Headlines:
- Risk tones keep calmer so far on the day
- Bonds bears refuse to throw in the towel just yet
- Oil steadies at support as OPEC+ mulls small output increase
- Fed's Bullard says still want rates to get to 3.75% to 4.00% this year
- US House speaker Pelosi departs Taiwan
- "America stands with Taiwan", says Pelosi
- Eurozone July final services PMI 51.2 vs 50.6 prelim
- Eurozone June retail sales -1.2% vs 0.0% m/m expected
- Germany June trade balance €6.4 billion vs €0.2 billion expected
- UK July final services PMI 52.6 vs 53.3 prelim
- Switzerland July CPI +3.4% vs +3.5% y/y expected
Markets:
- AUD leads, JPY lags on the day
- European equities slightly higher; S&P 500 futures up 0.4%
- US 10-year yields up 3.5 bps to 2.787%
- Gold up 0.3% to $1,764.55
- WTI crude up 1.5% to $95.25
- Bitcoin up 1.5% to $23,357
After all the drama involving Pelosi's visit to Taiwan, markets are settling in as calmer tones swept across European morning trade. Pelosi also departed from Taiwan during the session and all eyes will be on China's military operations surrounding the island in the coming days.
The bond market faced a heavy day of selling yesterday and after some steadier tones early on, we are seeing yields tick higher again now. 10-year Treasury yields are up 3.5 bps to 2.787% and that is underpinning USD/JPY on the day. The pair fell to a low of 132.20 in Asia trading before gradually gaining to 133.40 levels currently, up 0.2% on the day.
Equities kept the calm with US futures holding slightly higher after yesterday's late dip in the cash market. Meanwhile, the dollar was little changed early on but is now seen more sluggish on the session. EUR/USD moved up from 1.0170 to 1.0210 but large option expiries around 1.0195-00 and the key hourly moving averages at 1.0198-11 are keeping gains in check.
Elsewhere, GBP/USD is contesting its 100-hour moving average at 1.2191 but buyers are unable to firmly hold above that for now despite a bit of a push and pull around 1.2200. The commodity currencies are holding up decently after some selling in the past few sessions with USD/CAD down 0.2% to 1.2850 and AUD/USD up 0.3% to 0.6940 but nothing to really shout about after the pullback since yesterday.
In the commodities space, oil is pushing higher as OPEC+ looks set to settle on a small output increase for September - putting an end to the run of moderate production hikes. WTI crude moved up from around $93.50 to $95.40 and continues to hold at key support as outlined here.
