Asia Roundup: Antipodeans off-highs, sterling declines on Brexit-related concerns, Asian shares gain - Thursday, June 30th, 2016

Market Roundup

• Japan spokesman – Want to adopt all possible measures with BoJ and in cooperation with G7 to ensure global economic growth, financial stability.
   
• Japan May industrial output -2.3% m/m, -0.1% eyed, June eyed at +1.7%, prev fcst +0.3%, July at +1.3%.
   
• MoF flow data week-ended June 25 – Japanese bought net Y211.6 bln foreign stocks, Y394.2 bln bonds, sold Y21.1 bln bills; foreign investors sell Japan, stocks net Y184.2 bln, bonds Y2.1575 trln, bills Y122.9 bln.
   
• Deutsche, Santander fail US stress test, Morgan Stanley gets second chance –Reuters.
   
• UK YouGov/CEBR consumer confidence lowest since May ’13 on Brexit – Reuters.
   
• UK June GfK consumer confidence index -1, May -1, April -3.
   
• UK bank branch closures cut small business lending in half – Reuters.
   
• Australia May priv-sector credit +0.4% m/m, housing credit +0.5%.
   
• New Zealand June ANZ biz confidence index 20.2%, own activity 35.1%, May 11.3%, 30.4%, confidence at six-month high.
   
• New Zealand May building consents -0.9% m/m, +16.1% y/y, April +6.6% m/m.
  ​

Economic Data Ahead

• (0245 ET/0645 GMT) France May consumer spending, -0.1% m/m eyed; last -0.1%.
   
• (0245 ET/0645 GMT) France May producer prices; last -0.5% m/m.
   
• (0245 ET/0645 GMT) France Jun HICP – flash, +0.3% y/y eyed; last unch.
   
• (0300 ET/0700 GMT) Spain Apr current account balance; last E840 mln surplus.
   
• (0300 ET/0700 GMT) Switzerland Jun KoF indicator, 102.8 eyed; last 102.9.
   
• (0355 ET/0755 GMT) Germany Jun unemployment, 2.61 mln nsa, 6.1% sa eyed; last 2.66 mln, 6.1%.
   
• (0355 ET/0755 GMT) Germany Jun unemployment, -5k eyed; last -11k, total 2.7 mln sa.
   
• (0400 ET/0800 GMT) Norway May credit indicator, +5.0% y/y eyed; last +5.1%.
   
• (0400 ET/0800 GMT) Italy Q1  ISTAT public deficit/GDP; last 2.2%.
   
• (0430 ET/0830 GMT) Great Britain Q1  GDP, +0.4% q/q, +2.0% y/y eyed; prelim +0.4%, +2.0%.
   
• (0430 ET/0830 GMT) Great Britain Q1  business investment; last -0.5% q/q, -0.4% y/y.
   
• (0430 ET/0830 GMT) Great Britain Q1  c/a balance, GBP27.1 bln deficit eyed; last GBP32.66 bln deficit.
   
• (0500 ET/0900 GMT) Eurozone Jun inflation – flash, unch y/y eyed; last -0.1%.
   
• (0500 ET/0900 GMT) Eurozone Jun – ex-food/energy, +0.8% y/y eyed; last +0.8%.
   
• (0500 ET/0900 GMT) Italy Jun CPI  - flash, +0.3% m/m, -0.2% y/y eyed; last +0.3%, -0.3%.
   
• (0500 ET/0900 GMT) Italy Jun HICP – flash, +0.2% m/m, -0.2% y/y eyed; last +0.3%, -0.3%.
   
• (0600 ET/1000 GMT) Italy May PPI; last -0.7% m/m, -4.1% y/y.
   
• (0830 ET/1230 GMT) United States w/e initial jobless claims, 267k eyed; last 259k.
   
• (0945 ET/1345 GMT) United StatesJun Chicago PMI, 50.7 eyed; last 49.3.
  ​

Key Events Ahead

• N/A   Japan PM phone talks with UK’s Cameron, Germany’s Merkel.
   
• N/A   Riksbank executive board meeting
  .
• (0400 ET/0800 GMT) Norway daily currency operations, previous –NOK900 mln.
   
• (0500 ET/0900 GMT) Italy E1.25-1.75 bln 0.327% 2023 floating rate CCT auction.
   
• (0500 ET/0900 GMT) Italy E2.0-2.5 each 0.45% and 1.6% 2021 and 2026 BTP auctions.
   
• (0730 ET/1130 GMT) ECB June policy meeting minutes.
   
• (1100 ET/1500 GMT) BoE Gov Carney London speech.
   
• (1520 ET/1920 GMT) St Louis Fed Bullard presentation at London dinner.
   

FX Beat

USD: The dollar index, against a basket of currencies rose to 95.88, hovering away from a low of 95.59 touched in the previous session.

