Market Roundup
- BoJ Policy Board Sato – Global slowdown to continue, Japan Inc cautious, no recession but no spunk, QQE shock-therapy effect fading, NIRP having negative effects, road towards 2% CPI target to be long, wages must rise – Reuters.
- MoF flow data week-ended May 28 – Japanese buy net Y124.9 bln foreign stocks, sell Y549.4 bln bonds, Y12.4 bln bills; foreign investors sell net Y175.3 bln Japanese stocks, buy Y68.0 bln bonds, sell Y788.6 bln bills.
- Japan May monetary base Y386.7264 trln, April Y386.1882 trln, +25.5% y/y.
- China ViceFinMin Zhu – fed rate decisions will have big economic impact, US and China must up policy coordination, cooperation – Reuters.
- US May auto sales 17.45 mln AR, sedan sales weak – Autodata.
- Australia Apr trade deficit A$1.579 bln, A$2 bln eyed, exp +1% m/m, imp -1%.
- Australia April retail sales +0.2% m/m, +0.3% eyed, March revised +0.4%.
- New Zealand Fonterra GDT price index +3.4%, volumes up at auction too.
Economic Data Ahead
- (0330 ET/0730 GMT) Sweden Q1 current account balance; last SEK63.7 bln surplus.
- (0430 ET/0830 GMT) Great Britain May construction PMI, 52.0 eyed; last 52.0.
- (0500 ET/0900 GMT) Eurozone Apr producer prices, +0.1% m/m, -4.1% y/y eyed; last +0.3%, -4.2%.
- (0730 ET/1130 GMT) United States May Challenger layoffs; last 65.14k.
- (0815 ET/1215 GMT) United States May ADP national employment, +175k eyed; last +156k.
- (0830 ET/1230 GMT) United States w/e initial jobless claims, 270k eyed; last 268k.
- (0945 ET/1345 GMT) United States May ISM-New York index; last 724.4.
Key Events Ahead
- N/A Statistics Norway economic forecasts.
- (0300 ET/0700 GMT) Spain EconMin Guindos opens Spain-USA forum in Madrid.
- (0305 ET/0705 GMT) Riksbank DepGov Jochnick speech in Stockholm.
- (0430 ET/0830 GMT) Spain E4-5 bln 0.75/1.95/2.9% 2021/26/46 Bono auctions.
- (0450 ET/0850 GMT) France E8-9 bln 2.25/0.5/3.25% 2024/26/45 OAT auctions.
- (0600 ET/1000 GMT) Sweden SEK500 mln each 0.125% each 2019 and 2026 linker-bond auctions.
- (0745 ET/1145 GMT) ECB policy announcement, no changes to -0.4% depo, zero refi rates eyed.
- (0800 ET/1200 GMT) EuroGroup Pres Dijsselbloem Brussels European Business Summit presser.
- (0830 ET/1230 GMT) ECB Pres Draghi press conference.
- (0835 ET/1235 GMT) Fed Gov Powell in panel discussion at Washington, DC conference.
- N/A Ex-Tsy Summers, Dallas Fed Kaplan speak at Boston College.
- (0900 ET/1300 GMT) BoE Gov Carney meets press on unveiling of new GBP5 note.
- (1000 ET/1400 GMT) ECB Pres Draghi, ECB/Austria CB Nowotny speak at Austria CB event.
- (1045 ET/1445 GMT) BoC DepGov Schembri presentation in Nova Scotia.
- (1130 ET/1530 GMT) NY Fed Dudley presides over Economic Club of New York luncheon.
- (1130 ET/1530 GMT) Dutch CB semi-annual economic forecasts.
FX Beat
USD: The dollar index, against a basket of currencies trades 0.1 percent lower at 95.31, hovering towards an early low of 95.19.
EUR/USD: The euro rose 0.1 percent to 1.1205, after gaining 0.5 percent overnight. The major gained momentum, extending gains above the 1.1200 level amid fresh selling in the greenback against its major peers and declining Japanese stocks. The markets will closely watch the European Central Bank's policy meeting later in the session. The ECB is widely expected to stand pat on monetary policy. However, Draghi’s presser will hold the key for further directions on the pair. The pair continues to rise, hovering towards an early high of 1.1213. Immediate resistance is located at1.1227 (May-24 High), break above targets 1.1242/1.1250. On the downside, support is seen at 1.1169 (10-DMA), break below could drag the pair to 1.1154/1.1128.
