIDENCE


MORNING MEETING


JGBS FOLLOW USTS, LOSSES LIMITED

BONDS, EQUITIES, OTHER ASSET MARKETS

US Tsy 10s 2.322%, off early highs, JGB 10s 0.073%, Bund 10s 0.564%
• US-Japan-Germany respective 2s indicated 1.389%, -0.110%, -0.520%
• JGBs soften following UST weakness overnight
• JGB futures fall to 150.07 early, then slide stalls
• Long-end JGBs recover some of early losses, but still heavy
• JS130 squeezed again in repo market
• At 150.11, futures off 15 ticks on day, range 150.17/150.07
• Nikkei gap up open, off later from 20,116 early to 20,039
• At 20,040, index stil up 85 points or 0.4% on day
• AXJ mixed - SSEC -0.4%, KOSPI -0.3% and TWI -0.2%
• HSI, STI, NZX50, Sensex just above par, ASX +1.0%
• Dailian iron ore +1%, crude up post-NY settle on API inventory draw

Currency Summaries
JPY
• USD/JPY on higher plane on bounce in US yields, risk-on sentiment
• Good demand in selective JPY crosses also supportive
• USD/JPY 111.84-112.08 in Asia, Japanese exporters, longs taking profits cap
• Downside limited too though, good bids 111.70-75, recent shorts covering
• Option-related bids too, USD535 mln in expiries today at 111.45-50
• Descending 200-HMA at 111.93 pivot of sorts, global close above bullish
• EUR/JPY also on higher plane, better bid, Asia 130.25-50, July 11 high 130.76
• Breaks above July 11 trend high, 131.00 bullish, stops 130.80+, 131.00+
• AUD/JPY 88.36-91, NZD/JPY 82.94-83.24, CAD/JPY 89.40-60, all on higher plane
• Decent summer carry demand noted in above crosses on dips, CAD bid on crude
• GBP/JPY laggard of sorts, up o/n but upside limited, Asia 145.63-146.00

EUR
• EUR/USD opened Asia at 1.1647 after topping out at 1.1712 in Europe
• It was a dull session for the EUR/USD with the attention on the AUD & JPY
• EUR/USD traded in a 1.1638/53 range and was around 1.1650 into the afternoon
• More consolidation likely ahead of FOMC decision/statement later today
• FOMC likely to be a non-event, but market will still seek clues
• Key to direction will be yield spreads between US Treasuries and Bunds
• Resistance at Aug 2015 trend at 1.1715 & 38.2 of 1.3995/1.0340 move at 1.1735
• Support former resistance at 1.1616 and close below would suggest a top is in

GBP
• Cable out of market focus, touch soggy, Asia 1.3018-31
• Support still ahead of 1.3000, 100-HMA 1.3010, heavy pre-1.3050
• EUR/GBP quiet too, Asia 0.8936-44, heavy ahead of 0.9000 still

Market Briefs
• BOJ DepGov Nakaso: Will pursue current easy policy till CPI target met
• Prices recently weak but turnaround soon, weak JPY helps, mantra unchanged
• Japan June corp service prices +0.8% y/y, +0.8% y/y last four months
• China says to steadily expand opening of capital markets
• Australia's c.bank Gov defends low policy rates, says won't move in lock step
• Australia Q2 CPI, 0.2% q/q, 1.9% y/y vs 0.5%, 2.1%; f'cast 0.4%, 2.2%
• NZ June trade surplus NZ$242 mln vs $103 mln
• Wall Street regulator sets sights on digital coin offerings
• U.S. House approves new Russia sanctions, defying Trump

Looking Ahead - Economic Data (GMT)
• 06:45 FR Jul Consumer Confidence, 108.00 eyed, last 108.00
• 08:00 IT Jul Consumer Confidence, 106.20 eyed, last 106.40
• 08:00 IT Jul Mfg Business Confidence, 107.00 eyed, last 107.30
• 08:30 GB Q2 GDP Prelim, 0.30% q/q, 1.70% y/y eyed; last 0.20%, 2.00%

Looking Ahead - Events, Auctions, Other Releases (GMT)
• 15:30 ECB's Lautenschlager speaks in Berlin
• 16:00 Austrian National Bank Gov Ewald Nowotny to speak in Vienna
• 18:00 Federal Open Market Committee announces its decision on interest rate
See North American Open for a detailed listing of US/NorAm releases, events.

 
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Tadhg Gaelach

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Dow Jones Symphony - Home
Dow Jones Newswires, 27 July 2017 02:43
Global Forex and Fixed Income Roundup: Market Talk


0643 GMT - The recent rise in crude oil prices boosts breakeven rates and therefore provides "fundamental headwinds" for German government bonds, according to Commerzbank. Rising inflation is negative for conventional fixed-rate bonds, as it eats into returns, prompting investors to ask for higher rates. Breakevens are the difference between yields of conventional and inflation-linked bonds and act as market-based gauge of inflation expectations. Brent crude has risen to $51 per barrel from around $45 in late June. Yields on 10-year German bonds trade at 0.54% Thursday, according to Tradeweb. ([email protected], @tasosvos)

0638 GMT - German consumer sentiment is set to remain on a positive track in August. GfK market research group says its forward-looking consumer sentiment index is set to rise to 10.8 points next month from 10.6 points in July. This is better than what economists expected in The Wall Street Journal's survey, as they envisaged an unchanged reading at 10.6 points. German consumers' mood continues to be supported by a solid labor market, modest oil prices and the European Central Bank's expansive monetary policy. ([email protected] ; @EmeseBartha) (END)

0634 GMT - Chemical giant BASF's 2Q earnings are good, but a stronger euro could put the brakes on stock gains Thursday, a Frankfurt trader says. BASF says its net profit rose 37% to EUR1.5 billion in 2Q. The euro rose to its highest against the dollar since early 2015 after a no-surprise U.S. Federal Reserve meeting. Traders expect the currency move to cap stock gains for BASF and other exporters when trading starts Thursday. ([email protected] , [email protected]) (END)

0634 GMT - A tech-cycle peak could sent the Korean won lower despite ongoing dollar weakness, says Ho Woei Chen at UOB. The won has been the region's top currency this year, rising 7.8% against the greenback, helped in part by foreign money entering its stock market. The brokerage sees the dollar ending this quarter at KRW1,140 and the year at KRW1,150 versus the current KRW1,112.80. The dollar is up slightly today versus the won as news reports quoted a Bank of Korea official saying the central bank is keenly watching the currency's appreciation. ([email protected]) (END)

0631 GMT - The resignation of Nitish Kumar, chief minister of the eastern Indian state of Bihar, amid corruption charges against politicians in his coalition government weakens the opposition against Modi and brighten the prospects of policy changes by the federal government getting pushed through. Following the unexpected resignation late Wednesday, Modi's Bharatiya Janata Party announced its support to Kumar's party, putting him back atop the region. He had been seen by some as a potential leader of an opposition alliance to challenge Modi in 2019's federal elections. But with Kumar now on the BJP's side, Modi's political standing will strengthen. "With the opposition in greater disarray, obstruction to Modi's agenda and economic policy will wither further," says Eurasia Group. ([email protected])
(END)


