USD broadly lower as risk sentiment improves
Market Brief
The Reserve Bank of New Zealand released an economic update on Thursday. The statement was very dovish and clearly set the stage for a rate cut in August. For the New Zealand dollar, it was the last straw that breaks the camel’s back as the Kiwi dropped another 1% against the greenback during the Asian session. Since mid-July, NZD/USD has fell as much as 5% amid mounting bets for an August rate cut. The currency pair is currently testing a key support area at between 0.6964 and 0.70 (low from June 15th and 50dma). The support is holding for now as traders take profit and consolidate positions. However, the Kiwi still has a solid downside potential as the statement left little doubt about the RBNZ’s next move.
The yen slid further against most G10 currencies, falling 0.60% against the GBP, 0.55% against the Aussie and 0.50% against the single currency. USD/JPY continued to move higher as the market anticipated the Bank of Japan to launch another round of easing. USD/JPY broke the 106.84 resistance (high from June 23rd) and is now heading towards the following one at around 108 (psychological level and high from June 7th). Even though the yen should continue to lose ground over the next few weeks, the BoJ’s announcements had historically very little impact on the Japanese currency; even worst the JPY tends to strengthen a couple of days after the announcement of new easing measures.
EUR/USD rose 0.25% in Tokyo amid improving risk sentiment across financial markets. Overnight the single currency reached 1.1047 against the US dollar. However on the medium-term the technical structure continues to suggest a downside bias. A break of the 1.11 level should revive long EUR position. On a longer term, the currency pair is still stuck in its monthly range in between 1.0913 and 1.1186.
In the equity market, Asian regional equity markets were blinking green across the screen amid positive lead from Wall Street. In Japan, the Nikkei and Topix indices were up 0.77% and 0.65% respectively. In mainland China, the Shanghai and Shenzhen Composites were up 0.45% and 0.29%, while offshore Hong Kong’s Hang Seng rose 0.97%. In Europe, equity futures are more mixed with the Footsie down 0.32%, while the DAXC and CAC were up 0.35% and 0.06% respectively.
Today traders will be watching trade balance from Spain; retail sales from the UK; ECB interest rate decision and Draghi’s speech in the euro zone; mid-month inflation report in Brazil; initial jobless claims, Philly business index, existing home sales and leading index; interest rate decision from South Africa (no change expected).
| Global Indexes | Current Level | % Change |
|---|---|---|
| Nikkei 225 Index | 16810.22 | 0.77 |
| Hang Seng Index | 22095.67 | 0.97 |
| Shanghai Index | 3041.604 | 0.45 |
| FTSE futures | 6657 | -0.32 |
| DAX futures | 10170 | 0.35 |
| SMI Futures | 8196 | 0.16 |
| S&P future | 2168 | 0.02 |
| Global Indexes | Current Level | % Change |
|---|---|---|
| Gold | 1317.11 | 0.08 |
| Silver | 19.4 | -0.02 |
| VIX | 11.77 | -1.67 |
| Crude wti | 45.97 | 0.48 |
| USD Index | 96.94 | -0.27 |
| Today's Calendar | Estimates | Previous | Country/GMT |
|---|---|---|---|
| SZ Jun Money Supply M3 YoY | - | 2,00% | CHF/07:00 |
| SP May Trade Balance | - | -637.3m | EUR/07:00 |
| SA Bloomberg July South Africa Economic Survey (Table) | - | - | ZAR/07:00 |
| UK Bloomberg July United Kingdom Economic Survey | - | - | GBP/07:30 |
| UK Jun Retail Sales Ex Auto Fuel MoM | -0,60% | 1,00% | GBP/08:30 |
| UK Jun Retail Sales Ex Auto Fuel YoY | 4,80% | 5,70% | GBP/08:30 |
| UK Jun Retail Sales Inc Auto Fuel MoM | -0,60% | 0,90% | GBP/08:30 |
| UK Jun Retail Sales Inc Auto Fuel YoY | 5,00% | 6,00% | GBP/08:30 |
| UK Jun Public Finances (PSNCR) | - | 3.4b | GBP/08:30 |
| UK Jun Central Government NCR | - | 6.0b | GBP/08:30 |
| UK Jun Public Sector Net Borrowing | 9.2b | 9.1b | GBP/08:30 |
| UK Jun PSNB ex Banking Groups | 9.5b | 9.7b | GBP/08:30 |
| EC Jul 21 ECB Main Refinancing Rate | 0,00% | 0,00% | EUR/11:45 |
| EC Jul 21 ECB Deposit Facility Rate | -0,40% | -0,40% | EUR/11:45 |
| EC Jul 21 ECB Marginal Lending Facility | 0,25% | 0,25% | EUR/11:45 |
| EC Jul ECB Asset Purchase Target | EU80b | EU80b | EUR/11:45 |
| BZ Bloomberg July Brazil Economic Survey | - | - | BRL/12:00 |
| BZ Jul IBGE Inflation IPCA-15 MoM | 0,45% | 0,40% | BRL/12:00 |
| BZ Jul IBGE Inflation IPCA-15 YoY | 8,83% | 8,98% | BRL/12:00 |
| US Jun Chicago Fed Nat Activity Index | -0,2 | -0,51 | USD/12:30 |
| CA May Wholesale Trade Sales MoM | 0,20% | 0,10% | CAD/12:30 |
| EC ECB President Draghi Speaks to Press After Rate Decision | - | - | EUR/12:30 |
| US Jul 16 Initial Jobless Claims | 265k | 254k | USD/12:30 |
| US Jul 9 Continuing Claims | 2137k | 2149k | USD/12:30 |
| US Jul Philadelphia Fed Business Outlook | 4,5 | 4,7 | USD/12:30 |
| US May FHFA House Price Index MoM | 0,40% | 0,20% | USD/13:00 |
| RU Jul 15 Gold and Forex Reserve | - | 394.7b | RUB/13:00 |
| US Jul Bloomberg Economic Expectations | - | 41 | USD/13:45 |
| US Jul 17 Bloomberg Consumer Comfort | - | 44,7 | USD/13:45 |
| US Jun Existing Home Sales | 5.48m | 5.53m | USD/14:00 |
| US Jun Existing Home Sales MoM | -0,90% | 1,80% | USD/14:00 |
| US Jun Leading Index | 0,20% | -0,20% | USD/14:00 |
| SA Jul 21 SARB Announce Interest Rate | 7,00% | 7,00% | ZAR/22:00 |
Currency Tech
EURUSD
R 2: 1.1428
R 1: 1.1186
CURRENT: 1.1032
S 1: 1.0913
S 2: 1.0822
GBPUSD
R 2: 1.3981
R 1: 1.3534
CURRENT: 1.3260
S 1: 1.2851
S 2: 1.2798
USDJPY
R 2: 109.14
R 1: 107.90
CURRENT: 107.13
S 1: 103.91
S 2: 99.02
USDCHF
R 2: 1.0328
R 1: 0.9956
CURRENT: 0.9872
S 1: 0.9764
S 2: 0.9685
- S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot
Author
Arnaud Masset
Swissquote Bank Ltd
Arnaud Masset is a Market Analyst at Swissquote Bank. He has a strong technical background and also works in the development of quantitative trading strategies.
