Market Roundup
- BOJ holds fire on policy, joins Fed in warning of mounting global risks
- Fed sees case building for interest rate cuts this year
- Trump believes he has authority to demote Fed's Powell - Bloomberg
- China to stand firm as trade talks with U.S. restart-state media
- China's premier tells foreign CEOs China will commit to reform, opening up
- Australia's central bank flags lower rates in jobs hunt
- New Zealand Q1 GDP growth steady, but soft underbelly keeps more rate cuts on table
- Gold sprints to over 5-year peak after Fed hints at rate cuts
- UK PM candidate Johnson increases support in third round of leadership contest
- Italy coalition drafts bill to reform central bank's management
- No U.S. aircraft operated over Iran, U.S. military says
Economic Data Ahead
- (0430 ET/0830 GMT) Great Britain May Retail Sales YY, 2.7% f'cast, 5.2% prev
- (0430 ET/0830 GMT) Great Britain May Retail Sales MM, -0.5% f'cast, 0.0% prev
- (0700 ET/1100 GMT) Great Britain Jun BoE Bank Rate, 0.75% f'cast, 0.75% prev
- (0700 ET/1100 GMT) Great Britain Jun BoE MPC Vote Unchanged, 9 f'cast, 9 prev
- (1000 ET/1400 GMT) EZ Jun Consumer Confidence Flash, -6.5 f'cast, -6.5 prev
Key Events Ahead
- N/A Finland central bank's Olli Rehn, BoE's Sam Woods, Single Resolution Board's Chair Elke König and European Banking Authority's Jose Manuel Campa speak at financial conference in Brussels
- (0330 ET/0730 GMT) ECB's Luis de Guindos speaks at economy event in Santander, Spain
- (0400 ET/0800 GMT) Norway Central Bank announces executive board's interest rate decision and publication of Monetary Policy followed by press conference in Oslo
- (0550 ET/0950 GMT) ECB's Andrea Enria speaks at FIBI International Banking Conference 2019 in Dublin
- (0530 ET/0930 GMT) Swedish Central Bank's Martin Floden discusses management of foreign exchange reserves at the 8th BBVA Seminar for Public Sector Investors and Issuers in Porto, Portugal
- (0700 ET/1100 GMT) BoE announces rate decision and publishes minutes of the meeting after the rate decision
- (1400 ET/1800 GMT) UK Finance Minister Philip Hammond and BoE's Mark Carney make annual Mansion House speeches in London
FX Beat
DXY: The dollar index plunged to a 1-week low, as the U.S. Treasury yields slumped after the Federal Reserve signalled it was ready to lower interest rates as early as next month to combat growing global and domestic risks. The greenback against a basket of currencies traded 0.5 percent down at 96.78, having touched a low of 96.76 earlier, its lowest since June 12. FxWirePro's Hourly Dollar Strength Index stood at -133.57 (Highly Bearish) by 0400 GMT.
EUR/USD: The euro rose to a near 1-week peak as the greenback eased after the Federal Reserve opened door to rate cut as early as July. The European currency traded 0.4 percent up at 1.1266, having touched a high of 1.1273 earlier, its highest since June 14. FxWirePro's Hourly Euro Strength Index stood at -34.45 (Neutral) by 0400 GMT. Investors’ attention will remain on the ECB's Economic Bulletin, ahead of the U.S. current account, unemployment claims and Philadelphia Fed manufacturing survey. Immediate resistance is located at 1.1292 (61.8% retracement of 1.1347 and 1.1202), a break above targets 1.1316 (78.6% 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 plunged to a 4-1/2 month low after Bloomberg reported that U.S. President Donald Trump believes that he has the authority to replace Fed Chair Jerome Powell and demote him to be a board governor. The pair was trading 0.4 percent down at 107.64, having hit a low of 107.55 earlier, its lowest since Jan. 4. FxWirePro's Hourly Yen Strength Index stood at -133.57 (Highly Bearish) by 0400 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. current account, unemployment claims and Philadelphia Fed manufacturing survey. 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 107.18 (June 3 Low), a break below could take it lower at 106.88.
