Market Brief
Regional equity markets are on the rise in Asia-Pacific as strong growth number from the US and a less volatile environment heightened traders’ interest for riskier assets. Mainland Chinese shares are trading strongly higher with the Shanghai Composite and the Shenzhen Composite adding 4.62% and 5.39%, respectively. However, Japanese shares printed the stronger gains among Asian markets (beside China) with the Nikkei 225 adding 3.03% and the TOPIX index rising 3.29% as Japan’s July inflation figures came in line with expectations. July Nationwide CPI matched expectations, printing at 0.2%y/y compared to 0.4% a month earlier while the core index, which exclude the more volatile components such as fresh food and energy prices, printed at 0.6%y/y as expected. On the bright side, retail sales grew 1.6%y/y in July versus 1.1% median forecast, following a revised increase of 1% in the previous month. Finally, the jobless rate fell to 3.3% in July compared to 3.4% consensus and previous reading. Despite those relatively strong data from Japan, USD/JPY is gaining positive momentum on renewed optimism about the US economy amid better-than-expected GDP figures. US second-quarter growth estimate rose at a 3.7% annualized rate while market participants were looking for a figure closer to 3.2%.
Elsewhere, in Hong Kong the Hang Seng added 0.52%, in Australia the S&P/ASX rose 0.58%, In India the BSE Sensex 30 adds 1.55% so far while in Thailand the SET index edged higher by 0.77%.
EUR/USD continued to grind lower yesterday but moved sideways in the Asian session, as usual. The euro already erased half the gains made since July 20 and is back around the key 1.1262 threshold (Fibo 50% on July 20 - August 24 rally). A break of the support standing at 1.1155 (Fibo 61.8%) will open the road toward the next one lying at 1.0850. On the upside, the closest resistance ca be found around 1.1368-1.14.
In Switzerland, second-quarter GDP figures were due earlier this morning and came in above market’s expectations. The Swiss economy grew 1.2%y/y versus 1.2% median forecast and an increase previous reading of 1.2%. Initially, EUR/CHF reacted negatively to the headline and lost 0.30% to 1.0840 while USD/CHF’s response was muted.
In Europe, equity futures are mixed this morning with German DAX down 0.22%, CAC 40 down 0.06%, Footsie 100 up 0.14%, SMI up 0.34% and Euro Stoxx 50 down 0.18%. GBP/USD is treading water around 1.5420, stabilising after having dropped 2.50% since the beginning of the weak. UK second-quarter preliminary estimates are due today and the pound sterling could react wildly in case of above consensus reading.
Today traders will be watching retails sales from Sweden; unemployment rate from Norway; consumer and business confidence from Italy; Q2 GDP from United Kingdom; IGPM inflation, net debt % GDP and Q2 GDP from Brazil; August inflation report from Germany; personal income and spending, PCE deflator and Michigan sentiment index from the US. In addition, SNB President Jordan and Fed’s Lockhart, Kocherlakota and Mester will give speech today.
Currency Tech
R 2: 1.2252
R 1: 1.1871
CURRENT: 1.1287
S 1: 1.1017
S 2: 1.0809
R 2: 1.5930
R 1: 1.5803
CURRENT: 1.5429
S 1: 1.5425
S 2: 1.5330
R 2: 135.15
R 1: 125.86
CURRENT: 120.96
S 1: 115.57
S 2: 113.86
R 2: 0.9904
R 1: 0.9588
CURRENT: 0.9616
S 1: 0.9151
S 2: 0.9072