0615 GMT - The sale of Jimmy Choo to Michael Kors is positive for the credit of JAB Holding, as it will help it reduce the net debt-to-total market value ratio below 20%, Moody's credit officer Jeanine Arnold says. The rating company requires a ratio of 15% from firms with JAB's rating of Baa1. Investment firm JAB owns 67.66% of Jimmy Choo. It has a series of outstanding bonds denominated in euros. ([email protected], @tasosvos) (END)

0603 GMT - South Korea's new left-leaning government policies--including hefty spending, likely tax increases on the wealthy and a substantial increase in the minimum wage--could backfire and stifle growth, says DBS. "A rise in exports demand should encourage manufacturers to spend. But the new government's policies--including wage hikes, tax increases for large companies and tighter regulations on chaebols--could weigh on investment incentives." ([email protected]; @kwanwoo)
(END)


0501 GMT - The dollar continues to be cheap based on short-term models, and JPMorgan economist Sally Auld says it's easy to attribute the persistent discount to DC dysfunction. While the dollar got roughed up amid previous periods things got rough in Washington, like 2011's debt-ceiling debate, "there is little precedent for what is going on now, so it's hard to have a sense of what discount is, if at all, appropriate." The WSJ Dollar Index is at its lowest levels since last summer.([email protected]; @JamesGlynnWSJ) (END)

(END) Dow Jones Newswires
 
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Tadhg Gaelach

Tadhg Gaelach

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THURSDAY, JULY 27, 2017
TOP NEWS
China industrial profits jump 19.1 pct y/y, weather higher financing costs
Earnings for China's industrial firms surged 19.1 percent in June from a year earlier, accelerating from May in a sign economic momentum remains solid even as rising borrowing costs have raised concerns about pressure on margins. Profits in June rose to 727.78 billion yuan, the National Bureau of Statistics said on its website. For the first half of the year, the firms notched up profits of 3.63 trillion yuan, a 22.0 percent jump from the same period of last year and just a touch slower from the 22.7 percent annual growth in the January-May period.

Fed holds rates steady, expects portfolio cuts "relatively soon"
The Federal Reserve kept interest rates unchanged on Wednesday and said it expected to start winding down its massive holdings of bonds "relatively soon" in a sign of confidence in the U.S. economy. The Fed kept its benchmark lending rate in a target range of 1.00 percent to 1.25 percent, as expected, and said it was on track to continue the slow path of monetary tightening that has lifted rates by a percentage point since 2015. In a statement, the U.S. central bank's rate-setting committee indicated the economy was growing moderately and job gains had been solid.

ECB could reduce but not stop asset buys from Jan: Nowotny
The European Central Bank could reduce asset purchases from the start of next year but should not completely stop bond buys, Austrian central bank governor Ewald Nowotny said on Wednesday, adding thatpolicymakers needs a flexible, careful plan. With economic growth picking up strength and the threat of deflation gone, the ECB has room to claw back stimulus but only moderately since inflation remains far below its target of close to 2 percent and wage growth is still muted, Nowotny told a conference.

EU warns U.S. it may respond swiftly to counter new sanctions on Russia
The European Union warned on Wednesday that it was ready to act within days to counter proposed new U.S. sanctions on Russia, saying they would harm the bloc's energy security. Brussels also fears the new sanctions will harm European firms with connections to Russia, and oil and gas projects on which the EU is dependent. "The U.S. bill could have unintended unilateral effects that impact the EU's energy security interests," EU chief executive Jean-Claude Juncker said in a statement.



GRAPHIC
Bond supply set to turn positive as central banks eye end of easy money
A scaling back of central bank cash injections into the world economy could lead next year to the first glut in sovereign debt issuance from major economies in four years.



UK ECONOMY


MORNING MEETING


BONDS, EQUITIES, OTHER ASSET MARKETS
US Treasury 10s indicated 2.277%, JGB 10s 0.067%, Bund 10s 0.537%
• US-Japan-Germany respective 2s indicated 1.353%, -0.117%, -0.675%
• JGBs firm following USTs, then pare gains as Nikkei rallies
• Nikkei jumps on news opposition DPJ leader expresses intention to resign
• Both 3mo, 2yr auctions go well, stopping at -0.1202%, -0.114%
• At 150.21, futures up 10 ticks on day, range 150.27/150.17
• Nikkei range today 20,005-104, at 20,076 up 26 points, 0.1% on day
• AXJ mostly up - HSI 0.5%, KOSPI 0.2%, STI 0.3%, TWI 0.9%
• ASX up 0.3% and NZX50 above par, Shanghai off 0.3%
• Shanghai rubber -1.1%, Tokyo -0.6%, Daliian iron ore -0.8%

Currency Summaries
JPY
• USD/JPY soggy on continuing, post-FOMC long liquidation, lower US yields
• Asia early 111.27 high to 110.88, slow going, Japanese bids on way down
• 110.38-111.25 daily Ichi cloud supportive, USD622 mln option expiries 110.00
• Resistance from rapidly descending hourly Ichi tankan at 111.09
• Plenty option expiries on 111 too – USD1.7 bln between 111.20-32 stand out
• EUR/JPY down leg, 130.52 to 130.10 but in range of 130.76 July 11 trend high
• NZD/JPY and CAD/JPY to fresh trend highs, 83.45-67 and 89.52/53, respectively
• Central bank expectations, higher crude buoying CAD, NZD yields attract retail
• AUD/JPY 88.80 to 89.25, test of 89.29 trend high July 20 maybe imminent
• GBP/JPY still the laggard, 145.38-89 Asia range
• Japan's life insurers curb enthusiasm for foreign bonds - Nikkei
• MoF flow data week-ended July 22 – Japanese again good buyers of foreign bonds
• Net Y1.1786 trln bought, adds to large buys previous week, stocks bought too
• Foreign investors buy net Y292.4 bln Japanese stocks, adds to buys previous wk
EUR
• EUR/USD opened at 1.1738 after outside day reversal higher after Fed statement
• Market perceived Fed statement as dovish and fading idea of another 2017 hike
• USD traded with offered tone through Asian session led by AUD/USD strength
• EUR/USD traded to fresh 30 month high at 1.1770 at one stage
• Heading into the afternoon it was trading around 1.1755
• Sentiment towards the USD becoming increasingly bearish as trend intensifies
• Dovish turn in Fed expectations and DC political uncertainty weighing on USD
• EUR/USD trending higher and showing no sign of topping out yet
• Little in the way of resistance this side of 1.2000
• Support now at former resistance around 1.1610/20
GBP
• Cable bid in Asia, soggy USD helping, 1.3108 to 1.3157, some stops 1.3130+
• 1.3125-26 double top yesterday/July 18, GBP highest since last September
• Peak then 1.3445 on the 6th but resistance on way up at each big figure
• Hard to get bullish given Brexit concerns, Rudd promise helpful though
• EUR/GBP steady, Asia 0.8932-53, holding near recent highs

