Market Roundup
- Merkel to fight another day after settling migration row
- BOJ likely to cut inflation forecasts for current, next fiscal years-sources
- Trump moves to block China Mobile's U.S. entry, citing security concerns
- British PM May gets new customs idea as party bickers over Brexit
- New Zealand business confidence drops to 7-year low, pointing to slower economic growth
- Australia Jul RBA Cash Rate, 1.50%, f'cast 1.50%, last 1.50%
- Australia May Building Approvals, -3.2%, f'cast 1%, last -5%
Economic Data Ahead
- (0245 ET/0645 GMT) France May Budget Balance, last -54.34 bln
- (0430 ET/0830 GMT) Great Britain Jun Markit/CIPS Cons PMI, f'cast 52.5, last 52.5
- (0500 ET/0900 GMT) EZ May Producer Prices YY, f'cast 0.4%, last 0.0%
- (0500 ET/0900 GMT) EZ May Retail Sales YY, f'cast 1.5%, last 1.7%
Key Events Ahead
- (1200 ET/1600 GMT) ECB Chief Economist Peter Praet speaks in Bucharest
FX Beat
DXY: The dollar index consolidated as the trade row between the United States and major economies has rattled financial markets. The greenback against a basket of currencies trades 0.1 percent down at 94.80, having touched a high of 95.53 on Thursday, its highest since July 2017. FxWirePro's Hourly Dollar Strength Index stood at -48.08 (Neutral) by 0500 GMT.
EUR/USD: The euro declined, extending previous session losses, despite Germany's Christian Social Union (CSU) party reaching a deal with Chancellor Merkel’s Christian Democrats (CDU) over illegal immigration and German Interior Minister Horst Seehofer resignation threat withdrawn. The European currency traded 0.05 percent down at 1.1633, having touched a high of 1.1719 last week, its highest since June 14. FxWirePro's Hourly Euro Strength Index stood at 89.87 (Slightly Bullish) by 0500 GMT. Investors’ attention will remain on the Eurozone producer price index and retail sales, ahead of U.S. factory orders and business conditions index. Immediate resistance is located at 1.1700, a break above targets 1.1744 (June 4 High). On the downside, support is seen at 1.1530 (June 19 Low), a break below could drag it till 1.1500.
USD/JPY: The dollar steadied after rising to a 1-1/2 month peak against the Japanese yen earlier in the day on news that the Bank of Japan is likely to cut its price growth forecasts at a policy meeting later this month as long-term inflation expectations stall. The major was trading 0.1 percent up at 110.96, having hit a high of 111.13 earlier, its highest since May 22. FxWirePro's Hourly Yen Strength Index stood at -69.15 (Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. factory orders and business conditions index. Immediate resistance is located at 111.39 (May 21 High), a break above targets 111.08 (June 18 High). On the downside, support is seen at 110.59 (5-DMA), a break below could take it lower 109.68 (June 27 Low).
GBP/USD: Sterling consolidated within narrow ranges, as stronger-than-expected manufacturing sector data failed to temper investors' concerns about a Brexit cabinet meeting later in the week. The major traded 0.05 percent up at 1.3145, having hit a low of 1.3049 on Thursday; it’s lowest since Nov. 2. FxWirePro's Hourly Sterling Strength Index stood at -16.25 (Neutral) 0500 GMT. Investors’ attention will remain on UK Markit construction PMI figures, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3230, a break above could take it near 1.3314 (June 22 High). On the downside, support is seen at 1.3102 (June 21 Low), a break below targets 1.3049 (June 28 Low). Against the euro, the pound was trading 0.01 percent down at 88.59 pence, having hit a low of 88.90 pence on Friday, it’s lowest since March 12.
AUD/USD: The Australian dollar rebounded after falling to 1-1/2 year lows in the previous session after the Reserve Bank of Australia kept its cash rate at 1.5 percent, a widely expected decision given policymakers have signaled a steady near-term outlook. The Aussie trades 0.3 percent up at 0.7360, having hit a low of 0.7310 on Monday; it’s lowest since Jan 2017. FxWirePro's Hourly Aussie Strength Index stood at -61.38 (Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7300, a break below targets 0.7280. On the upside, resistance is located at 0.7423 (June 26 High), a break above could take it near 0.7443 (June 22 High).
NZD/USD: The New Zealand dollar slumped to a 2-year low as worries about falling Chinese assets and rising global trade tensions weighed on investor sentiment. The Kiwi trades 0.05 percent down at 0.6714, having touched a low of 0.6687, its lowest level since May 2016. FxWirePro's Hourly Kiwi Strength Index was at 48.08 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6779 (5-DMA), a break above could take it near 0.6833 (10-DMA). On the downside, support is seen at 0.6687 (Session High), a break below could drag it below 0.6650.
Equities Recap
Asian shares declined as investors feared the Sino-U.S. trade war ahead of a July 6 deadline, when the U.S. is set to impose tariffs on $34 billion worth of Chinese goods that Beijing has vowed to match with tariffs on U.S. products.
MSCI's broadest index of Asia-Pacific shares outside Japan tumbled 1.4 percent to its lowest level since September 29,
Tokyo's Nikkei fell 0.1 percent to 21,785.54 points, Australia's S&P/ASX 200 index gained 0.5 percent to 6,210.20 points, and South Korea's KOSPI rallied 0.2 percent to 2,277.14 points.
Shanghai composite index rose 0.3 percent to 2,784.37 points, while CSI300 index was trading 0.05 percent up at 3,408.97 points.
Hong Kong’s Hang Seng was trading 1.8 percent lower at 28,436.93 points. Taiwan shares shed 0.6 percent to 10,715.72 points.
Commodities Recap
Crude oil prices rallied after Libya declared force majeure on some of its supplies, however, an overall rise in OPEC output and an emerging slowdown in demand limited gains. International benchmark Brent crude was trading 0.5 percent up at $77.72 per barrel by 0501 GMT, having hit a high of $79.53 on Friday, its highest since May 31. U.S. West Texas Intermediate was trading 0.7 percent higher at $74.53 a barrel, after rising as high as $74.78, its highest since Nov. 2014.
Gold prices declined to the lowest since December as the greenback strengthened against the basket of currencies, offsetting safe-haven demand amid mounting global trade concerns. Spot gold eased 0.3 percent to $1,238.35 an ounce by 0507 GMT after falling to its lowest since Dec. 12 at $1,237.91 earlier in the session. U.S. gold futures were 0.1 percent lower at $1,240.60 an ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.872 percent higher by 0.006 bps, while 5-year yield was 0.004 bps up at 2.756 percent.
The Australian government bond futures rallied to multi-month peaks. The 3-year bond contract was near its highest since December at 97.955, while the 10-year contract added 1 tick to 97.4050.
The New Zealand government bonds gained, sending yields 4 basis points lower at the long end of the curve.
