Global Markets:
- Asian stock markets: Nikkei up 1.20 %, Shanghai Composite fell 0.05 %, Hang Seng gained 0.60 %, ASX 200 rallied 0.55 %
- Commodities: Gold at $1329 (-0.20 %), Silver at $20.30 (-0.10 %), WTI Oil at $45.48 (-0.45 %), Brent Oil at $47.15 (-0.45 %)
- Rates: US 10 year yield at 1.55, UK 10 year yield at 0.79, German 10 year yield at -0.04
News & Data:
- China GDP (YoY) Q2: 6.7% (est 6.6%, prev 6.7%)
- China GDP (QoQ) Q2: 1.8% (est 1.6%, prev 1.1%, rev 1.2%)
- China Industrial Production (YoY) Jun: 6.2% (est 5.9%, prev 6.0%)
- China Industrial Production YtD (YoY) Jun: 6.0% (est 5.9%, prev 5.9%)
- China Retail Sales (YoY) Jun: 10.6% (est 9.9%, prev 10.0%)
- China Money Supply M1 (YoY) Jun: 24.6% (est 22.6%, prev 23.7%)
- China Money Supply M2 (YoY) Jun: 11.8% (est 11.4%, prev 11.8%)
- NZ REINZ House Sales (YoY) Jun: 6.0% (prev 13.6%)
- PBOC Fixes Yuan Reference Rate At 6.6805 (prev 6.6846)
- Fed’s Bullard: No rush to hike rates again
- Bullard: Favours one hike in 2016
- Fed’s Kaplan: US economy more global than previous; policymakers must take this into account – RTRS
- Kaplan: Important to normalise rate; need to be gradual and patient
- Kaplan: Will be appropriate to raise rates as progress is made
Markets Update:
The British Pound rallied yesterday after the Bank of England surprised markets by keeping rates and the size of their QE programme unchanged. The market was not expecting any QE expansion, but it was anticipating a 0.25 % rate cut. GBP/USD saw high volatility following the announcement. It first rallied from 1.3250 to 1.3470 and then declined back to 1.3275. After the NY close, the pair caught a bid again and extended gains to 1.3480. Heavy selling was seen in EUR/GBP, which fell to 0.8240.
EUR/USD saw some minor support from the GBP/USD rally and rose from 1.11 in the early Asian session to 1.1140. Meanwhile, USD/JPY extended gains even further and rose to a high of 106.30, supported by the global rally in equity markets. Resistance is now seen at 106.80.
What is a bit surprising is how the commodity currencies failed to benefit much from the risk-on sentiment this week. AUD/USD is only 100 pips up from the Sunday open, while NZD/USD declined almost 150 pips this week. The Canadian Dollar was the best performing currency amongst them, as USD/CAD fell from 1.3140 to a low of 1.2875 so far, after the Bank of Canada remained neutral and amid rising oil prices.
Upcoming Events:
- 10:00 BST – Euro Zone CPI
- 13:00 BST – Bank of England Governor Carney speaks
- 13:30 BST – US Retail Sales
- 13:30 BST – US CPI
- 13:30 BST – Canadian Manufacturing Sales
- 14:15 BST – US Industrial Production
- 14:15 BST – US Manufacturing Production
- 15:00 BST – US Michigan Consumer Sentiment
- 20:30 BST – US CFTC Positioning Data
