Daily Market Update 29th July 2016
OVERNIGHT NEWS
- It was a light day for data, with German July inflation coming in a touch stronger than expected (+0.4% y/y). But despite the firmer tone, the outlook for inflation remains a concern and the 10-yr bund yield remains sub-zero
- Initial jobless claims rose modestly to 266k vs 252k the previous week. The noise in the data do not alter the fact that claims remain very low by any historic measure, indicative of a robust labour market.
FOREIGN EXCHANGE (INDICATIVE RATES)
| Currency | Last | % Change | Overnight Range |
|---|---|---|---|
| DXY | 96.74 | -0.04% | 96.287 - 96.771 |
| EURUSD | 1.1082 | -0.09% | 1.1064 - 1.1119 |
| USDJPY | 104.79 | -0.18% | 104.49 - 105.51 |
| AUDUSD | 0.7511 | 0.08% | 0.7063 - 0.7121 |
| GBPUSD | 1.3155 | 0.46% | 1.3117 - 1.323 |
Commodities (INDICATIVE RATES)
| Currency | Price USD | % Change | Overnight Range |
|---|---|---|---|
| Gold | 1335.02 | 0.31% | 1332.6 - 1345.7 |
| Silver | 20.17 | 0.68% | 20.1068 - 20.5202 |
| Oil (BRENT) | 42.70 | 0.77% | 42.56 - 49.22 |
| Oil (WTI) | 41.03 | 2.28% | 41.04 - 42.22 |
COMMODITIES
Precious Metals: Platinum and palladium prices have reached 2016 highs. In July, Platinum was up 12%, on track for the best month since 2012, while Palladium jumped 17%, the most since 2008.
Oil: WTI hovered around three-month low after US supply gains and testing key technical levels of 200SMA. Natural-gas futures rallied by 8%, their largest one-day percentage gain of the year, as EIA reported supplies of the commodity rose 17 billion cubic feet, below the average rise of 27 billion cubic feet expected, lifting prices to their highest level in nearly a month.
FOREX NEWS
- AUDUSD held up reasonably well around its 100 day moving average (0.7485 – three closes above), however, yet again, it found the air above its minor swing 15 day moving average (0.7530 – no close above since 18-July) quite thin. On the day, 0.7550 represents daily trend line resistance.
- The much anticipated BOJ meeting has about 80% of analysts and economists are expecting some form of easing as the stakes are high for Kuroda and his board. However, Yen surged on early Friday as the Japan's currency rose as much as 1.8 percent to 103.41 per dollar before trading 0.5 percent stronger at 104.77 as of 8.40a.m. Pricing in FX Option also priced a 2-2.5% move in the BOJ meeting.
BOJ eases policy with modest increase in ETF buying
The Bank of Japan expanded monetary stimulus on Friday through a modest increase in purchases of exchange-traded funds (ETF), yielding to pressure from the government and financial markets for bolder action to spur growth and accelerate inflation towards its 2 percent target.
But the central bank maintained its base money target at 80 trillion yen ($775 billion) as well as the pace of purchases for other assets including Japanese government bonds.
It also left unchanged the 0.1 percent interest it charges to a portion of excess reserves financial institutions park with the central bank.
The BOJ said it will increase ETF purchases so that its total holdings increase at an annual pace of 6 trillion yen, up from the current 3.3 trillion yen. The decision was made by a 7-2 vote.
Read More at www.reuters.com
