31 July: Nasdaq leads stocks lower again. Busy day ahead; BOJ Meeting, EU provisional Q2 CPI/GDP, US PCE all due.

By | July 31, 2018

 

The dollar is steady  – to slightly lower – today ahead of the BOJ Meeting as traders await the possibility that the BOJ will announce changes to its monetary easing policy. US$Jpy itself is pretty much unchanged while the Euro is firmer after data showed that German and Spanish inflation remained slightly above the ECB’s price stability target in July, supporting the ECB’s cautious approach of winding down its monetary stimulus only gradually. Cable was also firm ahead of Thursday’s BOE Meeting at which a rate hike is considered a strong possibility, while the commodity currencies are steady. The main interest of the day was once gain in the stock markets, where the Nasdaq posted its third consecutive loss of more than 1%, for the first time in three years just days after hitting a record high. The DJI and S+P were also lower, by around 0.6%. The metals were steady, but WTI climbed strongly, by almost 2%, reaching $70 a barrel as trader concerns over global crude supply supported sentiment, with supply disruptions in Saudi Arabia and declining output from and Venezuela, Iran and Libya underpinning the price.

Tuesday will be a busy session, beginning early with the Japanese Unemployment and Industrial Production figures for June and will be closely followed by the China Mfg/Non-Mfg PMIs for July (exp 51.3/55) as well as the NZ Activity Outlook and the Australian New Home Sales, Private Sector Credit (exp 0.4%mm) and Building Permits (exp 0.0%mm) for June. In the Asian afternoon the main event of the day will be the BOJ Meeting, where speculation has suggested that the BOJ may undertake some form of tightening of policy although that seems to have been watered down in the last couple of days. We shall see, but for today all eyes will be on the BOJ’s yield curve control policy, with any moves to allow 10-year bonds to trade higher, from the current 0%, target likely to see a sharp move lower in US$Jpy. The BOJ Press Conference may therefore be more lively than usual although there are plenty of analysts who think that no tightening at all will take place this month. Later on, from Europe comes German Retail Sales (1.0%mm/1.5%yy), Unemployment (exp -10k, 5.2%) and the EU Provisional Q2 GDP (exp 0.4%qq/2.4%yy), Provisional July CPI (exp 2%yy; Core 0.9%yy) and unemployment (exp 8.5%). From the US we will have the June Personal Consumption/Expenditure Index, the Case Shiller House Price Index, Chicago Purchasing Managers Index and the API weekly Crude Oil Stock Inventory. Have a good day.

CURRENCIES
EURUSD: 1.1704
Res  1.1720  1.1735  1.1750
Sup  1.1690  1.1675  1.1660
USDJPY: 111.06
Res  111.40  111.65  112.00
Sup  110.80  110.60  110.25
GBPUSD: 1.3130
Res  1.3150  1.3180  1.3210
Sup  1.3100  1.3075  1.3050
USDCHF: 0.9883
Res  0.9915  0.9945  0.9980
Sup  0.9860  0.9830  0.9790
AUDUSD: 0.7405
Res  0.7415  0.7440  0.7465
Sup  0.7370  0.7350  0.7325
NZDUSD: 0.6823
Res  0.6835  0.6860  0.6885
Sup  0.6790  0.6760  0.6725
INDICES / COMMODITIES
S&P.fs: 2804
Res  2815  2825  2840
Sup  2795  2780  2770
DJ30.fs: 25299
Res  25365  25470  25575
Sup  25260  25180  25090
SPI200.fs: 6222
Res  6235  6250  6265
Sup  6205  6185  6160
XAUUSD: 1221.49
Res  1230  1235  1240
Sup  1220  1215  1210
XAGUSD: 15.48
Res  15.55  15.65  15.75
Sup  15.40  15.30  15.20
WTI.fs: 70.04
Res  70.40  70.85  71.35
Sup  69.55  69.05  68.60