Market Roundup
- MoF data w/e July – Japanese sell net Y772.8 bln foreign bonds
- Japanese investors re-setting for-bond exposures on higher yields abroad
- Foreign investors sell net Y1.0627 tln parked in Japanese bills, re-pat flow
- Japan-EU trade agreement likely from today, to cover wide spectrum of goods
- Japan Inc’s vast pool of cash is growing stagnant -Nikkei
- Australia May s/adj trade surplus, A$+2.47 bln vs forecast A$+1.1 bln
- Australia May exports +9.0% m/m vs -8.0%
- Australia May imports +1.0% m/m vs -1.0%
- U.S. prepared to use force on No Korea 'if we must' -U.N. envoy
- NATO allies look for reassurance from Trump in Warsaw
- Britain's finance industry faces 'tipping point' over Brexit
Economic Data Ahead
- (0315 ET/0715 GMT) Switzerland Jun CPI, 0.0% m/m, 0.3% y/y eyed, last 0.2%, 0.5%
Key Events Ahead
- (0430 ET/0830 GMT) Spain 13YI E0.500 bln auction
- (0430 ET/0830 GMT) Spain E2.0/1.0/1.5 bln, 5/23/29 Yr auctions
- (0450 ET/0850 GMT) France E4.0/2.0/2.5 bln, 10/10/31 Yr auctions
- (0500 ET/0900 GMT) Macron meets World Bank President Jim Yong Kim at the Elysee Palace
- (0700 ET/1100 GMT) ECB's Praet participates in conf. in Paris
- (1000 ET/1400 GMT) Fed Gov Powell speaks in Washington
- N/A BoE's McCafferty speaks on LBC radio
- N/A EU Informal meeting of mins of justice and home affairs at Tallinn
FX Beat
DXY: The dollar rallied against its major peers following the release of the Federal Reserve's latest policy meeting minutes. The greenback against a basket of currencies traded 0.1 percent up at 96.28, having touched a low of 95.47 last week, it’s lowest since Oct. 3. FxWirePro's Hourly Dollar Strength Index stood at 110.94 (Highly Bullish) by 0500 GMT.
EUR/USD: The euro edged down following a recovery momentum in the greenback amid a lack of surprises offered by the FOMC minutes released the day before. The European currency traded 0.1 percent down at 1.1337, having touched a low of 1.1312 on Wednesday, its lowest since Jun 28. FxWirePro's Hourly Euro Strength Index stood at -106.61 (Highly Bearish) by 0400 GMT. Investors’ attention will remain on ECB's Paret Speech and ECB monetary policy meeting accounts, ahead of the U.S. ADP employment change, unemployment benefit claims, service PMI and Fed official's speeches for further clues on the pair. Immediate resistance is located at 1.1383 (5-DMA), a break above targets 1.1400. On the downside, support is seen at 1.1315 (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 for third straight session, as heightened risk of the escalation of the North Korea crisis continued to weigh on market sentiment. Investors now await comments from San Francisco Fed President John Williams and Fed Board Governor Jerome Powell after most Fed policymakers viewed recent softness in inflation data. The major traded 0.2 percent down at 113.02, having hit a high of 113.68 on Wednesday, its highest since May 16. FxWirePro's Hourly Yen Strength Index stood at 88.05 (Slightly Bullish) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of the U.S. ADP employment change, unemployment benefit claims, service PMI and Fed official's speeches. Immediate resistance is located at 113.50, a break above targets 114.00. On the downside, support is seen at 112.88 (5-DMA), a break below could take it near 112.54 (61.8% retracement of 110.67 and 113.68).
GBP/USD: Sterling nudged up, rebounding from a 1-week low touched in the previous session, as a survey on Britain's business services added to a series of weak data that dented expectations that the Bank of England would raise interest rates for the first time in 10 years. The major traded 0.1 percent up at 1.2942, having hit a high of 1.3029 on Friday, its highest since May 23. FxWirePro's Hourly Sterling Strength Index stood at 31.74 (Neutral) by 0400 GMT. Investors’ focus will remain on the U.S. fundamental drivers, amid a lack of economic data from the UK docket. Immediate resistance is located at 1.2964 (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 1.2854 (June 5 Low). Against the euro, the pound traded 0.2 percent up at 87.63 pence, having hit a 7-month low of 88.79 on Thursday.
