18 Jul: FX steady, metals up, oil, stocks lower. IMF warn of overvalued US$. Australian jobs data ahead. UK R/S later.

By | July 18, 2019

The FX markets have ended Wednesday having traded within a tight range, with the US dollar ending mildly softer, but leaving the action to the commodity and stock markets.  The dollar was unable to make any headway after the IMF released a report stating that the US dollar is overvalued, suggesting that  the US$ exchange rates is 6% to 12% too high, while the Euro is undervalued for Germany, but overvalued by 4% for France, based on economic fundamentals. Also not helping the dollar on Wednesday were lower US yields and narrowing US-developed market bond spreads.

The US stock indexes dipped by around 0.5%, on the back of some weak corporate results, particularly from CSX Corp (-9.9%), which dragged the industrial sector down with it and stoked concerns that the protracted trade war between the US and China could increasingly impact on corporate earnings.

Gold and Silver were big movers on the day, rising by 1.5% and 2.5% respectively on the back of the IMF statement.  WTI headed lower, after the weekly report from the US Energy Information Administration indicated that gasoline stockpiles were nearly 4 times higher than expected, with a gasoline balance of more than 9 times the forecast during the week ended July 12. This more than counteracted the expected rise in demand from fuel following Cyclone Barry, and consequently WTI prices fell by around 1.8%.

In terms of data, the EU CPI was finalised at 1.3% yy in June, revised up from 1.2%, up from May’s 1.2% yy. Core CPI was finalized at 1.1% yy, unrevised, up from May’s 0.8% yy, while the June, UK headline CPI was unchanged at 2.0% yy, matched expectations. From the US, the June housing starts fell for a second straight month in June, by 0.9%, and building permits dropped sharply, by 6.1%, to a two-year low, suggesting that the housing market continues to struggle despite declining mortgage rates.

Thursday will see a relatively thin calendar but will kick off with the June, Japan Trade Balance and Australian Unemployment (exp 5.2%, +10K, 66% PR). Europe will the look to the U Retail Sales for June (exp -0.3%mm, +2.6%yy), while the US have just the Philadelphia Fed Mfg Survey (exp 5)  and the weekly Jobless Claims to focus on, in what looks likely to be a session dominated by politics and Twitter Accounts!

Economic data highlights will include:

Thur: Japan Merchandise Trade Balance, Australian Unemployment, UK Retail Sales, US Philadelphia Fed Mfg Survey, Jobless Claims

Market moves, in brief:

FX: DXY 97.22 (-0.16%)

Bonds: US10Y; 2.047% (-2.96%), German 10Y; -0.290% (-16.61%), UK 10Y; 0.76% (-6.15%), Australian 10Y; 1.403% (-0.82%), NZ 10Y; 1.62% (+0.93 %), China 10Y; 3.199% (+0.66%)

Stock Indices: DJI; -0.42%, S+P; -0.65%, NASDAQ; -0.46%, EUStoxx50; -0.56%, FTSE100; -0.55%, Shanghai Composite; -0.20%,

Metals: Gold $1426 oz (+1.49%), Silver $15.97 oz (+2.71%), Copper $2.716 lb (+0.59%), Iron Ore $121.14 per tonne (NYMEX) (-0.04%),

Oil: WTI $56.36 pb (-1.88%)

CURRENCIES
EURUSD: 1.1223
Res  1.1235  1.1250  1.1265
Sup  1.1200  1.1180  1.1155
USDJPY: 108.05
Res  108.35  108.70  109.00
Sup  107.90  107.60  107.30
GBPUSD: 1.2433
Res  1.2455  1.2480  1.2505
Sup  1.2405  1.2380  1.2350
USDCHF: 0.9873
Res  0.9895  0.9925  0.9950
Sup  0.9860  0.9835  0.9815
AUDUSD: 0.7010
Res  0.7020  0.7035  0.7050
Sup  0.7000  0.6985  0.6965
NZDUSD: 0.6733
Res  0.6745  0.6765  0.6785
Sup  0.6715  0.6695  0.6675
INDICES / COMMODITIES
S&P.fs: 2984.78
Res  2995.00  3005.00  3015.00
Sup  2975.00  2965.00  2955.00
DJ30.fs: 27235.50
Res  27400.00  27650.00  27885.00
Sup  27120.00  26920.00  26695.00
SPI200.fs: 6598
Res  6610  6625  6635
Sup  6585  6570  6555
XAUUSD: 1425.44
Res  1430.00  1445.00  1460.00
Sup  1410.00  1395.00  1380.00
XAGUSD: 15.96
Res  16.00  16.20  16.40
Sup  15.75  15.55  15.30
WTI.fs: 56.35
Res  57.00  57.75  58.50
Sup  56.00  55.25  54.50