Market Briefs
• China's Jun industrial profits surged 19.1% to 727.78 bln yuan
• Rudd promises to keep door open for EU workers after Brexit - FT
• UK car industry - clarity on Brexit needed, June output -13.7% - SMMT
• Australia Q2 export prices, -5.7% vs 9.4%, f'cast -6.3%
• Q2 import prices, -0.1% vs 1.2%, f'cast 0.7%
• U.S. lawmakers reach deal for Senate Russia sanctions vote

Looking Ahead - Economic Data (GMT)
• 06:00 DE Aug GfK Consumer Sentiment, 10.60 eyed, last 10.60
• 07:00 ES Q2 Unemployment Rate, 17.80% eyed, last 18.75%

Looking Ahead - Events, Auctions, Other Releases (GMT)
• 08:00 ECB releases monthly data on lending and money supply
• 23:50 BOJ to release summary of July 19-20 policy meeting
• 09:05 IT 6 mnth E6.5 bln auction
See North American Open for a detailed listing of US/NorAm releases, events.

Stars aligning for a sustained US dollar decline
A confluence of fundamental & technical factors as well as a shift in sentiment are coming together to torpedo the US dollar this week. A number of currencies are testing or breaking their respective 200-week MAs, just as fundamentals suggest the rest of the world is enjoying stronger economic data than the US and the risks of another Fed rate hike this year appear to be fading. On the sentiment front, the gridlock in Washington DC and the daily drip-feed of negative news around the Trump administration are also weighing on the dollar. These three factors could be indicating the start of a major shift out of the USD. Confirmation of the technical outlook would come via the AUD, EUR and CAD closing above their respective 200 WMAs this week, and then beginning to accelerate away from the averages. Interestingly, London copper, often a good barometer of sentiment and always a good indicator for the AUD, broke its 200 WMA four weeks ago and has begun that acceleration this week.
 
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Tadhg Gaelach

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FRIDAY, JULY 28, 2017
TOP NEWS
Japan household spending jumps most since 2015 in sign of sustainable growth
Japanese household spending in June jumped the most since 2015 as job availability improved to a fresh 43-year high, in a sign the tightening labour market is helping push up wages and consumer spending - albeit gradually. Underscoring stubbornly low inflation despite the tightening job market, core consumer prices rose just 0.4 percent in June from a year earlier, unchanged from the previous month and still far below the Bank of Japan's ambitious 2 percent target.

China's urban unemployment rate stays below 4 pct for 2nd straight quarter
China's registered urban unemployment rate stayed below 4 percent for the second consecutive quarter as the world's No. 2 economy maintained a robust growth trajectory in 2017's first half. China's urban registered unemployment rate was 3.95 percent at end-June, compared with 3.97 percent at end-March and 4.05 percent a year earlier, the Ministry of Human Resources and Social Security said. The registered urban jobless rate excludes China's 280 million migrant workers.

Consumers, businesses likely spurred U.S. economic pickup in Q2
The U.S. economy likely accelerated in the second quarter as consumers ramped up spending and businesses invested more on equipment, which would confirm that the sluggish performance early in the year was temporary. Gross domestic product probably increased at a 2.6 percent annual rate in the April-June period, according to a Reuters survey of economists. The poll, however, was conducted before the release of data on Thursday that showed a sharp drop in the goods trade deficit in June and strong gains in wholesale and retail inventories.

UK consumer morale slips as economic mood hits 4-year low - GfK
British consumer morale has sunk back to depths hit just after last year's Brexit vote and worse may be to come as households' view of the broader economic situation dropped to a four-year low, according to a survey. Market research firm GfK's consumer confidence index fell to -12 in July from -10 in June, a one-year low and slightly below the median forecast in a Reuters poll of economists. The figures are likely to strengthen the conviction of Bank of England officials who want to keep interest rates on hold ahead of next Thursday's policy decision.





U.S. DURABLE GOODS


MORNING MEETING


BONDS, EQUITIES, OTHER ASSET MARKETS
US Treasury 10s indicated 2.302%, JGB 10s 0.072%, Bund 10s 0.538%
• US-Japan-Germany respective 2s indicated 1.361%, -0.115%, -0.677%
• JGB futures trade in tight 150.17/150.21 range
• Due to continued tight range trade, participants remain sidelined
• At 150.19, futures off 2 ticks on day
• Market risk-off, Nikkei small gap open, 20,056 early to 19,963
• At 19,966, index off 112 points or 0.6% on day
• AXJ off too - HSI 0.6%, KOSPI 1.45%, STI 0.9%, TWI 0.8%
• ASX off 1.55%, NZX50 0.9%, Sensex 0.5% and Shanghai below par
• Dalian iron ore +0.9%, Shanghai rubber -3.9%, Tokyo rubber -3.1%

Currency Summaries
JPY
• USD/JPY soggy, Asia 110.93-111.33, cross sales weigh, CHF/JPY especially
• Option expiries help tether market – 110.80 USD1.2 bln, 111.00 1.47 bln
• More expiries above – 111.20-30 USD720 mln, 111.45-50 425 mln, 112.00 781
• 110.38-111.25 daily Ichi cloud supportive, also plenty Japanese bids on 110
• CHF/JPY off more, Toshiba repatriating profits on Landis-Gyr IPO, Y201.7 bln
• From 117.86 high Tuesday to 114.21 today in Asia, related [nNen8k6Xl1]
• EUR/JPY off leg from yesterday, Asia 129.57-99, Ichi daily tenkan 129.59
• GBP/JPY 144.95-145.47, AUD/JPY 88.35-68, NZD/JPY 83.07-40, CAD/JPY 88.40-68
• AUD, NZD and CAD especially hard hit on long liquidation after recent buys
EUR
• EUR/USD off from yesterday on broad USD buy-backs, Asia 1.1672-94
• Market still essentially bullish EUR however, renewed gain likely next week
• Option expiries a tether - 1.1670-90 E954 mln total, 1.3000 E1.7 bln
• More below and above - 1.1650 E404 mln, 1.1715-25 E594 mln
• Underlying trend support around ascending daily Ichi tankan at 1.1624
• 100-HMA 1.1668, buying below recently profitable, 200-HMA 1.1620 below
• EUR/GBP quiet, Asia 0.8932-41, mostly between 55/100-HMAs at 0.8930, 0.8939
• EUR/CHF up more in Asia, 1.1263 to 1.1364, stops likely tripped above 1.1300
• Talk too of CHF-funded summer carries (as JPY-funding carries closed out)
GBP
• Cable lightly bid in Asia after fall o/n, Asia 1.3065 to 1.3089
• Low late NY 1.3050, just above ascending 100-HMA, 100-HMA currently 1.3057
• 1.3159 high yesterday before fall on abating Brexit concerns post-Rudd talk
• Still very difficult to get too bullish GBP at this time
• EUR/GBP quiet, Asia 0.8932-41, mostly between 55/100-HMAs at 0.8930, 0.8939

