Market Roundup
- U.S. plans limits on Chinese investment in U.S. technology firms
- As trade war looms, China cuts some banks' reserve requirements to boost lending
- BOJ should continue powerful easing, guard against side effects - June meeting summary
- Support for Japan PM Abe rises, boosting shot at historic tenure
- U.S. to give North Korea post-summit timeline with 'asks' soon -official
- Merkel presses over migration as "European solution" fails
- UK ministers take aim at business over Brexit warnings
- Half of EU business leaders cut UK investment over Brexit - survey
- Turkey's Erdogan wins presidential election, opposition yet to concede
- Trump says illegal immigrants should be deported with 'no judges or court cases'
- U.S.-based money market funds post $51 bln net outflows for week -Lipper
- Speculators turn net long dollars for 1st time since July 2017-CFTC, Reuters
Economic Data Ahead
- (0400 ET/0800 GMT) Germany Jun Ifo Business Climate New, 101.7 f'cast; 102.2 last
- (0400 ET/0800 GMT) Germany Jun Current Conditions New, 105.6 f'cast; 106.0 last
- (0400 ET/0800 GMT) Germany Jun Ifo Expectations New, 98.0 f'cast; 98.5 last
Key Events Ahead
- (0800 ET/1200 GMT) Introductory remarks by ECB VP Luis de Guindos at the Bond Market Contact Group organized by the ECB in Frankfurt
- (0815 ET/1215 GMT) Bank of Japan board member Makoto Sakurai speaks at a International Economic Seminar in Italy in Rome
FX Beat
DXY: The dollar index rebounded after falling to a 1-week low in the previous session, as higher U.S. yields underlined the divergence in monetary policies between the United States and Europe. The greenback against a basket of currencies trades 0.1 percent up at 94.60, having touched a high of 95.53 on Thursday, its highest since July 2017. FxWirePro's Hourly Dollar Strength Index stood at -97.46 (Slightly Bearish) by 0500 GMT.
EUR/USD: The euro declined after rising to a 1-week high in the prior session after U.S. President Donald Trump on Friday threatened to impose a 20 percent tariff on all cars imported from the European Union. The European currency traded 0.1 percent down at 1.1640, having touched a low of 1.1508 on Thursday, its lowest since May 30. FxWirePro's Hourly Euro Strength Index stood at -14.98 (Neutral) by 0500 GMT. Investors’ attention will remain on the German IFO- expectation, current assessment and business climate, ahead of U.S. new home sales change figures. Immediate resistance is located at 1.1732 (June 5 Low), a break above targets 1.1750 (May 24 Low). On the downside, support is seen at 1.1608 (5-DMA), a break below could drag it till 1.1531 (June19 Low).
USD/JPY: The dollar slumped to a 2-week low after the Wall Street Journal reported the U.S. Treasury Department is crafting rules that would block firms with at least 25 percent Chinese ownership from buying U.S. companies involved in industrially significant technology. The major was trading 0.5 percent down at 109.47, having hit a low of 109.37 earlier, its lowest since June 11. FxWirePro's Hourly Yen Strength Index stood at 127.46 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. new home sales change 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 109.19 (June 8 Low), a break below could take it lower 108.95 (May 24 Low).
GBP/USD: Sterling steadied after rising to an over 1-week peak in the prior session, after a Bank of England meeting revived expectations of a rate hike this year. However, fears of a breakdown in Brexit talks next week limited gains. The major traded 0.05 percent down at 1.3249, having hit a high of 1.3314 the session before; it’s highest since June 14. FxWirePro's Hourly Sterling Strength Index stood at -13.60 (Neutral) 0500 GMT. Investors’ attention will remain on the U.S. fundamental drivers, amid a lack of economic data from the UK docket. Immediate resistance is located at 1.3307 (21-DMA), a break above could take it near 1.3389. On the downside, support is seen at 1.3216 (5-DMA), a break below targets 1.3150 (June 19 Low). Against the euro, the pound was trading 0.05 percent down at 87.85 pence, having hit a low of 88.05 pence on Friday, it’s lowest since June 14.