EUR/USD: The euro edged down as the market turns slightly more risk averse. The major was trading 0.2 percent lower at 1.1101, however, well above its 3 1/2-month low of 1.0912 touched last week. It continues to remain under pressure, as the consequences of the Britain leaving the EU will have a negative impact on the Eurozone. Markets will closely watch eurozone's consumer price index data and U.S. unemployment benefits claim figures for fresh cues. Immediate support is located at 1.1080 (5-DMA), break below could drag it till 1.1049 (Previous Session Low). On the higher side, resistance is seen at 1.1144, break above targets 1.1166.

USD/JPY: The greenback edged down, having failed to extend gains above the 103 level. The major trades 0.2 percent lower at 102.62 yen, after rising to an early high of 103.02.  It is well above its 2-1/2-year low of 99.00 hit in volatile trade on Friday, however, still on track to shed more than 7 percent for the month. Data released earlier in the session showed that Japan's industrial output for the month of May declined -2.3 percent against forecast -0.1 percent and prior 0.5 percent, highlighting concerns about slumping exports and uncertainty about weak consumer spending. Immediate support is located at 102.17 (Previous Session Low), break below could drag the pair lower 102 level. On the higher side, resistance is seen at 103.57 (10-DMA).

GBP/USD: Sterling eased after rising as high as 1.3533 in the previous session amid increasing Brexit-related concerns over Britain's growth and investment. The major edged down to 1.3395, falling back below 1.3400 level as risk sentiment seen deteriorating. Markets will eye UK's gross domestic product report for further momentum. Immediate support is located at 1.3285 (Previous Session Low), break below could take the pair lower 1.3200 level. On the higher side, resistance is seen at 1.3533, break above targets 1.3600 level. Against the euro, the pound trades flat at 82.85 pence.

AUD/USD:  The Australian dollar was weighed down by renewed selling pressure as the greenback remains in demand amid ongoing political and economic uncertainty surrounding the Brexit vote. The Aussie declined 0.2 percent to 0.7432, after rising to an early high of 0.7472. The major also weakened after Australia's Private Sector Credit edged down to 0.4 percent versus previous 0.5 percent. Markets now await U.S. unemployment benefits claim data, ahead of Australia's AiG performance of Manufacturing index for further cues. Immediate support is seen at 0.7412 (5-DMA), break below could drag the pair to lower 0.7400 level. On the higher side, resistance is located at 0.7481, break above targets 0.7500.

NZD/USD: The New Zealand dollar declined as risk sentiment seen deteriorating amid ongoing political and economic uncertainty triggered by Brexit. The Kiwi dropped 0.4 percent to 0.7080, pulling away from a high of 0.7136 touched in the previous session. The major weakened despite New Zealand's ANZ Business Confidence Index for the month of May rose to 20.2 from 11.3, while activity outlook for June gained 35.1 percent from previous 30.4 percent. The moves in the major will be driven by broad based market sentiment. Immediate support is seen at 0.7058 (20-DMA), break below could take the pair till 0.7040. On the higher side, resistance is located at 0.7136 (Previous Session High), break above targets 0.7147/0.7169.   

Equities Recap

Asia shares rose across the board, following an overnight rally on Wall Street as global markets regained momentum after last week's Brexit shock.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.3 percent, pulling further away from a one-month low touched on Friday.

Tokyo's Nikkei edged up 0.06 pct at 15,575.92, Australia's S&P/ASX 200 index gained 1.64 pct at 5,226.50 points and Seoul shares added 0.83 pct.

Shanghai composite index trades flat at 2,932.88 points and CSI300 index gained 0.2 pct at 3,159.07 points.

Hong Kong’s Hang Seng was trading 1.65 percent higher at 20,774.56 points. Taiwan stocks rose 0.9 pct at 8,666.58 points.

Commodities Recap

Oil prices rose, with Brent oil extending gains above $50 per barrel despite concerns over strike outages in Norway diminished and as Nigeria's production improved. International Brent crude oil was trading at $50.72 per barrel at 0357 GMT, up 1.2 percent. U.S. West Texas Intermediate crude oil edged down 0.2 percent, at $49.40 a barrel.

Gold edged down after rising as much as 1 percent in the previous session, with safe-haven demand easing as the shock of Britain's decision to leave the European Union began to fade. Spot gold declined 0.2 percent to $1,314.95 an ounce by 0403 GMT, while U.S. gold was down 0.8 percent at $1,316.90.

Treasuries Recap

The 10-year U.S treasury yield stood at 1.5104 percent up by 0.034 bps, while 5-year was 0.024 bps up at 1.0478 percent.

The Australian government bonds were little changed in relatively quiet session. The yield on the benchmark 10-year Treasury note remained steady at 2.007 percent and the yield on short-term 2-year note hovered around 1.608 percent.

The New Zealand government bonds ended firmer as investors increased bets that New Zealand’s central bank will cut its cash rate in the coming months from an already record-low 2.25 percent. The yield on benchmark 10-year bond fell 1-1/2 basis point to 2.370 percent in the end session and the yield on short-term 2-year note ended steady at 2.045 percent.

Canadian government bond prices were lower across the maturity curve, with the 2-year price down 9 Canadian cents to yield 0.550 percent and the benchmark 10-year slid 47 Canadian cents to yield 1.131 percent.