Market Briefs
• BOJ July 19-20 summary of opinions - Concerns over credibility, ETF buys
• Achieving inflation target later, FY '19 eyed, as already communicated
• Japan June core CPI +0.4% y/y, as eyed, Tokyo July core +0.2%, +0.1% eyed
• Tokyo July core CPI rise fastest since May '15
• Japan June household spending +1.5% m/m, +2.3% y/y, -0.1% and +0.6% eyed
• Spending rise best since August '15, sign of sustainable growth
• Japan June retail sales +2.1% y/y, +2.3% eyed
• Japan June jobless 2.8%, jobs-applicants 1.51, May 3.0%, 1.49, 3%, 1.50 eyed
• Japan June crude oil imports -12.5% y/y, LNG -1.2%, thermal coal +20.2%
• China Urban jobless rate 3.95% end-Jun vs 3.97% end-March
• Ryan assures Republican senators House will not pass "skinny" Obamacare repeal
• U.S. Senate slaps new sanctions on Russia, putting Trump in corner
• Foreign CB US debt holdings $6.0 bln to $3.3 tln for July 19 week
• Treasuries $5.4 bln to $3.0 tln, agencies +$1.1 bln to $261.8 bln
• U.S. fund investors shun stocks during Q2 earnings, buy bonds: Lipper

Looking Ahead - Economic Data (GMT)
• 05:30 FR Q2 GDP Preliminary, 0.50% eyed, last 0.40%
• 06:45 FR Jun Consumer Spending, -0.20% eyed, last 1.00%
• 06:45 FR Jul CPI (EU Norm) Prelim, 0.80% eyed, last 0.80
• 07:00 CH Jul KOF Indicator, 106.00 eyed, last 105.50
• 07:00 ES Q2 Estimated GDP, 0.90% q/q, 3.10% y/y eyed; last 0.80%, 3%
• 09:00 EZ Jul Consumer Confid. Final, -1.70 eyed, last -1.70
• 09:00 EZ Jul Economic Sentiment, 110.80 eyed, last 111.10
• 09:00 EZ Jul Business Climate, 1.12 eyed, last 1.15
• 12:00 DE Jul HICP Prelim, 1.40% y/y eyed, last 1.50%

Looking Ahead - Events, Auctions, Other Releases (GMT)
• 09:00 IT E4.00/2.250 bln for 5/10 yr auctions
• 10:05 UK Stg0.5/0.5/1.0 bln for 1/3/6 month auctions
See North American Open for a detailed listing of US/NorAm releases, events.

 
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Dow Jones Symphony - Home
Dow Jones Newswires, 31 July 2017 05:44
Global Forex and Fixed Income Roundup: Market Talk


0944 GMT - Poland's Mortgage Loan Act, which took effect earlier in July, is positive for domestic banks, even though it came a year after the European Commission's deadline, according to Moody's. The new mortgage origination guidelines are now in line with the EU's credit directive and contain credit risks related to banks' rapidly growing mortgage portfolios, analysts Arif Bekiroglu and Aleksander Blacha say in a note. Zloty-denominated mortgages have grown by at least 20% each year since 2010, based on Moody's-compiled data. ([email protected], @tasosvos)

0943 GMT - Spreads on euro investment-grade corporate bonds look poised to tighten further in early August as the supportive technical environment remains in place, Commerzbank strategist Marco Stoeckle says. Positive technical factors are a combination of limited new bond supply during the so-called summer lull and ongoing inflows to euro investment-grade funds. Almost $28 billion has made it to euro IG funds this year, with 2017 featuring just two weeks of outflows, according to ING. Spreads on the iBoxx Euro Corporates index have been tightening steadily in past months and now stand at their tightest level since early 2015, based on Factset data. ([email protected], @tasosvos) (END)

0908 GMT - The eurozone's annual rate of inflation for July was as expected at 1.3%, unchanged from June at the lowest level in 2017. The core rate nudged up to 1.2% despite a slowing of service prices, but all measures remain well below the European Central Bank's target of just under 2%. The frustration for the central bank arises from the fact that the unemployment rate is falling quite quickly, and was down to 9.1% in June, its lowest level since Feb. 2009. The May rate was revised lower from 9.3% to 9.2%. Economists had expected to see a 9.2% June rate when that would have marked a further fall, so the figures were a little stronger than anticipated. ([email protected] ; Twitter: @Paulhannon29) (END)

0851 GMT - U.K. government bonds, or gilts, look poised to outperform their U.S. counterparts, as the gap between the Bank of England's and the U.S. Federal Reserve's policy rates looks set to widen further, RBC Capital Markets says. Past experience shows that it's the policy rate spread that drives cross-market performance, and the U.K-U.S. spread looks set to only get wider, RBC adds. The Fed's target rate stands at 1-1.25%, with the U.S. central bank firmly on the tightening path. Meanwhile, the BOE's rate is at 0.25% and it's still unclear when this will rise for the first time since July 2007. ([email protected], @tasosvos) (END)

0837 GMT - Asset swap spreads on Sanofi bonds are tightening Monday after the French pharmaceutical raised its business earnings-per-share guidance for 2017. The group now expects EPS to be broadly stable at constant exchange rates versus its previous guidance of "stable to -3%." Bid asset swap spreads on the 0% 2020 issue are tightening to negative 3.54 bps Monday, approaching their tightest level since the bond was issued in September 2016. Shares in Sanofi trade up 1.9%.([email protected], @tasosvos) (END)

0835 GMT - Resilient Ebitda, a limited impact on credit from acquisitions and relative value make Kepler Cheuvreux credit research raise its recommendation on Ineos's 2023 and 2024-maturing euro bonds to buy from hold. Although the company's cash pile decreased, it was mainly due to the redemption of EUR1.2 billion of senior notes. And the drop in gross debt should improve annual financial expenses by EUR100 million, Kepler adds. ([email protected], @tasosvos) (END)

0835 GMT - Expectations of a stable credit profile and relative value versus European water and waste peers prompt UniCredit to raise its recommendation on Veolia Environnement bonds to overweight from marketweight. Analyst Michael Gerstner likes Veolia's geographical diversification and its focus on efficiency improvements. He says the French firm's 1H results were positive as they underscoring its "operating resilience." His preferred Veolia senior bonds are the 4.625% 2027 and 1.59% 2028 issues. ([email protected], @tasosvos) (END)

