Market Roundup
- RBA says economic outlook supported by low rates
- House prices rising briskly in some markets, labour demand indicators mixed -RBA
- Rising A$ would complicate economic adjustment -RBA
- Slow growth in real wages restraining rise in household consumption -RBA
- North Korea launches intermediate-range missile, falls in Japan waters -Media
- BoJ Tankan corp prices expectations still well shy of BoJ target, +0.8% in year
- Corporate Japan turning corner on price hikes – Nikkei survey
- Japan corporate tax revenue sinks to post-Abenomics low -Nikkei
- Japan end-June monetary base Y468.0343 tln, +17.0% y/y
- China sets new framework for 'sharing economy' policy
- China opens local bond ratings to global agencies
- Chinese vice premier talks economy with US commerce sec Ross -Xinhua
- New Zealand business confidence broadly steady in Q2, inflation pressures ease
Economic Data Ahead
- (0430 ET/0830 GMT) Great Britain Jun Markit/CIPS Cons PMI, 55.00 eyed, last 56.00
- (0500 ET/0900 GMT) Eurozone May Producer Prices, -0.2% m/m, 3.5% y/y eyed; last 0.0%, 4.3%
Key Events Ahead
- (0430 ET/0830 GMT) BoE's Record of Financial Policy Committee Meeting on 21 June
- (0500 ET/0900 GMT) AT E0.60/0.60 bln 10/30 yr auctions
- (0530 ET/0930 GMT) Germany 13YI 0.500 bln auction
- (0830 ET/1230 GMT) Riksbank's Ohlsson participates in the Almega and the Riksbank event
- (0930 ET/1330 GMT) ECB's Praet participates in a panel discussion in Rome
- (0950 ET/1350 GMT) Riksbank's Skingsley participates in conf, panel discussion
- (1440 ET/1840 GMT) ECB's Yves Mersch speaks in Frankfurt
- N/A Sveriges Riksbank to publish interest rate decision
- N/A 15th ASEAN-Japan STOM Leaders Conference (to July 5)
- N/A EFSF named Citi/CMZ/SG for EUR benchmark 8yr, 31yr dual tranche
FX Beat
DXY: The dollar declined against yen after rising to multi-weeks highs in the prior session on upbeat U.S. data. The greenback against a basket of currencies traded flat at 96.18, having touched a low of 95.47 last week, it’s lowest since Oct. 3. FxWirePro's Hourly Dollar Strength Index stood at 88.40 (Slightly Bullish) by 0500 GMT.
EUR/USD: The euro edged up after declining for the previous two sessions, as the greenback eased from recent highs on expectations that central banks in Europe would eventually shift to tighter monetary policy. The European currency traded 0.1 percent up at 1.1371, having touched a high of 1.1445 on Friday, its highest since May 5, 2016. FxWirePro's Hourly Euro Strength Index stood at -0.71 (Neutral) by 0400 GMT. Investors’ attention will remain on the Eurozone producer price index and ECB Praet's speech, as the U.S. markets remain closed for the Independence Day holiday. Immediate resistance is located at 1.1454, a break above targets 1.1500. On the downside, support is seen at 1.1350, a break below could drag it near 1.1321 (61.8% retrace of 1.1119 and 1.1445).
USD/JPY: The dollar eased after rising to a 1-1/2 month high in the previous session on the back of stronger-than-expected rise in the June Institute of Supply Management national factory activity index. The renewed weakness comes in after North Korea launched a missile, which Tokyo said appeared to have landed in its Exclusive Economic Zone. The major traded 0.2 percent down at 113.11, having hit a high of 113.47 on Monday, its highest since May 16. FxWirePro's Hourly Yen Strength Index stood at -114.61 (Highly Bearish) by 0400 GMT. Investors’ will continue to track broad based market sentiment, amid holiday-thinned trading as the U.S. celebrates Independence Day today. Immediate resistance is located at 113.50, a break above targets 114.00. On the downside, support is seen at 112.87 (78.6% retracement of 110.67 and 113.47), a break below could take it near 112.51 (5-DMA).
GBP/USD: Sterling steadied after declining from a 5-week high in the prior session on weaker-than-expected data from Britain's manufacturing sector. The UK economy's manufacturing sector activity deteriorated sharply in the month of June, raising doubts whether the Bank of England will hike interest rates this year. Sterling traded 0.1 percent up at 1.2949, having hit a high of 1.3029 on Friday, its highest since May 23. FxWirePro's Hourly Sterling Strength Index stood at 46.59 (Neutral) by 0400 GMT. Investors’ focus will remain on the UK construction PMI reading and the BoE’s inflation report hearings before the Treasury Select Committee. Immediate resistance is located at 1.3000, a break above could take it near 1.3047 (May 18 High). On the downside, support is seen at 1.2907 (June 8 Low), a break below targets 1.2854 (June 5 Low). Against the euro, the pound traded 0.1 percent up at 87.73 pence, having hit a 7-month low of 88.79 on Thursday.