GBP/USD: Sterling rallied to a 1-week peak as the greenback plunged after the Federal Reserve signalled possible interest rate cuts later this year. The major traded 0.4 percent at 1.2694, having hit a high of 1.2694 earlier it’s highest since Jun. 13. FxWirePro's Hourly Sterling Strength Index stood at 64.72 (Bullish) 0400 GMT. Investors’ attention will remain on UK retail sles, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2709 (78.6% retracement of 1.2758 and 1.12511), a break above could take it near 1.2763 (June 7 High). On the downside, support is seen at 1.2580 (Jun. 14 Low), a break below targets 1.2506. Against the euro, the pound was trading flat at 88.76 pence, having hit a high of 89.72 earlier, it’s highest since Jun. 7.
AUD/USD: The Australian dollar rose, extending gains for the third straight session, after Reserve Bank of Australia Governor Philip Lowe said a recent cut in interest rates would not be enough to revive economic growth, and called for the government for more action on fiscal stimulus. The Aussie trades 0.4 percent up at 0.6906, having hit a low of 0.6831 on Tuesday, it’s lowest since Jan. 3. FxWirePro's Hourly Aussie Strength Index stood at 8.80 (Neutral) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6848 (June 17 Low), a break below targets 0.6831 (June 18 Low). On the upside, resistance is located at 0.6944 (May 31 High), a break above could take it near 0.6994 (June 6 High).
NZD/USD: The New Zealand dollar advanced to a 1-week peak after data showed domestic economy expanded at a steady pace in the first quarter, boosted by solid construction activity. However, the upside was limited as RBNZ policymakers are expected to cut rates again before year-end to underpin growth amid slowing housing market and global demand. The Kiwi trades 0.7 percent up at 0.6580, having touched a high of 0.6583, its highest level June 13. FxWirePro's Hourly Kiwi Strength Index was at 33.65 (Neutral) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6611 (June 11 High), a break above could take it near 0.6644 (June 6 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 on signs that China and the United States are returning to the negotiating table after a six-week gap, while the dollar plunged after the Federal Reserve signalled possible interest rate cuts later this year.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.6 percent.
Tokyo's Nikkei rallied 0.6 percent to 21,462.86 points, Australia's S&P/ASX 200 index gained 0.6 percent to 6,687.40 points and South Korea's KOSPI rallied 0.2 percent to 2,129.55 points.
Shanghai composite index rose 2.2 percent to 2,981.17 points, while CSI 300 index traded 1.3 percent up at 3,819.60 points.
Hong Kong’s Hang Seng traded 0.9 percent higher at 28,467.49 points. Taiwan shares added 0.1 percent to 10,785.01 points
Commodities Recap
Crude oil prices rose as official data showed U.S. crude stocks fell more than expected and as OPEC and other producers finally agreed a date for a meeting to discuss output cuts. International benchmark Brent crude was trading 0.7 percent higher at $62.62 per barrel by 0515 GMT, having hit a high of $62.85 earlier, its highest since June 11. U.S. West Texas Intermediate was trading 1.05 percent up at $54.70 a barrel, after rising as high as $54.93 earlier, its highest since the May 31.
Gold prices surged nearly 2 percent to touch their highest in more than five years as the greenback and U.S. Treasury yields declined after the U.S. Federal Reserve signalled possible interest rate cuts later this year. Spot gold was trading 1.4 percent up at $1,379.61 per ounce by 0519 GMT, having touched a high of $1,393.85, its highest since Sept. 2013. U.S. gold futures surged 2.5 percent to $1,382.60 an ounce.
Treasuries Recap
The 10-year U.S. Treasuries yield fell as low as 1.974 percent, its lowest level since November 2016.
The Japanese 10-year bond yields slipped 1.5 basis points to minus 0.155 percent, matching three-year lows.
The yields on three-year Australian government debt dived to a fresh record low of 0.922 percent, while futures climbed 4.5 ticks to a peak of 99.115. The 10-year contract also added 4.5 ticks to an all-time high of 98.700.
The 2-year New Zealand yields hit an all-time low of 1.14 percent, far below the cash rate.
The Canadian government bond prices were lower across a steeper yield curve, with the two-year down 1 Canadian cent to yield 1.408 percent and the 10-year falling 11 Canadian cents to yield 1.435 percent The gap between Canada's 2-year yield and its U.S. equivalent narrowed by 11.4 basis points to a spread of 34.6 basis points in favor of the U.S. bond, its smallest gap since February 2018.