0826 GMT - Greece will have to opportunistically access the capital market two to three times more by August 2018 in order to make a clean exit of its bailout program, say J.P. Morgan strategists. This is possible if the reform agenda is delivered by the Greeks, and the Europeans deliver on debt-relief details well before the program ends, to enable the European Central Bank to carry out asset purchases in Greece, they say. Last week Greece issued EUR3 billion in new 2022-dated five-year bond, with about half of the issue volume representing new money and the other half a switch from Greece's 2019-dated bond.([email protected]; @EmeseBartha) (END)

0825 GMT [Dow Jones] Currently trading at $1.3120, the British pound stands above the horizontal support and overlap at $1.3100 and remains supported by the rising 50-period moving average at $1.3110 on a 30-min chart. Moreover, the intraday RSI stands within its buying area between 50 and 70, which confirms the bullish bias. Therefore, a first target is set at the horizontal resistance and July 27 top at $1.3160. A break above this threshold would open the way to further rise towards the horizontal resistances at $1.3185 and $1.3215 in extension. Only a break the horizontal support at $1.3100 would turn the intraday outlook to bearish with a first alternative target set at $1.3070 and a second one set at July 27 bottom at $1.3055. [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]) (END)

0823 GMT [Dow Jones] Currently trading at 148.75, the French September OAT contract is under pressure, below the 50-period moving average at 148.85. Furthermore, the 30-min RSI stands within its selling area between 50 and 30 and confirms the bearish bias. As a consequence, further weakness is expected with a first target set at the horizontal support at 148.30. The downside breakout of this threshold will open the way to further weakness towards 148.03 and towards the horizontal support and overlap at 147.70. Only an upside breakout of the horizontal resistance at 149.20 would invalidate this bearish scenario. In this case, a bullish acceleration towards July 24 top at 149.44 and towards 149.70 would be in the cards. [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]) (END)

0809 GMT - Litigation regarding the sukuk debt of Dana Gas could last up to 10 years, says a source close to the company. Dana Gas said in June its sukuk debt isn't Sharia-compliant and now looks to restructure it, but legal proceedings in the U.K. and the United Arab Emirates are ongoing. In a note Monday, Emirates NBD head of fixed income research Anita Yadav says the "standoff" between Dana Gas and Islamic bond holders is unlikely to be resolved until the court hearing in the U.K, likely in September, and in the U.A.E. on December 25. But judging by lawyers' advice to Dana Gas, these milestones may prove premature. ([email protected], @tasosvos) (END)

0804 GMT - The recent gradual rise in JGB yields are hitting Mizuho's (8411.TO) earnings. One of Japan's biggest financial firms, F1Q earnings fell 11% amid sharply lower profit from JGB trading. Japanese banks have benefited by years of bond-price gains, driven by BoJ purchases. Interest-rate gains are, nonetheless, modest at best--limiting the scope for wider lending spreads. The benchmark 10-year JGB yield rose a basis point during the course of last quarter to 0.075%. ([email protected])
(END)


(END) Dow Jones Newswires
 
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MONDAY, JULY 31, 2017
TOP NEWS
Japan industrial output increase hints at more stable growth
Japan's factory output rebounded in June from a decline in May as production of cars and industrial chemicals increased, suggesting economic expansion may be on a more stable footing. Industrial output rose 1.6 percent in June from the previous month, just below the median estimate for a 1.7 percent increase and following a 3.6 percent decline in May. Transport sector output rose 4.2 percent in June, rebounding from a 13.0 percent tumble in the previous month. Output of chemicals rose 3.4 percent in June, also a rebound from a 2.2 percent decline in May.

China July factory growth cools but construction boom fortifies economy
Growth in China's manufacturing sector cooled slightly in July as foreign demand for Chinese goods slackened, but a government-led infrastructure push kept construction humming and helped prop up the world's second-largest economy. The official PMI stood at 51.4 in July, the National Bureau of Statistics said on Monday, down from the previous month's 51.7 and a touch below the 51.6 forecast in a Reuters poll. New export orders slipped to 50.9 in July from 52.0 in June, helping drag the index for overall factory orders to 52.8 from 53.1.

UK companies' optimism on economy slips to six-month low - Lloyds
British businesses are their least optimistic about the economy in six months and their overall confidence levels remain slightly below average, a survey showed on Monday, adding to a lacklustre outlook for the economy. Lloyds Bank said its survey pointed to moderate growth although there had been some improvement from a month earlier, just after Prime Minister Theresa May unexpectedly failed to win a parliamentary majority in a national election. More firms also said they were raising prices.

ECB should think about when it wants to wind down bond buys- Lautenschlaeger
The European Central Bank should start thinking about how it wants to return to normal monetary policy and when it wants to wind down it bond purchases, governing council member Sabine Lautenschlaeger said in remarks published on Saturday. "The expansionary monetary policy has both advantages and side effects. As time passes, the positive effects get weaker and the risks increase," she told the Mannheimer Morgen newspaper.




AUSTRALIA CPI AND POLICY RATE


MORNING MEETING


JGBS IN NARROW RANGE AGAIN, TIBOR UP

BONDS, EQUITIES, OTHER ASSET MARKETS

US Treasury 10s indicated 2.281%, JGB 10s 0.072%, Bund 10s 0.541%
• US-Japan-Germany respective 2s indicated 1.345%, -0.118%, -0.688%
• JGB futures remain in narrow range
• Futures trade in 150.19/150.22 range in AM, 150.13/150.19 range in PM
• Curve steepens ahead of 10 and 30-year auctions
• At 150.15, futures off 4 ticks on day
• Euroyen Tibor unexpectedly jumps, 3mo at 0.075%, vs 0.056% last Fri
• Domestic yen Tibor remains unchanged however, 3mo at 0.05727%
• Euroyen futures sold off, Mar8 off 1 tick at 99.935
• Nikkei steady, range 19,891-983, at 19,949 off 10 points on day
• Renewed tensions in region over NoKorea ICBM shoot weighs on sentiment
• AXJ mixed - KOSPI down 0.3%, STI 0.3% and -TWI 0.2%
• SSEC up 0.6%, HSI 0.8%, ASX 0.55%, NZX50 0.5% and Sensex +0.3%
• Dalian iron ore +7.95%, Shanghai rubber -2.3%, Tokyo rubber +0.7%

