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Asia Roundup: Antipodeans rebound as U.S., China rekindle trade talks, greenback consolidates near 2-week peak ahead of Fed policy meeting outcome, Asian shares at 5-week high- Wednesday, June 19th, 2019

Market Roundup

  • Trump pressures Fed's Powell: 'Let's see what he does'
     
  • U.S., China rekindle trade talks ahead of Trump-Xi G20 meeting
     
  • China c.bank to issue offshore bills to keep yuan stable ahead of G20
     
  • Left in the dark, ECB policymakers divided on stimulus options
     
  • Brexit campaigner Boris Johnson advances on Britain's top job
     
  • Trump creates doubt over use of U.S. force to protect Gulf oil
     
  • Xi firmly backs Pyongyang's effort to solve Korea Peninsula issues -Rodong Sinmun
     
  • Trade tensions kick Asian business confidence to 10-yr low -Thomson Reuters/INSEAD
     
  • POLL-In shift, economists now split over BOJ's next move
     
  • Japan May Exports YY, -7.8%, -7.7% f'cast, -2.4% prev
     
  • Japan May Imports YY, -1.5%, 0.2% f'cast, 6.4% prev, 6.5% rvsd
     
  • New Zealand Q1 Current Account-Qtrly (NZD), 0.675 bln, 0.526 bln f'cast, -3.256 bln prev
     

Economic Data Ahead

  • (0430 ET/0830 GMT) Great Britain May CPI YY, 2.0% f'cast, 2.1% prev
     
  • (0430 ET/0830 GMT) Great Britain May RPI YY, 2.9% f'cast, 3.0% prev
     
  • (0430 ET/0830 GMT) Great Britain May PPI Input Prices YY NSA, 0.8% f'cast, 3.8% prev
     
  • (0430 ET/0830 GMT) Great Britain May PPI Output Prices YY, 1.7% f'cast, 2.1% prev
     
  • (0500 ET/0900 GMT) EZ Apr Construction Output MM, -0.27% prev
     
  • (0600 ET/1000 GMT) Great Britain CBI Trends - Orders, -12 f'cast, -10 prev
     

Key Events Ahead

  • N/A Canadian Finance Minister Bill Morneau speaks in Calgary, Canada
     
  • (0400 ET/0800 GMT) BoE's Anna Sweeney speaks at Insurance Insider Progress network event in London
     
  • (0500 ET/0900 GMT) ECB's Sabine Lautenschlager participates at ECB Forum on Central Banking 2019 in Sintra, Portugal
     
  • (0600 ET/1000 GMT) Swedish Central Bank Deputy Governor Per Jansson discusses economic situation and current monetary policy at an event in Stockholm
     
  • (0700 ET/1100 GMT) Bank of Slovenia Vice Governor Jozef Bradesko speaks on financial stability in Ljubljana, Slovenia
     
  • (0830 ET/1230 GMT) ECB's Benoit Coeure participates in a session in Sintra, Portugal
     
  • (0930 ET/1330 GMT) German Finance Minister Olaf Scholz speaks to students at Berlin's Free University in Berlin
     
  • (1000 ET/1400 GMT) ECB's Mario Draghi delivers closing remarks in Sintra, Portugal
     
  • (1400 ET/1800 GMT) Federal Reserve's FOMC to announces decision on interest rates followed by statement
     
  • (1430 ET/1830 GMT) Federal Reserve chairperson hold a news conference
     

FX Beat

DXY: The dollar index consolidated near a 2-week peak as investors awaited the Federal Reserve's policy decision later in the day for further insight on the U.S. monetary policy outlook. The greenback against a basket of currencies traded flat at 97.62, having touched a high of 97.77 on Tuesday, its highest since June 3. FxWirePro's Hourly Dollar Strength Index stood at -44.64 (Neutral) by 0600 GMT.

EUR/USD: The euro declined, hovering towards a 2-week low hit in the previous session after ECB President Mario Draghi said the bank will need to ease policy again if inflation doesn't head back to its target. Moreover, data showing German investor sentiment deteriorated sharply in June, amid an escalating trade dispute between China and the United States further intensified the selling pressure around the major.  The European currency traded 0.05 percent down at 1.1187, having touched a low of 1.1181 on Tuesday, its lowest since June 3. FxWirePro's Hourly Euro Strength Index stood at -110.09 (Highly Bearish) by 0500 GMT. Investors’ attention will remain on the Eurozone current account, construction output, and ECB officials' speech ahead of the U.S. Federal Reserve's policy decision. Immediate resistance is located at 1.1258 (32.2% retracement of 1.1347 and 1.1202), a break above targets 1.1292 (61.8% retracement). On the downside, support is seen at 1.1172 (May 24 Low), a break below could drag it below 1.1141 (May 21 Low).

USD/JPY: The dollar slumped, extending previous session losses, as the prospect of the U.S. central bank lowering rates drove benchmark Treasury yields to near two-year lows. The Federal Reserve is widely expected to stand pat on monetary policy today but open the door for an interest rate cut at the next meeting in July. The pair was trading 0.1 percent down at 108.35, having hit a high of 108.72 on Monday, its highest since June 11. FxWirePro's Hourly Yen Strength Index stood at 186.29 (Highly Bullish) by 0500 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S.  Federal Reserve's policy decision. Immediate resistance is located at 108.80 (June 11 High), a break above targets 109.08 (Jan. 8 High). On the downside, support is seen at 107.88 (June 3 Low), a break below could take it lower at 107.51 (Jan. 4 Low).

