Market Roundup
- Japan FinMin Aso – Very concerned over one-sided, rapid, speculative FX moves, will respond if necessary, stability extremely important - Reuters.
- MoF Asakawa – MoF, BoJ, FSA share view volatility up in FX, fin’l markets.
- Source – BoJ ready to offer USD funding with 5 other central banks if markets roiled by Brexit vote – Reuters.
- Japan Cabinet Office leaves economic assessment as is, CPI rise slower.
- EconMin Ishihara – Japan exiting deflation, moving forward – Reuters.
- Japan end-March household financial assets Y1706 trln, -0.6% y/y, official pension fund Q1 JGB net sales Y1.3624 trln, stock buys Y965.4 bln, foreign bond sales Y86.7 bln.
- Investors brace for specter of USD/JPY 100 – Nikkei.
- Japan corporate pensions flee stocks in search of new options – Nikkei.
- Foreign CB US debt holdings -$3.133 bln to $3.238 trln week-ended June 15,Tsy holdings -$3.460 bln to $2.922 trln, agencies -$151 mln to $265.114 bln.
- NY Fed – Swaps with foreign CBs $6 mln June 15 week, ECB $5 mln, BoJ $1 mln.
- Lipper – Investors pull $3.11 bln from US taxable bond funds, most in ’16, stock funds post $3.4 bln outflows, seventh straight week of withdrawals.
- UK $1.1bn stock fund withdrawals largest in a year – Financial Times.
- New Zealand June ANZ/RM consumer confidence index 118.9, May 116.2.
- New Zealand May PMI 57.1, April 56.6, production sub-index up to 61.1.
- New Zealand May ANZ job adverts +0.2% m/m, +7.2% y/y.
- New Zealand Fonterra – Dairy output to fall 3% this season – Reuters.
Economic Data Ahead
- (0400 ET/0800 GMT) Eurozone Apr current account balance; last E32.3 bln surplus nsa, E27.3 bln sa.
- (0400 ET/0800 GMT) Eurozone Apr net investment flow; last E21.8 bln inflow.
- (0400 ET/0800 GMT) Italy Apr trade balance – global/EU; last E5.37, 1.33 bln surpluses.
- (0500 ET/0900 GMT) Eurozone Q1 labor costs, wages; last +1.3% and +1.5% y/y.
- (0830 ET/1230 GMT) United States May housing starts, 1.15 mln AR eyed; last 1.17 mln, +6.6% m/m.
- (0830 ET/1230 GMT) United States May building permits, 1.15 mln AR eyed; last 1.13 mln, +4.9% m/m.
- (0900 ET/1300 GMT) Belgium Jun consumer confidence index; last -8.0.
Key Events Ahead
- N/A St Petersburg 20th International Economic Forum (till June 18).
- N/A EZ EcoFin meeting in Luxembourg, Slovakia quarterly economic update.
- (0500 ET/0900 GMT) IMF Lagarde, Austria FinMin Schelling in Vienna panel discussion.
- (0600 ET/1000 GMT) UK DMO GBP0.5/2.5/2.5 bln 1/3/6-month treasury bill auctions.
- (0745 ET/1145 GMT) ECB Coeure speaks at Berlin conference.
- (1100 ET/1500 GMT) ECB Pres Draghi speaks at Munich event.
- (1250 ET/1650 GMT) BoC DepGov Wilkins speaks in Calgary.
FX Beat
USD: The dollar index, which tracks the greenback against a basket of currencies, dropped 0.2 percent to 94.44 and is set for a weekly decline.
EUR/USD: The euro edged up after declining as low as 1.1130 on Thursday, however, it recovered to close-out above the 1.1200 level. The major rose after U.S consumer price index and unemployment claims data came in weaker-than- expected. The number of Americans filing for unemployment benefits increased 13,000 to a seasonally adjusted 277,000 for the week ended June 11, while consumer price index for the month of May came in at 0.2 percent, lower than consensus of 0.3 percent and previous 0.4 percent. The pair gained 0.3 percent to 1.1256, having touched session's high of 1.1271. With effects of the U.S. and Japanese central bank meetings fading away, markets now await eurozone's current account data and U.S. housing report for further cues. Immediate resistance is located at 1.1289 (10-DMA), break above targets 1.1300. On the lower side, support is seen at 1.1222 (Session Low).
