Asia Roundup: Aussie advances on better-than-expected GDP data, Abe's sales tax hike delay press conference eyed, Asian shares edge down - Wednesday, June 1st, 2016

Market Roundup

• BoJ Gov Kuroda – Important for Japan to aim for budget surplus by FY 20 - Hokkaido Shimbun.
   
• Japan May mfg PMI 47.7, flash 47.6, April 48.2, new orders 44.7, flash 44.1.


• MoF survey – Japan Q1 CAPEX +4.2% y/y, Q4 ’15 +8.5%, +1.4% q/q ex-software, recurring profits -9.3% y/y, sales -3.3%.
   
• China push in international bonds to support weakening renminbi, $19.2 bln bonds issued in May, third highest – Financial Times, Dealogic.
   
• China May Caixin mfg PMI 49.2, 49.3 eyed, April 49.4, 15th contraction month, new orders led decline, push down reversal of improvements last two months.
   
• China May official mfg PMI 50.1, 50.0 eyed, April 50.1.
   
• China May official services PMI 53.1, April 53.5.
   
• Australia Q1 GDP +1.1% q/q, +3.1% y/y, +0.8% and +2.8% eyed, Q4 +0.7% q/q, consumption expenditure +0.7%, CAPEX -1.7%, chain price index -0.4%.
   
• Australia May mfg PMI off 2.4 points to 51.0.
   
• New Zealand Q1 terms of trade index +4.4% q/q, export volumes -2.7%, export prices unch, import prices -4.3%, -0.2%, -1.3%, -1.5% and -2.5% eyed.
   
• ECB/Austria CB Nowotny – No alternative to expansive policy – Die Presse.
   

Economic Data Ahead

• (0300 ET/0700 GMT) Norway May PMI mfg, 48.5 eyed; last  48.0.
   
• (0315 ET/0715 GMT) Spain May PMI mfg, 52.6 eyed; last  53.5.
   
• (0315 ET/0715 GMT) Switzerland Apr retail sales; last -1.3% y/y.


• (0330 ET/0730 GMT) Switzerland May PMI mfg, 54.0 eyed; last  54.7.
   
• (0345 ET/0745 GMT) Italy May PMI mfg, 53.0 eyed; last  53.9.


• (0350 ET/0750 GMT) France May PMI mfg, 48.3 eyed; flash 48.3.
   
• (0355 ET/0755 GMT) Germany May PMI mfg, 52.4 eyed; flash 52.4.


• (0400 ET/0800 GMT) Norway Q1 current account balance; last NOK54.98 bln.


• (0400 ET/0800 GMT) Eurozone May PMI mfg, 51.5 eyed; flash 51.5.
   
• (0430 ET/0830 GMT) Great Britain May PMI mfg, 49.6 eyed; last  49.2.


• (0430 ET/0830 GMT) Great Britain Apr mortgage approvals, 67.95k eyed; last 71.36k.
   
• (0430 ET/0830 GMT) Great Britain GB Apr mortgage lending, GBP3.8 bln eyed; last GBP7.44 bln.
   
• (0430 ET/0830 GMT) Great Britain Apr consumer credit,  GBP1.6 bln eyed; last GBP1.88 bln.


• (0430 ET/0830 GMT) Great Britain Apr money supply M4; last -0.4%.
   
• (0945 ET/1345 GMT) United States May Markit PMI mfg – final; flash 50.5.


• (1000 ET/1400 GMT) United StatesMay ISM PMI mfg, 50.4 eyed; last 50.8.
   
• (1000 ET/1400 GMT) United States Apr construction spending, +0.6% m/m eyed; last +0.3%.
   
• (1030 ET/1430 GMT) United States May Dallas Fed services rev, outlook indices; last 10.6, -3.7.
   
• (1330 ET/1730 GMT) United States May total vehicle sales, 17.3 mln AR eyed; last 17.42 mln AR.
   

Key Events Ahead

• N/A   European Business Summit in Brussels, various attendees, speakers.
   
• N/A   Buba bank supervision conference in Frankfurt, various speakers.
   
• N/A   OECD Forum ’16 in Paris, various attendees/speakers, economic outlook.
   
• (0330 ET/0730 GMT) Riksbank biannual financial stability report.
   
• (0400 ET/0800 GMT) Iceland CB policy announcement.
   
• (0500 ET/0900 GMT) Japan PM Abe press conference on sales tax hike delay.


• (0530 ET/0930 GMT) Germany E4 bln 0% 2021 Bobl, UK DMO GBP2.75 bln 1.5% 2021 Gilt auctions.
   
• (0600 ET/1000 GMT) Sweden SEK7.5 and 10 bln 110 and 201-day treasury bill auctions.
   
• (1400 ET/1800 GMT) Fed Beige Book.
   

FX Beat

USD: The dollar index, against a basket of currencies, trades at 95.73, pulling back from Monday's 2-month peak of 95.895.