Currency Summaries
JPY
• Broadly offered USD, paring of some summer carries biasing JPY up
• USD/JPY soggy, more JPY buybacks, 110.68 to 110.30, same for JPY crosses
• Japanese bids from @110.50, more towards presumed option barriers at 110.00
• Also some vanilla option expiries below today, total USD613 mln 110.00-30
• Stops large sub-110.00, nothing showing topside but likely above 110.80, 111
• Base of daily Ichi cloud in flux, 110.42/110.75, top up at 111.25
• Soggy US yields help cap USD/JPY, Treasury 10s indicated 2.281%, 2s 1.345%
• EUR/JPY 130.07 to 129.56, GBP/JPY 145.43 to 144.85, CHF/JPY 114.23 to 113.95
• AUD/JPY 88.37 to 87.85 before bouncing, NZD/JPY 83.12 to 82.92
• CAD/JPY hit hard, 88.99 to 88.42 but thin, AUD and NZD long liquidation too
EUR
• EUR/USD opened Asia at 1.1741 after moving higher on easing US yields
• The pair moved to 1.1763 in early Asia when USD/JPY fell 110.30
• The USD broadly recovered when the USD/JPY moved back to 110.50
• The EUR/USD traded down to 1.1730 before settling around 1.1740
• EZ inflation data out later today to start a busy week for key data
• EUR/USD continues to trend higher in the short-term
• A break and close below the 10-day MA at 1.1653 would suggest slowing momentum
GBP
• Cable relatively bid though offers topside, Asia 1.3125-51
• Market especially heavy above 1.3150, offers to 1.3159 trend high Thursday
• Top of weekly Ichi cloud 1.3257, likely cap, support @1.3100, @1.3050
• EUR/GBP quiet, Asia 0.8935-44, trend high July 21 0.8994, stops 0.9000
• 0.9000 likely to have good optionality

Market Briefs
• Japan-US may link currency, trade in economic dialogue - Nikkei
• Japan may reverse course, issue more government bonds - Nikkei
• Japan June industrial output +1.6% m/m, +1.7% eyed, May -3.6%
• Output eyed at +0.8% m/m in July, previous forecast -0.1%, August at +3.6%
• China Jul official mfg PMI, 54.5 vs Jun 51.7, f'cast 51.6
• Jul official services PMI, 54.5 vs Jun 54.9
• MSCI warns Chinese companies about suspending trading of shares
• UK companies' optimism on economy slips to six-month low - Lloyds
• Australia new homes sales fall sharply in Jun -Industry survey
• NZ business confidence drops in Jul - ANZ bank
• Trump urges Republican senators not to give up on healthcare
• Trump and Japan's Abe talk about "grave and growing" NoKorea threat

Looking Ahead - Economic Data (GMT)
• 08:00 IT Jun Unemployment Rate, 11.30% eyed, last 11.30%
• 08:30 GB Jun BOE Consumer Credit, 1.50 bln eyed, last 1.73 bln
• 08:30 GB Jun Mortgage Approvals, 65.00k eyed, last 65.20k
• 09:00 EZ Jun Unemployment Rate, 9.20% eyed, last 9.30%
• 09:00 EZ Jul Inflation Flash, 1.30% eyed, last 1.30%

Looking Ahead - Events, Auctions, Other Releases (GMT)
• 10:00 Bank of Spain Gov Luis Linde speaks in a conf. in Asturias
• 12:55 FR E3.0-3.4/1.0-1.4/0.9-1.3 bln for 3/6/12 month auctions
See North American Open for a detailed listing of US/NorAm releases, events.

AUD/USD-RBA may struggle to put off AUD bulls
The AUD remains in focus after hitting a 2-year high at 0.8066 versus the USD at one stage last week. If the RBA do sharpen their language on the AUD in Tuesday's meeting statement, any negative reaction should be relatively short-lived. While the RBA may not like a rising AUD/USD, there isn't a lot they can do about it. It might be especially difficult to keep the AUD from rising if the RBA Statement on Monetary Policy on Friday is upbeat in its tone and forecasts. AUD/USD could top out if there was a hawkish shift in Fed expectations, as the RBA has made it clear they are on hold for the foreseeable future. But if expectations of another Fed hike in 2017 continue to fade and the commodity rally gains pace, it will be hard to keep AUD/USD down.

JPY set to benefit as CHF loses safe-haven shine
Last week's pronounced CHF weakness (-2.4% vs the USD) sparked many theories, including inevitable rumours that the SNB may have played a part - a notion most dismiss. The CHF was the strongest currency the previous week so it was vulnerable to a move lower and the drop was put down to heavy Japanese JPY/CHF buying related to M&A flows, comments from the SNB's Jordan, and unwinding of stale EUR/CHF shorts as the ECB gets ready to normalize policy. One potential ramification from the huge selloff is the damage it did to the Swiss franc's role as a safe haven. If investors do get spooked for some reason in the short term, the JPY is likely to be the main beneficiary of safe-haven flows in risk-off markets. USD/JPY remains vulnerable to a move lower in any case, as the IMM data Fri continued to show speculative accounts holding large JPY shorts (121.5k contracts or USD13.6 bln)

Week Ahead-RBA & BOE meetings, US politics
It will be an event-filled week with plenty of key data alongside central bank meetings in Australia and the UK, and the drama playing out in Washington DC. The RBA meets Tues and while it is quite clear they will remain on hold, the market will pay close attention to what they say about the rising AUD. The latest statements indicated a rising exchange rate would complicate the economic adjustment in the wake of the mining boom, but some are looking for a stronger tweak of the comment. The RBA Statement on Monetary Policy is due Fri and the RBA may use that occasion to send their signals rather than change the statement to any great extent. The BOE meets Thurs and no change is expected. The BOE will release the meeting's minutes and their quarterly Inflation Report alongside the decision, so it could be a market-moving event. Investors will also keep a close eye on the dramas at the White House and the potential impact they may have on economic policy.

Week Ahead-US NFP, PMIs everywhere, EZ CPI & GDP
The US has a full week, starting with the Chicago PMI and pending home sales Mon, ISM manufacturing PMI and the Fed's favoured inflation gauge the core PCE price index Tues. ADP jobs data Weds will help shape expectations for non-farm payrolls at the end of the week. Thurs is packed, with ISM non-mfg PMI, factory orders, durable goods & weekly jobless claims all due. The main event is NFP Fri; the market expects +183k for jobs, unemployment to slip to 4.3% from 4.4% and ave hourly earnings to improve to 0.3% from 0.2%. Euro zone data includes flash inflation for July Mon, the closely watched mfg PMI and Q2 EZ GDP Tues, EZ services & composite PMIs and retail sales Thurs, and German industrial orders Fri. The UK has mfg PMI Tues, construction PMI Weds & services PMI Thurs. Japan has the Nikkei mfg PMI Tues and consumer confidence Weds. China's official mfg & non-mfg PMIs were out this morning and the Caixin mfg & services PMIs are due Tues & Thurs. Australia has trade data Thurs and retail sales Fri.

