Market Roundup
- Japan MoF ViceFinMin Asakawa – Closely watching FX moves - Reuters.
- ChiefCabSec Suga – Closely watching FX, stability extremely important
- Japan Q1 land prices broadly higher, up in 89 or 99 locations.
- China Pres Xi – Important to conclude investment treaty with US – Reuters.
- US TsySec Lew – Looks forward to China efforts to reduce excess capacity, reduce barriers to investment, concerned over foreign NGO law, problematic if CNY only goes down over time – Reuters.
- Cleveland Fed Mester – Gradual rate hikes still appropriate, timing data dependent, US jobs report disappointing but cannot read too much – Reuters.
- BoC Gov Poloz – Interest rate actions having smaller effect, any GDP growth huge deal, govts-CBs need to coordinate
- BAML takes top spot as UK blue-chips advisor – IFR.
- ECB/BdF Villeroy – ECB would act to counter any Brexit market turmoil.
- Italy EconMin Padoan – ’16 GDP at least +1%, public debt to fall – Reuters.
- Australia May MI trimmed mean CPI -0.2% m/m, +1.0% y/y, Apr +0.2%, +1.5%.
- Australia May overall job ads +2.4% m/m, +9.1% y/y, April -0.6% m/m.
Economic Data Ahead
- (0430 ET/0830 GMT) Eurozone Jun Sentix index, 7.0 eyed; last 6.2.
- (1000 ET/1400 GMT) United States May employment trends index; last 128.3.
Key Events Ahead
- N/A US-China Strategic and Economic Dialogue in Beijing (till tomorrow).
- (0400 ET/0800 GMT) ECB VP Constancio speaks at Frankfurt ESRB conference.
- (0540 ET/0940 GMT) Netherlands E1-2 bln 3 and 6-month DTC auctions.
- (0800 ET/1200 GMT) Spain EconMin Guindos speaks at Madrid IESE business school.
- (0850 ET/1250 GMT) France E3.1-3.5/0.6-1.0/1.1-1.5 bln 3/6/12-month BTF note auctions.
- (1200 ET/1600 GMT) Austria FinMin Schelling press conference in Bregenz, Austria.
- (1230 ET/1630 GMT) FOMC Chair Yellen speech in Philadelphia, roundtable talks to follow.
FX Beat
USD: The dollar index, against a basket of currencies trades 0.3 percent higher at 94.23, having been as low as 93.855 on Friday, a level last seen on May 12. It tumbled 1.6 percent on Friday, posting its second biggest one-day drop this year.
EUR/USD: The euro edged down after advancing following downbeat U.S. non-farm payroll data on Friday. The major failed to sustain gains above the 1.1350 level, trading 0.2 percent lower at 1.1338, after rising to 1.1373 on Friday, its highest level since May 13. U.S. nonfarm payrolls gained by just 38,000 in the month of May, the smallest increase in more than 5-1/2-years and well short of expectations for a rise of 164,000. The currency was also strengthened after U.S. ISM non manufacturing PMI in May declined to 52.9, against market consensus of 55.5 and previous 55.7. With the U.S. NFP effects fading away, markets attention will shift towards U.S. labor market conditions index, ahead of Federal Chair Janet Yellen, speech. Immediate support is located at 1.1326 (Apr-6 Low), break below could target 1.1301/1.1282. On the higher side, resistance is seen at 1.1379 (May-13 High), break above could take the pair over 1.400 level.
USD/JPY: The Japanese yen nudged down after rising to a 1-month low 106.35 struck earlier in the session. The greenback attempts a recovery, bouncing back from a 1-month low as the USD bulls appear to strengthen the pair, above the 107 handle. The major rose 0.4 percent 107.04, having touched session's high of 107.18. With the yen near its 18-month peak of 105.55 hit in early May, some traders wary on threats of intervention from Japanese authorities. Markets now await Federal Chair Janet Yellen's comments, for more insights on economic outlook and interest rates outlook, after weak employment data released last week. Immediate resistance is seen at 107.42, break above could take the pair near 107.80/ 108.00 level. On the lower side, support is seen at 106.35 (Session Low), break below could drag the pair to 106.24/106.13.
