Market Roundup
- EUR/USD -0.17%, USD/JPY 0.03%, GBP/USD -0.09%, EUR/GBP -0.11%
- DXY 0.02%, DAX 0.47%, FTSE 1.18%, Brent 0.61%, Gold -0.14%
- Germany Producer Prices YY, 2.7%, 2.5% f'cast, 2% previous
- Great Britain CBI Trends - Orders, 13, 1 f'cast, -3 previous
- Britain's May faces new battle in parliament over Brexit
- ECB's Nowotny sees more political than economic risks to financial stability
- Saudi struggles for Gulf oil producers' support ahead of OPEC meeting
- Chinese media denounces Trump trade moves as Beijing touts sincerity
- Gold prices little changed; platinum hits over two-year low
- Oil up on U.S. stocks, Libya ahead of OPEC meeting
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Commerce Department is likely to report that current account deficit widened to $129.0 billion in the first quarter from $128.2 billion in the previous quarter.
- (0900 ET/1300 GMT) Swiss National Bank releases its Quarterly Bulletin.
- (1000 ET/1400 GMT) National Association of Realtors is likely to report that U.S. existing home sales rose 1.5 percent, after posting a fall of 2.5 percent in the previous month.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending June 15.
- (1300 ET/1700 GMT) The Brazilian central bank will meet to set its benchmark Selic rate and is expected to keep interest rates unchanged at 6.50 percent
Key Events Ahead
- (0930 ET/1330 GMT) Reserve Bank of Australia's Governor Philip Lowe participates in a panel discussion at Forum on Central Banking - Sintra, Portugal
- (0930 ET/1330 GMT) U.S. Federal Reserve Chairman Jerome Powell gives a presentation on "Monetary Policy at a Time of Uncertainty and Tight Labor Markets" panel at the ECB Forum on Central Banking in Sintra, Portugal.
- (0930 ET/1330 GMT) European Central Bank's President Mario Draghi speaks at ECB Forum on Central Banking - Sintra
- (0930 ET/1330 GMT) Federal Reserve Bank of St. Louis President James Bullard gives presentation on "Macroeconomics of Price and Wage Setting" - Sintra
- (1230 ET/1630 GMT) Deutsche Bundesbank's Joachim Wuermeling speaks on "Brexit means Brexit - But what does that mean for the financial center of Europe?" – Frankfurt N/A Bundesbank's Joachim Wuermeling, BaFin's Felix Hufeld, European Investment Bank's Werner Hoyer, Deutsche Bank's Christian Sewing speak at Maleki group conference - Multiple locations
- N/A ECB's Peter Praet, SocGen's Bini Smaghi, BaFin's Felix Hufeld, former ECB board members Andreas Dombret, French treasury chief Renaud Basso speak at conference - Paris
- N/A Canadian Foreign Minister Chrystia Freeland will give a speech on "Canada in a changing world" amid worsening relations with the United States.
FX Beat
DXY: The dollar index surged to a fresh 11-month peak as the White House piled pressure on China after Trump’s tariff threat. The greenback against a basket of currencies trades 0.1 percent up at 95.11, having touched a high of 95.30, its highest since July 2017. FxWirePro's Hourly Dollar Strength Index stood at 66.98 (Bullish) by 1100 GMT.
EUR/USD: The euro declined, extending previous session losses after European Central Bank policymaker Ewald Nowotny stated that the euro weakness was caused by the growing interest rate differential between the United State and Europe. The European currency traded 0.2 percent down at 1.1561, having touched a low of 1.1531 on Tuesday, its lowest since May 30. FxWirePro's Hourly Euro Strength Index stood at -35.87 (Neutral) by 1100 GMT. Immediate resistance is located at 1.1650, a break above targets 1.1699 (21-DMA). On the downside, support is seen at 1.1510 (May 29 Low), a break below could drag it till 1.1434 (July 2017 Low).
USD/JPY: The dollar extended losses for the third straight session as President Donald Trump threatened to impose $200 billion of Chinese imports with 10 percent tariffs if China follows through with retaliation against his previous targeting of $50 billion in imports. The major was trading 0.05 percent down at 110.01, having hit a low of 109.55 the day before, its lowest since June 11. FxWirePro's Hourly Yen Strength Index stood at 128.85 (Highly Bullish) by 1100 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. current account and existing home sales. Immediate resistance is located at 110.43 (5-DMA), a break above targets 110.90 (June 15 High). On the downside, support is seen at 109.55 (June 19 Low), a break below could take it lower 109.19 (June 8 Low).