 
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Dow Jones Symphony - Home
Dow Jones Newswires, 1 August 2017 02:59
Global Forex and Fixed Income Roundup: Market Talk


0659 GMT - Columbia Threadneddle clips back its exposure to European high yield across its asset allocation portfolios attributing this to investment grade and high yield bonds' strong run. The move seems prudent from a risk/reward perspective, say Toby Nangle, head of multi assets for EMEA, and portfolio manager Maya Bhandari. Total return from high yield over the last 12 months stands at 9% in Europe and at 11% in the U.S, and on a 10-year horizon this rise to about 100% in each geographical area, they add. ([email protected]; @EmeseBartha)

0657 GMT - German two-year Schatz yields have been on a declining trend over the past month, partly attributable to a correction from European Central Bank President Mario Draghi's "Sintra-scare," ING rates strategists say. The June 2019 Schatz is trading at a yield of minus 0.68%, according to Tradeweb, ahead of Germany's EUR4 billion tap of this two-year debt at auction later in the day. While the current yield in the secondary market is lower than the minus 0.61% at the previous auction on June 27, the concession versus the April 2019 Schatz is bigger than it was at the time of the prevous auction-currently at 3.1 bps versus 2.3 bps on June 27, when the previous tap took place. ([email protected]; @EmeseBartha) (END)

0654 GMT - Bid quotes on the Hellenic Telecommunications Organization's 3.5% 2020 rise early Tuesday, pointing to further gains after S&P lifted its outlook on the B+ rating to positive from stable. The rating company cites a similar action it took on the Greek sovereign, reflecting its view that the general government's debt and debt-servicing costs will gradually decline. S&P now sees a one-in-three probability of an upgrade for OTE -- as the telecom is known locally -- in the next 12 months. The 3.5% 2020 bond closed at 104.56% Monday, its highest level since the bond was issues in mid-2014. ([email protected], @tasosvos) (END)

0653 GMT - A series of eurozone data releases Tuesday, including PMI/GDP and German unemployment figures, are unlikely to affect German government bonds, as they should just confirm the narrative of better growth and inflation sentiment rather than provide "genuine news," Commerzbank strategist Michael Leister says. He recommends conditional long positions in bunds. Yields on 10-year German debt trade at 0.55% Tuesday, within the narrow 0.5-0.59% range established since early July, based on Tradeweb data. ([email protected], @tasosvos) (END)

0648 GMT - Even though the European Central Bank looks poised to reduce and eventually end its quantitative easing program in 2018, re-investment of maturing bonds held by the ECB should still put pressure on yields, Nordea says in a note. In fact, this re-investment pressure will be a "significant instrument" in the ECB's toolbox, the bank adds. Germany looks poised to benefit the most from re-investments next year, as Nordea calculates a EUR42 billion re-investment flow for 2018. ([email protected], @tasosvos) (END)

0644 GMT - Frankfurt stocks are set to open marginally higher on Tuesday amid a heavy flow of corporate earnings and economic data. Lang & Schwarz expects the DAX to open at 12,129, up less than 0.1%. HeidelbergCement, Fresenius Medical Care, Fresenius SE and Infineon have released earnings and each of them confirmed their respective guidances. Investors are likely to take some clues from purchasing manager's index data and they will also eye fresh affirmation of the strength of the German labor market with data for July due. Germany's EUR4 billion auction of two-year debt on Tuesday will be newsworthy for multi-asset investors. ([email protected]; @EmeseBartha) (END)

0641 GMT - Two separate pieces of Indian industrial data the past few days--infrastructure output and manufacturing PMI--have shown a sharp weakening in broader production amid confusion about the new GST. But some economists aren't worried. "We don't think that July's weakness [in PMI] is cause for immediate concern," says Capital Economics, adding that conditions should improve as businesses get familiar with the new tax system. ([email protected])
(END)


0617 GMT - Japan stocks were higher nearly all session, with the Nikkei briefly getting back to 20000 shortly before the close before pulling back. The index rose 0.3% to 19985.79 after having fallen in 5 of the prior 7 sessions. Gains could have been bigger were it not for the political shadow amid Thursday's cabinet reshuffle, analysts say. That as the yen has continued to strength, but that seemed to have limited impact today. The dollar is around Y110.25, versus Y110.40 when trading started today. Elsewhere, a selloff in longer-dated Japanese debt extended to superlongs. The newest 20-year tenor saw yields rise a half-basis point to 0.59% while 30s and 40s rose a full pip. ([email protected]) (END)

0613 GMT - With the RBA warning that a strengthening currency will slow GDP growth and inflation's rise, the central bank's forecasts in Friday's quarterly review might push back the time lines for reaching 3% GDP growth and 2-3% inflation, says JPMorgan economist Sally Auld. But a pushback in the timeline can only go on for so long, she adds, contending that sub-3% growth would require the RBA to acknowledge that financial conditions aren't consistent with returning the economy to trend-or-better gains. ([email protected]; @JamesGlynnWSJ) (END)

0610 GMT - India manufacturing PMI for July logged its biggest monthly drop in nearly 9 years in the wake of the country's new sales-tax regime. The Nikkei/IHS Markit Manufacturing PMI fell to 47.9, the first sub-50 reading this year, from June's 50.9. But businesses didn't anticipate the decline lasting, the survey showed. Still, it builds the case for a central-bank rate cut tomorrow. "The weakening trend for demand, relatively muted cost-inflationary pressures and discounted factory-gate charges provide powerful tools" for easing, says Pollyanna De Lima, principal economist at IHS Markit. ([email protected])
(END)


0530 GMT - The Reserve Bank of Australia's policy statement was an opportunity to restart the process of "jawboning" the resurgent Australian dollar, says Craig James, chief economist at Commsec. As the central bank said a stronger currency would likely cut inflation expectations, it's "essentially a quasi rate hike on the economy," he adds. ([email protected]; @JamesGlynnWSJ) (END)

0517 GMT - Inflation in Indonesia showed signed of easing in July, which may confirm the central bank's expectation that price growth will likely remain under control through year-end. CPI rose 3.9% from a year earlier, versus June's 4.4% increase, as prices normalized after being stoked by higher electricity prices and religious festivities. The core reading slowed to 3.1% from 3.3%, a signal that consumers' purchasing power remains weak. The data didn't move Indonesian stocks; the JSX finished morning trading down 0.2% amid some profit-taking. ([email protected])
(END)


(END) Dow Jones Newswires
 
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TUESDAY, AUGUST 1, 2017
TOP NEWS
China factory activity accelerates in July on strong export orders - Caixin PMI
Growth in China's manufacturing quickened in July, a private survey showed, as output and new orders rose at the fastest pace since February on strong export sales. The Caixin/Markit Manufacturing Purchasing Managers' Index rose to 51.1 in July. A resurgent export sector underpinned by a brightening global economy helped China post surprisingly strong gross domestic product growth of 6.9 percent in the first half of the year. The Caixin new export orders reading came in at 53.5 in July, up from 50.9 June and the highest since February.

Japan July final manufacturing PMI slows to 8-month low as exports falter
Japan's manufacturing activity grew in July at the slowest pace in eight months as export demand weakened, a private survey showed. The Markit/Nikkei Japan Final Manufacturing Purchasing Managers Index dipped to 52.1 in July on a seasonally adjusted basis, slightly weaker than a preliminary reading of 52.2 and a final 52.4 in the previous month. The final reading for new export orders was 50.9, above the flash reading of 50.0 but a marked slowdown from 53.4 in June.

