G10 FX Analysis - 28th July 2017
In the G10 currencies, NOK, EUR and SEK are the top three with CHF at the bottom. In equities, Nikkei 225 has closed 0.6% lower at 19,959.84, down 0.7% for the week. The European equities have also opened lower with FTSE, DAX and CAC40 down 0.26%, 0.63% and 1.00%, respectively. In the rates market, the EU and US 10-year yields are consolidating at 0.53% and 2.3%, respectively. In the energy space, the WTI front month is consolidating above the $49.0 handle after a strong 8.3% rise for the week.
USD had a bit of a respite yesterday with gains across the G10 space, however, the USD-index is still down roughly 0.5% (93.75) from pre-FOMC highs. The main focus for the day remains the US Q2 GDP growth rate (advance) at 1230GMT; in our view, a strong print will be needed to keep USD from falling. The Euro-area Business confidence at 0900GMT and German inflation rate (preliminary) at 1200 GMT will also be keenly watched.
Overnight, the Tokyo core CPI increased 0.2% better than the 0.1% increase expected. The headline inflation was same as expected at 0.4%. The unemployment rate also fell unexpectedly to 2.8% from 3%. Elsewhere, the Swedish Q2 GDP growth rate came in strong at 1.7% while a rise of 1% was expected. The retail sales were also very strong and as we have said before the Riksbank is likely to be compelled by data to change their dovish stance.