Market Roundup
- Japan's central bank dials down inflation view, complicates stimulus-exit
- Trump ready to impose tariffs on about $50 bln in Chinese goods-official
- Trump gets win at U.S. Supreme Court in China antitrust case
- Chinese border town with North Korea leads house price rally in May
- China reshuffles c.bank monetary policy committee, Gov Yi named chief
- U.S. fund investors pull nearly $10 bln from stocks in week-Lipper
- U.S. muni bond funds post $449.6 mln in inflows-Lipper
- Foreign CB US debt holdings +$3.242 bln to $3.401 tln June 13 week
- Treasuries +$3.496 bln to $3.038 tln, agencies +$0.138 bln to $288.124 bln
Economic Data Ahead
- (0500 ET/0900 GMT) EZ May HICP Final YY, f'cast 1.9%, last 1.9%
- (0500 ET/0900 GMT) EZ May HICP Final MM, f'cast 0.5%, last 0.3%
- (0500 ET/0900 GMT) EZ Q1 Labour Costs YY, last 1.5%
- (0500 ET/0900 GMT) Italy May CPI (EU Norm) Final YY, f'cast 1.1%, last 1.1%
- (0500 ET/0900 GMT) Italy May Consumer Prices Final YY, f'cast 1.1%, last 1.1%
- (0500 ET/0900 GMT) Italy Apr Industrial Sales YY WDA, last 3.60%
- (0500 ET/0900 GMT) Italy Apr Industrial Orders YY NSA, last 2.60%
Key Events Ahead
- (0445 ET/0845 GMT) ECB's Benoit Coeure speaks at "Chief Investment Officer - Chief Financial Officer" conference - Paris
- (1330 ET/1730 GMT) Fed's Robert Kaplan speaks at Fort Worth Chamber of Commerce - Fort Worth
- N/A Sveriges Riksbank hosts fourth Annual Macroprudential Conference - Stockholm
FX Beat
DXY: The dollar rallied to an over 7-month peak after the Federal Reserve on Wednesday raised interest rates for the second time this year and indicated that it could tighten policy two more times in 2018. The greenback against a basket of currencies trades 0.2 percent up at 95.02, having touched a high of 95.11 earlier, its highest since Nov. 2017. FxWirePro's Hourly Dollar Strength Index stood at 58.82 (Bullish) by 0500 GMT.
EUR/USD: The euro fell to a fresh 2-week low and was headed for its worst weekly loss in 19 months after a cautious European Central Bank signalled it will keep interest rates at record lows well into 2019. The European currency traded 0.05 percent up at 1.1571, having touched a low of 1.1555 earlier, its lowest since May 30. FxWirePro's Hourly Euro Strength Index stood at -50.13 (Bearish) by 0500 GMT. Investors’ attention will remain on series of data from the Eurozone economies and Eurozone consumer price index, ahead of U.S. industrial production and capacity utilization. Immediate resistance is located at 1.1650, a break above targets 1.1714 (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 rallied to an over 3-week peak after data showed U.S. retail sales increased more than expected in May, indicating an acceleration in economic growth in the second quarter. The major was trading 0.2 percent up at 110.88, having hit a high of 110.89 earlier, its highest since May 23. FxWirePro's Hourly Yen Strength Index stood at -26.47 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. industrial production and capacity utilization. Immediate resistance is located at 111.18 (May 22 High), a break above targets 111.39 (May 21 High). On the downside, support is seen at 110.17 (5-DMA), a break below could take it lower 109.89 (21-DMA).
GBP/USD: Sterling slumped to a new 2-week low on news that Brittan’s lawmakers supported the government's position to reject amendments to the EU withdrawal bill that challenged May's commitment to leave the European Union's customs union and the single market. The major traded 0.1 percent down at 1.3245, having hit a low of 1.3244 earlier, it’s lowest since May 30. FxWirePro's Hourly Sterling Strength Index stood at 72.54 (Bullish) by 0500 GMT. Investors’ attention will remain on the U.S. fundamental drivers, amid a lack of economic data from the UK dockets. Immediate resistance is located at 1.3357 (5-DMA), a break above could take it near 1.3439 (June 8 High). On the downside, support is seen at 1.3204 (May 29 Low), a break below targets 1.3169 (Nov. 17 Low). Against the euro, the pound was trading 0.1 percent down at 87.34 pence, having hit a high of 87.21 pence earlier, it’s lowest since May 7.