USD/JPY: The Japanese yen lost ground as the greenback attempted a minor recovery amid risk-aversion environment. The major rose to an early high of 104.82, however, it was unable to sustain ongoing reversal from 22-months low. The yen was among the strongest performers as the BoJ refrained from adding fresh stimulus despite market concerns of a global turmoil if Britain votes to leave the European Union at the June 23 referendum. The dollar last stood at 104.42, attempting to uphold above 104.00 level. Immediate support is located at 104 level, break below could drag the pair till 103.55, a low last seen in Aug. 2014. On the higher side resistance is located at 104.82 (Session High), break above targets 105.36 (5-DMA).
GBP/USD: Sterling bounced back above 1.4200, recovering from a slide to a 2-month low of 1.4012 struck on Thursday. Campaigning for next week's Brexit vote has been suspended after a British member of parliament, Jo Cox, also a vocal advocate for Britain to stay in the EU, was shot dead in the street on Thursday. Sterling gained more than 0.5 percent to a high of 1.4293, extending a rebound from 2-month lows touched the previous day. It was last trading 0.3 percent higher at 1.4249. Immediate resistance is located at 1.4322 (10-DMA), while on the lower side, support is seen at 1.4091 (Jun-15 Low). Against the euro, the pound was trading 0.1 percent higher at 78.92 pence.
AUD/USD: The Australian dollar edged up, bouncing off from a nearly 2-week low struck on Thursday in a volatile session. The Aussie trades 0.3 percent higher at 0.7387, hovering towards session high of 0.7403 and pulling away from a low of 0.7285 touched in the previous session. It was up 0.2 percent for the week and if sustained, it would be the third week of gains. Markets will closely watch U.S. housing starts and building permits data due later in the day for further momentum on the major. Immediate resistance is located at 0.7436 (Previous Session High), while on the down side, support is seen at 0.7333 (Jun-15 Low).
NZD/USD: The New Zealand dollar trades between a thin range of 0.7036 -0.7068, supported from risk-on rally in the Asian equities. The kiwi was firm at 0.7044, having recovered from a a low of 0.6968 in the previous session. The major was strengthened after New Zealand's Business Performance of Manufacturing Index (PMI) for the month of May rose to 57.1, the highest since January, from a revised 56.6 in April. Immediate support is located at 0.7093 (Previous Session High), while on the lower side, support is seen at 0.7012 (Jun-9 Low).
Equities Recap
Asian shares rose, but were set for weekly losses as investors supported safe haven assets due to worries that Britain will vote to leave the European Union at the June 23 referendum.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.8 percent, but was down nearly 2.5 percent for the week.
Tokyo's Nikkei soared 1.07 pct at 15,599.66, Australia's S&P/ASX 200 index gained 0.39 pct at 5,165.90 points and Seoul shares edged up 0.14 pct.
Shanghai composite index rose 0.4 percent to 2,885.84 points, while CSI300 index gained 0.5 percent at 3,110.68 points. That helped them reduce losses for the week to 1.2 percent and 1.3 percent respectively.
Hong Kong’s Hang Seng was trading 0.05 percent higher at 20,135 points, but is set for a weekly decline of 4 percent. Taiwan stocks added 0.9 pct at 8,568.08 points.
Commodities Recap
Crude oil prices rose after declining 6-day in a row as markets took a breather from concerns about the impact of Britain's possible exit from the European Union. Brent crude futures were up 1.4 percent, at $47.69 a barrel at 0414 GMT after slumping 3.6 percent in the previous session. The contract is on course for a drop of more than 5.5 percent for the week. U.S. West Texas Intermediate crude futures rose 0.6 percent at $46.48. The contract fell 3.8 percent in the previous session and prices are down more than 5 percent so far this week.
Gold edged up after recording its biggest 1-day drop in over three weeks in the previous session, facilitated by a weaker dollar, and was still on track for a third consecutive weekly gain. Spot gold was up 0.4 percent at $1,283.85 an ounce at 0417 GMT and has risen 0.7 percent this week so far. U.S. gold fell one percent to $1,285.
Treasuries Recap
The U.S. 10-year treasuries yield stood at 1.604 percent versus previous close of 1.563 percent.
Japanese Government Bonds declined after the poor liquidity tap auction, with JGB futures falling to as low as 152.08.
Australian government bond futures retreated from all-time highs touched earlier in the session, with the 3-year bond contract off 6 ticks at 98.480. The 10-year contract skidded 8.5 ticks to 97.9000, while the 20-year contract dropped 7 ticks to 97.3450.
New Zealand government bonds gained, sending yields 1.5 basis points lower at the long end of the curve.
Canadian government bond prices were mixed across the maturity curve, with the 2-year price down 6 Canadian cents to yield 0.512 percent and the benchmark 10-year fell 25 Canadian cents to yield 1.107 percent. The 10-year yield hit its lowest since Feb. 12 at 1.052 percent.