GBP/USD: Sterling declined more than 1 percent after several polls released during the weekend pointed to a recovery in support for Britain's exit from the European Union membership. It had rallied on Friday after a disappointing U.S. employment report sent the greenback sharply lower, aiding the pound to erase losses incurred earlier in the previous week on "Brexit" concerns. Sterling trades 0.8 percent lower at 1.4394, having touched an early low of 1.4351 and away from a high of 1.4581 struck on Friday. Immediate support is seen at 1.4351 (Session Low), break below could take the pair to 1.4332. On the upside, resistance is located at 1.4488, break above targets 1.4507/1.4523. Against the euro, the pound trades 0.7 percent lower at 78.79, hovering towards an early low of 79.05, a level seen since May, 12.
AUD/USD: The Australian dollar slumped on profit-taking despite robust job advertisements data. The Aussie trades 0.4 percent lower at 0.7331, hovering towards a low of 0.7315 touched earlier in the session. ANZ's Job advertisement for the month of May rose to 2.4 percent from a 0.6 percent decline, suggesting strong employment growth and improving labor market conditions. However, it failed to boost the major as investors remain cautious ahead of Reserve Bank of Australia meeting on Tuesday. Markets widely expect the central bank to keep rates on hold at an all-time low of 1.75 percent. Immediate support is seen at 0.7310, break below will drag the pair lower 0.7300 level. On the higher side, resistance is located at 0.7368 (Session High), break above could take the pair to 0.7402.
NZD/USD: The New Zealand dollar declined to 0.6909, from a high of 0.6960 touched late on Friday. The kiwi briefly touched a 1-month peak of 0.6948 early in the session before giving ground to broad U.S. dollar strength. The major was a clear outperformer last week when it advanced 3.9 percent, the largest such gain in five years. Markets focus now remains on the monetary policy outlook between the Fed and RBNZ as markets await Fed Chair Yellen speech due later in the day. Immediate support is seen at 0.6897, break below could take the pair to 0.6871. On the higher side, resistance is located at 0.6960 (Previous Session High), break above targets 0.6990/0.7000.
Equities Recap
Asian shares rose, while the dollar bounced off its lowest levels in nearly a month after U.S. nonfarm payrolls showed the slowest job growth in more than five years, slashing expectations for a near-term U.S. interest rate hike.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.6 percent. Hong Kong’s Hang Seng Index was trading flat at 20,964.41 point
Tokyo's Nikkei lost 0.37 pct to 16,580.03 and Australia's S&P/ASX 200 index gained 0.70 pct at 5,356.00 points
Shanghai Composite Index was 0.3 percent lower at 2,929.56 points, while CSI300 index was trading 0.4 percent at 3,176.01 points.
New Zealand's financial markets were closed in observance of Queen's Birthday.
Commodities Recap
Brent crude oil prices hovered around $50 a barrel mark, strengthened by a plunge in the U.S.-dollar that could spur demand and however, gains were capped on signs of increased output. International Brent crude futures were trading at $49.96 per barrel at 0632 GMT, while U.S. West Texas Intermediate crude futures were up 49 cents or 1 percent at $49.11 a barrel.
Gold edged down from its highest level, after adding to its biggest 1-day gain in nearly three months in the previous session when weak U.S. employment data sharply cut the chance of a near-term U.S rate hike. Spot gold was 0.2 percent lower at 1,241.02 per ounce by 0636 GMT. It reached a high of $1,248.40, its best since May 24 earlier in the session.
Treasuries Recap
The U.S. 10-year treasuries yield stood at 1.707 percent versus previous close of 1.704 percent.
The Australian government bond futures rallied, with the 10-year contract exploded to an all-time high of 97.8550. It last gained 5.5 ticks to 97.8250. The 3-year bond contract rose 5 ticks to 98.460, while the 20-year contract added 6 ticks to 97.2400.
Canadian government bond prices were higher across the maturity curve, with the 2-year price up 10.5 Canadian cents to yield 0.507 percent and the benchmark 10-year rising 62 Canadian cents to yield 1.183 percent. The 10-year yield hit its lowest since April 7 at 1.175 percent.