AUD/USD: The Australian dollar fell to a 1-week low after Reserve Bank of Australia left its cash rate at 1.5 percent, a widely expected decision given policy makers have signalled a steady outlook for much of the year ahead. However, upbeat domestic retail sales data provided some support to the Aussie bulls. The major trades 0.7 percent down at 0.7605, having hit a high of 0.7712 on Friday, it’s strongest since Mar. 21. FxWirePro's Hourly Aussie Strength Index stood at -140.42 (Highly Bearish) by 0500 GMT. Investors will continue to digest RBA announcement, with the U.S. markets closed in observance of Independence Day holiday. Immediate support is seen at 0.7584 (June 19 Low)), a break below targets 0.7535 (June 22 Low). On the upside, resistance is located at 0.7650, a break above could take it near 0.7720.
NZD/USD: The New Zealand dollar dropped, extending previous session losses, as crude oil prices eased from recent highs. The Kiwi trades 0.4 percent down at 0.7268, having touched a peak of 0.7346 on Friday, its strongest level since Feb. 2. FxWirePro's Hourly Kiwi Strength Index was at -139.52 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad based market sentiment, as the U.S. markets remain closed. Immediate resistance is located at 0.7300, a break above could take it near 0.7370. On the downside, support is seen at 0.7243 (21-DMA), a break below could drag it till 0.7213.
Equities Recap
Asian shares advanced amid slight risk-off sentiment, while the Australian dollar declined after Reserve Bank of Australia left its cash rate at 1.5 percent.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.3 percent.
Tokyo's Nikkei edged down 0.2 percent to 20,019.43 points, Australia's S&P/ASX 200 index rose 1.6 percent to 5,776.40 points and South Korea's KOSPI declined 0.7 percent to 2,378.83 points.
Shanghai composite index eased 0.5 percent to 3,180.00 points, while CSI300 index was trading 0.9 percent down at 3,617.94 points.
Hong Kong’s Hang Seng was trading 1.6 percent lower at 25,371.81 points. Taiwan shares shed 0.6 percent to 10,347.78 points.
Commodities Recap
Crude oil prices declined in early trade, halting an eight-day winning streak on signs that a continuous rise in U.S. crude production oversupplied markets. International benchmark Brent crude was trading 0.4 percent down at $49.35 per barrel by 0425 GMT, having hit a high of $48.68 the prior day, its strongest since Jun. 7. U.S. West Texas Intermediate traded 0.5 percent lower at $46.78 a barrel, after rising as high as $47.10 earlier, its strongest since Jun 6.
Gold prices steadied after declining to seven-week lows in the previous session, recording its biggest one-day percentage loss since November. Spot gold rose 0.2 percent to $1,222.20 per ounce at 0435 GMT, having touched a low of $1,218.37 an ounce on Monday, its weakest since May 11. U.S. gold futures for August delivery rose 0.4 percent to $1,224.10 per ounce.
Treasuries Recap
The Japanese government bonds disappointed as investors remained cautious ahead of the 30-year auction, scheduled to be held on July 6. Also, the 10-year auction, held earlier today failed to spur demand for safe-haven assets, leading to further sluggishness in the bond prices. The benchmark 10-year bond yield rose nearly 1 basis point to 0.06 percent, the long-term 30-year bond yields hovered around 0.82 percent and the yield on the short-term 2-year note traded nearly 1/2 basis point higher at -0.12 percent.
The Australian bonds sharply rebounded after the Reserve Bank of Australia (RBA) remained unchanged in its monetary policy decision, revealed today and maintained a lesser-than-expected hawkish tone of its underlying statement after major central banks pre-empted a hawkish sentiment across major global markets at an ECB forum early last week. The yield on the benchmark 10-year Treasury note slumped 5-1/2 basis points to 2.58 percent, the yield on 15-year note plunged 6 basis points to 2.94 percent and the yield on short-term 2-year also traded nearly 6 basis points lower at 1.70 percent.
The New Zealand bonds ended higher as investors wait to watch the country’s GlobaldairyTrade (GDT) price auction, scheduled to be held later today amid a silent trading week. At the time of closing, the yield on the benchmark 10-year bond slumped 2-1/2 basis points to 3.02 percent, the yield on 7-year note also plunged 2-1/2 basis points to 2.92 percent and the yield on short-term 2-year note ended 4 basis points lower at 2.08 percent.
