Market Roundup
- Ruling LDP/PM Abe suffer a major defeat in Tokyo elections, worst ever?
- Polls reflection of ebbing LDP support, may need to resort to fiscal stimulus
- BoJ Tankan - Big Mfg sentiment +17, +15 eyed, Mar survey +12, Sept +15 eyed
- Big non-Mfg index +23, as eyed, March +20, Sept +18 eyed
- Big firms still cautious, FY‘17/18 profits -3.3%, CAPEX -20.6%, USD/JPY 108.31
- BoJ may trim inflation outlook after slow quarter -Nikkei
- Japan June final Mfg PMI 52.4, flash 52.0, May final 53.1
- Japan ’16 land prices up, led by big gain in cities – Govt survey
- Japan GPIF to begin more active investment in ESG, eyeing Y1 tln initially
- China Jun Caixin Mfg PMI, +50.4 vs forecast +49.5, last +49.6
- China, Hong Kong launch long-awaited bond connect scheme
- Australia May building approvals -5.6% m/m, s/adj vs forecast -2.0%
- Australia Jun home prices +0.8% m/m, last -1.1%
- U.S. dollar net longs fall to lowest in about a year: CFTC
- USD share of FX reserves slips in Q1, yen's share up -IMF
Economic Data Ahead
- (0230 ET/0630 GMT) Sweden Jun Mfg PMI, 59.80 m/m eyed, last 58.80
- (0300 ET/0700 GMT) Norway Jun Mfg PMI SA, 54.70 eyed, last 54.30
- (0315 ET/0715 GMT) Spain Jun Mfg PMI, 55.70 eyed, last 55.40
- (0345 ET/0745 GMT) Italy Jun Markit/ADACI Mfg PMI, 55.30 eyed, last 55.10
- (0350 ET/0750 GMT) France Jun Markit Mfg PMI, 55.00 eyed, last 55.00
- (0355 ET/0755 GMT) Germany Jun Markit/BME Mfg PMI, 59.30 eyed, last 59.30
- (0400 ET/0800 GMT) Eurozone Jun Markit Mfg Final PMI, 57.30 eyed, last 57.30
- (0430 ET/0830 GMT) Great Britain Jun Markit/CIPS Mfg PMI, 56.50 eyed, last 56.70
- (0500 ET/0900 GMT) Eurozone May Unemployment Rate, 9.20% eyed, last 9.30%
Key Events Ahead
- (0300 ET/0700 GMT) Riksbank holds executive board meeting and monetary policy meeting no.3
- (0435 ET/0835 GMT) Fed's Bullard speaks at a BoE research conference
- (1330 ET/1730 GMT) BoE's Haldane speaks at a dinner to mark conference
- N/A 15th ASEAN-Japan STOM Leaders Conference in Kyoto (to July 5)
FX Beat
DXY: The dollar rebounded from recent lows versus its major peers on skepticism that the Federal Reserve would be able to hike interest rates again this year. The greenback against a basket of currencies traded 0.1 percent up at 95.76, having touched a low of 95.47 the prior session, it’s lowest since Oct. 3. FxWirePro's Hourly Dollar Strength Index stood at -114.36 (Highly Bearish) by 0500 GMT.
EUR/USD: The euro steadied above the 1.1400 handle after easing from a 14-month peak in the previous session as investors expect the central banks in Europe to move away from accommodative monetary policies. The European currency traded flat at 1.1413, having touched a high of 1.1445 on Friday, its highest since May 5, 2016. FxWirePro's Hourly Euro Strength Index stood at 27.30 (Neutral) by 0400 GMT. Investors’ attention will remain on series of Manufacturing PMI data from the Eurozone economies, ahead of the U.S. manufacturing PMI figures from both ISM and Markit for further clues on the pair. Immediate resistance is located at 1.1454, a break above targets 1.1500. On the downside, support is seen at 1.1400, a break below could drag it near 1.1377 (78.6% retrace of 1.1119 and 1.1445)
USD/JPY: The dollar closed the bearish opening gap as better-than-expected Chinese Caixin manufacturing PMI for June triggered a fresh bout of risk-on market sentiment. Moreover, the latest headlines on the Bank of Japan’s future by the Japanese PM Abe’s adviser slightly weighed down on the yen. The major traded 0.1 percent up at 112.53, having hit a high of 112.92 on Thursday, its highest since May 17. FxWirePro's Hourly Yen Strength Index stood at -71.37 (Bearish) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of the U.S. construction spending and manufacturing PMI figures from both ISM and Markit. Immediate resistance is located at 112.70, a break above targets 113.00. On the downside, support is seen at 112.00, a break below could take it near 111.79 (10-DMA).
