Market Brief
Usd consolidated in Asian session, as the current environment paints a mixed picture creating indecision in traders. EurUsd in choppy trading ranged from 1.5783 to 1.5866 while UsdJpy was slightly stronger, rising above 107.00 in early trading, before retracting back to 106.13 as the day wore on. Jpy fueled carry trades followed a similar pattern. Commodity bloc ccy’s continued to hold up despite general pullback in commodity prices. AudUsd was able to rally off the 0.9680 session, lows to 0.9725. Try was able to gain on the back of their Central Bank raising rates 50bp with UsdTry falling to 1.1950. Usd sentiment is clearly varied and will stay so for today’s trading.
Equity markets in the US clearly got a boost from yesterday’s sharp fall in oil prices--down almost $5bbl to $129.50bbl (partially due to reports the US will attend nuclear talks with Iran, easing perceptions of geopolitical tensions). This optimism was also reflected in yields with 2-year up 2.50%. This weeks decline brings up an interesting situation if energy prices continue to decrease, many central banks will take this as positive sight that inflation pressures will also ease. Which will therefore, provide policy makers with the perceived opportunity to address deteriorating growth by lowering rates.
Australian terms of trade for Q2 were better than expected. Export prices for Q2 surged by 13.5% vs. 10% exp q/q, while import prices grew by only 1.4% vs, 1.7% exp q/q. The rise in export prices reflects a broad based surge of commodity demand. As stated above Aud and the rest of the commodity bloc remains supportive of commodity prices and yield differentials.
BoJ minutes revealed a slightly more hawkish view on inflation than expected, however it is clear that members will be focused on the downside risks near term. In addition Shirakawa noted that Japans economy is more insolated from external shocks than previously believed. We are targeting 108.00 despite the unsettled nature of risk appetite.
Another light day in European session and with summer Friday clearly in effect, we expect trading to be subdued.
| Global Indexes | Current Level | % Change |
| Nikkei 225 Index | 11,329.00 | -0.63 |
| Hang Seng Index | 1,245.10 | -1.04 |
| Shanghai Index | 2,778.37 | 3.48 |
| FTSE 100 Index | 5,226.30 | -1.13 |
| CAC 40 Index | 4,181.48 | -1.05 |
| SMI Index | 6,683.97 | -0.81 |
| DJIA futures | 11,329.00 | -0.63 |
| World Markets | Current Level | % Change |
| Gold | 961.65 | 0.44 |
| Silver | 18.57 | 0.25 |
| VIX | 25.01 | -0.35 |
| Crude wti | 130.95 | 1.28 |
| USD Index | 72.01 | -0.32 |
| Todays Calender | Estimates | Previous | Country / GMT |
| Public Finances (Jun) PSNB | +£7.4bn | +£11.0bn | UK / 8.30 |
| Trade Balance (May) s.a. | +e0.8bn | +e2.2bn | EZ / 9.00 |
| Producer Prices (Jun) m/m | 0.60% | 0.80% | PD / 13.00 |
Currency Tech
AUDUSD
R 3: 0.9895
R 2: 0.9849
R 1: 0.9818
CURRENT: 0.9718
S 1: 0.9675
S 2: 0.9664
S 3: 0.9597
EURJPY
R 3: 170.00
R 2: 169.67
R 1: 169.11
CURRENT: 168.39
S 1: 165.23
S 2: 164.76
S 3: 163.60
USDSGD
R 3: 1.3717
R 2: 1.3661
R 1: 1.3565
CURRENT: 1.3521
S 1: 1.3452
S 2: 1.3399
S 3: 1.3300
- S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot
