Market Roundup
- China says both U.S., China should make compromises in trade talks
- U.S. prods Iran for talks to ease Gulf tensions; Tehran dismisses sanctions threat
- Kushner's economic plan for Mideast peace faces broad Arab rejection
- Turkey's opposition strikes blow to Erdogan with Istanbul mayoral win
- Rival in UK PM race calls on frontrunner Johnson to answer "difficult questions"
- Australia c.bank gov: legitimate to question effectiveness of global easing
- ECB to pacify doves with a cut or easing guidance by end-Sept
- Gold hovers near 6-year high as dovish cenbanks, US-Iran tensions fuel demand
- Pompeo to seek stronger strategic ties with India despite trade tensions
Economic Data Ahead
- (0400 ET/0800 GMT) Germany Jun Ifo Business Climate New, 97.2 f'cast, 97.9 prev
- (0400 ET/0800 GMT) Germany Jun Ifo Curr Conditions New, 100.2 f'cast, 100.6 prev
- (0400 ET/0800 GMT) Germany Jun Ifo Expectations New, 94.5 f'cast, 95.3 prev
Key Events Ahead
- (0700 ET/1100 GMT) Presentation by ECB Executive Board Member Sabine Lautenschlager at Rotary Club Frankfurt in Frankfurt
- (1950 ET/2350 GMT) Bank of Japan to release Minutes of Monetary Policy Meeting held on April 24 and 25 in Tokyo
FX Beat
DXY: The dollar index steadied, halting a 3-day losing streak, as investors await an expected meeting between Presidents Donald Trump and Xi Jinping later this week for signs of de-escalation in a trade war that is hurting the global economy and weakening business confidence. The greenback against a basket of currencies traded 0.05 percent up at 96.14, having touched a low of 96.09 earlier, its lowest since Mar. 21. FxWirePro's Hourly Dollar Strength Index stood at -71.68 (Bearish) by 0500 GMT.
EUR/USD: The euro rallied to a 3-month peak after a Reuters survey showed the European Central Bank will either cut its deposit rate or ease its forward guidance further by pledging to keep interest rates lower for longer by the end of September. The European currency traded 0.1 percent up at 1.1376, having touched a high of 1.1386 earlier, its highest since Mar. 22. FxWirePro's Hourly Euro Strength Index stood at 16.26 (Neutral) by 0500 GMT. Investors’ attention will remain on German IFO Survey, and ECB Lautenschlager's speech, ahead of the Chicago Fed national activity index and Dallas Feb manufacturing business index. Immediate resistance is located at 1.1419 (Feb. 28 High), a break above targets 1.1474 (Dec. 21 High). On the downside, support is seen at 1.1345 (Feb 26 Low), a break below could drag it below 1.1301 (Jun. 11 Low).
USD/JPY: The dollar rose, extending previous session rebound, as investors focus was whether Washington and Beijing can resolve their trade dispute at a summit in Japan this week of leaders from the Group of 20 leading world economies. The pair was trading 0.1 percent up at 107.44, having hit a low of 107.04 on Friday, its lowest since Jan. 3. FxWirePro's Hourly Yen Strength Index stood at -72.80 (Bearish) by 0500 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the Chicago Fed national activity index and Dallas Feb manufacturing business index. Immediate resistance is located at 107.93 (5-DMA), a break above targets 108.52 (21-DMA). On the downside, support is seen at 106.88 (Apr. 17, 2018), a break below could take it lower at 106.26 (Mar. 29, 2018).
GBP/USD: Sterling rallied to a 1-1/2 week peak, as investors shifted their attention back to British politics and the Conservative Party leadership contest. The British pound continues to gain after the Bank of England reiterated that interest rates would need to rise, contrasting with the U.S. Federal Reserve which is now expected to cut rates from July. The major traded 0.1 percent up at 1.2749, having hit a high of 1.2756 earlier, it’s highest since Jun. 12. FxWirePro's Hourly Sterling Strength Index stood at 37.14 (Neutral) 0500 GMT. Investors’ attention will remain on the UK inflation report hearings, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2798 (May 17 High), a break above could take it near 1.2853 (May 16 High). On the downside, support is seen at 1.2681 (Jun. 12 Low), a break below targets 1.2628 (Jun. 20 Low). Against the euro, the pound was trading 0.1 percent down at 89.23 pence, having hit a high of 88.72 on Thursday, it’s highest since Jun. 7.