GBP/USD: Sterling declined to a fresh 7-month low as concerns over the latest round of Brexit negotiations and cautiousness ahead of the Bank of England policy meeting dented the British currency. However, the downside was limited as better than expected CBI Industrial Orders survey for June, which came in at 13, surpassing estimate of 1 provided some relief to the British pound bulls. The major traded 0.05 percent down at 1.3165, having hit a low of 1.3151 on Tuesday; it’s lowest since Nov 16. FxWirePro's Hourly Sterling Strength Index stood at -41.62 (Neutral) 1100 GMT. Immediate resistance is located at 1.3265 (5-DMA), a break above could take it near 1.3331 (10-DMA). On the downside, support is seen at 1.3130 (Nov.15 Low), a break below targets 1.3110 (Oct. 25 Low). Against the euro, the pound was trading 0.2 percent up at 87.78 pence, having hit a low of 88.01 pence earlier, it’s lowest since June 14.
USD/CHF: The Swiss franc slumped as investors risk sentiment revived despite rising tensions between the world’s two biggest economies for trade war. The major trades 0.4 percent up at 0.9972, having touched a high of 0.9990 on Monday, it’s highest since May. 21. FxWirePro's Hourly Swiss Franc Strength Index stood at 5.20 (Neutral) by 1100 GMT. On the higher side, near-term resistance is around 1.0001 (May 21 High) and any break above will take the pair to next level till 1.0033 (May 17 High). The near-term support is around 0.9917 (June 19 Low) and any close below that level will drag it till 0.9895 (21-DMA).
Equities Recap
European shares advanced but failed to reverse the previous session's losses as investors' concerns about the trade dispute between the United States and China lingered on.
The pan-European STOXX 600 index gained 0.8 percent at 386.32 points, while the FTSEurofirst 300 index surged 0.9 percent to 1,511.36 points.
Britain's FTSE 100 trades 1.2 percent up at 7,693.41 points, while mid-cap FTSE 250 rallied 0.8 percent to 21,004.21 points.
Germany's DAX rose 0.4 percent at 12,733.22 points; France's CAC 40 trades 0.3 percent higher at 5,408.80 points.
Commodities Recap
Crude oil prices gained, supported by a drop in U.S. commercial crude inventories and the loss of storage capacity in Libya, while investors remained cautious ahead of a biannual meeting of OPEC exporters. International benchmark Brent crude was trading 0.4 percent up at $75.27 per barrel by 1029 GMT, having hit a low of $72.44 on Monday, its lowest since May 2. U.S. West Texas Intermediate was trading 0.1 percent down at $65.00 a barrel, after falling as low as $63.62 on Monday, its lowest since April 10.
Gold prices extended losses for the fourth straight session and were hovering towards a 6-month low hit in the previous session, amid a firm dollar and stronger equity markets. Spot gold declined 0.2 percent to $1,272.18 an ounce by 1033 GMT, having touched its weakest since December 22 at $1,270.30 an ounce on Tuesday. U.S. gold futures for August delivery were, however, 0.2 percent lower at $1,275.80 per ounce.
Treasuries Recap
The U.S. 10-year Treasuries traded range-bound in a muted trading session that witnessed data of little economic significance. However, the 30-year TIPS auction, scheduled to be held on June 21 by 17:00GMT will add further direction to the debt market. The yield on the benchmark 10-year Treasuries hovered around 2.89 percent, the super-long 30-year bond yields remained flat at 3.02 percent and the yield on the short-term 2-year traded nearly 1 basis point up at 2.55 percent.
The UK gilts remained narrowly mixed during European session ahead of Bank of England’s (BoE) monetary policy meeting, scheduled to be held on June 21 and Governor Mark Carney’s speech, following the decision, for added direction in the debt market. The yield on the benchmark 10-year gilts, remained tad lower at 1.27 percent, the super-long 30-year bond yields rose slightly to 1.75 percent and the yield on the short-term 2-year traded 1 basis point lower at 0.69 percent.
The New Zealand bonds closed Wednesday’s session on a sharply higher note even as the United States counterpart plunged overnight, tracking a trade tussle with China over the imposition of tariffs on aluminium and steel goods. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, jumped 3-1/2 basis points to 2.91 percent, the yield on the long-term 20-year note surged nearly 4 basis points to 3.23 percent and the yield on short-term 2-year closed 1-1/2 basis points higher at 1.90 percent.
The Australian government slumped as investors risk sentiment revived despite rising tensions between the world’s two biggest economies for a trade war. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, rose 2-1/2 basis points to 2.638 percent, the yield on the long-term 30-year Note climbed 1-1/2 basis points to 3.143 percent and the yield on short-term 2-year up 5-1/2 basis points to 2.045 percent.
