Market Roundup
- Reuters survey – 61% of Japanese firms support decision to delay sales tax hike, 60% concerned over currency swings on Brexit.
- Fed – US equity valuations well above median – Reuters.
- ThomsonReuters/INSEAD Q2 Asia business sentiment index 67, Q1 65, China rising corporate debt biggest risk, Philippines most optimistic, Japan least.
- Australia May Westpac/MI leading index 97.0, deviation from trend -0.42, April 96.8, -1.19, commodity price drag easing.
- New Zealand May migration gain, short-term visitors also +9.6% y/y.
Economic Data Ahead
- (0300 ET/0700 GMT) Sweden Jun consumer confidence index, 96.8 eyed; last 96.0, mfg 105.3.
- (0330 ET/0730 GMT) Sweden May unemployment, 7.2% nsa eyed; last 7.3% nsa, 6.7% sa.
- (0400 ET/0800 GMT) Norway Apr labor force survey – unemployment, 4.7% eyed; last 4.7%.
- (0500 ET/0900 GMT) Switzerland Jun ZEW investor sentiment index; last 17.5.
- (0900 ET/1300 GMT) United States Apr FHFA monthly home prices; last +0.7% m/m, +6.1% y/y, index 233.1.
- (1000 ET/1400 GMT) United States May exist home sales, 5.54mln AR, +1.1% m/m eyed; last 5.45mln, +1.7%.
- (1000 ET/1400 GMT) Eurozone Jun consumer confidence index – flash, -7.0 eyed; last -7.0.
Key Events Ahead
- N/A ECB Governing Council meeting.
- N/A ECB zero% 819-day TLTRO, E435 bln allotment eyed, E367.9 bln repaid.
- (0400 ET/0800 GMT) Finland updated economic forecasts.
- (0530 ET/0930 GMT) Germany E1 bln 2.5% 2046 Bund auction.
- (0600 ET/1000 GMT) Sweden SEK3.5 bln 4.25% 2019 government bond auction.
- N/A US CommSec Pritzer addresses OECD meeting in Cancun, Mexico.
- (1000 ET/1400 GMT) FOMC Chair Yellen semi-annual Humphrey-Hawkins House testimony.
- (1030 ET/1430 GMT) US TsySec Lew press conference on social security, Medicare.
FX Beat
USD: The dollar index, against a basket of currencies stood at 93.98, after rising to 94.00 from a 2-week trough of 93.425 after Fed Chair Yellen testified on the Semi-annual Monetary Policy Report before the Senate Banking Committee yesterday.
EUR/USD: The euro gained after declining to 1.1241, pulling away from a 2-week peak of 1.1383 set on Monday. The major attempts to recovery after speeches from both central banks (ECB and Fed) kept a cautious approach on monetary policy ahead of the UK referendum on EU membership. ECB President Mario Draghi said the central bank stood ready to act with all instruments if necessary, while Fed chair Yellen expressed general optimism about the U.S. economy before another hike. The euro rose 0.2 percent to 1.1266, drifting away from a 4-day low of 1.1241 struck in the previous session. Immediate resistance is seen at 1.1296 (Jun-17 High), break above will take the pair over 1.1300. On the lower side, support is located at 1.1222, break below targets 1.1196.
USD/JPY: The Japanese yen edged up after the dollar briefly rose back above 105.00 yen for the first time in nearly a week, on Tuesday. The greenback strengthened after Federal Reserve Chair Janet Yellen held the line of gradual increases in U.S. rates. She also sated that the economic outlook was uncertain and that monetary policy was not on a preset course. Markets attention now remains on U.S. economic releases and Yellen’s round 2 of testimony, ahead of Brexit referendum. The major trades 0.1 percent lower at 104.55, not far from its 22-month low of 103.55 hit last week. Immediate support is located at 104.04 (Jun-17 Low), break below could take the pair lower 104 level. On the higher side, resistance is seen at 105.38 (10-DMA), break above targets 105.70/ 106.00.
