It has been a rather steady day in the FX markets, as can be seen through the DXY which is more or less unchanged, while stocks are flat after a choppy session. The main interest has been in Bitcoin, which has continued its stratospheric rally from 7500 in early June, to currently sit at 13650, helped on its way by the prospect that Facebook’s Libra token could push crypto-currencies into the mainstream. The other move of note seen on Wednesday was in oil, with WTI also rising strongly and nearly reaching 60.00 before giving up some of its gains towards the end of the session. The reason for the move was the EIA Crude Oil Stocks Weekly report, which showed the biggest weekly inventory drop in the US since September 2016, falling by 12.79 million barrels in the week to June 21, against forecasts for a stockpile draw of 2.54 million. The drawdown comes on top of the US/Iran tensions and it does appear that WTI has further upside potential.
In the FX markets, the Jpy has shown some mild weakness, while the Aud and Nzd both retain a quietly bid tone and the EU majors have been confined to a tight range. With Donald Trump suggesting the good possibility of a trade deal with China, safe-haven Jpy trades are being unwound, which is placing downside pressure on the Jpy. Yields were mildly stronger but overall, traders remain sidelined ahead of the G20 meeting.
Thursday will have its focus on the US Q1 GDP (exp 3.1%yy) and US Personal Consumption/Expenditure figures although activity may be muted ahead of the G20 meeting, which gets underway tomorrow and then heads into the weekend. Ahead of today’s US data, there is some minor NZ data Activity Outlook (exp 7.8%) and Business Confidence (exp -22.5) – due shortly -, and then later and more importantly, the Preliminary German CPI/HICP for June (CPI, exp 0.1%mm, 1.4%yy; HICP, exp 1.3%yy). Aside from the GDP figure, the US will also have the May Pending Home Sales (exp +1.0%mm, +2.7%yy), and the Kansas Fed Mfg Activity although this is likely to have limited effect on the market as traders wait on any G20 headlines.
Economic data highlights will include:
Thur: Japan Retail Trade, NZ ANZ Activity Outlook, Business Confidence, EU Economic Sentiment Indicator, Industrial Confidence, Services Sentiment, Business Climate, German CPI, US Q1 GDP, US Personal Consumption/Expenditure, Pending Home Sales, Kansas Fed Mfg Activity, Jobless Claims
Market moves, in brief:
FX: DXY 96.23 (+0.05%)
Bonds: US10Y; 2.05% (+3.2%), German 10Y; -0.303% (+8.22%), UK 10Y; 0.827% (+4.27%), Australian 10Y; 1.291% (-0.08%), NZ 10Y; 1.55% (+0.98 %), China 10Y; 3.25% (0.00%)
Stock Indices: DJI; -0.04%, S+P; -0.12%, NASDAQ; +0.32%, EUStoxx50; -0.04%, FTSE100; -0.08%, Shanghai Composite; -0.19%,
Metals: Gold $1410 oz (-1.0%), Silver $15.28 oz (-0.55%), Copper $2.713 lb (-0.80%), Iron Ore $110.00 per tonne (NYMEX) (+1.92%),
Oil: WTI $ 59.20 pb (+0.60%)
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