AUD/USD: The Australian dollar tumbled to a 1-month low amid concerns about a China-U.S. trade war with U.S. President Donald Trump almost certain to impose significant tariffs on Chinese goods. The Aussie trades 0.2 percent down at 0.7460, having hit a low of 0.7452 earlier; it’s lowest since May 16. FxWirePro's Hourly Aussie Strength Index stood at -49.75 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7433 (May 8 Low), a break below targets 0.7412 (May 9 Low). On the upside, resistance is located at 0.7522 (May 16 High), a break above could take it near 0.7566 (5-DMA).
NZD/USD: The New Zealand dollar plunged to a 2-week low as investors favoured the greenback against major currencies amid diverging monetary policy outlooks. The Reserve Bank of New Zealand is certain to keep rates at 1.75 percent for a long time to come. The Kiwi trades 0.5 percent down at 0.6941, having touched a low of 0.6939 earlier, its lowest level since May 30. FxWirePro's Hourly Kiwi Strength Index was at 16.42 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7011 (5-DMA), a break above could take it near 0.7042. On the downside, support is seen at 0.6914, a break below could drag it below 0.6900.
Equities Recap
Asian shares tumbled as investors braced for U.S. tariffs against China, while the euro plunged to 2-week lows after a cautious European Central Bank indicated it would not raise interest rates until 2019 summer.
MSCI's broadest index of Asia-Pacific shares outside Japan slumped 0.2 percent.
Tokyo's Nikkei surged 0.5 percent to 22,851.75 points, Australia's S&P/ASX 200 index gained 1.3 percent to 6,094.00 points, and South Korea's KOSPI plunged 0.6 percent to 2,408.98 points.
Shanghai composite index fell 0.6 percent to 3,024.56 points, while CSI300 index was trading 0.4 percent down at 3,757.10 points.
Hong Kong’s Hang Seng was trading 0.1 percent lower at 30,416.60 points. Taiwan shares added 0.7 percent to 11,087.47 points.
Commodities Recap
Crude oil prices declined, extending previous session losses, as Saudi Arabia and Russia indicated production could rise ahead of a key OPEC meeting in Vienna next week. International benchmark Brent crude was trading 0.1 percent down at $75.86 per barrel by 0449 GMT, having hit a high of $77.56 last week, its highest since June 1. U.S. West Texas Intermediate was trading 0.1 percent down at $66.90 a barrel, after rising as high as $67.14 on Thursday, its highest since June 1.
Gold prices eased after hitting a 1-month high in the previous session on the European Central Bank's decision to keep interest rates steady through the summer of 2019. Spot gold was trading 0.1 percent down at $1,301.25 per ounce at 0452 GMT, having touched a high of $1,309.16 an ounce on Thursday, its highest since May 15 and was on track for a second straight weekly gain. U.S. gold futures for August delivery were 0.2 percent lower at $1,305.10 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.927 percent lower by 0.018 bps, while 5-year yield was 0.013 bps down at 2.802 percent.
The Japanese government bonds remained narrowly mixed on the last trading day of the week after the Bank of Japan (BoJ) held its benchmark interest rate steady at its momentary policy meeting concluded early today, with the 10-year yield target maintained at around zero percent. The yield on the benchmark 10-year JGB note, which moves inversely to its price, remained tad lower at 0.03 percent, the yield on the long-term 30-year note slid nearly 1 basis point to 0.71 percent and the yield on short-term 2-year steadied at -0.13 percent.
The Australian government bonds gained on last trading day of the week after the Federal Reserve hints at faster rate hikes, while concerns about a US-China trade war also hurt sentiment. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, fell 2 basis points to 2.699 percent (2-week low), the yield on the long-term 30-year Note dipped 4 basis points to 3.199 percent and the yield on short-term 2-year down 1 basis point to 2.024 percent.