AUD/USD: The Australian dollar rallied to an over 1-week peak after Reserve Bank of Australia Governor Philip Lowe said that it would be legitimate to question the effectiveness of global monetary policy easings to boost economic growth and also more infrastructure investment would benefit the country's struggling economy. The Aussie trades 0.5 percent up at 0.6955, having hit a high of 0.6961 earlier, it’s highest since Jun. 12. FxWirePro's Hourly Aussie Strength Index stood at 68.48 (Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6881 (May 24 Low), a break below targets 0.6831 (June 18 Low). On the upside, resistance is located at 0.6994 (June 6 High), a break above could take it near 0.7022 (June 7 High).
NZD/USD: The New Zealand dollar advanced to a near 2-week peak, ahead of the Reserve Bank of New Zealand's policy meeting, where it is expected to hold rates steady. The Kiwi trades 0.3 percent down at 0.6606, having touched a high of 0.6608, its highest level June 11. FxWirePro's Hourly Kiwi Strength Index was at 16.04 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6619 (June 4 High), a break above could take it near 0.6644 (June 6 High). On the downside, support is seen at 0.6540 (May 27 Low), a break below could drag it below 0.6474 (Oct. 4 Low).
Equities Recap
Asian shares steadied as investors hoped for signs of easing in U.S.-China trade dispute, while oil prices held gains on heightened tensions between the United States and Iran.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 percent.
Tokyo's Nikkei rose 0.1 percent to 21,285.99 points, Australia's S&P/ASX 200 index surged 0.2 percent to 6,665.40 points and South Korea's KOSPI rallied 0.05 percent to 2,126.37 points.
Shanghai composite index declined 0.05 percent to 3,001.95 points, while CSI 300 index traded 0.05 percent down at 3,833.91 points.
Hong Kong’s Hang Seng traded 0.05 percent higher at 28,478.61 points. Taiwan shares shed 0.2 percent to 10,779.45 points
Commodities Recap
Crude oil prices rallied as tensions remain high between Iran and the United States, with U.S. Secretary of State Mike Pompeo saying significant sanctions on Tehran would be announced. International benchmark Brent crude was trading 0.1 percent higher at $65.41 per barrel by 0426 GMT, having hit a high of $65.74 on Friday, its highest since May 31. U.S. West Texas Intermediate was trading 0.4 percent up at $57.80 a barrel, after rising as high as $57.96 on Monday, its highest since the May 30.
Gold prices surged, hovering towards a near 6-year high touched in the previous session, as dovish signals from major central banks and heightened tensions between the United States and Iran boosted the safe-haven's demand. Spot gold was 0.3 percent up at $1,402.84 per ounce by 0442 GMT, having touched a high of $1,411.75 on Friday, its highest since Sept. 4 2013. U.S. gold futures rose 0.6 percent to $1,409.10 per ounce.
Treasuries Recap
The Japanese government bond prices edged lower, with the 10-year JGB yield rising 1.5 basis points to minus 0.155 percent, after having fallen to as low as minus 0.195 percent, its lowest in almost three years, in the previous session. The 10-year benchmark JGB futures dropped 0.13 point to 153.80, from a record high of 154.13 touched last week. The 20-year JGB yield rose 2.0 basis points to 0.215 percent, pulling further away from Friday's low of 0.145 percent, while the 30-year JGB yield rose 2.5 basis points to 0.345 percent.
The Australian three-year bond future eased 2.5 ticks to 99.120, though that was from a record high. The 10-year contract dipped 3 ticks to 98.6850.
