Market Roundup
- Australia's central bank says "likely" will have to cut rates again-minutes
- U.S. says to send more troops to the Middle East, cites Iran threats
- U.S. firms say China tariffs will raise costs, see few sourcing alternatives
- China's home prices growth fastest in 5 months, raises policy challenge
- China holdings of U.S. Treasuries in April skid to nearly 2-year low
- How Japan turned against its 'bazooka'-wielding central bank chief
- Kuroda says BOJ will debate rising overseas economic risks this week
- UK's Hammond 'prepared to resign' over May's legacy spending plans -ITV, citing PA
- Trump says U.S. agency will begin removing millions of illegal immigrants
- Darkening mood among Japanese manufacturers flags risks ahead - Reuters Tankan
- Australia Q1 Home Price Index, -3.0%, -2.4% prev
Economic Data Ahead
- (0500 ET/0900 GMT) EZ May HICP Final YY, 1.2% f'cast, 1.2% prev
- (0500 ET/0900 GMT) EZ May HICP Final MM, 0.2% f'cast, 0.7% prev
- (0500 ET/0900 GMT) Germany Jun ZEW Economic Sentiment, -5.8 f'cast, -2.1 prev
- (0500 ET/0900 GMT) Germany Jun ZEW Current Conditions, 6.0 f'cast, 8.2 prev
Key Events Ahead
- N/A U.S. Federal Reserve's FOMC starts two-day meeting on interest rates
- N/A Top ECB officials speak at bank's annual showcase conference in Sintra, Portugal
- N/A Italian Finance and Economy Minister Giovanni Tria speaks at Global Borrowers and Bond Investors Forum in London
- (0400 ET/0800 GMT) ECB's Mario Draghi delivers introductory speech at ECB Forum on Central Banking 2019 "20 Years of European Economic and Monetary Union" in Sintra, Portugal
- (0430 ET/0830 GMT) ECB's Luis de Guindos participates in chairing Session 1 "The first 20 years of EMU" in Sintra, Portugal
- (0630 ET/1030 GMT) German Economy Minister Peter Altmaier speaks at German construction industry's annual congress in Berlin
- (0630 ET/1030 GMT) ECB's Philip Lane participates in chairing panel "The first 20 years of EMU" in Sintra, Portugal
- (0930 ET/1330 GMT) Powertalk with Bundesbank executive board member Joachim Wuermeling, title: "Connecting Values: A Digital Finance Hub for Europe" in Frankfurt
- (1000 ET/1400 GMT) ECB's Mario Draghi participates in policy panel in Sintra, Portugal
FX Beat
DXY: The dollar index eased, retreating from a 2-week peak, undermined by the New York Fed's business index showing a record fall this month to its weakest level in more than 2-1/2 years. The greenback against a basket of currencies traded 0.1 percent down at 97.44, having touched a high of 97.60 on Monday, its highest since June 3. FxWirePro's Hourly Dollar Strength Index stood at 101.86 (Highly Bullish) by 0500 GMT.
EUR/USD: The euro rose, extending gains for the second straight session after Italian government sources stated that Italy believes it can meet the European Commission's demands over its public accounts for this year. The European currency traded 0.2 percent up at 1.1235, having touched a low of 1.1202 on Friday, its lowest since June 6. FxWirePro's Hourly Euro Strength Index stood at -23.80 (Neutral) by 0500 GMT. Investors’ attention will remain on the German ZEW survey, Eurozone trade balance and consumer price index, ahead of the U.S. building permits and housing starts. 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 declined, halting a 2-day rally, as investors turned cautious ahead of the Federal Reserve's interest rate meeting. On Monday, the U.S. Treasury yields dipped after data showed the New York Fed's business growth fell this month to its weakest in more than 2-1/2-years, stoking rate cut expectations. The pair was trading 0.2 percent down at 108.29, having hit a high of 108.72 the day before, its highest since June 11. FxWirePro's Hourly Yen Strength Index stood at 144.93 (Slightly Bullish) by 0500 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. building permits and housing starts. 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 plunged to a fresh 5-1/2 month low amid growing worries Boris Johnson, the front-runner to replace UK Prime Minister Theresa May, could put Britain on a path towards a no-deal Brexit. The major traded 0.05 percent down at 1.2528, having hit a low of 1.2511 earlier; it’s lowest since Jan 3. FxWirePro's Hourly Sterling Strength Index stood at -81.32 (Slightly Bearish) 0500 GMT. Investors’ attention will remain on BoE Governor Carney's speech, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2570 (23.6% 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 0.2 percent down at 89.65 pence, having hit a low of 89.74 earlier, it’s lowest since Jan. 15.