GBP/USD: Sterling eased, halting a four-day winning streak amid a better sentiment seen around the greenback. Meanwhile, investors await UK’s manufacturing sector activity data, which is expected to decelerate to 56.4 versus 56.7 seen previously. Sterling traded 0.2 percent down at 1.2995, having hit a high of 1.3029 the prior session, its highest since May 23. FxWirePro's Hourly Sterling Strength Index stood at 83.53 (Slightly Bullish) by 0400 GMT. Investors’ focus will remain on the UK manufacturing PMI reading, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.3047 (May 18 High), a break above could take it near 1.3087 (Sept 23 High). On the downside, support is seen at 1.2936 (78.6% retracement of 1.2589 and 1.3031), a break below targets 1.2862 (61.8% retrace). Against the euro, the pound traded 0.3 percent down at 87.81 pence, having hit a 7-month low of 88.79 on Thursday.
AUD/USD: The Australian dollar edged down from a three-month peak touched in the previous session after data showed domestic building permits declined 5.6 percent in May, against expectations of a 2.0 percent fall and previous reading of 4.8 percent. However, a rebound in the China's Caixin manufacturing PMI limited the downside in the major. The Aussie trades 0.1 percent down at 0.7675, having hit a high of 0.7712 on Friday, it’s strongest since Mar. 21. FxWirePro's Hourly Aussie Strength Index stood at 46.46 (Neutral) by 0500 GMT. Investors will continue to digest upbeat Chinese data, ahead of U.S. economic releases. Immediate support is seen at 0.7634 (61.8% retracement of 0.7535 and 0.7712), a break below targets 0.7622 (50.0% retracement). On the upside, resistance is located at 0.7720, a break above could take it near 0.7749 (Mar 21 High).
NZD/USD: The New Zealand dollar nudged down after rising to a near 5-month high earlier on the back of upbeat Chinese Caixin manufacturing PMI release and ongoing bullish momentum in oil prices. The Kiwi trades 0.1 percent up at 0.7321, having touched a peak of 0.7346 on Friday, its strongest level since Feb. 2. FxWirePro's Hourly Kiwi Strength Index was at 29.05 (Neutral) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7350, a break above could take it near 0.7370. On the downside, support is seen at 0.7298 (5-DMA), a break below could drag it till 0.7272 (10-DMA).
Equities Recap
Asian shares steadied near two-year highs, while the dollar rebounded against the Japanese yen as a surprise recovery in China's manufacturing activity sector indicated a steady growth in the world's second-largest economy.
MSCI's broadest index of Asia-Pacific shares outside Japan neared its two-year peak hit last week.
Tokyo's Nikkei edged up 0.2 percent to 20,071.55 points, Australia's S&P/ASX 200 index fell 0.5 percent to 5,694.40 points and South Korea's KOSPI declined 0.2 percent to 2,388.11 points.
Shanghai composite index eased 0.04 percent to 3,191.14 points, while CSI300 index was trading 0.4 percent down at 3,650.89 points.
Hong Kong’s Hang Seng was trading 0.1 percent higher at 25,785.66 points. Taiwan shares added 0.2 percent to 10,412.79 points.
Commodities Recap
Crude oil prices declined after rising for seven straight sessions, as rising OPEC output in June weighed heavily on prices. International benchmark Brent crude was trading 0.3 percent down at $48.84 per barrel by 0427 GMT, having hit a high of $48.97 the prior day, its strongest since Jun. 12. U.S. West Texas Intermediate traded 0.3 percent lower at $46.18 a barrel, after rising as high as $46.35 earlier, its strongest since Jun 14.
Gold prices slumped, hitting a 1-week low earlier in the session as Asian shares traded near two-year highs and the dollar rebounded from nine-month lows hit last week. Spot gold declined 0.3 percent at $1,237.95 per ounce at 0438 GMT, having lost over 2 percent in the month of June, its first monthly decline this year. U.S. gold futures for August delivery fell 0.1 percent to $1,240.80 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.287 percent higher by 0.023 bps, while 5-year yield was 0.017 up at 1.866 percent.
The Australian bonds slumped at the start of the trading week, tracking weakness in the U.S. counterpart and as investors remain cautious ahead of the Reserve Bank of Australia’s (RBA) monetary policy decision, scheduled to be held on June 4. The yield on the benchmark 10-year Treasury note jumped 4 basis points to 2.64 percent, the yield on 15-year note surged 3-1/2 basis points to 2.99 percent and the yield on short-term 2-year traded nearly 1 basis point higher at 1.75 percent.
The New Zealand bonds closed on the downside as investors remained cautious ahead of the GlobaldairyTrade price auction, scheduled to be held on July 4 amid a silent trading week. At the time of closing, the yield on the benchmark 10-year bond jumped 9-1/2 basis points to 2.99 percent, the yield on 7-year note surged 9 basis points to 2.88 percent and the yield on short-term 2-year note ended 6 basis points higher at 2.09 percent.
