Market Roundup
- U.S. aims to restart China trade talks, will not accept conditions on tariff use
- G20 summit draft communique calls for promotion of free trade - media
- Fed pushes back on aggressive U.S. rate cut views
- U.S. Special Counsel Mueller to testify before House panels on July 17 -statement
- Trump threatens 'obliteration,' Iran calls White House 'mentally retarded'
- N.Korea says U.S. extension of sanctions 'a hostile act' -KCNA
- New Zealand cenbank stands pat, says more easing may be needed to support growth
- Johnson courts financiers in race to become British PM -sources
- U.S. border agency acting head leaving as House passes migrant aid funding bill
- China c.bank sells 30 bln yuan of offshore bills in Hong Kong
Economic Data Ahead
- (0245 ET/0645 GMT) France Jun Consumer Confidence, 100 f'cast, 99 prev
Key Events Ahead
- (0400 ET/0800 GMT) BoE Executive Director, Prudential Policy, Victoria Saporta, speaks at Risk.net Liquidity & Funding Risk Europe in London
- (0500 ET/0900 GMT) Opening remarks by ECB board member Yves Mersch at the ECB Legal Colloquium "The new challenges raised by investment arbitration for the EU legal order" in Frankfurt
- (0515 ET/0915 GMT) BoE's Mark Carney and other interest rate-setters Jon Cunliffe, Silvana Tenreyro and Michael Saunders explain the economic forecasts and interest rate decisions included in May's Inflation Report in London
- (1130 ET/1530 GMT) San Francisco Fed's Mary Daly speaks to The Forecasters Club of New York on "The Dual Mandate in a Flat Phillips Curve Environment" in New York
FX Beat
DXY: The dollar index steadied after falling to a 3-month low in the previous session, as investors dialled back expectations for aggressive U.S. rate cuts next month after Fed Chairman Jerome Powell stressed the central bank's independence from U.S. President Donald Trump, who is pushing for aggressive rate cuts. The greenback against a basket of currencies traded 0.1 percent up at 96.25, having touched a low of 95.84 on Tuesday, its lowest since Mar. 21. FxWirePro's Hourly Dollar Strength Index stood at -32.15 (Neutral) by 0400 GMT.
EUR/USD: The euro declined, extending previous session losses, as the greenback rebounded after U.S. Federal Reserve officials played down expectations of aggressive rate cuts. The European currency traded 0.1 percent down at 1.1355, having touched a high of 1.1412 earlier, its highest since Mar. 21. FxWirePro's Hourly Euro Strength Index stood at 32.49 (Neutral) by 0400 GMT. Investors’ attention will remain on ECB Mersch's speech, ahead of the U.S. prelim wholesale inventories, goods trade balance, durable goods orders, and a speech by Fed's Daly. Immediate resistance is located at 1.1437 (Mar. 21 High), a break above targets 1.1474 (Dec. 21 High). On the downside, support is seen at 1.1335 (Mar 20 Low), a break below could drag it below 1.1301 (Jun. 11 Low).
USD/JPY: The dollar bounced back from a near 6-month low hit in the previous session after Federal Reserve officials pushed back market expectations and presidential pressure for the central bank to deliver a significant U.S. interest rate cut of half a percentage point as soon as it’s next meeting. The pair was trading 0.3 percent up at 107.46, having hit a low of 106.78 the day before, its lowest since Jan. 3. FxWirePro's Hourly Yen Strength Index stood at -91.07 (Slightly Bearish) by 0400 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. prelim wholesale inventories, goods trade balance, durable goods orders, and a speech by Fed's Daly. Immediate resistance is located at 107.75 (50.0% retracement of 108.72 and 106.78), a break above targets 107.98 (61.8% retracement). On the downside, support is seen at 106.26 (Mar. 29, 2018), a break below could take it lower at 106.00.
