Market Roundup
- BOJ Apr 26-27 Policy Board minutes – Affirms even-keel policy
- BOJ Policy Board - Fluctuations in JGBs normal under YCC, no guidance probs
- BOJ - Inflation expectations weak, output-exports to grow, spending too
- Japan Inc concerned over shrinking domestic market, worker shortage -poll
- Asia firms' confidence at 3 yr-high on brighter global outlook -poll
- 'A' shares get MSCI nod in landmark moment for China's markets
- PM May says will consult widely on Brexit, but UK will leave EU
- Trump says China tried but failed to help on No Korea
- Republican Karen Handel wins Georgia congressional race
Economic Data Ahead
- (0430 ET/0830 GMT) Great Britain May PSNB Ex Banks GBP, 6.70 bln eyed, last 10.37 bln
- (0430 ET/0830 GMT) Great Britain May PSNB GBP, 7.0 bln m/m eyed, last 9.65 bln
Key Events Ahead
- N/A Germany’s Schaeuble speaks at corporate governance conference
- N/A ECB governing council non-monetary policy meeting
- N/A BOJ's Kuroda attends meeting of the Nat Asso of Shinkin Banks
- N/A Swedish Gov and Dep Gov participate in macroprudential policy conf
- (0400 ET/0800 GMT) Bank of Austria’s Zadrazil speaks about banking sector
- (0630 ET/1030 GMT) Germany 30Y 1 bln auction
FX Beat
DXY: The dollar slightly edged down across the board as tumbling oil prices pushed down U.S. Treasury yields. The greenback against a basket of currencies traded down at 97.74, having touched a high of 97.87 the day before, it’s highest since May 19. FxWirePro's Hourly Dollar Strength Index stood at 132.66 (Highly Bullish) by 0500 GMT.
EUR/USD: The euro steadied after falling to a 3-week low in the previous session, as strong Eurozone economic growth and the relative political stability support the bid tone around the major. The European currency traded flat at 1.1135, having touched a low of 1.1119 on Tuesday, its lowest since May 30. FxWirePro's Hourly Euro Strength Index stood at -46.10 (Neutral) by 0400 GMT. Investors’ attention will remain on Eurozone non-monetary policy's ECB meeting, ahead of U.S. existing home sales figures for further clues on the pair. Immediate resistance is located at 1.1183 (5-DMA), a break above targets 1.1269 (June 8 High). On the downside, support is seen at 1.1132 (June 15 Low), a break below could drag it near 1.1100.
USD/JPY; The dollar eased from recent highs as a big drop in oil prices and a fall in the 10-year Treasury note yield reversed a large portion of the gains it made the day before. On Tuesday, the major rallied to a 3-1/2 week peak on expectations that the U.S. Federal Reserve, which hiked interest rates last week, would tighten policy again in 2017. The major traded 0.1 percent down at 111.27, having hit a high of 111.78 the day before, its highest since May 26. FxWirePro's Hourly Yen Strength Index stood at 13.24 (Neutral) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of U.S. existing home sales figures. Immediate resistance is located at 111.95 (May 25 High), a break above targets 112.12. On the downside, support is seen at 111.13 (78.6 % retracement of 108.81 and 111.78), a break below could take it near 110.63 (61.8 % retracement).
GBP/USD: Sterling edged up after declining to 2-month lows in the previous session on the back of dovish BoE Governor Carney’s remarks and latest reports of the UK PM May’s Conservatives party’s failure to reach a deal with the Domestic Unionist Party. The major traded up at 1.2631, having hit a low of 1.2602 the prior day, its weakest since Apr 18. FxWirePro's Hourly Sterling Strength Index stood at -66.44 (Neutral) by 0400 GMT. Investors’ focus will remain on the UK public sector net borrowing figures, ahead of MPC member Haldane speech scheduled later in the day. Immediate resistance is located at 1.2682 (78.6% retrace of 1.2978 and 1.2602), a break above could take it near 1.2728 (5-DMA). On the downside, support is seen at 1.2600, a break below targets 1.2521 (Apr 18 Low). Against the euro, the pound traded up at 88.12 pence, having hit a 1-week high of 87.19 on Friday.
