Market Roundup
• Draghi's stimulus hints put ECB in Trump's crosshairs
• U.S., China rekindle trade talks ahead of Trump-Xi G20 meeting
• Brexit campaigner Boris Johnson advances on Britain's top job
• White House considered demoting Fed's Powell -report
• US May Housing Starts Number, 1.269 mln, 1.239 mln forecast, 1.235 mln previous,
• US May Building Permits: Number, 1.294 mln, 1.296 mln forecast, 1.290 mln previous
• CA Apr Manufacturing Sales MM, -0.6%, 0.4% forecast, 2.1% previous
• Facebook reveals Libra cryptocurrency, with lofty goals
Looking Ahead - Economic Data (GMT)
• 18 June 22:45 New Zealand Q1 Current Account/GDP, -3.5% forecast, -3.7% previous
• 18 June 22:45 New Zealand Q1 Current Account- Annual (NZD), -10.367 bln forecast, -10.974 bln previous
• 18 June 23:50 Japan May Trade Balance Total Yen, -979.2 bln forecast, 60.4 bln previous
• 19 June 22:45 New Zealand Q1 GDP Prod Based YY, SA, 2.4% forecast, 2.3% previous
Looking Ahead - Events, Other Releases (GMT)
• N/A Bank of Japan to hold Monetary Policy Meeting (to June 20) in Tokyo
• 06:30 Bank of Japan Governor Haruhiko Kuroda to deliver a speech at annual meeting of credit unions in Tokyo
• 08:00 Director of Insurance Supervision of Bank of England Anna Sweeney delivers speech at Insurance Insider Progress network event, London
• 09:00 ECB's Sabine Lautenschlager participates in chairing Session 2 "The future of EMU" at ECB Forum on Central Banking 2019 "20 Years of European Economic and Monetary Union" in Sintra, Portugal
• 10:00 Swedish Central Bank Deputy Governor Per Jansson will discuss the economic situation and current monetary policy at a lunch held by the Stockholm Chamber of Commerce
• 12:30 ECB's Benoit Coeure participates at ECB Forum on Central Banking 2019 "20 Years of European Economic and Monetary Union" in Sintra, Portugal
• 13:30 German Finance Minister Olaf Scholz speaks to students at Berlin's Free University about lessons to be learned from the financial crisis
• 14:00 ECB's Mario Draghi delivers closing remarks at ECB Forum on Central Banking 2019 "20 Years of European Economic and Monetary Union" in Sintra, Portugal
• 18:00 U.S. Federal Reserve's Federal Open Market Committee (FOMC) to announce its decision on interest rates followed by statement in Washington D.C.
• 18:30 U.S. Federal Reserve chairperson to hold a news conference in Washington D.C.
Currency Summaries
EUR/USD: The euro declined against the U.S. dollar on Tuesday, after European Central Bank chief Mario Draghi said policymakers will provide more stimulus if inflation does not pick up.At a speech in Sintra, Draghi said the ECB could still cut rates, adjust its guidance, offer mitigating measures to counter the unwanted side effects of negative rates, and also had "considerable headroom" for more asset purchases. The euro's weakness propped up the dollar against a basket of its rivals before a U.S. central bank meeting got underway with expectations growing the Fed will signal its first rate cut in a decade. The euro fell as much as 0.3 percent against dollar to a two-week low of $1.1182. It dived to a 1-1/2 week low versus the Swiss franc too. Immediate resistance can be seen at 1.1217 (50 DMA), an upside break can trigger rise towards 1.1266 (100 DMA).On the downside, immediate support is seen at 1.1183 (Daily Low), a break below could take the pair towards 1.1107 (May 23rd low).
GBP/USD: The Sterling recovered some ground against the dollar on Tuesday, after arch-Brexiteer Boris Johnson was confirmed as the frontrunner to become Britain's next prime minister on Tuesday. The British currency had dropped to its weakest since January against the euro and dollar earlier in the session, as investors worry that Johnson could put Britain on a path towards a disruptive no-deal Brexit.Johnson, the face of the campaign to leave the European Union in the 2016 referendum, won 126 of 313 votes, by far the largest number in the second round of voting for Conservative Party leader, with four other candidates also getting through. Sterling stood at $1.2551, up 0.1% on the day and unchanged from before the results were announced. Immediate resistance can be seen at 1.2562 (5 DMA), an upside break can trigger rise towards 1.2659 (11 DMA).On the downside, immediate support is seen at 1.2535 (38.2 % retracement level), a break below could take the pair towards 1.2500 (Psychological level).
