Market Roundup
- EU leaders agree on migration after late-night summit
- First Trump-Putin summit has Cold War backdrop, U.S. allies nervous
- U.S.-based equity funds post $20 bln outflows, most since Feb. -Lipper
- U.S. ambassador unconvinced China willing to make fast progress on trade
- BOJ trims purchase amount of 5- to 10-year JGBs at regular operation
- Japan Jun CPI Core Tokyo YY, 0.7%, f'cast 0.6%, last 0.5%
- Japan Jun CPI, Overall Tokyo, 0.6%, last 0.4%
- Japan May Jobs/Applicants Ratio, 1.60, f'cast 1.59, last 1.59
- Japan May Unemployment Rate, 2.2%, f'cast 2.5%, last 2.5%
- Japan May Industrial Output prelim MM, -0.2%, f'cast -1.1%, last 0.5%
- Australia May Private Sector Credit, 0.2%, last 0.4%
- Australia May Housing Credit, 0.4%, last 0.4%
- Foreign CB US debt holdings -$4.039 bln to $3.399 tln June 27 week
- Treasuries -$3.493 bln to $3.038 tln, agencies -$475 mln to $289.101 bln
Economic Data Ahead
- (0245 ET/0645 GMT) France May Consumer Spending MM, f'cast 0.8%, last -1.5%
- (0245 ET/0645 GMT) France Jun CPI (EU Norm) Prelim YY, f'cast 2.4%,last 2.3%
- (0400 ET/0800 GMT) Germany Jun Unemployment Chg SA, f'cast -8k, last -11k
- (0400 ET/0800 GMT) Germany Jun Unemployment Rate SA, f'cast 5.2%, last 5.2%
- (0430 ET/0830 GMT) Great Britain Q1 GDP YY, f'cast 1.2%, last 1.2%
- (0430 ET/0830 GMT) Great Britain May BOE Consumer Credit, f'cast 1.500 bln, last 1.832 bln
- (0430 ET/0830 GMT) Great Britain May Mortgage Lending, f'cast 3.733 bln, last 3.894 bln
- (0430 ET/0830 GMT) Great Britain Q1 Current Account GBP, last -18.00 bln, last -18.44 bln
- (0500 ET/0900 GMT) EZ Jun HICP Flash YY, f'cast 2%, last 1.9%
Key Events Ahead
- N/A ECB's Draghi speaks at Brussels
- (0600 ET/1000 GMT) Bank of England's Bailey speaks at London
FX Beat
DXY: The dollar index slumped as underlying sentiment was dampened by worries over trade war, just a week before initial U.S. and Chinese tariffs were set to take effect. The greenback against a basket of currencies trades 0.4 percent down at 94.91, having touched a high of 95.53 in the prior session, its highest since July 2017. FxWirePro's Hourly Dollar Strength Index stood at -23.38 (Neutral) by 0500 GMT.
EUR/USD: The euro rallied above the 1.1600 handle after European Union leaders reached an agreement on migration at their summit. Investors now await the Eurozone's consumer price index (CPI), which is seen rising 2 percent year-on-year in June against 1.9 percent in May, while core CPI growth is seen cooling to 1.0 percent from 1.1 percent. The European currency traded 0.7 percent up at 1.1654, having touched a high of 1.1719 on Tuesday, its highest since June 14. FxWirePro's Hourly Euro Strength Index stood at 131.46 (Highly Bullish) by 0500 GMT. Investors’ attention will remain on the Eurozone consumer price index, ahead of U.S. personal consumption expenditures, personal income and spending figures. Immediate resistance is located at 1.1700, a break above targets 1.1744 (June 4 High). On the downside, support is seen at 1.1530 (June 19 Low), a break below could drag it till 1.1500.
USD/JPY: The dollar rose to a 2-week peak amid growing prospects of rising U.S. interest rates on the back of better-than-expected expansion in the U.S. economy. Moreover, easing geo-political tensions in the European Union weighed heavily on the safe-haven Japanese yen. The major was trading 0.2 percent up at 110.67, having hit a high of 110.78 earlier, its highest since June 15. FxWirePro's Hourly Yen Strength Index stood at -110.40 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. personal consumption expenditures, personal income and spending figures. Immediate resistance is located at 110.90 (June 15 High), a break above targets 111.08 (June 18 High). On the downside, support is seen at 110.20 (10-DMA), a break below could take it lower 109.68 (June 27 Low).