AUD/USD: The Australian dollar slumped for a third straight session to a one-week low as crude oil fell about 2 percent to seven-month lows, led by increased supply from several key producers. The Aussie trades 0.3 percent down at 0.7558, having hit a low of 0.7554 earlier, it’s weakest since June 14. FxWirePro's Hourly Aussie Strength Index stood at -114.19 (Highly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7554 (Session Low), a break below targets 0.7519 (June 9). On the upside, resistance is located at 0.7635 (June 14 High), a break above could take it near 0.7662 (Mar 31 High).
NZD/USD: The New Zealand dollar declined, reversing most of its previous session gains after dairy auction showed prices for milk products fell 0.8 percent despite market expectations of a gain. The Kiwi trades 0.2 percent down at 0.7223, having touched a peak of 0.7319 on Wednesday, its strongest level since Feb. 8. FxWirePro's Hourly Kiwi Strength Index was at 36.89 (Neutral) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7300, a break above could take it near 0.7350. On the downside, support is seen at 0.7200, a break below could drag it till 0.7171 (June 12 Low).
Equities Recap
Asian shares declined following a fall in the oil prices to seven-month lows, overshadowing a decision by U.S. index provider MSCI to include mainland China’s stocks to one of its benchmarks.
MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.7 percent.
Tokyo's Nikkei fell 0.4 percent to 20,159.83 points, Australia's S&P/ASX 200 index declined 1.5 percent to 5,671.30 points and South Korea's KOSPI lost 0.6 percent to 2,355.42 points.
Shanghai composite index eased 0.02 percent to 3,139.51 points, while CSI300 index was trading 0.4 percent up at 3,559.96 points.
Hong Kong’s Hang Seng was trading 0.5 percent lower at 25,720.84 points. Taiwan shares added 0.2 percent to 10,349.72 points.
Commodities Recap
Crude oil prices steadied after tumbling to multi-month lows in the previous session as investors discounted evidence of strong compliance by oil producers with a deal to cut global output. International benchmark Brent crude was trading 0.3 percent up at $45.91 per barrel by 0424 GMT, having hit a low of $45.43 the day before, its weakest since Nov. 15. U.S. West Texas Intermediate traded 0.2 percent down at $43.44 a barrel, after falling as low as $42.92 on Tuesday, its lowest since Nov 15.
Gold prices inched up after hitting its lowest in five weeks in the previous session, as equities markets eased and the dollar fell across the board. Spot gold had risen 0.3 percent to $1,246.55 per ounce by 0429 GMT, after falling as low as $1,241.20 on Tuesday, its lowest since May 17. U.S. gold futures for August delivery climbed 0.2 percent to $1,246.3 an ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.158 percent higher by 0.005 bps, while 5-year yield was 0.008 bps up at 1.766 percent.
The Australian bonds rebounded as investors poured into safe-haven instruments amid losses in riskier assets including equities and oil. The yield on the benchmark 10-year Treasury note slumped nearly 3 basis points to 2.41 percent, the yield on 15-year note also plunged 3 basis points to 2.77 percent and the yield on short-term 2-year traded 2-1/2 basis point lower at 1.68 percent.
The New Zealand bonds closed on the upside after reading a drop in the country’s latest GlobalDairyTrade (GDT) price auction, held overnight. At the time of closing, the yield on the benchmark 10-year bond, which moves inversely to its price, slumped 1-1/2 basis points to 2.80 percent, the yield on 7-year note slipped 1 basis point to 2.69 percent and the yield on short-term 2-year note traded 1 basis point lower at 1.99 percent.
The Canadian government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries. The two-year rose 5 Canadian cents to yield 0.916 percent and the 10-year climbed 34 Canadian cents to yield 1.504 percent. The 2-year yield fell 1.1 basis points further below its U.S. equivalent to a spread of -43.2 basis points. On Monday it touched its smallest gap in nearly four months at -42.1 basis points.