AUD/USD: The Australian dollar slumped to a 5-1/2 month low, weighed down by growing expectations of another rate cut by the country's central bank and by the spectre of a further slowdown in China. The Aussie trades 0.2 percent down at 0.6838, having hit a low of 0.6833, it’s lowest since Jan. 3. FxWirePro's Hourly Aussie Strength Index stood at -130.67 (Highly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6810, a break below targets 0.6744 (Jan.3 Low). On the upside, resistance is located at 0.6879 (23.6% retracement 0.7022 and 0.6833), a break above could take it near 0.6906 (50% retracement).
NZD/USD: The New Zealand dollar consolidated near multi-week lows, as investors bet the Reserve Bank of New Zealand will ease at least once more having cut rates in May. The Kiwi trades flat at 0.6495, having touched a low of 0.6487 on Friday, its lowest level May 23. FxWirePro's Hourly Kiwi Strength Index was at -105.34 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6542 (May 21 High), a break above could take it near 0.6573 (June 14 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 surged, as investors awaited the Federal Reserve's interest rate meeting, where it is expected to leave borrowing costs unchanged but possibly lay the groundwork for a rate cut later this year.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 percent.
Tokyo's Nikkei fell 0.7 percent to 20,972.71 points, Australia's S&P/ASX 200 index gained 0.6 percent to 6,570.00 points and South Korea's KOSPI rallied 0.4 percent to 2,098.71 points.
Shanghai composite index eased 0.05 percent to 2,886.69 points, while CSI 300 index traded 0.2 percent rose at 3,662.60 points.
Hong Kong’s Hang Seng traded 1.2 percent higher at 27,548.63 points. Taiwan shares added 0.3 percent to 10,566.74 points
Commodities Recap
Crude oil prices declined, weighed down by signs that global economic growth is being hit by U.S.-China trade tensions, although tensions in the Middle East after tanker attacks last week limited downside. International benchmark Brent crude was trading 0.1 percent lower at $60.92 per barrel by 0456 GMT, having hit a low of $59.55 on Wednesday, its lowest since June 5. U.S. West Texas Intermediate was trading 0.05 percent down at $51.89 a barrel, after falling as low as $50.71 on Wednesday, its lowest since the June 5.
Gold prices rose, halting a 2-day losing streak as the greenback pulled back from multi-week highs ahead of the U.S. Federal Reserve's two-day monetary policy meeting. Spot gold was 0.2 percent up at $1,341.69 by 0503 GMT, having touched a high of $1,358.06 on Friday, its highest since April 11. U.S. gold futures rose 0.2 percent to $1,345.20 an ounce.
Treasuries Recap
The Japanese government bond prices gained, with the 10-year JGB futures up 0.05 point to 153.53. The 10-year JGB yield was flat at minus 0.130 percent, just above its recent low of minus 0.135 percent, its lowest level since August 2016. The 20-year JGB yield fell 0.5 basis point to 0.230 percent, edging near last week's near three-year low of 0.220 percent. The 30-year JGB yield fell 0.5 basis point to 0.360 percent. At the shorter end, the benchmark two-year JGB yield fell 0.5 basis point to minus 0.205 percent, while the five-year JGB yield was flat at minus 0.230 percent.
The Australian bond yields fell, with the three-year rate at 1.00 percent and just above all-time lows. Three-year bond futures firmed 1 tick to 99.030, implying a yield of 0.97 percent, while the 10-year contract rose 2 ticks to 98.6250.
The yields on New Zealand two-year debt were near historic lows at 1.205 percent and far beneath the 1.5 percent cash rate.
The Canadian government bond prices were lower across much of a flatter yield curve, with the two-year down 3 Canadian cents to yield 1.398 percent and the benchmark 10-year falling 8 Canadian cents to yield 1.444 percent.
