Thursday 3rd August: European Open Briefing

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Thursday 3rd August: European Open Briefing 1

Global Markets:

  • Asian stock markets: Nikkei and Hang Seng both down 0.20 %, Shanghai Composite lost 0.25 %, ASX 200 fell 0.40 %

  • Commodities: Gold at $1261 (-0.85 %), Silver at $16.51 (-1.35 %), WTI Oil at $49.45 (-0.30 %), Brent Oil at $52.20 (-0.35 %)

  • Rates: US 10-year yield at 2.26, UK 10-year yield at 1.23, German 10-year yield at 0.49

News & Data:

  • China Caixin PMI Services Jul: 51.5 (Prev 51.6)
  • China Caixin PMI Composite Jul: 51.9 (Prev 51.1)
  • Australia Trade Balance (AUD) Jul: 856m (Est 1.8B Prev 2.47B)
  • New Zealand ANZ Commodity Price Jul: -0.80% (Prev 2.10%)
  • Japan Nikkei PMI Composite Jul: 51.8 (Prev 52.9)
  • Japan Nikkei PMI Services Jul: 52 (Prev 53.3)
  • Fed's Williams: Maybe 1 More Rate Hike In 2017, 3 More In 2018 Appropriate
  • Fed's Williams: USD Decline Isn't a Big Factor in Inflation Outlook
  • PBoC Fixes USDCNY Reference Rate At 6.7211(Prev 6.7205)

Markets Update:

Risk appetite decreased overnight following worse than expected Chinese economic data. Asian stock markets came under pressure, along with risk currencies such as the Aussie and New Zealand Dollar.

AUD/USD fell from 0.7970 to 0.7915 overnight. Support is now seen at 0.7880 and stronger at 0.7830. The outlook is still positive, and the Aussie is likely to run into decent demand below 0.79.

Meanwhile, NZD/USD fell below 0.74. The weak employment numbers from Tuesday have brought the currency under pressure. However, it should find good support around 0.7330.

USD/JPY is holding surprisingly well given the risk-off bias. The pair traded only briefly below 110 yesterday, and managed to bounce back to 110.90. While the outlook is still negative, USD/JPY is showing a lot of resilience given the broad Dollar weakness elsewhere. A break back above 111.30 resistance would signal that the recovery could extend to 112.

The Euro remains strong. While the charts suggest EUR/USD is heavily overbought in the short-term, it is not showing any signs of a reversal yet. There is little resistance until 1.20 now, and the pair is likely to test that level soon.

Upcoming Events:

  • 08:45 BST – Italian Services PMI
  • 08:50 BST – French Services PMI
  • 08:55 BST – German Services PMI
  • 09:00 BST – Euro Zone Services PMI
  • 09:30 BST – UK Services PMI
  • 10:00 BST – Euro Zone Retail Sales
  • 12:00 BST – Bank of England Rate Decision
  • 15:00 BST – US ISM Services PMI

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