USD/CAD: The Canadian dollar was little changed on Tuesday, paring earlier losses after slipping to a two-week low against the greenback, as a rally in oil prices offset domestic data showing an unexpected drop in April manufacturing sales. Canadian factory sales fell by 0.6% in April from March as motor vehicle sales were held back by temporary assembly plant shutdowns, Statistics Canada said. Analysts had forecast a 0.4% increase. At (2008 GMT), the Canadian dollar was trading nearly unchanged at 1.3381 to the greenback. The currency traded in a narrow range of 1.3402 to 1.3433. Still, 1.3433 was its weakest intraday level since June 4. Immediate resistance can be seen at 1.3414 (50 DMA), an upside break can trigger rise towards 1.3528 (June 3rd high).On the downside, immediate support is seen at 1.3376 (5 DMA), a break below could take the pair towards 1.3350 (100 DMA).
USD/JPY: The dollar was little changed against the Japanese yen on Tuesday, as traders awaited the Federal Reserve's policy announcement on Wednesday. The Federal Open Market Committee began its two-day meeting on Tuesday, and will issue a statement and economic projections at the close of Wednesday's session. The committee is expected to leave its benchmark overnight policy rate unchanged at the current range between 2.25% and 2.5%. But slow employment growth in May, the ongoing trade war with China and weak inflation data have increased expectations for dovish remarks.The dollar was 0.10 percent lower versus the Japanese yen at 108.42. Strong resistance can be seen at 108.82 (21 DMA), an upside break can trigger rise towards 110.15 (50 DMA).On the downside, immediate support is seen at 107.57 (Lower Bollinger band), a break below could take the pair towards 107.00 (Psychological level).
Equities Recap
European Central Bank chief Mario Draghi's dovish remarks sent European stocks to six-week highs on Tuesday while news that the United States and China would resume trade talks at the G20 summit also boosted sentiment.
UK's benchmark FTSE 100 closed up by 1.4 percent, the pan-European FTSEurofirst 300 ended the day up by 1.81 percent, Germany's Dax ended up by 2.2 percent, France’s CAC finished the day down by 2.3 percent.
U.S. stocks surged on Tuesday and the S&P 500 approached a record high after Washington rekindled trade talks with Beijing, boosting sentiment along with growing investor confidence that the U.S. Federal Reserve will cut interest rates this year.
Dow Jones closed down by 1.34 percent, S&P 500 ended down by 0.97 percent, Nasdaq finished the down up by 1.39 percent.
Treasuries Recap
U.S. Treasury yields plunged on Tuesday, in line with the European market, after European Central Bank President Mario Draghi hinted at more stimulus if regional inflation fails to pick up toward its target.
U.S. 10-year note yields fell to 2.056% from 2.086% late on Monday, after reaching 2.016%, the lowest since September 2017.Yields on U.S. 30-year bonds dropped to 2.556%, from 2.547% on Monday. Earlier, 30-year yields dropped to a nearly 2-1/2-year trough of 2.513%.
Commodities Recap
Gold prices pared gains on Tuesday after U.S. President Donald Trump confirmed he would meet with Chinese President Xi Jinping at an international summit, fanning hopes for a quick end to the U.S.-China trade dispute.
Spot gold gained 0.5% to $1,345.70 per ounce as of 1:32 p.m. EDT (1732 GMT). Prices had risen to $1,354.20 earlier, before Trump said in a tweet he had a "very good telephone conversation" with China's Xi.U.S. gold futures settled 0.6% higher at $1,350.7 per ounce.
Oil prices rose more than $1 a barrel on Tuesday after news that China and the United States were rekindling trade talks ahead of a meeting at the G20 summit later this month, spurring hopes that the two countries would resolve an ongoing trade war.
U.S. West Texas Intermediate crude futures rose $1.97, or 3.8%, to settle at $53.90 a barrel. Brent crude futures LCOc1 gained $1.20, or 2%, to settle at $62.14 a barrel.
