Market Roundup
- RBA frets on financial stability as household debt mounts -minutes
- Moody's downgrade of Australian banks won't raise funding costs -analysts
- Australia Q1 Home Price Index +2.2%, last +4.1%
- Reuters Jun Tankan manufacturing index +26, non-manufacturing +33, May +24/+30, Sep +29/+28 eyed
- Japan automakers reach for 40% of American market share -Nikkei
- Protectionism hurts China's financial sector, opening helps -PBOC
- BPCE marketing 5/7/10/15-year social samurais via Daiwa, MUFG et al -IFR
- New Zealand June cons conf index +127.8, last +123.9 -ANZ survey
- Worth waiting until year-end to assess next rate hike -Fed's Evans
- Tech CEOs meet with Trump on government overhaul
- U.S. House Speaker vows to complete tax reform in 2017
Economic Data Ahead
- (0400 ET/0800 GMT) Eurozone Apr Current Account (EUR), last 34.10 bln SA, 44.80 bln NSA
Key Events Ahead
- N/A UK’s finmin Hammond, BoE's Carney speak at Mansion House
- N/A Riksbank's Jochnick participates in the Riksdag Committee on Finance meet
- N/A EU's Dombrovskis speaks to EU parliament's committee on economic affairs
- N/A SNB's Jordan speaks at an event
- N/A Riksbank's Ingves, Skingsley participate in a conference (to June 21)
- (0400 ET/0800 GMT) EU General Affairs Council meeting in Luxembourg City
- (1100 ET/1500 GMT) ECB's Coeure participates in a global fin markets meeting
- N/A Cyprus EUR bmk 7yr with tender for 2019/2020 bonds
FX Beat
DXY: The dollar slightly eased versus its major peers after Chicago Fed President Charles Evans said the U.S. central bank may wait until year-end to decide whether to hike interest rates again. The greenback against a basket of currencies traded down at 97.50, having touched a high of 97.61 earlier, it’s highest since May 30. FxWirePro's Hourly Dollar Strength Index stood at 50.86 (Bullish) by 0500 GMT.
EUR/USD: The euro steadied, having retreated from a 7-month peak in the prior session after New York Federal Reserve President William Dudley said U.S. inflation should rebound alongside wages as the labor market continues to improve. The European currency traded flat at 1.1154, having touched a low of 1.1132 on Thursday, its lowest since May 30. FxWirePro's Hourly Euro Strength Index stood at -47.92 (Neutral) by 0400 GMT. Investors’ attention will remain on Eurozone current account, ahead of Fed Stanley Fisher and FOMC member Kaplan's speech for further clues on the pair. Immediate resistance is located at 1.1183 (5-DMA), a break above targets 1.1269 (June 8 High). On the downside, support is seen at 1.1132 (June 15 Low), a break below could drag it near 1.1100.
USD/JPY: The dollar rallied to a three-week high against the Japanese yen after New York Fed President William Dudley said U.S. inflation should rise alongside wages, supporting expectations for the Fed to keep hiking interest rates. The major traded 0.1 percent up at 111.66, having hit a high of 111.77 earlier, its highest since May 26. FxWirePro's Hourly Yen Strength Index stood at -153.61 (Highly Bearish) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of Fed Stanley Fisher and FOMC member Kaplan's speech. Immediate resistance is located at 111.95 (May 25 High), a break above targets 112.12. On the downside, support is seen at 111.12 (78.6 % retracement of 108.81 and 111.77), a break below could take it near 110.62 (61.8 % retracement).
GBP/USD: Sterling slightly nudged up as Brexit talks got off to a positive start on Monday. However, despite a positive start to the Brexit negotiations, EU chief Brexit negotiator stated that there is still a long way to finalize a deal, which is likely to weaken the British currency. Sterling traded up at 1.2739, having hit a low of 1.2635 earlier in the month, its weakest since Apr 18. FxWirePro's Hourly Sterling Strength Index stood at -14.69 (Neutral) by 0400 GMT. Investors’ focus will remain on the Brexit negotiations, ahead of Fed officials' speech scheduled later in the day. Immediate resistance is located at 1.2799 (10-DMA), a break above could take it near 1.2854 (21-DMA). On the downside, support is seen at 1.2700, a break below targets 1.2635. Against the euro, the pound traded flat at 87.57 pence, having hit a 1-week high of 87.19 on Friday.