GBP/USD: Sterling eased as investors turned cautious amid increasing risk of a no-deal Brexit stemming from the Conservative Party leadership contest. The major traded 0.1 percent down at 1.2670, having hit a high of 1.2783 on Tuesday, it’s highest since May 21. FxWirePro's Hourly Sterling Strength Index stood at -117.41 (Highly Bearish) 0400 GMT. Investors’ attention will remain on BoE Governor Carney's speech, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2743 (June 5 High), a break above could take it near 1.2798 (May 17 High). On the downside, support is seen at 1.2642(Jun. 21 Low), a break below targets 1.2611 (May 29 Low). Against the euro, the pound was trading 0.1 percent down at 89.63 pence, having hit a low of 89.63 earlier, it’s lowest since Jun. 18.
AUD/USD: The Australian dollar steadied near a 2-week peak, as investors cautiously awaited the Reserve Bank of Australia policy meeting next week, where it is widely expected to cut interest rates. The Aussie trades 0.1 percent up at 0.6965, having hit a high of 0.6978 on Tuesday, it’s highest since Jun. 10. FxWirePro's Hourly Aussie Strength Index stood at 64.47 (Bullish) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6925 (June 12 Low), a break below targets 0.6881 (May 24 Low). On the upside, resistance is located at 0.6994 (June 6 High), a break above could take it near 0.7022 (June 7 High).
NZD/USD: The New Zealand dollar rallied to a near 3-week peak, after the Reserve Bank of New Zealand held the official cash rate at 1.5 percent at its policy meeting, but signalled another easing was likely given economic risks at home and abroad. The Kiwi trades 0.2 percent up at 0.6654, having touched a high of 0.6661, its highest level June 7. FxWirePro's Hourly Kiwi Strength Index was at 91.80 (Slightly Bullish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6681 (June 7 High), a break above could take it near 0.7729 (Apr. 18 High). On the downside, support is seen at 0.6540 (May 27 Low), a break below could drag it below 0.6474 (Oct. 4 Low).
Equities Recap
Asian shares plunged as the greenback rebounded from multi-month lows after Federal Reserve officials tempered expectations in the markets for aggressive monetary easing.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.2 percent.
Tokyo's Nikkei plunged 0.5 percent to 21,086.59 points, Australia's S&P/ASX 200 index tumbled 0.3 percent to 6,640.50 points and South Korea's KOSPI slumped 0.05 percent to 2,119.88 points.
Shanghai composite index declined 0.1 percent to 2,979.89 points, while CSI 300 index traded 0.05 percent down at 3,800.52 points.
Hong Kong’s Hang Seng traded 0.05 percent higher at 28,244.52 points. Taiwan shares shed 0.5 percent to 10,652.55 points.
Commodities Recap
Crude oil prices rose to their highest in nearly a month as industry data showed U.S. crude stockpiles fell more than expected, underpinning a market already buoyed by worries over a potential U.S.-Iran conflict. International benchmark Brent crude was trading 0.3 percent higher at $65.97 per barrel by 0445 GMT, having hit a high of $66.10 earlier, its highest since May 31. U.S. West Texas Intermediate was trading 0.4 percent up at $58.94 a barrel, after rising as high as $59.08, its highest since the May 30.
Gold prices declined more than 1 percent, drifting away from a 6-year peak hit in the previous session, as U.S. Federal Reserve officials played down expectations of aggressive rate cuts. Spot gold was trading 1.1 percent down at $1,407.72 per ounce by 0449 GMT, having touched a high of $1,439.14 on Friday, its highest since May 14, 2013. U.S. gold futures fell 0.4 percent to $1,413.30 an ounce.
Treasuries Recap
The Australian three-year bond yields were only a whisker above record lows at 0.925 percent. The 10-year bond future hit a historic high in early trade before dipping 2.5 ticks to 98.7150, implying a yield of 1.285 percent.
The New Zealand two-year paper was near all-time lows at 1.15 percent.
The Canadian government bond prices were higher across a flatter yield curve. The two-year rose 1.5 Canadian cents to yield 1.397 percent and the 10-year gained 22 Canadian cents to yield 1.438 percent.