GBP/USD: Sterling consolidated near an 8-month low touched in the prior session, after Irish Prime Minister Leo Varadkar stated that his country would have to start making preparations for the unlikely scenario of Britain separating from the European Union without a deal. The major traded 0.3 percent up at 1.3113, having hit a low of 1.3049 the day before; it’s lowest since Nov. 2. FxWirePro's Hourly Sterling Strength Index stood at -74.23 (Neutral) 0500 GMT. Investors’ attention will remain on UK gross domestic product, total business investment, mortgage approvals, current account and consumer credit figures, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3188, a break above could take it near 1.3250. On the downside, support is seen at 1.3049 (June 29 Low), a break below targets 1.3039 (Oct. 3 Low). Against the euro, the pound was trading 0.4 percent down at 88.76 pence, having hit a low of 88.90 pence earlier in the day, it’s lowest since March 12.
AUD/USD; The Australian dollar rose, extending gains for the second straight session, as the Reserve Bank of Australia appeared certain to keep its cash rate at an all-time low of 1.5 percent at a policy meeting on July 3. The Aussie trades 0.5 percent up at 0.7387, having hit a low of 0.7323 on Wednesday; it’s lowest since Jan 2017. FxWirePro's Hourly Aussie Strength Index stood at 84.73 (Slightly Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7300, a break below targets 0.7280. On the upside, resistance is located at 0.7423 (June 26 High), a break above could take it near 0.7443 (June 22 High).
NZD/USD: The New Zealand dollar rebounded after falling to a fresh-1 year low after the RBNZ reiterated that the OCR is expected to remain low and gave no guidance about the timing or direction of the next move. The Kiwi trades 0.2 percent up at 0.6771, having touched a low of 0.6732 earlier, its lowest level since June 2016. FxWirePro's Hourly Kiwi Strength Index was at -85.36 (Slightly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6810 (Previous Session High), a break above could take it near 0.6841 (5-DMA). On the downside, support is seen at 0.6725, a break below could drag it below 0.6700.
Equities Recap
Asian shares rebounded from 9-month lows after China eased foreign investment limits, while the dollar index eased a week before initial U.S. and Chinese tariffs were set to take effect.
MSCI's broadest index of Asia-Pacific shares outside Japan advanced 1.0 percent.
Tokyo's Nikkei surged 0.2 percent to 22,304.51 points, Australia's S&P/ASX 200 index fell 0.3 percent to 6,194.60 points, and South Korea's KOSPI rallied 0.5 percent to 2,326.45 points.
Shanghai composite index rose 2.06 percent to 2,844.32 points, while CSI300 index was trading 0.4 percent up at 3,506.42 points.
Hong Kong’s Hang Seng was trading 1.4 percent higher at 28,903.11 points. Taiwan shares added 1.7 percent to 10,836.91 points.
Commodities Recap
Crude oil prices declined amid escalating trade friction between the United States and other major economies, however, crude markets remain tight due to supply disruptions. International benchmark Brent crude was trading 0.3 percent down at $77.42 per barrel by 0519 GMT, having hit a high of $78.38 the day before, its highest since May 31. U.S. West Texas Intermediate was trading 0.1 percent down at $73.14 a barrel, after rising as high as $74.00 on Thursday, its highest since Nov. 2014.
Gold prices rebounded after easing to a more than 6-month low in the previous session, as the dollar retreated from recent highs, however, the safe-haven metal was on course for its worst monthly performance since November 2016. Spot gold was 0.2 percent up at $1,250.99 an ounce by 0524 GMT, having touched a low of $1,245.84 on Thursday, its lowest since December 13. It was on track for its third straight weekly decline, and also heading towards its worst quarterly loss since end-2016. U.S. gold futures were 0.1 percent lower at $1,249.90 an ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.854 percent higher by 0.008 bps, while 5-year yield was 0.007 bps up at 2.732 percent.
The Japanese 10-year government bond yield suffered during Asian session after the country’s unemployment rate for the month of May dropped to fresh 25-year low and the industrial production for the similar period also topped market expectations, thus weighing on debt prices. The yield on Japan’s benchmark 10-year bond, which moves inversely to its price, rose 1/2 basis point to 0.03 percent, the yield on the long-term 30-year hovered around 0.71 percent and the yield on short-term 1-year traded tad higher at -0.12 percent.
The Australian government bonds slumped on the last trading day of the week following weakness in the U.S. Treasuries, pushing the yield on the benchmark 10-year U.S. Treasury note rose to 2.849 percent compared with 2.827 percent Tuesday. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, rose 2 basis points to 2.648 percent, the yield on the long-term 30-year Note jumped 1 basis point to 3.103 percent and the yield on short-term 2-year up 1/2 basis point to 2.005 percent.
The Canadian government bond prices were lower across the yield curve, with the 10-year falling 35 Canadian cents to yield 2.134 percent.
