30 Jul: US$, stocks mixed. Gbp sharply lower as “no-deal” Brexit looms on the horizon. BOJ Meeting in focus today.

By | July 30, 2019

The US$ and stocks are mixed on Monday, although Sterling has been in freefall as Boris Johnson’s government begins to prepare for the possibility of a “no-deal” Brexit.  The Aud$ and Nzd$ are both weak as markets await the resumption of US-China trade negotiations which start tomorrow in Shanghai, but where expectations for any progress are low, and both sides seem to be more focused on preventing tensions from escalating before the 2020 US Presidential election, than on making concessions.

Elsewhere, stocks are mixed but generally remain at/near all-time highs because the Q2 US corporate profit reporting season is proving to be more resilient than expected, while WTI moved up by 1.5% and the metals by 0.5% as the prospects of the first Fed rate cut in a decade underpinned commodity prices.

Sterling tumbled by around 1% as various members of UK PM, Boris Johnson’s team took a tough stance on the Brexit outcome, with the UK Chancellor, Sajid Javid, saying he was stepping up preparations for a no-deal departure and Michael Gove, writing in the UK Press, said that the government is now working on the assumption that the talks with the EU would fail. The FTSE finished strongly higher, by 1.8%; Goodness knows why, given the current mess that the UK is in, but most likely as a direct result of the weaker Sterling, allowing foreign investors to buy UK stocks at a discount. The rally was led by the Financial Services, Mobile Telecommunications and Pharmaceuticals & Biotech sectors.

Tuesday is going to be busy, starting with the NZ Building Permits (exp -1.0%mm), which will be followed by the BOJ Meeting. No change is expected to policy and the interest will lie in the forward outlook/statement. from the EU, the main action will come via the Preliminary German inflation report for July (CPI, exp 0.3%mm, 1.5%yy; HICP, exp 1.3%yy)  – and the EU Economic Sentiment Indicator, Industrial Confidence, Services Sentiment and Business Climate figures for June. There will then be a fair bit of secondary data from the US, which will include the Personal Consumption/Expenditure – Price Index (June), Case Shiller House Price Index (May, exp +2.6%mm), Consumer Confidence (July), Pending Home Sales (June, exp +1.0%mm), API Weekly Crude Oil Stock Inventory

Economic data highlights will include:

Tue: NZ Building Permits, BOJ Meeting/Interest Rate Decision/Statement/Outlook, EU Economic Sentiment Indicator, Industrial Confidence, Services Sentiment, Business Climate, German CPI/HICP, US Personal Consumption/Expenditure – Price Index, Case Shiller House Price Index, Consumer Confidence, Pending Home Sales, API Weekly Crude Oil Stock Inventory

Market moves, in brief:

FX: DXY 98.04 (+0.14%)

Bonds: US10Y; 2.065% (-0.49%), German 10Y; -0.393% (-4.14%), UK 10Y; 0.649% (-5.57%), Australian 10Y; 1.222% (-1.61%), NZ 10Y; 1.490% (-1.65 %), China 10Y; 3.179% (+0.14%)

Stock Indices: DJI; +0.11%, S+P; -0.14%, NASDAQ; -0.44%, EUStoxx50; -0.03%, FTSE100; +1.82%, Shanghai Composite; -0.02%,

Metals: Gold $1427 oz (0.58%), Silver $16.46 oz (+0.41%), Copper $2.7175 lb (+1.21%), Iron Ore $114.24 per tonne (NYMEX) (-4.72%),

Oil: WTI $57.03 pb (+1.53%)

CURRENCIES
EURUSD: 1.1145
Res  1.1160  1.1185  1.1210
Sup  1.1125  1.1100  1.1075
USDJPY: 108.78
Res  109.00  109.20  109.40
Sup  108.60  108.40  108.20
GBPUSD: 1.2223
Res  1.2270  1.2310  1.2355
Sup  1.2200  1.2165  1.2130
USDCHF: 0.9915
Res  0.9930  0.9950  0.9970
Sup  0.9905  0.9885  0.9865
AUDUSD: 0.6902
Res  0.6915  0.6925  0.6935
Sup  0.6895  0.6880  0.6865
NZDUSD: 0.6632
Res  0.6650  0.6675  0.6700
Sup  0.6615  0.6595  0.6570
INDICES / COMMODITIES
S&P.fs: 3021.53
Res  3030.00  3040.00  3050.00
Sup  3015.00  3005.00  2995.00
DJ30.fs: 27198.00
Res  27225.00  27290.00  27350.00
Sup  27140.00  27075.00  27025.00
SPI200.fs: 6791
Res  6800  6815  6830
Sup  6780  6765  6750
XAUUSD: 1426.20
Res  1430.00  1435.00  1440.00
Sup  1420.00  1410.00  1405.00
XAGUSD: 16.45
Res  16.50  16.65  16.80
Sup  16.30  16.20  16.00
WTI.fs: 57.01
Res  57.60  58.35  59.15
Sup  56.35  55.65  54.85