Market Roundup
- North Korea says its ICBM can carry nuclear warhead; US calls for global action
- Japan June services PMI 53.3, highest since Aug ’15, May 53.0.
- Japan June composite PMI off to 52.9, May 53.4.
- China June services PMI, 51.6, last 52.8 -Caixin
- Australia new vehicle sales surge to record in June
- New Zealand house price growth slows to 2-year low in June on gov't curbs -QV
- New Zealand commodity prices rise at slower monthly pace in June
- ANZ job ads rise 1.3% in June - ANZ survey
- Fall in UK shop prices eases, June -0.3% y/y, food soars, +1.4% -BRC
Economic Data Ahead
- (0315 ET/0715 GMT) Spain Jun Srvcs PMI, 56.50 eyed, last 57.30
- (0345 ET/0745 GMT) Italy Jun Markit/ADACI Svcs PMI, 54.60 eyed, last 55.10
- (0350 ET/0750 GMT) France Jun Markit Comp PMI, 55.30 eyed, last 55.30
- (0355 ET/0755 GMT) Germany Jun Markit Comp Final PMI, 56.10 eyed, last 56.10
- (0400 ET/0800 GMT) Eurozone Jun Markit Comp Final PMI, 55.70 eyed, last 55.70
- (0430 ET/0830 GMT) Great Britain Jun Markit/CIPS Serv PMI, 53.50 eyed, last 53.80
- (0500 ET/0900 GMT) Eurozone May Retail Sales, 0.3% m/m, 2.3% y/y eyed, last 0.1%, 2.5%
Key Events Ahead
- N/A ECB Governing Council: non-monetary policy meeting in Frankfurt
- (0530 ET/0930 GMT) Germany 5Y 4.0 bln auction
- (0625 ET/1025 GMT) Riksbank's Henry Ohlsson to participate in Dagens industry event
- (0700 ET/1100 GMT) Riksbank's Henry Ohlsson to participate in the Veidekke event
FX Beat
DXY: The dollar eased against the Japanese yen on growing concerns about tensions between the United States and North Korea. The greenback against a basket of currencies traded 0.1 percent down at 96.21, having touched a low of 95.47 last week, it’s lowest since Oct. 3. FxWirePro's Hourly Dollar Strength Index stood at 33.31 (Neutral) by 0500 GMT.
EUR/USD: The euro steadied after falling for three consecutive sessions, as investors remained cautious ahead of the FOMC minutes due later today. The European currency traded 0.1 percent up at 1.1355, having touched a high of 1.1445 on Friday, its highest since May 5, 2016. FxWirePro's Hourly Euro Strength Index stood at -35.60 (Neutral) by 0400 GMT. Investors’ attention will remain on the Eurozone Markit services PMI and retail sales, ahead of the U.S. factory orders and FOMC latest monetary policy minutes for further clues on the pair. Immediate resistance is located at 1.1388 (5-DMA), a break above targets 1.1400. On the downside, support is seen at 1.1297 (10-DMA), a break below could drag it near 1.1283 (50.0% retrace of 1.1119 and 1.1445).
USD/JPY: The dollar declined against the yen, extending previous session losses as North Korea’s missile launch and aggressive remarks from its Leader Kim Jong Un triggered a fresh bout of risk aversion. The major traded 0.2 percent down at 113.12, having hit a high of 113.47 on Monday, its highest since May 16. FxWirePro's Hourly Yen Strength Index stood at -129.55 (Highly Bearish) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of the U.S. factory orders and FOMC latest monetary policy minutes. Immediate resistance is located at 113.50, a break above targets 114.00. On the downside, support is seen at 112.70 (5-DMA), a break below could take it near 112.40 (78.6% retracement of 110.67 and 113.47).