British consumer morale steadies in July but at low levels - YouGov/Cebr
British consumer confidence steadied last month after falling sharply in the aftermath of June's inconclusive national election, but it still marked the weakest two months in four years, a survey published on Monday showed. Pollster YouGov and the Centre for Economics and Business Research consultancy said its consumer confidence index crept back up to 107.3 in July from 107.1 in June. But morale overall remained muted as households have been squeezed by rising inflation that followed last year's Brexit vote, as well as subdued wage growth.

Australia's central bank keeps rate steady, dismayed at high-flying A$
Australia's central bank marked a full year without changing interest rates, and many economists suspect rates could stay at record lows of 1.5 percent for yet another year as policymakers look to put the economy on a sustainable footing. The central bank said it still expected a gradual pick-up in inflation and forecast the A$1.7 trillion economy to grow at around 3 percent over the next couple of years. The central bank is worried that incomes are rising at a much slower pace than the increase in household debt.


CANADA'S HOUSE PARTY


MORNING MEETING


JGBS STILL IN RANGE, 10YR AUCTION GOES WELL

BONDS, EQUITIES, OTHER ASSET MARKETS

US Treasury 10s indicated 2.301%, JGB 10s 0.077%, Bund 10s 0.551%
• US-Japan-Germany respective 2s indicated 1.353%, -0.117%, -0.674%
• JGBs remain in tight 150.12/150.17 range even on 10yr auction day
• 10yr auction goes well, stop 0.074% in line with market
• BTC down to 4.21 from 4.77 previously, tail unch at 0.1bp
• At 150.14, futures off 2 ticks on day
• Nikkei in 19,904-999 range, at 19,978 +53 points or 0.3% on day
• AXJ in black too - SSEC 0.4%, HSI 0.8%, KOSPI 1.0%, TWI 0.2%, STI above par
• ASX up 0.7% and NZX50 0.3%
• Dalian iron ore +3.3%, Shanghai rubber +1.0%, Tokyo rubber +0.1%

Currency Summaries
JPY
• USD/JPY heavy in Asia after push down to 110.21 overnight
• 110.21-42 early before 110.20 break, some stops tripped, low 110.01
• Japanese, other bids still ahead of presumed option barriers at 110.00
• Some vanilla option expiries today in area too, USD1 bln 109.80-110.10
• Expiries above cap of sorts, USD662 mln between 110.45-60 strikes
• Specs aiming for large stops sub-110.00, market gamma short sub-110 to 108
• JPY crosses affected by USD/JPY push down but hold up better
• EUR/JPY 130.58 to 130.17, broadly bid EUR supportive, still at recent highs
• 130.76 trend high July 11, 130.65 200-WMA, stops 130.80+, 131.00+
• GBP/JPY steady, on higher plane from yesterday, 145.34-79
• AUD/JPY bid, iron ore rally, view RBA more bullish on economy, 88.17 to 88.70
• NZD/JPY bid initially with AUD/JPY but off later, range 82.71-99
• CAD/JPY soggy, 88.39 to 88.03
• CHF/JPY soggy too, 113.81-114.20, CHF now carry funding currency of choice
EUR
• EUR/USD opened 1.1842 after EUR outperformed in broad USD weakness
• EUR/USD consolidated its gains in Asia trading in a 1.182046 range
• The EUR gave back some of its gains against other currencies in Asia
• Heading into the afternoon EUR/AUD was down 0.45% and EUR/JY was down 0.25%
• The EUR/USD settled around 1.1825 heading into the afternoon
• EUR/USD continues to trend higher, as USD sentiment remains bearish
• EUR benefitting from hawkish ECB expectations after higher EZ inflation
• Meanwhile the market is pricing out chances of the Fed hiking again in 2017
• Support comes in at the ascending 10-day MA at 1.1981 today
• There isn't any resistance of note this side of 1.2000
GBP
• Cable holds bid in Asia amidst continuing USD weakness, range 1.3192-1.3221
• GBP/USD seemingly on hold just below 1.3223 trend high yesterday
• Cable highest since September '16, 1.3445 peak then
• Towards top of weekly Ichi cloud, top at 1.3257, resistance too @1.3300
• EUR/GBP on hold just below 0.8994 trend high July 21, stops 0.9000+
AUD
• Opened at 0.8001 after strong commodities and weaker USD underpinned
• After trading at 0.7997 it started tracking higher through the morning
• A 4% rise in Dalian iron ore and buoyant AXJ equity markets gave support
• It was trading around 0.8030 when Caixin MFG PMI came in better than expected
• The better China data helped push the AUD/USD above 0.8040
• AUD was up 0.3% against the JPY and 0.5% against the EUR on commodity focus
• The AUD/USD was trading 0.8020 into the RBA before dipping to 0.7996 on outcome
• RBA strengthened language on AUD, higher risks slower pickup in activity/inflation
• Dip proved short-lived with ailing USD and higher commodity prices wkg to offset
• Markets betting RBA unlikely to intervene or move twds easing bias due to strong AUD

Market Briefs
• Japan foreign direct investment jumped to record $169.6 bln in '16 -Nikkei
• Japan April-June GDP on track for 2.6% annual pace -Nikkei
• Japan July mfg PMI - final 52.1, 8-month low, flash 52.2, June final 52.4
• Brexit projected to push up banks' costs 4% and capital needs 30% -FT
• British consumer morale steadies in July but at low levels -YouGov/Cebr
• China factory activity accelerates in July on strong export orders -Caixin
• Australia home prices jump anew in July, testing regulators
• Australia manufacturing still expanding in July -survey
• Trump fires communications director Scaramucci in new White House upheaval
• NoKorea can hit most of United States -U.S. officials

Looking Ahead - Economic Data (GMT)
• 07:15 ES Jul Manufacturing PMI, 54.50 eyed, last 54.70
• 07:45 IT Jul Markit/ADACI Mfg PMI, 55.20 eyed, last 55.20
• 07:50 FR Jul Markit Mfg PMI, 55.40 eyed, last 55.40
• 07:55 DE Jul Markit/BME Mfg PMI, 58.30 eyed, last 58.30
• 08:00 EZ Jul Markit Mfg Final PMI, 56.80 eyed, last 56.80
• 08:00 DE Jul Unemployment Total NSA, 2.52 mln eyed, last 2.47 mln
• 08:00 DE Jul Unemployment Rate SA, 5.70% eyed, last 5.70%
• 08:30 GB Jul Markit/CIPS Mfg PMI, 54.40 eyed, last 54.30
• 09:00 EZ Q2 GDP Flash Prelim, 0.60% q/q, 2.10% y/y eyed; last 0.60%, 1.90%

Looking Ahead - Events, Auctions, Other Releases (GMT)
• 09:00 RBNZ's Dep Gov Spencer will speak in Wellington
• 09:30 DE 2Y, E4.0 bln for auction
• 09:30 UK 10Y, Stg2.250 bln auction
• 09:35 BE 3-month, E1.3-1.7 bln auction
See North American Open for a detailed listing of US/NorAm releases, events.
 
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