AUD/USD: The Australian dollar rose after minutes of the Reserve Bank of Australia's June policy meeting reaffirmed the long-term outlook for steady interest rates. The Aussie trades 0.1 percent up at 0.7602, having hit a high of 0.7635 on Wednesday, it’s strongest since Apr 3. FxWirePro's Hourly Aussie Strength Index stood at -2.29 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of Fed officials' speech. Immediate support is seen at 0.7580, a break below targets 0.7559 (10-DMA). On the upside, resistance is located at 0.7635 (June 14 High), a break above could take it near 0.7662 (Mar 31 High).
NZD/USD: The New Zealand dollar gained, reversing most of its previous session losses on the back of an uptick in the domestic consumer confidence number and slightly dovish comments by Fed’s Evans. The Kiwi trades 0.2 percent up at 0.7247, having touched a peak of 0.7319 on Wednesday, its strongest level since Feb. 8. FxWirePro's Hourly Kiwi Strength Index was at 85.37 (Slightly Bullish) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of Fed officials’ speech. Immediate resistance is located at 0.7300, a break above could take it near 0.7350. On the downside, support is seen at 0.7200, a break below could drag it till 0.7171 (June 12 Low).
Equities Recap
Asian shares steadied near two-year high, boosted by a rebound in U.S. hi-tech stocks, while the dollar hit a 3-week high against the yen after an influential Federal Reserve official said U.S. inflation should rise alongside wages.
MSCI's broadest index of Asia-Pacific shares outside Japan neared a two-year high hit last week.
Tokyo's Nikkei rose 1.1 percent to 20,293.91 points, Australia's S&P/ASX 200 index declined 0.6 percent to 5,769.60 points and South Korea's KOSPI lost 0.1 percent to 2,368.25 points.
Shanghai composite index fell 0.1 percent to 3,140.43 points, while CSI300 index was trading 0.2 percent down at 3,546.62 points.
Hong Kong’s Hang Seng was trading 0.2 percent lower at 25,866.16 points. Taiwan shares added 0.7 percent to 10,324.46 points.
Commodities Recap
Crude oil prices steadied around seven-month lows as investors focused on persistent signs of rising supply that are undermining attempts by OPEC and other producers to support prices. International benchmark Brent crude was trading 0.3 percent up at $46.96 per barrel by 0414 GMT, having hit a low of $46.75 on Thursday, its weakest since May 5. U.S. West Texas Intermediate traded 0.2 percent down at $44.43 a barrel, after falling as low as $44.22 on Thursday, its lowest since May 5.
Gold prices edged higher after hitting near five-week lows in the previous session as the dollar strengthened after an influential Federal Reserve official reaffirmed the central bank's hawkish stance. Spot gold rose 0.2 percent to $1,245.04 per ounce, as of 0418 GMT, having hit its weakest since May 17 at $1,242.49 the day before. U.S. gold futures for August delivery fell 0.1 percent to $1,245.10 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.186 percent lower by 0.004 bps, while 5-year yield was 0.002 bps down at 1.786 percent.
The Australian bonds plunged after the Reserve Bank of Australia (RBA) remained slightly positive over the economic outlook of the country, mentioning the developments till date. The yield on the benchmark 10-year Treasury note rose 1-1/2 basis points to 2.44 percent, the yield on the 15-year note climbed 1-1/2 basis points to 2.80 percent while the yield on short-term 2-year traded 1 basis point higher at 1.70 percent.
The New Zealand bonds remained downbeat at the time of closing as investors remain cautious to observe the GlobalDairyTrade (GDT) price auction, scheduled to be held later today. At the time of closing, the yield on the benchmark 10-year bond jumped 3 basis points to 2.81 percent, the yield on 7-year note also surged 3 basis points to 2.72 percent and the yield on short-term 5-year note traded 3 basis points higher at 2.51 percent.
The Canadian government bond prices were lower across a flatter yield curve in sympathy with U.S. Treasuries. The two-year fell 8.5 Canadian cents to yield 0.943 percent and the 10-year declined 16 Canadian cents to yield 1.540 percent. The gap between the 2-year and 10-year yields narrowed by 2.9 basis points to a spread of +59.7 basis points, its smallest gap since Oct. 25, as shorter-dated Canadian bonds underperformed.
