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Asia Roundup: Aussie rallies to 4-month peak as RBA stands pat, dollar holds gains against yen as U.S. manufacturing activity rebounds from 11-year low, Asian shares advance - Tuesday, June 2nd, 2020

Market Roundup

  • Oil prices hold ground ahead of OPEC+ meeting
     
  • Gold edges lower as economies open up
     

Economic Data Ahead  

  • (0330 ET/0730 GMT) Switzerland SVME - Purchasing Managers' Index(May)    
        
  • (0430 ET/0830 GMT) UK Net Lending to Individuals (MoM)(Apr)   
                
  • (0430 ET/0830 GMT) UK Consumer Credit(Apr)
     
  • (0430 ET/0830 GMT) UK M4 Money Supply (MoM)(Apr)               
     
  • (0430 ET/0830 GMT) UK M4 Money Supply (YoY)(Apr)   
     
  • (0430 ET/0830 GMT) UK Mortgage Approvals(Apr)
     

Key Events Ahead

  • No Significant Events Scheduled

FX Beat

DXY: The dollar index plunged to a 2-1/2 month low over mass protests in many U.S. cities over the death of a black man in police custody. The protests erupted over the death of George Floyd, a 46-year-old African-American who died in Minneapolis police custody after being pinned beneath a white officer’s knee for nearly nine minutes. The greenback against a basket of currencies traded 0.05 percent down at 97.80, having touched a low of 97.74 earlier, its lowest since March 16.

EUR/USD: The euro steadied near recent peaks as the Eurozone manufacturing PMI recovered in May from April’s record low. The European currency traded 0.05 percent up at 1.1140, having touched a high of 1.1154 on Monday, its highest since March 17. Investors’ attention will remain on a series of data from Eurozone economies, ahead of the U.S. ISM-NY business conditions index and total vehicle sales. Immediate resistance is located at 1.1169, a break above targets 1.1215. On the downside, support is seen at 1.1059 (5-DMA), a break below could drag it below 1.1029.

USD/JPY: The dollar gained, reversing most of its previous session losses, as U.S. manufacturing activity eased off an 11-year low in May. The ISM said its index of national factory activity rose to a reading of 43.1 last month from 41.5 in April, which was the lowest level since April 2009. Moreover, U.S. President Donald Trump vowed to end unrest in major cities across the nation and stated he would deploy the military if state governors refused to call out the National Guard. The major was trading 0.1 percent up at 107.73, having hit a low of 107.07 on Friday, its lowest since May 18. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. ISM-NY business conditions index and total vehicle sales. Immediate resistance is located at 107.94, a break above targets 108.10. On the downside, support is seen at 107.32, a break below could take it near at 107.07.

GBP/USD: Sterling rallied to an over 1-month high above the 1.2500 handle amid risk-on sentiment in global markets prompted by hopes for an economic recovery. The major traded 0.05 percent up at 1.2495, having hit a high of 1.2525 earlier, it’s highest since May 1. Investors’ attention will remain on the geopolitical developments ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2560, a break above could take it near 1.2624. On the downside, support is seen at 1.2437, a break below targets 1.2389. Against the euro, the pound was trading 0.05 percent down at 89.09 pence, having hit a low of 90.54 on Friday, it’s lowest since March 27.

AUD/USD: The Australian dollar advanced to an over 4-month peak, as the country’s central bank held rates at all-time lows and sounded less gloomy as the economy gradually re-opened. The Reserve Bank of Australia left rates at 0.25 percent at its monthly policy meeting in a widely expected decision and said the accommodative approach will be maintained as long as it is required. The Aussie trades 0.1 percent up at 0.6804, having hit a high of 0.6812 earlier, it’s highest since Jan 27.  Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate resistance is located at 0.6838, a break above could take it near 0.6857. On the downside, support is seen at 0.6752, a break below targets 0.6700.

Equities Recap

Asian shares surged as investors’ focused on the prospects of a global coronavirus recovery.

MSCI's broadest index of Asia-Pacific shares outside Japan surged 0.3 percent.

Tokyo's Nikkei rallied 1.4 percent to 22,371.49 points, Australia's S&P/ASX 200 index surged 0.6 percent to 5,855.80 points. South Korea's KOSPI jumped 0.9 percent to 2,084.60 points.

Shanghai composite index rose 0.1 percent to 2,919.64 points, while CSI 300 index traded 0.2 percent up at 3,980.89 points.

Hong Kong’s Hang Seng traded 0.7 percent higher at 23,905.19 points. Taiwan shares added 0.4 percent to 11,127.93 points.

Commodities Recap

Crude oil prices surged, with traders waiting to see whether major crude producers agree to extend their huge output cuts to shore up prices at a meeting expected later this week.  International benchmark Brent crude was trading 0.4 percent higher at $38.67 per barrel by 0442 GMT, having hit a high of $38.74 earlier, its highest since March 11. U.S. West Texas Intermediate was trading 0.3 percent up at $35.66 a barrel, after rising as high as $35.87 on Monday, its highest since March 11.

Gold prices declined on signs of economic recovery as more countries ease lockdown curbs, while protests in the United States, and U.S.-China tensions limited losses. Spot gold was down 0.1 percent at $1,736.83 per ounce by 0445 GMT, having touched a high of $1,744.69 on Monday, its highest since May 21. U.S. gold futures rose 0.2 percent to $1,753.70.

Treasuries Recap

On Monday, the U.S. benchmark 10-year yield was up 2.8 basis points at 0.6721 percent. The two-year U.S. Treasury yield was up less than a basis point at 0.1603 percent.

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