Daily US Opening News And Market Re-Cap: August 2

From RanSquawk

  • The ECB leaves its key benchmark interest rate unchanged at 0.75% as expected; attention turns to Draghi's press conference at 1330BST/0730CDT.
  • The Bank of England keeps their benchmark borrowing rate and their asset purchase target unchanged at 0.5% and GBP 375bln
  • respectively; alongside expectations.

Market Re-Cap

Both the ECB and the BoE have held their benchmark borrowing rates unchanged at 0.75% and 0.5% respectively at their rate announcements.

The ECB decision provided instant support for EUR/USD, in firm positive territory at the North American crossover. In the fast money move, European equity futures sold off, but half the move has been rapidly pared. In fixed income, Bund futures declined, and are now seen marginally higher on the day. Despite this decision being largely expected, markets have priced in action from the ECB today, and some analysts pointed to a potential rate cut today. This reaction was seen on initial disappointment and the retracement move made as the ECB could still announce measures at the press conference scheduled to begin at 1330BST/0730CDT.

Risk appetite has boosted European equities are in positive territory at the North American crossover as speculation that the ECB will announce further stimulus at the press conference later today rises. Financials are the best performing sector led by BNP Paribas whose earnings beat analyst expectations despite a decline of 13% year-over-year for its net.

US Headlines

US Challenger Job Cuts (Jul) Y/Y 36.9K vs. Prev. 37.6K (Newswires)
No reaction was seen across asset classes following this data release as it was roughly in line with expectations.

EU & UK Headlines

Both Spanish and Italian bonds have performed strongly throughout the European morning, lifted by hopes that the ECB could resume their bond-buying programme. As such, the Italian and Spanish yields have declined throughout the curve, with particular declines seen in the Spanish short-end, with 5-yr yields seeing a decline of over 15bps ahead of the ECB announcement. The moves have also been assisted by a smooth Spanish bond auction, where the treasury sold to the top of the indicative range, selling over EUR 3bln in 2-, 4- and 10-yr bonds. However the yields did show an incline across the three lines. Following the ECB rate decision, Spanish and Italian 10yr yields are little changed after the fast money move lower in Spanish borrowing costs was rapidly pared. (RANsquawk)

UK Construction PMI (Jul) M/M 50.9 vs. Exp. 48.0 (Prev. 48.2)

Markit research noted that new orders recorded their second biggest drop since Jan 2010, but the fall was less steep than in June 2012, and the decline did not stop confidence about the year ahead.


European equities were making steady progress ahead of the ECB rate decision, trading among thin volumes as investors sat on the sidelines ahead of the announcements from the central bank. The oil & gas sector is seen leading the way higher, closely followed by financials as modest risk appetite is observed. US stock futures are seen moving in line with their European counterparts, indicating a higher open on Wall Street today.

In individual stock news, BNP Paribas reported their earnings premarket today, the company reported Q2 net down 13% at EUR 1.85bln vs. Exp. EUR 1.65bln, however, Q2 CIB pretax profit EUR 821mln vs. Exp. EUR 748mln. BNP Paribas also reported that it met its Basel 3 core capital ratio goal of 8.9% by end-June, 6-months in advance. At the North American crossover, BNP Paribas trade higher by 2.75%.


EUR/USD found support at the 1.2220 level overnight and has gradually inclined to just 2 pips shy of the 1.2300 level, strength  in the EUR stemming mostly from speculation rife that the ECB will announce unconventional stimulus boosting measures at the press conference this afternoon following last Thursday’s comments from President Mario Draghi, who said the ECB would do “whatever is needed to preserve the Euro”. EUR was further boosted following the results of the successful Spanish bond auction, where the country sold more than the indicative range. EUR/USD has pulled back from its intra-day highs, however, close proximity of a touted option expiry for the 10am NY cut (1500BST) at 1.2250. In the instant reaction to the ECB rate decision, EUR saw strength across the board, with investors now eyeing the press conference from Draghi.

GBP/USD traded within a 40 pip range for most of the morning session, where its low was 1.5523. A stronger than expected UK  construction PMI saw GBP strengthen and GBP/USD break up to new session highs of 1.5573. This level was once again tested immediately after the BoE announced that the rates and APF would remain on hold, as expected.


WTI and Brent crude futures are seen in positive territory ahead of the NYMEX pit open but on the decline over the past few hours, amongst thin volumes ahead of the key rate decisions today. The energy complex was relatively unreactive to the ECB rate decision, but may see price action alongside the USD with Draghi's scheduled press conference. Spot gold and silver prices are seen relatively unchanged ahead of the pit open, with gold prices moving into minor positive territory.