EUR/USD: The euro edged down to 1.1120, drifting away from a high of 1.1173 struck in the previous session. The greenback rose after U.S. personal income-related and housing indicators came in strong, while the Chicago manufacturing PMI and consumer confidence data disappointed the markets. Consumer spending recorded its biggest gain in more than six years in April, however, business activity in U.S. Midwest failed to impress the markets. Markets attention will now remain on Eurozones's Markit manufacturing PMI, ahead of U.S. ISM Manufacturing PMI data for further cues on the pair. The major continues to decline, hovering closer to a 2-1/2-month low of 1.1097 touched on Monday. Immediate support is seen at 1.1109 (May-27 Low), break below could target 1.1097 (2-1/2 month Low). On the higher side, resistance is located at 1.1162 (10-DMA).

USD/JPY: The Japoanese yen extended gains, trading 0.6 percent higher at 109.97, off Monday's 1-month low of 111.45. The yen strengthened on expectations that Prime Minister Shinzo Abe will announce a delay to next year's proposed sales tax hike to prevent further shock to the economy in a press conference, later in the day. Abe's plan to delay the tax hike and implement new fiscal stimulus measures has increased speculation that the BoJ could adopt further monetary easing as early as this month. The major continues to trade lower, hovering towards an early low of 110.41. Immediate support is seen at 110.35 (May-30 Low), break below could drag the pair to 110.17. On the upside, resistance is located at 110.83 (Session High).      

GBP/USD: Sterling steadied after declining more than one percent on Tuesday on polls showing an increasing support for those who want Britain to leave the European Union. The major trades 0.1 percent higher at 1.4488, having touched an early low of 1.4459. It dropped from a high of 1.4725 to close down at 1.4480, on Tuesday. Markets will closely watch Britain's housing price data for further directions. Immediate support is located at 1.4459 (Session Low), break below could target 1.4442. On the higher side, resistance is seen at 1.4512 (20-DMA). Against the euro, the pound trades at 76.79, off previous session high of 75.72.

AUD/USD: The Australian dollar rose after better-than- expected economic data hinted the investors to further scale back prospects for an interest rate cut soon. The Aussie gained 0.6 percent to 0.7277, having scaled a 2-week high of 0.7298 earlier in the session and pulling further away from a 3-month trough touched last week. Australia's economy grew by 1.1 percent in the first quarter and an on annualized basis it posted a growth of 3.1 percent, surpassing markets forecast of 2.8 percent and previous 2.9 percent growth. The RBA holds its monthly policy review on June 7 and the market widely expects the central bank to hold rates, following last month's cut. Markets now await U.S. ISM manufacturing PMI and price data, ahead of Australia's retail sales and trade data, for further momentum on the pair. Immediate resistance is located at 0.7330, break above targets 0.7366. On the lower side, support is seen at 0.7218 (5-DMA).

NZD/USD: The New Zealand dollar was trading 0.3 higher at 0.6786, strengthened by better-than-expected first quarter terms of trade data. New Zealand's terms of trade rose 4.4 percent in the first quarter, against markets expectation of a fall of 0.2 percent. The kiwi rose to a high of 0.6813, extending its recovery from Monday's 2-month low of 0.6676. Traders focus will remain on U.S. ISM manufacturing data and Global dairy trade price index for further cues on the major. Immediate resistance is located at 0.6813 (Session High), break above could take the pair to 0.6830 (May-13 High). On the down side, support is seen at 0.6748 (May-23 Low).

Equities Recap

Asian shares weakened as a drop in crude oil prices dampened investors' appetite for riskier assets.

MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.1 percent.

Tokyo's Nikkei declined 1.62 pct to16,955.73, Australia's S&P/ASX 200 index slipped 0.96 pct to 5,327.00 points and Seoul shares edged up 0.13 pct.

Shanghai composite index was 0.1 percent up at 2,919.81 points, while CSI300 index was down at 3,167.44 points.

Hong Kong’s Hang Seng index was trading 0.06 percent lower at 20,803.02 points. Taiwan stocks nudge up 0.7 pct at 8,597.16 points.

Commodities Recap

Oil prices edged down as production from the major Middle East exporters was expected to remain high or even increase just. as concerns over the state of China's economy weighed on its fuel demand outlook. International benchmark Brent crude oil futures were trading at $49.39 per barrel at 0620 GMT, down 0.2 percent, from their last settlement. U.S. West Texas Intermediate crude futures were down 0.4 percent, at $48.63 a barrel.

Gold declined after closing up the previous day for the first time in ten sessions, facilitated by an easing dollar and weaker Asian stocks. Spot gold was trading flat at $1215.24 per ounce by 0621 GMT, having gained 0.8 percent on Tuesday in its biggest one-day gain since May 13.

Treasuries Recap

The 10-year treasury yield stood at 1.8476 percent up by 0.014 bps.

Australian government bond futures declined, with the 3-year bond contract off 3 ticks at 98.350, having touched its lowest in 1-month. The 10-year contract shed 2.5 ticks to 97.6750, while the 20-year contract was 1 tick lower at 97.0900.

New Zealand government bonds eased, sending yields 1.5 basis points higher across the curve.

Canadian government bond prices were higher across the maturity curve, with the 2-year price up 7 Canadian cents to yield 0.616 percent and the benchmark 10-year rising 29 Canadian cents to yield 1.322 percent.