26 July 2016 at 11:18 GMT
The price movements in today's forex markets appear to reflect flagging hopes of strong central bank action with the Japanese yen soaring on apparent state indecision concerning the imminent round of stimulus and the greenback in a holding pattern ahead of a Federal Open Market Committee that is not expected to provide much direction.
In stocks, the big story of the day is Apple, where the US electronics giant is widely expected to post a less-than-stunning Q2. Buried in the fog of low expectations, however, is the possibility that "less-than-stunning" may still clock in above analyst expectations. If so, a rally in Apple shares could be on the cards.
Finally, the commodities space sees crude sliding on the resurgence of demand fears as the summer driving season peaks and recedes. Gold, meanwhile, has made up some of yesterday's lost ground on dimming stimulus hopes from the Federal Reserve and BoJ.
- US US May S&P/CaseShiller Home Price Index (1300 GMT)
- US Preliminary Jul. Markit Services PMI (1345 GMT)
- US Jul. Consumer Confidence (1400 GMT)
- US Jun. New Home Sales (1400 GMT)
EURUSD gaining on the day but with limited upside ahead of main Federal Open market Committee statement tomorrow evening. Main resistance today and tomorrow would be the 200-day moving average which is now at the 1.1076 area. The sense is that markets might be feeling that the FOMC will not deliver anything significant, which is weakening USD and taking EURUSD above the 1.10 area. USDJPY weakening significantly today following comments by the Japanese finance minister saying the size of the expected stimulus package remains unnown and BoJ needs to do its part, which was a disappointment with markets thinking the government and BoJ would work together.
Looking at the chart, 103.7 is around the 50% Fibo level from the rally starting July 8, and then 102.85 area; 104.65 is the 38% Fibo level. These areas could be where USDJPY is contained until Friday.
FX Options volatilities
EURUSD and GBPUSD volatility still offered; not a lot of expectations for the FOMC so the market does not want to run a big decay bill over the summer...
In USDJPY, volatility is unchanged even though spot is two big figures lower. Risk reversals still not really working either, and it seems that no one really want to be long vega after BoJ (but no one wants to run a short gamma position either).
AUD, NZD and CAD slightly better bid on the front end but not much interest on the curve.
A strong session for government bonds while the credit segment seeing its biggest drop in 10 days. Having tested 167 earlier, the 10-year german bunds future has settled slightly below for now.
XOVER credit spread is five basis points wider so far today and 10 bps off the most recent low at 315 bps.
European markets opened largely unchanged following a number of earnings releases in both the US and Europe but then drifted during early morning trade. A late recovery leaves the Euro Stoxx 600 off just 0.10%. Healthcare and Consumer Staples are the best performers versus struggling Banks and Energy stocks.
BP is down 2.25% after reporting a Q2 profit of $720m, which is lower than estimated while their dividend remains in line.
Virgin Money is up over 6% after a very good H1 pretax profit, but it has reported that it will be delaying small business lending post- the Brexit vote.
Mediaset shares fell 10% after confirming that Vivendi had proposed an alternative takeover deal than the one agreed in April.
Commerzbank fell 5.5% after reporting a weak Q2 and a drop in its capital buffer.
A number of US stocks are reporting today including Apple, Twitter, 3M, Caterpillar, and Freeport-McMoran.
The replay of our Morning Call can be found here.
Mid-session Europe is part of TradingFloor's stable of commentary running through from the US close, through Asia to the European session. Click below to keep abreast of all the developments as they happen.
Only a few hours to go until Apple's Q2 numbers will pop up on our screens... Photo: iStock
— Edited by Michael McKenna and Clemens Bomsdorf