25 July: Good earnings numbers underpin US stocks. US$ soft. NZ T/B & Australian CPI ahead. Otherwise a quiet day.

By | July 25, 2018

 

US Stock markets put aside the current geopolitical tensions and the fears of a full-blown trade war on Tuesday and rose by 0.2%/0.7%, underpinned by more strong corporate results. Currencies were generally quieter although the Aud$ and the Kiwi were in demand, as was Cable which saw some short covering in lacklustre conditions. Elsewhere, markets were generally steady although WTI climbed by around 1.2% as concerns about oversupply eased amid expectations that US oil stockpiles fell last week. The EIA Crude Oil Stocks Weekly Change is due on Wednesday and is expected to show domestic crude supplies, already close to 3-year lows, fell by 2.3 million barrels.

In terms of data, the PMIs were mixed. The EU PMI manufacturing rose to 55.1 in July, up from 54.9 and beat expectation of 54.6, but the PMI services dropped to 54.4, down from 55.2 and missed expectation of 55.1. The PMI composite dropped to 54.3, down from 54.9 and hit a 2-month low.  The German PMI manufacturing rose to 57.3 in July, up from 55.9; way above expectation of 55.7, but again, the PMI services dropped to 54.4, down from 54.5 and missed expectation of 54.5. The PMI composite rose to 55.2, up from 54.8, and hit a 5-month high. The France PMI manufacturing rose to 53.1 in July, up from 52.5 but missed expectation of 53.9. PMI services dropped to 55.3, down from 55.9, but beat expectation of 54.3. PMI composite dropped 0.4 to 54.5, hitting a two month low.

Wednesday will begin with the NZ Trade Balance for June (exp +$NZ 200 mio) and will be closely followed by the Australian Q2 CPI (CPI; exp 0.5% qq, 2.2% yy, Core; exp 0.5% qq, 1.9% yy). Inflation is generally expected to have picked up a little due to higher petrol prices but will have limited effect with regards to any potential RBA rate hike which is still a long way off. Later in the day, the EU will have the German IFO Business Climate/Expectations, the UK, the CBI Industrial Trends Survey (Realised), and the US will look to the New Home Sales and the EIA weekly crude oil stock change for guidance. Most likely it will be a mostly rangebound session today while awaiting the outcome of the meeting in Washington between Trump/Juncker who will be negotiating US/EU trade relationships. On Thursday we then get the EU Interest Rate Decision/Statement and on Friday the Q2 GDP. It will be a busy few days.

CURRENCIES
EURUSD: 1.1683
Res  1.1700  1.1715  1.1730
Sup  1.1670  1.1655  1.1630
USDJPY: 111.20
Res  111.55  111.90  112.25
Sup  111.00  110.75  110.50
GBPUSD: 1.3146
Res  1.3160  1.3175  1.3195
Sup  1.3130  1.3110  1.3070
USDCHF: 0.9937
Res  0.9975  1.0015  1.0065
Sup  0.9900  0.9875  0.9840
AUDUSD: 0.7416
Res  0.7435  0.7445  0.7470
Sup  0.7410  0.7395  0.7375
NZDUSD: 0.6800
Res  0.6815  0.6825  0.6840
Sup  0.6785  0.6770  0.6750
INDICES / COMMODITIES
S&P.fs: 2819
Res  2830  2840  2850
Sup  2810  2800  2790
DJ30.fs: 25202
Res  25270  25325  25410
Sup  25135  25085  25025
SPI200.fs: 6215
Res  6230  6250  6270
Sup  6200  6180  6160
XAUUSD: 1224
Res  1230  1235  1240
Sup  1220  1215  1210
XAGUSD: 15.47
Res  15.60  15.70  15.80
Sup  15.35  15.20  15.00
WTI.fs: 68.62
Res  69.05  69.50  70.15
Sup  68.00  67.55  66.60