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Asia Roundup: Yen slumps hits 1-month low against the dollar, Antipodeans hover near multi-month lows, gold slips below $1200 mark - Monday, May 30th, 2016

Market Roundup

  • Specs turn net long USD for first time in six weeks, JPY net longs down large, EUR net shorts expand.
     
  • Japan PM Abe seeks fresh stimulus on heels of G7 summit, after Upper House election, Y5-10 trln tipped – Nikkei.
     
  • Japan's Abe to delay sales tax hike until 2019: government source - Reuters.
     
  • FinMin Aso – Calls for Lower House elections if tax hike delayed – Kyodo.
     
  • LDP VP Komura – Sales tax hike to be delayed 1 ½ years, no snap elections.
     
  • ChiefCabSec Suga – PM Abe to decide on sales tax at appropriate time
     
  • LDP Inada – Public mandate needed to delay tax hike, hikes in stages?
     
  • Abe cabinet approval climbs to 56% post-G7, Obama Hiroshima visit – Nikkei.
     
  • Japan April retail sales -0.8% y/y, -1.2% eyed, still very weak.
     
  • PBOC fixes CNY at 6.5784 vs USD, weakest since February ’11, Friday 6.5490.
     
  • Australia Q1 company gross operating profits -4.7% q/q, +0.2% eyed, pre-tax profits -15.1%, business inventories +0.4%, unchanged eyed.
     
  • St Louis Fed Bullard– Revised GDP data encouraging, Q2 rebound materializing, reserving judgment on interest rate policy till June meeting, Fed may be giving too much forward guidance – Reuters.
     
  • Australia April HIA new home sales -4.7% m/m, March +8.9%, descent mild.

Economic Data Ahead

  • (0300 ET/0700 GMT) Switzerland May KOF indicator, 102.8 eyed; last 102.7.
     
  • (0300 ET/0700 GMT) Spain May HICP – flash, -1.1% y/y eyed; last -1.2%.
     
  • (0330 ET/0730 GMT) Sweden Q1  GDP, +0.7% q/q, +4.3% y/y eyed; last +1.3%, +4.5%.
     
  • (0400 ET/0800 GMT) Norway Mar labor force survey – unemployment, 4.6% eyed; last 4.6%.
     
  • (0400 ET/0800 GMT) Norway Apr retail sales ex-autos, +1.0% eyed; last -0.7%.
     
  • (0400 ET/0800 GMT) Italy Apr producer prices; last +0.2% m/m, -3.4% y/y.
     
  • (0500 ET/0900 GMT) Eurozone May business climate index,     0.16 eyed; last  0.13.
     
  • (0500 ET/0900 GMT) Eurozone May economic sentiment index,  104.4 eyed; last 103.9.
     
  • (0500 ET/0900 GMT) Eurozone May industrial sentiment index, -3.6 eyed; last  -3.7.
     
  • (0500 ET/0900 GMT) Eurozone May services sentiment index,   11.0 eyed; last  11.5.
     
  • (0500 ET/0900 GMT) Eurozone May consumer confidence index – final, -7.0 eyed; last -9.3.
     
  • (0530 ET/0930 GMT) Belgium May CPI; last +0.17% m/m, +2.04% y/y.
     
  • (0800 ET/1200 GMT) Germany May HICP – flash, +0.3% m/m, -0.1% y/y eyed; last -0.5%, -0.3%.
     

Key Events Ahead

  • UK bank holiday, US Memorial Day holiday.
     
  • N/A   Norway NOK3 bln NST33 6-month treasury bill auction.
     
  • (0430 ET/0830 GMT) ECB/BdF Villeroy, Rance FinMin Sapin presser on Paris as fin’l center.
     
  • (0500 ET/0900 GMT) Italy E2-2.5 and 2.5-3 bln 0.45% and 1.6% 2021 and 2026 BTP auctions.
     
  • (0500 ET/0900 GMT) Italy E1.5-2 bln 0.327% 2023 CCTeu auction.
     
  • (0800 ET/1200 GMT) France E2.9-3.3/0.9-1.3/1.0-1.4 bln 3/6/12-month BTF note auctions.
     

FX Beat

USD: The dollar index, against a basket of currencies was trading 0.5 percent higher at 95.70, its highest in two months.

EUR/USD: The euro extended losses, hovering near a 2-1/2-month low of 1.1097 after shedding 0.7 percent on Friday. The greenback continues to rise after Fed chair Yellen stated on Friday that if the economy and labor market continued to develop. a rate increase in the coming months would be appropriate. The major trades between a thin range of 1.1097- 1.1116, as the U.S. markets are closed in observance of Memorial Day. Markets will continue to digest the Fed Yellens speech effects, ahead of series of economic data from the eurozone economies. Immediate support is seen at 1.1097 (Session Low), break below could drag the pair to 1.1080. On the higher side, resistance is seen at 1.1140 (5-DMA). 

