Market Roundup
- Japan EconMin Ishihara – Closely eyeing UK EU membership vote, UK leaving EU could impact Japan company UK operations, optimistic on Japan economy despite weak core machinery orders data yesterday - Reuters.
- Japan May domestic corp goods prices +0.2% m/m, -4.2% y/y, +0.1%, -4.2% eyed.
- BPCE launches Y60.6 bln 3-tranche samurais via Daiwa, MUFJ/MS et al – IFR.
- Foreign CB US debt holdings +$11.562 bln to $3.241 trln June 8 week, Treasury holdings +$11.004 bln to $2.926 trln, agencies +$148 mln to $265.265 bln.
- Lipper – Investors pull money from US-based stock funds for 6th straight week, strong inflows into bond, emerging market funds at rate fears ebb.
- New Zealand May electronic card retail sales -0.3% m/m, +3.3% y/y, fuel prices low.
Economic Data Ahead
- (0400 ET/0800 GMT) Italy Apr industrial output, +0.2% m/m eyed; last unch, +0.5% y/y.
- (0400 ET/0800 GMT) Norway May CPI, +0.1% m/m, +3.1% y/y eyed; last +0.3%, +3.2%.
- (0400 ET/0800 GMT) Norway May – core, +0.3% m/m, +3.1% y/y eyed; last +0.4%, +3.3%.
- (0400 ET/0800 GMT) Norway May PPI; last -14.3% y/y.
- (0430 ET/0830 GMT) Great Briatin Apr construction output, +1.7% m/m, -4.8% y/y eyed; last -3.6%, -4.5%.
- (1000 ET/1400 GMT) United States Jun U.Mich sentiment – prelim, 94.0 eyed; last 94.7.
Key Events Ahead
- China markets closed.
- N/A ECB/Buba Weidmann, et al at Eltville am Rhein Buba conference.
- N/A London Slovakia-Europe conference, various speakers.
- (0500 ET/0900 GMT) OECD EU/EZ economic survey.
- (0500 ET/0900 GMT) Italy E6.5 bln 12-month BOT auction.
- (0600 ET/1000 GMT) UK DMO GBP0.5/2.5/2.5 bln 1/3/6-month treasury bill auctions.
- (1500 ET/1900 GMT) Canada FinMin Morneau press conference.
FX Beat
USD: The dollar index, against a basket of currencies stood at 94.16, pulling away from a low of 93.43 touched on Wednesday.
EUR/USD: The euro came under renewed selling pressure, declining from 1.1320 to an early low of 1.1291. The major eased from a 4-week high of 1.1416 set on Thursday, but is poised for a weekly decline of 0.6 percent. The greenback was support by upbeat weekly unemployment claim report. New applications for U.S. unemployment benefits decreased 4,000 to a seasonally adjusted 264,000 for the week ended June 3, while continuing claims for the week ending May 27 also declined to 2.095m from 2.170m. The pair continues to decline, hovering towards session’s low of 1.1291. Immediate support is located at 1.1271 (Apr-27 Low), break below targets 1.1256/1.1250 level. On the upside, resistance is seen at 1.1339, break above will take the pair to 1.1361/1.1379.
USD/JPY: The Japanese yen edged down as the greenback attempted to make a minor recovery, sustaining gains above the 107.00 level. The dollar trades at 107.10, pulling away from a 5-week low of 106.25 struck on Thursday and remains up 0.6 percent for the week. Markets attention now shifts towards the U.S. prelim consumer sentiment data due later in the day ahead of next week’s Fed and BOJ policy decisions. The pair faces resistance at 107.38 (Jun-8 High), break above will take it to 107.65/108.00 level. On the downside, support is seen at 106.58, break below targets 106.25 (5-week Low).