AUD/USD: The Australian dollar eased after rising to a 1-week peak in the prior session amid escalating trade tensions between the United States and major economies. Moreover, easing oil prices following major oil producers’ agreement on a modest increase in production further intensified the selling pressure around the major. The Aussie trades 0.3 percent down at 0.7420, having hit a high of 0.7443 on Friday; it’s highest since June 18. FxWirePro's Hourly Aussie Strength Index stood at 35.25 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7345 (June 21 Low), a break below targets 0.7328 (May 28, 2017, Low). On the upside, resistance is located at 0.7466 (10-DMA), a break above could take it near 0.7500.
NZD/USD: The New Zealand dollar plunged on reports the White House was considering new curbs on Chinese investment in the United States. The Kiwi trades 0.2 percent down at 0.6896, having touched a low of 0.6825 on Thursday, its lowest level since Dec. 8. FxWirePro's Hourly Kiwi Strength Index was at -17.42 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6944 (10-DMA), a break above could take it near 0.6967 (21-DMA). On the downside, support is seen at 0.6818 (Oct. 27 Low), a break below could drag it below 0.6780 (Nov. 17 Low).
Equities Recap
Asian shares slumped on escalating trade tensions between the United States and major economies, while oil prices reversed gains after major oil producers agreed to increase production.
MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.3 percent.
Tokyo's Nikkei fell 0.7 percent to 22,362.11 points, Australia's S&P/ASX 200 index eased 0.3 percent to 6,204.60 points, and South Korea's KOSPI plunged 0.2 percent to 2,353.75 points.
Shanghai composite index declined 0.6 percent to 2,872.98 points, while CSI300 index was trading 0.8 percent down at 3,580.47 points.
Hong Kong’s Hang Seng was trading 1.2 percent lower at 29,008.95 points. Taiwan shares shed 1.05 percent to 10,786.46 points.
Commodities Recap
Crude oil prices plunged over 1.5 percent as traders factored in an expected output increase that was agreed at the Organization of the Petroleum Exporting Countries meeting in Vienna on Friday. International benchmark Brent crude was trading 1.9 percent up at $74.14 per barrel by 0533 GMT, having hit a low of $72.44 last week, its lowest since May 2. U.S. West Texas Intermediate was trading 1.4 percent down at $68.31 a barrel, after falling as low as $63.62, its lowest since April 10.
Gold prices declined, having eased to 6-month lows last week as the dollar steadied after U.S. President Donald Trump on Friday threatened to impose a 20 percent tariff on all cars imported from the European Union. Spot gold fell 0.3 percent at $1,265.62 per ounce by 0543 GMT, having touched a low of $1,261.18 on Thursday, its lowest since Dec. 19, 2017. U.S. gold futures for August delivery settled up 20 cents, 0.02 percent, at $1,270.70 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.880 percent lower by 0.02 bps, while 5-year yield was 0.023 bps down at 2.751 percent.
The Japanese 10-year government bonds remained range-bound during Asian session amid a slew of global trade tensions initiated by the United States, in a bid to impose trade tariffs across all trading partners, mainly the EU and China. The yield on Japan’s benchmark 10-year bond, which moves inversely to its price, hovered around 0.03 percent, the yield on the long-term 30-year remained tad higher at 0.71 percent and the yield on short-term 2-year traded flat at -0.13 percent.
The Australian government bonds gained on first trading day of the week after the latest signs of trade hostility between China and the US. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, fell 2 basis points to 2.633 percent, the yield on the long-term 30-year Note dipped 3-1/2 basis points to 3.123 percent and the yield on short-term 2-year down 1/2 basis point to 2.034 percent.
The New Zealand bonds jumped at the time of closing as investors wait to watch the country’s trade balance data for the month of May and the Reserve Bank of New Zealand’s (RBNZ) monetary policy meeting, scheduled for June 26 and 27 by 22:45GMT and 21:00GMT respectively. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, slumped 2 basis points to 2.95 percent, the yield on the long-term 20-year note slumped 2-1/2 basis points to 3.27 percent while the yield on short-term 2-year closed flat at 1.92 percent.