AUD/USD: The Australian dollar declined, extending losses for the fourth straight session, despite data showing that Australia's trade surplus rebounded sharply in May. The economy's trade surplus surged to A$2.47 billion, more than twice estimates of A$1.1 billion, while the April surplus was revised down to A$90 million. The Aussie trades down at 0.7599, having hit a low of 0.7571 the day before, it’s weakest since Jul. 28. FxWirePro's Hourly Aussie Strength Index stood at -74.75 (Slightly Bearish) by 0500 GMT. Investors will continue to digest domestic data, ahead of U.S. economic releases. Immediate support is seen at 0.7571 (Previous Session Low), a break below targets 0.7550. On the upside, resistance is located at 0.7646 (5-DMA), a break above could take it near 0.7749 (Mar 21 High).
NZD/USD: The New Zealand dollar declined, reversing most of its previous session gains, as the greenback rose versus a basket of currencies following the release of the Federal Reserve's latest policy meeting minutes. The Kiwi trades 0.1 percent down at 0.7279, having touched a peak of 0.7346 on Friday, its strongest level since Feb. 2. FxWirePro's Hourly Kiwi Strength Index was at -112.29 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7300 (5-DMA), a break above could take it near 0.7350. On the downside, support is seen at 0.7255 (21-DMA), a break below could drag it till 0.7200.
Equities Recap
Asian shares slumped after minutes from the Federal Reserve's last meeting showed a lack of consensus on the future pace of U.S. interest rate hikes, while the dollar declined against the yen amid growing concerns about the North Korea crisis.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.2 percent.
Tokyo's Nikkei edged down 0.5 percent to 19,980.65 points, Australia's S&P/ASX 200 index fell 0.1 percent to 5,758.80 points and South Korea's KOSPI declined 0.03 percent to 2,387.59 points.
Shanghai composite index rose 0.1 percent to 3,209.42 points, while CSI300 index was trading 0.03 percent down at 3,658.89 points.
Hong Kong’s Hang Seng was trading 0.03 percent lower at 25,515.75 points. Taiwan shares shed 0.3 percent to 10,368.20 points.
Commodities Recap
Crude oil prices declined, extending previous session losses as oversupply continued to drag on markets, despite strong demand in the United States. International benchmark Brent crude was trading 0.4 percent down at $49.12 per barrel by 0426 GMT, having hit a high of $49.87 on Tuesday, its strongest since Jun. 7. U.S. West Texas Intermediate traded 0.3 percent lower at $45.46 a barrel, after rising as high as $47.29 earlier in the week, its strongest since Jun 6.
Gold prices steadied after rebounding from 7-week lows in the previous session, as Federal Reserve minutes released the day before showed the central bank was split on how inflation might affect the pace of interest rate hikes. Spot gold was 0.1 percent up at $1,226.98 per ounce at 0430 GMT, having touched a low of $1,217.31 an ounce on Wednesday, its weakest since May 11. U.S. gold futures for August delivery rose 0.3 percent to $1,225.50 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.324 percent lower by 0.009 bps, while 5-year yield was 0.013 down at 1.911 percent.
The Australian bonds traded mixed as investors remained muted in a silent trading session after witnessing a solid demand at a government auction early Wednesday, where a single buyer snapped up the entire AUD800 million (USD609 million) bonds, the largest-ever amount bought by one bidder in auctions since 1982. The yield on the benchmark 10-year Treasury note fell 1 basis point to 2.58 percent, the yield on 15-year note also slipped 1 basis point to 2.93 percent while the yield on short-term 2-year traded 1 basis point higher at 1.71 percent.
The New Zealand bonds closed higher as investors covered previous short positions after a long rally this week. Also, investors have largely shrugged off the improvement in the country’s latest GlobaldairyTrade (GDT) price auction, held late Tuesday. At the time of closing, the yield on the benchmark 10-year bond slumped 4-1/2 basis points to 2.98 percent, the yield on 7-year note also plunged 4-1/2 basis points to 2.87 percent and the yield on short-term 2-year note ended 3 basis points lower at 2.05 percent.
The Canadian government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries, the two-year rose 2 Canadian cents to yield 1.129 percent and the 10-year climbed 39 Canadian cents to yield 1.794 percent. Earlier in the session, the 2-year yield reached its highest since September 2014 at 1.148 percent.