GBP/USD: Sterling continues to weaken with just two weeks out before Britons vote in the referendum on EU membership. The major edged down to 1.4447, having declined from this week's high of 1.4656 touched on Tuesday, and heading for a drop of 0.4 percent this week. The threat of Brexit has weigh down the sterling, driving a fall of more than 10 percent on a trade-weighted basis between mid-November and mid-April. Immediate support is seen at 1.4433, break below could drag the pair to 1.4398/1.4385. On the higher side, resistance is located at 1.4477 (5-DMA), break above targets 1.4500/1.4526. Against the euro, the pound edged up to 78.18 pence.
AUD/USD: The Australian dollar edged off highs on growing uncertainty over the upcoming Brexit vote, however, it on track for weekly gains. The Aussie trades 0.2 percent lower at 0.7412, off from a high of 0.7504 struck in the previous session, but it is still up for a second consecutive week with a gain of 0.6 percent. Markets expect the major to consolidate around the 74 cents ahead of an Australian public holiday on Monday. Traders now await Australia's consumer inflation expectations data and Federal Reserve policy meeting scheduled next week. Immediate support is seen at 0.7407 (Session Low), break below could drag the pair lower the 0.7400 mark. On the upside, resistance is located at 0.7463.
NZD/USD: The New Zealand dollar edged down to 0.7084, from an early high of 0.7122. The kiwi rose to a 1-year peak of 0.7148 on Thursday after the RBNZ held rates at a record low of 2.25 percent and appeared less dovish than the market anticipated. The major weakened after the economy's electronic card retail sales for the month of May declined 0.3 percent, versus a gain of 0.9 percent. The pair trades lower at 0.7100, however, it is still on track for weekly gains. Immediate support is seen at 0.7084 (Session Low), break below could take the pair to 0.7022. On the higher side, resistance is located at 0.7147 (Previous Session High).
Equities Recap
Asian shares slumped as investors rushed towards safe-haven assets amid growing concerns over the June 23 referendum that could see Britain exit the European Union.
MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.6 percent, however, remains poised for a weekly gain of 1.7 percent.
Chinese markets will remain closed in observance of the Dragon Boat Festival.
Hong Kong's Hang Seng index dropped 0.6 percent to 21,150.06, heading for a loss of 1.4 percent for the week.
Tokyo's Nikkei lost 0.40 pct at 16,601.36, Australia's S&P/ASX 200 index declined 0.93 pct at 5,312.10 points and Seoul shares edged down 0.31 pct.
Commodities Recap
Oil prices steadied, after declining from 2016 highs. It was supported by strong demand and global supply disruptions, however, a stronger dollar kept crude below the 2016 highs reached this week. International Brent crude oil futures were trading at $51.64 per barrel at 0627 GMT. U.S. West Texas Intermediate futures were flat at $50.56 a barrel.
Gold edged down as the dollar pulled away from a 1-month low, however, it was within the sight of a 3-week high and remained on course for a second straight weekly gain. Spot gold was down 0.3 percent at $1,264.99 an ounce by 0627 GMT. On Thursday, it touched it’s highest since May 18 at $1,271.31 and was on track has risen 1.8 percent this week. U.S. gold fell 0.3 percent to $1,269.50.
Treasuries Recap
The 10-year U.S. treasury yield stood at 1.683 percent versus previous close of 1.680 percent.
Japan's10-year government bond yield declined to minus 0.145 percent, close to the record low of minus 0.140 percent seen earlier in the session.
Australian government futures ran into profit-taking following recent hefty gains with the 3-year contract off 3 ticks at 98.420. The 10-year contract shed 1.25 ticks to 97.8950, having advanced to a fresh record peak of 97.9150. The 20-year contract was 0.75 ticks softer at 97.3025.
New Zealand government bonds gained, sending yields 3 basis points lower at the short end and 3.5 basis points lower at the long end.
Canadian government bond prices were mixed across a flatter curve, with the 2-year price flat to yield 0.52 percent and the benchmark 10-year rising 16 Canadian cents to yield 1.184 percent. The 10-year yield hit its lowest since Feb. 29 at 1.149 percent.
