GBP/JPY forming a triangle
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.
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Trending Economic 31st July 2017
In the G10 currencies, USD and JPY are the top gainers for the day with CAD and NZD the top losers. In the equities space, the Nikkei 225 has closed 0.17% down, at 19925.18 but the European equities are trading slightly firm with FTSE up 0.38%, DAX up 0.1%, and CAC 40 up 0.17% so far. In the rates market, the EU and US 10-year yields are consolidating at 0.54% and 2.29%, respectively, after failing to keep the rise seen early on Friday. In the energy space, the WTI front month is consolidating after testing the $50.0 mark.
Looking ahead, this week is relatively busy with the Euro-area inflation (flash) and unemployment rate the main focus today followed by the RBA rates decision and global manufacturing PMI’s on Tuesday. The services PMI will be due on Thursday along with the BoE rates decision and Euro-area retail sales. On Friday, the US NFP data will be the main focus but with Fed dependent on inflation we doubt if the US jobs data alone is sufficient to lift USD.
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