USD/JPY: The Japanese yen extended gains against the greenback as Abe’s sales-tax hike delay decision combined with surging risk aversion, underpinned the bids for the domestic currency. The major declined below the 109.00 mark, however, regained some ground to trade 0.3 percent lower at 109.18. The greenback fell to a low of 109.05, off 1-month high of 111.45, following Abe announced on Wednesday. Markets now await the US ADP jobs data to provide some relief to the USD bulls, amid persistent broad based US dollar weakness. Immediate support is seen at 108.83 (Session Low), break below could drag the pair to 108.46/108.22. On the higher side, resistance is located at 109.65, break above targets 110.00.
GBP/USD: Sterling edged up after hitting a 2-week low on renewed worries that the "Out camp" was gaining lead in the June 23 referendum on Britain's exit from the European Union. Growing Brexit concerns continues to weigh down the major. Sterling rose 0.1 percent to 1.4436, after declining to 1.4385 on Wednesday, it’s lowest in two weeks. Investors will closely watch Britain's construction PMI and U.S. ADP employment data, for further cues on the major. Immediate resistance is located at 1.4454, break above targets 1.4479/1.4500. On the lower side, support is seen at 1.4402 (Session Low), break below could drag the pair to 1.4394/1.4385. Against the euro, pound trades flat at 77.06 pence, having touched an early low of 77.55, it’s weakest since May 18.
AUD/USD: The Australian dollar retreated from 2-week highs on mixed economic data and persisting risk aversion sentiment. The Aussie trades 0.1 percent lower at 0.7242, from an early high of 0.7269 and pulling away from a high of 73 cents touched on Wednesday. However, it was still up 0.7 percent since Monday and if sustained, it would be the first weekly gain since mid-April. The major failed to gain momentum after April retail sales rose 0.2 percent, slightly missing expectations of a 0.3 percent, while the trade deficit decreased to 1,579 million versus forecasts of a $2,000 million. Markets continue to absorb the macro news of the Australian economy ahead of the U.S. ADP jobs data. Immediate support is seen at 0.7219 (5-DMA), break below could drag the pair lower the 0.7200 mark. On the higher side, resistance is located at 0.7269 (Session High), break above targets 0.7298 (Previous Session High).
NZD/USD: The New Zealand dollar extended gains, supported by rising dairy prices. The kiwi trades 0.1 percent higher at 0.6820, having touched a high of 0.6833 earlier in the session. Global dairy prices increased 3.4 percent, its second consecutive auction of gains on the back of skim milk powder sales, though whole milk prices declined at this month's first auction. Markets attention will now remain on U.S. ADP employment and New Zealand's ANZ commodity price data for further direction. Immediate resistance is located at 0.6833 (Session High), break above targets 0.6842. On the lower side, support is seen at 0.6804, break below could drag the pair to 0.6778.
Equities Recap
Asian stocks eased after surveys showed global manufacturing activity and demand remained fragile.
MSCI's broadest index of Asia-Pacific shares outside Japan struggled to keep its head above water after rising more than 3 percent over the last seven days.
Tokyo's Nikkei slumped 2.32 pct at 16,562.55, Australia's S&P/ASX 200 index declined 0.90 pct at 5,275.00 points and Seoul shares edged up 0.19 pct.
Shanghai composite index rose 0.1 pct at 2,917.76 points, while CSI300 index was flat at 3,161.20 points.
Hong Kong’s Hang Seng index was trading 0.1 pct higher at 20,791.61 points. Taiwan stocks dropped 0.5 pct at 8,556.02 points.
Commodities Recap
Oil prices were steady on mixed market signals ahead of an OPEC meeting in Vienna, while traders do not expected to result in restrictions on crude output. International Brent crude oil futures were trading at $49.67 per barrel at 0637 GMT, while U.S. West Texas Intermediate crude was down 9 cents at $48.92 a barrel.
Gold steadied following overnight losses, with markets assessing whether the latest series of U.S. economic data strengthened the prospects of an early interest rate hike by the Federal Reserve. Spot gold was trading 0.1 percent higher at $1,214.56 per ounce by 0638 GMT, while U.S. gold was nearly flat at $1,215.20.
Treasuries Recap
The 10-year U.S. treasury yield stood at 1.8250 percent down by 0.021 bps.
Australian government bond futures bounced off lows, with the 3-year bond contract up 3 ticks at 98.390. The 10-year contract added 2.5 ticks to 97.7350, while the 20-year contract rose 1.5 tick to 97.1500.
New Zealand government bonds gained, sending yields 2 basis points lower.
Canadian government bond prices were higher across the maturity curve, with the 2-year price up 4.5 Canadian cents to yield 0.590 percent and the benchmark 10-year rising 17 Canadian cents to yield 1.302 percent.
