Market Roundup
- China presses Europe for anti-U.S. alliance on trade
- China's yuan gains, stocks grind after attempt to soothe markets
- BOJ's Harada spurns rate hikes, says 2 pct inflation goal needs lower unemployment
- Merkel's migrant deal hangs on Social Democrat, EU approval
- Britain's May to Pitch "softest possible Brexit" plan to team - ITV
- Australia May Retail Sales, 0.4%, f'cast 0.3%, last 0.4%
- Australia May Trade Balance G&S (A$), 827 mln, f'cast 1.200 mln, last 977 mln
- China Jun Caixin Services PMI, 53.9, last 52.9
Economic Data Ahead
- (0245 ET/0745 GMT) Italy Jun Markit/ADACI Svcs PMI, f'cast 53.3, last 53.1
- (0250 ET/0750 GMT) France Jun Markit Services PMI, f'cast 56.4, last 56.4
- (0255 ET/0755 GMT) Germany Jun Markit Services PMI, f'cast 53.9, last 53.9
- (0400 ET/0800 GMT) EZ Jun Markit Serv Final PMI, f'cast 55, last 55
- (0430 ET/0830 GMT) Great Britain Jun Markit/CIPS Serv PMI, f'cast 54, last 54
Key Events Ahead
- (0405 ET/0805 GMT) Bank of England Deputy Governor Sam Woods speaks in London
FX Beat
DXY: The dollar index plunged to a 1-week low as the Chinese yuan recovered from 11-month lows, while investors awaited the release of the Federal Reserve's June meeting minutes on Thursday. The greenback against a basket of currencies trades 0.1 percent down at 94.46, having touched a low of 94.45 earlier, its lowest since June 26. FxWirePro's Hourly Dollar Strength Index stood at -80.82 (Slightly Bearish) by 0500 GMT.
EUR/USD: The euro rose, extending previous session gains, ahead of Eurozone Markit services and composite PMI's, which are expected to hold steady at 55 and 54.8 in June, respectively. The European currency traded 0.1 percent up at 1.1664, having touched a high of 1.1720 last week, its highest since June 14. FxWirePro's Hourly Euro Strength Index stood at 29.11 (Neutral) by 0500 GMT. Investors’ attention will remain on the Markit PMIs from Span, Italy, Germany and the Euro-area, as the U.S. markets will remain closed on account of Independence Day holiday. Immediate resistance is located at 1.1700, a break above targets 1.1744 (June 4 High). On the downside, support is seen at 1.1628 (10-DMA), a break below could drag it till 1.1600.
USD/JPY: The dollar declined against the Japanese yen, as investors turned cautious ahead of July 6 deadline when the U.S. is set to impose tariffs on $34 billion worth of Chinese goods, that Beijing has vowed to retaliate with tariffs on U.S. products. The major was trading 0.1 percent down at 110.44, having hit a low of 110.60 earlier, its lowest since June 28. FxWirePro's Hourly Yen Strength Index stood at -47.81 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, as the U.S markets will remain shut in observance of Independence Day holiday. Immediate resistance is located at 110.75 (June 21 High), a break above targets 111.08 (June 18 High). On the downside, support is seen at 110.22 (21-DMA), a break below could take it lower 109.68 (June 27 Low).
GBP/USD: Sterling surged to a 1-week peak as a survey released on Tuesday showed decent growth in Britain's construction industry amid gloomy progress of Brexit talks. Investors now await the UK services PMI, which is expected to show the pace of expansion in the service sector steadied at 54.00 index points in June. The major traded 0.1 percent up at 1.3203, having hit a high of 1.3216 earlier; it’s highest since June 27. FxWirePro's Hourly Sterling Strength Index stood at 55.25 (Bullish) 0500 GMT. Investors’ attention will remain on UK Markit service PMI figures, as U.S. economic calendar remains absolutely data empty. Immediate resistance is located at 1.3230, a break above could take it near 1.3314 (June 22 High). On the downside, support is seen at 1.3144 (5-DMA), a break below targets 1.3102 (June 21Low). Against the euro, the pound was trading 0.05 percent down at 88.36 pence, having hit a low of 88.90 pence on Friday, it’s lowest since March 12.
AUD/USD: The Australian dollar rallied to an over 1-week peak after data showed domestic retail sales rose 0.4 percent in May, surpassing forecast of 0.3 percent rise, while April was revised a tick higher to 0.5 percent. The Aussie trades 0.2 percent up at 0.7401, having hit a low of 0.7310 on Monday; it’s lowest since Jan 2017. FxWirePro's Hourly Aussie Strength Index stood at 116.21 (Highly Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7345, a break below targets 0.7280. On the upside, resistance is located at 0.7443 (June 22 High), a break above could take it near 0.7480 (June 15 High).
NZD/USD: The New Zealand dollar rebounded from recent low on the back of better-than-expected China Caixin services PMI. Investors seem to have ignored the Global Dairy Trade (GDT) price index, which dropped 5 percent after slipping 1.2 percent at the previous sale. The Kiwi trades 0.2 percent up at 0.6768, having touched a low of 0.6687 on Tuesday, its lowest level since May 2016. FxWirePro's Hourly Kiwi Strength Index was at -10.65 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6818 (10-DMA), a break above could take it near 0.6859. On the downside, support is seen at 0.6736 (June 29 Low), a break below could drag it below 0.6700.
Equities Recap
Asian shares slumped on the worries of a China-U.S. trade war ahead of a July 6 deadline, when the U.S. will impose tariffs on $34 billion worth of Chinese imports.
MSCI's broadest index of Asia-Pacific shares outside Japan tumbled 0.2 percent.
Tokyo's Nikkei eased 0.3 percent to 21,717.04 points, Australia's S&P/ASX 200 index plunged 0.4 percent to 6,183.40 points, and South Korea's KOSPI declined 0.2 percent to 2,267.92 points.
Shanghai composite index fell 0.9 percent to 2,762.02 points, while CSI300 index was trading 1.2 percent down at 3,369.71 points.
Hong Kong’s Hang Seng was trading 1.2 percent lower at 28,209.86 points. Taiwan shares added 0.05 percent to 10,721.87 points.
Commodities Recap
Crude oil prices rose following a report of tightening U.S. fuel inventories and looming U.S. sanctions against Iran. International benchmark Brent crude was trading 0.4 percent up at $78.11 per barrel by 0455 GMT, having hit a high of $79.53 on Friday, its highest since May 31. U.S. West Texas Intermediate was trading 0.4 percent higher at $74.57 a barrel, after rising as high as $75.24 on Tuesday, its highest since Nov. 2014.
Gold prices rallied to a 1-week high earlier in the session, rebounding from a 7-month low touched in the prior session, as the dollar weakened triggering demand for the safe-haven metal. Spot gold was 0.3 percent up at $1,256.48 an ounce as of 0459 GMT, having touched a low of $1237.82 on Tuesday, its lowest since Dec. 12. U.S. gold futures for August delivery were 0.4 percent higher at $1,258.10 an ounce.
Treasuries Recap
The Australian bond futures were near multi-month peaks amid the general mood of risk aversion. The three-year bond contract added half a tick to 97.935, while the 10-year contract firmed 3 ticks to 97.4050.
The New Zealand government bond yields were down around 2 basis points across the curve.
The Canadian government bond prices were higher across a flatter yield curve, with the two-year up 2.5 Canadian cents to yield 1.898 percent and the 10-year rising 22 Canadian cents to yield 2.142 percent. The 10-year yield touched its highest intraday level since June 18 at 2.204 percent.