GBP/USD: Sterling slightly edged up after tumbling to a 1-week low in the previous session on a survey of Britain's construction sector showing growth slowing in June, which added to signs that the economy might be struggling to gain momentum. The major traded 0.1 percent up at 1.2923, having hit a high of 1.3029 on Friday, its highest since May 23. FxWirePro's Hourly Sterling Strength Index stood at 35.69 (Neutral) by 0400 GMT. Investors’ focus will remain on the UK service PMI reading, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.2962 (5-DMA), a break above could take it near 1.3047 (May 18 High). On the downside, support is seen at 1.2907 (June 8 Low), a break below targets 1.2854 (June 5 Low). Against the euro, the pound traded 0.1 percent down at 87.85 pence, having hit a 7-month low of 88.79 on Thursday.
AUD/USD: The Australian dollar held gains above the 0.7600 handle despite downbeat China services PMI release. The Chinese service sector's pace of expansion slowed to 51.6 in June from 52.8 in May and below expectations of an uptick to 52.9. The Aussie trades 0.2 percent up at 0.7618, having hit a low of 0.7591 on Tuesday, it’s weakest since Jul. 28. FxWirePro's Hourly Aussie Strength Index stood at -119.68 (Highly Bearish) by 0500 GMT. Investors will continue to digest downbeat Chinese data, ahead of U.S. economic releases. Immediate support is seen at 0.7584 (21-DMA), a break below targets 0.7550. On the upside, resistance is located at 0.7653 (5-DMA), a break above could take it near 0.7749 (Mar 21 High).
NZD/USD: The New Zealand dollar consolidated within a narrow range following a mixed report from a fortnightly global dairy auction that showed average dairy prices edged lower. Moreover, weak services PMI figures from the Chinese docket limited the upside in the major. The Kiwi trades flat at 0.7287, having touched a peak of 0.7346 on Friday, its strongest level since Feb. 2. FxWirePro's Hourly Kiwi Strength Index was at -19.33 (Neutral) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7303 (5-DMA), a break above could take it near 0.7370. On the downside, support is seen at 0.7250 (21-DMA), a break below could drag it till 0.7200.
Equities Recap
Asian shares traded in a subdued session as tensions on the Korean peninsula underpinned safe-haven assets, while the greenback eased ahead of the Federal Reserve's last meeting minutes due later in the day.
MSCI's broadest index of Asia-Pacific shares outside Japan rallied 0.1 percent, having shed 0.6 percent the prior day.
Tokyo's Nikkei edged up 0.1 percent to 20,045.51 points, Australia's S&P/ASX 200 index fell 0.1 percent to 5,776.20 points and South Korea's KOSPI gained 0.3 percent to 2,388.07 points.
Shanghai composite index rose 0.5 percent to 3,197.81 points, while CSI300 index was trading 0.6 percent up at 3,642.10 points.
Hong Kong’s Hang Seng was trading 0.5 percent higher at 25,528.55 points. Taiwan shares added 0.5 percent to 10,404.79 points.
Commodities Recap
Crude oil declined, halting a nine-day winning streak on worries over geopolitical tensions in the Korean peninsula and the Middle East. International benchmark Brent crude was trading 0.3 percent down at $49.52 per barrel by 0425 GMT, having hit a high of $49.87 the prior day, its strongest since Jun. 7. U.S. West Texas Intermediate traded 0.2 percent lower at $46.95 a barrel, after rising as high as $47.29 the day before, its strongest since Jun 6.
Gold prices gained, rebounding from seven-week lows after North Korea fired a missile into Japanese waters, raising geopolitical tensions and strengthening safe-haven demand. Spot gold edged up 0.3 percent at $1,227.26 an ounce, having touched a low of $1,218.37 an ounce on Monday, its weakest since May 11. U.S. gold futures were up 0.3 percent to $1,223 an ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.328 percent lower by 0.017 bps, while 5-year yield was 0.012 down at 1.918 percent.
The Australian government bond futures fell, with the three-year bond contract down 3 ticks at 98.040. The 10-year contract slipped 1 tick to 97.3700.
The New Zealand government bonds gained, sending yields 3.5 basis points lower at the long end of the curve.
The Canadian two-year price fell 6.5 Canadian cents to yield 1.137 percent and the 10-year declined 60 Canadian cents to yield 1.832 percent on Tuesday. The two-year yield is at its highest since October 2014.