GBP/USD: Sterling gained after declining from a 5-1/2-month high against the dollar on Tuesday. The major weakened after a poll showed the campaign for Britain to leave in the European Union has gained some lead ahead of Thursday's referendum on EU membership. Sterling trades 0.2 percent higher at 1.4678, having advanced as high as 1.4782 on Tuesday, its strongest level since January 4. Immediate resistance is located at 1.4700 level, break above targets 1.4782. On the lower side, support is seen at 1.4616 (Previous Session Low), break below will take it lower 1.4600 level. Against the euro, the pound trades flat at 76.72 pence.
AUD/USD: The Australian dollar rose 0.1 percent to 0.7460, with investors cautious ahead of Britain votes on whether to stay in or leave the European Union. The Aussie was strengthened after Westpac Lending Index for the month of April rose 0.21 percent after posting a decline of 0.2 percent in the prior month. The major finds support from renewed demand for oil prices, as the bulls ignore a slightly risk-off market profile. Trading will remain subdued amid developments surrounding the EU referendum. Immediate resistance is located at 0.7481 (Jun-20 High), break above could take the pair over 0.7500 level. On the down side, support is seen at 0.7424 (5-DMA).
NZD/USD: The New Zealand dollar was trading 0.2 percent higher at 0.7137, having scaled a 1-year peak of 0.7169 on Tuesday. The kiwi manages to regain as the U.S. dollar remains broadly weaker against major peers after Fed Yellen’s testimony offered no new surprises, combined with upbeat visitor arrivals data from the New Zealand. The economy's visitor arrivals for the month of May rose to 9.6 percent y/y against pervious 7.9 percent. Markets focus will now awaits U.S. economic releases and Yellen’s round 2 of testimony, ahead of Brexit referendum. Immediate resistance is located at 0.7169 (Previous Session High), while on the lower side, support is seen at 0.7093 (5-DMA).
Equities Recap
Asian stocks edged up as investors remain wary on Britain's European Union referendum, while Fed Chair Yellen's cautious stance on future rate hikes added to a subdued mood in markets.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 percent.
Tokyo's Nikkei declined 0.64 pct at 16,065.72, Australia's S&P/ASX 200 index edged up 0.23 pct at 5,286.30 points and South Korea’s Kospi gained 0.3 percent at 1,989.56 points.
Shanghai composite index rose 0.4 pct at 2,890.28 points and CSI300 index added 0.3 pct at 3,118.19 points.
Hong Kong’s Hang Seng was trading 0.5 pct higher at 20,783 points. Taiwan stocks climbed 0.4 pct at 8,716.25 points.
Commodities Recap
Oil prices edged down, however, held above the $50 barrel mark after data from the American Petroleum Institute showed a larger than expected draw on stocks. Brent crude oil was trading flat at $50.91 a barrel, after declining to an early low of $50.56. U.S. crude futures' August contract, the new front month from Wednesday, had gained 9 cents to $49.94 a barrel. Earlier it rose to as high as $50.54, marking the first time it had risen above $50 since June 10.
Gold hovered near its lowest in over a week as the dollar and Asian shares remained firm on growing expectations that Britain would vote to remain in the European Union. Spot gold was trades lower at $1,264.46 an ounce by 0630 GMT, while, U.S. gold was down 0.1 percent at $1,271 an ounce.
Treasuries Recap
The 10-year U.S. treasury yield stood at 1.6938 percent down by 0.003 bps, while 5-year yield was down by 0.007 bps at 1.2106 percent.
Australian government bond futures declined, with the 3-year bond contract 4 ticks lower at 98.380. The yield on the benchmark 10-year Treasury note, rose nearly 6 basis points to 2.170 percent and the yield on short-term 2-year note jumped more than 4 basis points to 1.724 percent.
New Zealand government bonds eased, sending yields two to three basis points higher.
Canadian government bond prices were lower across the maturity curve, with the 2-year price down 4 Canadian cents to yield 0.608 percent and the benchmark 10-year falling 37 Canadian cents to yield 1.251 percent.
