? Dollar rises and 10-year Treasurys steady ahead of U.S. GDP.
? BoJ makes another offer to buy bonds.
? European stocks rise amid mixed session in Asia.
? S&P 500 set to open higher.
The dollar strengthened against most major currencies and Treasurys were steady ahead of the release of U.S. GDP data for the second quarter. Japanese government bonds rose after the Bank of Japan made a second offer this week to purchase debt amid speculation that it could consider changing its policy next week. European stocks advanced after a mixed session in Asia and futures pointed to the S&P 500 opening 0.09% higher.
The euro depreciated by 0.12% against the dollar and sterling slipped 0.1% versus sterling by 7:04 a.m. ET. National Economic Council Director Larry Kudlow told Fox Business yesterday that the U.S. will likely "get a very good economic growth number" and suggested that GDP growth could exceed 4%.
"There's no doubt the U.S. economy is strong. ... Today's U.S. GDP print is not the start of a new economic norm; the circa 4% figure is distortedly high due to base effects (soft [first quarter]), some tariff-related trade activity and high inventories," strategists at ING Research said in a note.
"A strong U.S. GDP number today could well be the next catalyst for further euro weakness, and more or less confirm the prospect that the Federal Reserve remains on course for another two rate rises this year," according to Michael Hewson of CMC Markets UK. A figure of around 4.5% should be positive for the dollar while second-quarter GDP below 4% can put downward pressure on the U.S. currency, Hewson added.
Treasurys were broadly stable, with 10-year yields at 2.976%. "Treasurys remain torn between ongoing trade concerns and fears that the [Bank of Japan] will move away from yield curve control," TD Securities noted. A firm GDP reading later in the day "should allow the Treasury curve to continue flattening," TD added.
The BoJ offered for the second time this week to buy an unlimited number of bonds after 10-year yields on Japanese government bonds rose to 0.1% amid continuing speculation that the central bank will consider shifting its monetary policy at a two-day meeting starting July 30.
"Though the bank has in the past engaged in shock and awe policy, this is one side of the surprise that the bank does not want to be on," TD Securities said. "We expect no change at the upcoming meeting."
The yen was down 0.07% against the dollar at 111.1500. The Nikkei 225 index rose 0.56% at market close, while elsewhere in Asia, the Shanghai SE Composite Index closed 0.3% lower amid lingering trade tensions and Hong Kong's Hang Seng Index edged up 0.08%.
The Euro Stoxx 50 rose 0.42% while the FTSE 100 was up 0.49% before 7 a.m. ET. Reckitt Benckiser Group PLC shares have traded more than 7% up after the company reported first-half earnings above expectations and boosted its full-year revenue guidance.
Overnight, Amazon.com Inc.'s second-quarter earnings beat analyst expectations, and are likely to mitigate the pessimism cast on the tech sector by Facebook Inc., Hewson noted separately. The Nasdaq Composite index closed 1.01% lower July 26. Twitter Inc. fell more than 14% in pre-market trading after its earnings fell short of estimates.
Oil supermajors Exxon Mobil Corp. and Chevron Corp. were also slated to report today, as well as pharmaceutical giant Merck & Co. Inc.
Brent crude slipped 0.11% to $74.46 per barrel on the ICE Futures Exchange. Gold fell 0.62% to $1,227.7 per ounce.
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The day ahead:
8:30 a.m. ET — U.S. GDP (Econoday consensus: 4.2% quarterly)
10 a.m. ET — U.S. consumer sentiment (Econoday consensus: 97.1)
1 p.m. ET — U.S. Baker-Hughes rig count