GBP/USD: Sterling consolidated within narrow ranges after Boris Johnson was confirmed as the frontrunner to become Britain's next prime minister on Tuesday. Johnson 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. The major traded flat at 1.2559, having hit a low of 1.2506 on Tuesday; it’s lowest since Jan 3. FxWirePro's Hourly Sterling Strength Index stood at -78.29 (Slightly Bearish) 0500 GMT. Investors’ attention will remain on UK CBI industrial trends, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2606 (38.2% retracement of 1.2758 and 1.12511), a break above could take it near 1.2635 (50% retracement). On the downside, support is seen at 1.2476 (Dec. 12 Low), a break below targets 1.2435. Against the euro, the pound was trading flat at 89.14 pence, having hit a low of 89.74 on Tuesday, it’s lowest since Jan. 15.

AUD/USD: The Australian dollar rebounded from a 5-1/2month low, as China and the United States rekindled trade talks ahead of a meeting next week between Presidents Donald Trump and Xi Jinping, The Aussie trades 0.05 percent up at 0.6877, having hit a low of 0.6831 on Tuesday, it’s lowest since Jan. 3. FxWirePro's Hourly Aussie Strength Index stood at 90.46 (Slightly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6810, a break below targets 0.6748 (June 17 Low). On the upside, resistance is located at 0.6906 (38.2% retracement 0.7022 and 0.6833), a break above could take it near 0.6950 (61.8% retracement).

NZD/USD: The New Zealand dollar surged to a 5-day peak after data showed the economy's current account rising to 0.675 billion in the first quarter, compared to a forecast of 0.526 billion and a previous reading of -3.256 billion. The Kiwi trades flat at 0.6528, having touched a high of 0.6539, its highest level June 14. FxWirePro's Hourly Kiwi Strength Index was at 110.63 (Highly Bullish) by 0600 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6559 (May 27 High), a break above could take it near 0.6592 (June 12 High). On the downside, support is seen at 0.6474 (Oct. 4 Low), a break below could drag it below 0.6432 (Oct. 5 Low).

Equities Recap

Asian shares advanced to 5-week highs on news U.S. President Donald Trump would meet with Chinese President Xi Jinping at the G20 summit later this month, and that trade talks would restart.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.5 percent.

Tokyo's Nikkei rallied 1.7 percent to 21,333.87 points, Australia's S&P/ASX 200 index gained 1.2 percent to 6,648.10 points and South Korea's KOSPI rallied 1.2 percent to 2,124.78 points.

Shanghai composite index rose 0.9 percent to 2,917.80 points, while CSI 300 index traded 1.3 percent rose at 3,715.94 points.

Hong Kong’s Hang Seng traded 2.3 percent higher at 28,134.14 points. Taiwan shares added 1.9 percent to 10,775.34 points

Commodities Recap

Crude oil prices surged, extended gains for the second straight session on rekindled hopes for a U.S.-China trade deal. International benchmark Brent crude was trading 0.1 percent higher at $62.26 per barrel by 0511 GMT, having hit a low of $59.55 last week, its lowest since June 5. U.S. West Texas Intermediate was trading 0.05 percent up at $54.08 a barrel, after falling as low as $50.71 last week, its lowest since the June 5.

Gold traded consolidated within narrow ranges as investors awaited the U.S. Federal Reserve's monetary policy decision later in the day, while expectations of an improvement in trade relationship between the United States and China dented demand for safe-haven assets. Spot gold was trading flat at $1,345.94 by 0525 GMT, having touched a high of $1,358.06 on Friday, its highest since April 11. U.S. gold futures declined 0.2 percent to $1,348.40 an ounce.

Treasuries Recap

The Japanese government bond yields skidded to the lowest in nearly three years, with the 10-year JGB yield at minus 0.155 percent, its lowest level since August 2016. Ten-year JGB futures rose to 153.82, their highest since July 28, 2016. The 20-year JGB yield fell 2.5 basis points to 0.205 percent, also at the lowest in almost three years. The 30-year JGB yield fell 2 basis points to 0.335 percent. The benchmark two-year JGB yield fell 1 basis point to minus 0.215 percent, while the five-year JGB yield was flat at minus 0.240 percent.

The Australian three-year contract firmed 2.5 ticks to 99.060, implying a yield of 0.94 percent. The 10-year contract rose 2 ticks 98.6450.

The yields on New Zealand government bonds dropped to record lows. The two-year yield of 1.20 percent was well beneath the 1.5 percent overnight cash rate.

The Canadian government bond prices were mixed across a flatter yield curve, with the two-year flat to yield 1.401 percent and the 10-year rising 28 Canadian cents to yield 1.425 percent. The 10-year yield hit its lowest intraday since June 2017 at 1.383 percent, while the gap between the two- and 10-year yields narrowed by 2.9 basis points to a spread of 2.4 basis points, its smallest since August 2007.

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July 2 15:00 UTC Released

DKCurrency Reserves

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449.6 Stale

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451.7 Stale

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50 %

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48.6 %

January 31 00:00 UTC 773628773628m

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