USD/JPY: The Japanese yen declined as the dollar hit a 1-month high after comments by Federal Reserve Chair Janet Yellen enhanced the prospect of a near-term U.S. interest rate hike and on political developments in Tokyo. According to a government official, Japanese Prime Minister Shinzo Abe plans to delay an increase in the sales tax by two and a half years. The greenback was also boosted by revised U.S. gross domestic product data for the first quarter released on Friday, which showed that growth did not slow as much as first estimated.  The major rose 1.03 percent to 111.33, extending gains above 111.00, a level last seen in late April. Immediate resistance is seen at 11.47, break above targets 111.75/11.88. On the lower side, support is seen at 110.35 (Session Low).

GBP/USD: Sterling consolidated after declining on Friday as investors cashed in on last week's rally generated by easing in "Brexit" expectations. A series of polls last week has shown the remain camp in lead, ahead of those favoring Brexit. Sterling was steady at 1.4612, having touched session's high of 1.4630 and within the sight of a 3-week high of 1.4738 struck on Thursday. Immediate resistance is seen at 1.4641 (May 24 High), break above could take the pair to 1.4663/1.4670. On the lower side, support is seen at 1.4587 (10-DMA). Against the euro, the pound edged up to 75.97 pence.

AUD/USD: The Australian dollar hovered near multi-month lows after comments by Federal Reserve Chair Janet Yellen raised expectations of a U.S. interest rate hike as early as June. The Aussie declined to 0.7148, from an early high of 0.7187 and last stood at 0.7161. The major lost 0.5 percent last week and was on track for its largest monthly fall in around 18 months with a 6 percent drop. The pair was also weighed down by down beat new home sales data, which declined -4.7 percent in April after posting an increase of 8.9 percent in March. Markets now await Australia's current account balance, producer price index and building permits data for further momentum on the pair. Immediate support is seen at 0.7145 (May 24 Low), break below targets 0.7135/0.7132. On the higher side, resistance is seen at 0.7217 (10-DMA). 

NZD/USD: The New Zealand dollar touched its lowest in 2-months at 0.6675, weakening from an early 0.6702 and was last at 0.6685. The kiwi has declined 4 percent this month, partly due to a disappointing milk payout forecast by cooperative Fonterra. The pair is likely to be driven broader market sentiments, ahead of New Zealand’s business confidence data. Immediate support is seen at 0.6675 (Session Low), break below could take the pair to 0.6668. On the higher side, resistance is located at 0.6716 (5-DMA).

Equities Recap

Asian shares were volatile while the dollar touched fresh highs after Federal Reserve Chair Janet Yellen suggested that the central bank could raise interest rate in near-term.

MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.2 percent.

Hong Kong’s Hang Seng index was trading 0.5 percent higher at 20,690 points. Taiwan stocks gained 0.9 pct at 8,535.87 points

Shanghai composite index rose 0.2 pct at 2,828.99 points and CSI300 index added 0.3 pct at 3,073.39 points.

Australia's S&P/ASX 200 index edged down 0.02 pct at 5,405.10 points, Tokyo's Nikkei gained 1.39 pct at 17,068.02 and Seoul shares ended down 0.06 pct.

Commodities Recap

Oil prices edged down, despite the peak demand U.S. summer driving season starts off just as its crude production declines to its lowest level since September 2014. U.S. West Texas Intermediate crude futures were trading at $49.06 per barrel at 0644 GMT. International Brent futures were at $49.05 a barrel.

Gold slumped to its lowest in over 3-months as the dollar touched a 1-month high against the yen after Federal Reserve chief Janet Yellen stated that the central bank could raise interest rates in the near term. Spot gold declined 0.8 percent to $1,202.77 per ounce by 0645 GMT. It touched a low of $1199.87 earlier in the session, its lowest since Feb. 17. U.S. gold was down 0.7 percent at $1,205.50.

Treasuries Recap

The 10-year U.S. treasury yield last stood at 1.8510. U.S. markets will be closed in observance of Memorial day.

Australian government bond futures eased, with the 3-year bond contract off 3 ticks at 98.380. The 10-year contract slipped 1.5 ticks to 97.7300, while the 20-year contract was off 1 tick at 97.1250.

New Zealand government bonds eased, sending yields 2 basis points higher at the long end of the curve and four basis points higher at the short end of the curve.

Canadian government bond prices were lower across the maturity curve, with the 2-year price down 6 Canadian cents to yield 0.649 percent and the benchmark 10-year falling 26 Canadian cents to yield 1.358 percent. The Canada-U.S. 2-year bond spread was 1.2 basis points more negative at -26.2 basis points.

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