Market Roundup
- Australia's central bank cuts rates to 1%, likely not done yet
- Australian government close to securing enough votes for $110 bln tax cut plan
- Trump says any China trade deal would need to be somewhat tilted in U.S. favor
- USTR proposes $4 bln in potential additional tariffs over EU aircraft subsidies
- Trump says Iran 'playing with fire' with uranium enrichment
- Japan Inc's inflation expectations stagnate, keep BOJ under pressure
- China says to push forward opening up of financial, manufacturing sectors
- OPEC extends oil cut to prop up prices as economy weakens
Economic Data Ahead
- (0430 ET/0830 GMT) UK Jun Markit/CIPS Cons PMI, 49.3 f'cast, 48.6 prev
- (0500 ET/0900 GMT) EZ May Producer Prices MM, -0.1% f'cast, -0.3% prev
- (0500 ET/0900 GMT) EZ May Producer Prices YY, 1.7% f'cast, 2.6% prev
Key Events Ahead
- (0430 ET/0830 GMT) Dutch central bank president Klaas Knot and Lithuanian central bank Governor Vitas Vasiliauskas speak in Vilnius
- (1005 ET/1405 GMT) BoE's Mark Carney attends Local Government Association Annual Conference and Exhibition in Bournemouth
- (1100 ET/1500 GMT) Cleveland Fed's Loretta Mester participates in Distinguished Speakers Seminar, European Economics and Financial Centre in London
FX Beat
DXY: The dollar index rose to a near 2-week peak, as the United States and China trade agreement took little pressure off Federal Reserve to cut interest rates. The greenback against a basket of currencies traded 0.05 percent up at 96.80, having touched a high of 96.88 earlier, its highest since June 20. FxWirePro's Hourly Dollar Strength Index stood at 67.14 (Bullish) by 0500 GMT.
EUR/USD: The euro declined to a near 2-week low after the European Central Bank policymakers stated the Eurozone inflation remains unacceptably low and the ECB will ease policy further if necessary to boost price pressures. The European currency traded 0.05 percent down at 1.1280, having touched a low of 1.1275 earlier, its lowest since June 20. FxWirePro's Hourly Euro Strength Index stood at -19.11 (Neutral) by 0500 GMT. Investors’ attention will remain on a series of data from the Eurozone economies, EZ producer price index, ahead of the U.S. ISM - NY business conditions index and Fed William's speech. Immediate resistance is located at 1.1308 (23.6% retracement of 1.1412 and 1.1275), a break above targets 1.1343 (50% retracement). On the downside, support is seen at 1.1251 (June 7 Low), a break below could drag it below 1.1203 (June 17 Low).
USD/JPY: The dollar eased as risk sentiment weakened after the U.S. government threatened tariffs on $4 billion of additional European Union goods in a long-running dispute over aircraft subsidies. Moreover, data showing U.S. manufacturing activity slowed to a near 3-year low in June further undermined the bid tone around the greenback. The pair was trading 0.1 percent down at 108.32, having hit a high of 108.53 on Monday, its highest since Jun. 19. FxWirePro's Hourly Yen Strength Index stood at -30.45 (Neutral) by 0500 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. ISM - NY business conditions index and Fed William's speech. Immediate resistance is located at 108.80 (June 11 High), a break above targets 109.08 (Jan. 8 Low). On the downside, support is seen at 107.81 (Jun. 5 Low), a break below could take it lower at 107.24 (June 24 Low).
GBP/USD: Sterling plunged to a near 2-week low, amid growing concerns that Boris Johnson, the favourite to replace Prime Minister Theresa May, will push to leave the European Union with or without a deal by Oct. 31. The major traded 0.05 percent down at 1.2630, having hit a low of 1.2626 earlier, it’s lowest since June 19. FxWirePro's Hourly Sterling Strength Index stood at -35.44 (Neutral) 0500 GMT. Investors’ attention will remain on the UK Markit construction PMI, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2674 (10-DMA), a break above could take it near 1.2743 (June 5 High). On the downside, support is seen at 1.2611 (May 29 Low), a break below targets 1.2580 (June 14 Low). Against the euro, the pound was trading 0.1 percent down at 89.32 pence, having hit a high of 89.19 earlier, it’s highest since Jun. 25.
AUD/USD: The Australian dollar fell to a near 1-week low after the country's central bank reduced its benchmark cash rate a quarter of a percentage point to a record low 1.0 percent, a widely expected move and signalled it could go again, if required. However, the major attempted a minor recovery against a backdrop of growing expectations the Federal Reserve will cut rates due to low inflation and worries about the U.S.-China trade war. The Aussie trades 0.2 percent up at 0.6976, having hit a high of 0.7034 on Monday, it’s highest since Jun. 7. FxWirePro's Hourly Aussie Strength Index stood at 46.54 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6941 (June 25 Low), a break below targets 0.6901 (June 13 Low). On the upside, resistance is located at 0.7008 (June 27 High), a break above could take it near 0.7069 (Apr. 30 High).
NZD/USD: The New Zealand dollar consolidated within narrow ranges as the Reserve Bank of New Zealand is also seen on an easing path, with markets implying around a 69 percent probability of a quarter-point cut on Aug. 7. The Kiwi trades flat at 0.6670, having touched a high of 0.6726 on Monday, its highest level April 18. FxWirePro's Hourly Kiwi Strength Index was at -26.50 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6721 (June. 28 High), a break above could take it near 0.6771 (Apr. 11 High). On the downside, support is seen at 0.6626 (10-DMA), a break below could drag it below 0.6592 (June 26 Low).
Equities Recap
Asian shares surged as investors were now turning to the prospects of actual progress in U.S.-China talks to settle the dispute that has dented global trade.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.4 percent.
Tokyo's Nikkei rallied 0.1 percent to 21,754.27 points, Australia's S&P/ASX 200 index gained 0.1 percent to 6,653.20 points and South Korea's KOSPI declined 0.3 percent to 2,124.14 points.
Shanghai composite index rose 0.05 percent to 3,045.09 points, while CSI 300 index traded 0.05 percent up at 3,938.33 points.
Hong Kong’s Hang Seng traded 1.3 percent higher at 28,920.25 points. Taiwan shares shed 0.3 percent to 10,865.12 points.
Commodities Recap
Crude oil prices declined as weak global data raised concerns about future demand for the commodity, although OPEC's decision to extend supply cuts until next March limited downside. International benchmark Brent crude was trading 0.3 percent lower at $64.98 per barrel by 0502 GMT, having hit a low of $64.00 on Friday, its lowest since June 21. U.S. West Texas Intermediate was trading 0.3 percent down at $58.95 a barrel, after rising as high as $60.26 on Monday, its highest since the May 23.
Gold prices surged, boosted by a safe-haven sentiment rising from weak global manufacturing data that hinted at an economic slowdown. Spot gold was 0.5 percent up at $1,390.85 per ounce by 0505 GMT, having touched a low of $1,381.62 on Monday, its lowest since June 20. U.S. gold futures were up 0.2 percent at $1,391.70 an ounce.
Treasuries Recap
The Japanese government bond prices edged lower, with benchmark 10-year JGB futures dipped 0.03 point to 153.69, while the yield on 10-year cash bonds climbed half-a-basis point to minus 0.145 percent. The 30-year yield was also half-a-basis point higher at 0.380 percent. At the short end of the curve, two-year yields rose half-a-basis point to minus 0.220 percent.
The Australian government bond futures gained, with the 3-year bond contract and the 10-year contract each up 1.5 ticks at 99.075 and 98.6550.
The New Zealand government bonds were broadly flat.
