Market Roundup
- U.S. plans limits on Chinese investment in U.S. technology firms
- As trade war looms, China cuts some banks' reserve requirements to boost lending
- BOJ should continue powerful easing, guard against side effects - June meeting summary
- Support for Japan PM Abe rises, boosting shot at historic tenure
- U.S. to give North Korea post-summit timeline with 'asks' soon -official
- Merkel presses over migration as "European solution" fails
- UK ministers take aim at business over Brexit warnings
- Half of EU business leaders cut UK investment over Brexit - survey
- Turkey's Erdogan wins presidential election, opposition yet to concede
- Trump says illegal immigrants should be deported with 'no judges or court cases'
- U.S.-based money market funds post $51 bln net outflows for week -Lipper
- Speculators turn net long dollars for 1st time since July 2017-CFTC, Reuters
Economic Data Ahead
- (0830 ET/1230 GMT) The Federal Reserve Bank of Chicago will release its Chicago Fed National Activity Index (CFNAI) for the month of May. The index stood at 0.34 in the prior month.
- (1000 ET/1400 GMT) The U.S. new single-family home sales are expected to have gained 1.5 percent to a seasonally adjusted annual rate of 667,000 units in May after declining 1.5 percent to a seasonally adjusted annual rate of 662,000 units in April.
- (1030 ET/1430 GMT) The Dallas Fed releases its Manufacturing Business Index for the month of June. The index posted a rise of 26.8 percent in the previous month.
Key Events Ahead
- (0800 ET/1200 GMT) Introductory remarks by ECB VP Luis de Guindos at the Bond Market Contact Group organized by the ECB in Frankfurt
- (0815 ET/1215 GMT) Bank of Japan board member Makoto Sakurai speaks at a International Economic Seminar in Italy in Rome
- (0855 ET/1255 GMT) France E2.6-3.0/E0.6-1.0/E0.6-1.0 bln for 3/6/12 month auction
FX Beat
DXY: The dollar index eased, extending losses for the third straight session, after U.S. President Donald Trump on Friday called for a 20 percent levy on European Union-assembled car imports. The greenback against a basket of currencies trades 0.05 percent down at 94.48, having touched a high of 95.53 on Thursday, its highest since July 2017. FxWirePro's Hourly Dollar Strength Index stood at -85.11 (Slightly Bearish) by 1000 GMT.
EUR/USD: The euro retreated from 1-week peak hits in the previous session, after data showed German business confidence ebbed in June to its lowest in more than a year. Moreover, trade tensions between the United States and the European Union further dented the bid tone around the major. The European currency traded 0.1 percent down at 1.1641, having touched a low of 1.1508 on Thursday, its lowest since May 30. FxWirePro's Hourly Euro Strength Index stood at -0.04 (Neutral) by 1000 GMT. Immediate resistance is located at 1.1732 (June 5 Low), a break above targets 1.1750 (May 24 Low). On the downside, support is seen at 1.1608 (5-DMA), a break below could drag it till 1.1531 (June 19 Low).
USD/JPY: The dollar slumped to a fresh 2-week low against the Japanese yen on a report that U.S. President Donald Trump plans to block many Chinese companies from investing in U.S. technology firms and bar more tech exports to Beijing. The major was trading 0.4 percent down at 109.51, having hit a low of 109.37 earlier, its lowest since June 11. FxWirePro's Hourly Yen Strength Index stood at 70.95 (Bullish) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. new home sales change figures. Immediate resistance is located at 110.90 (June 15 High), a break above targets 111.08 (June 18 High). On the downside, support is seen at 109.19 (June 8 Low), a break below could take it lower 108.95 (May 24 Low).
GBP/USD: Sterling consolidated within a narrow range, as investors turned cautious ahead of a European Union summit. Last week, the major rallied to an over 1week peak as the Bank of England's more-hawkish-than-expected stance revived expectations of a rate hike this year. Sterling traded 0.05 percent down at 1.3254, having hit a high of 1.3314 the session before; it’s highest since June 14. FxWirePro's Hourly Sterling Strength Index stood at -15.79 (Neutral) 1000 GMT. Immediate resistance is located at 1.3307 (21-DMA), a break above could take it near 1.3389. On the downside, support is seen at 1.3216 (5-DMA), a break below targets 1.3150 (June 19 Low). Against the euro, the pound was trading 0.1 percent down at 87.94 pence, having hit a low of 88.08 pence earlier, it’s lowest since June 14.
USD/CHF: The Swiss franc rallied to a fresh 1-week peak as worries over a worsening trade dispute between the United States and other major economies triggered a risk-off sentiment across global markets. The major trades 0.1 percent down at 0.9878, having touched a low of 0.9869 earlier, it’s lowest since June 14. FxWirePro's Hourly Swiss Franc Strength Index stood at 97.06 (Slightly Bullish) by 1000 GMT. On the higher side, near-term resistance is around 0.9893 (21-DMA) and any break above will take the pair to next level till 0.9928 (5-DMA). The near-term support is around 0.9840 (June 13 Low) and any close below that level will drag it till 0.9825 (June 14 Low).
Equities Recap
European shares tumbled, weighed down by losses by autos, basic resources and tech stocks, while the euro declined after President Trump on Friday threatened to impose a 20 percent tariff on all cars imported from the European Union.
The pan-European STOXX 600 index slumped 1.2 percent at 380.49 points, while the FTSEurofirst 300 index plunged 1.2 percent to 1,488.15 points.
Britain's FTSE 100 trades 1.2 percent down at 7,587.08 points, while mid-cap FTSE 250 declined 0.8 percent to 20,845.53 points.
Germany's DAX fell 1.6 percent at 12,383.92 points; France's CAC 40 trades 0.9 percent lower at 5,336.24 points.
Commodities Recap
Crude oil prices slumped over 1.5 as investors prepared for an extra 1 million barrels per day in output to hit the markets after OPEC and non-OPEC partners agreed to increase production. International benchmark Brent crude was trading 1.8 percent down at $74.26 per barrel by 1034 GMT, having hit a low of $72.44 last week, its lowest since May 2. U.S. West Texas Intermediate was trading 1.0 percent down at $68.55 a barrel, after falling as low as $63.62 last week, its lowest since April 10.
Gold prices declined, weighed down by a strong U.S. dollar amid prospects of higher interest rates. Spot gold was 0.2 percent down at $1,266.77 an ounce as of 1040 GMT, having touched a low of $1,261.18 on Thursday, its lowest since Dec. 19, 2017. U.S. gold futures for August delivery were 0.3 percent lower at $1,266.60 per ounce.
Treasuries Recap
The U.S. 10-year Treasuries jumped during European trading hours, tracking fears of an ongoing trade war, spiked by the imposition of trade tariffs by President Donald Trump over China, EU and other trading partners as well. The yield on the benchmark 10-year Treasuries slumped nearly 2-1/2 basis points to 2.87 percent, the super-long 30-year bond yields slumped 1-1/2 basis points to 3.02 percent and the yield on the short-term 2-year traded nearly 2 basis points lower at 2.53 percent.
The German bunds gained during European session after the country’s Ifo business climate index disappointed market participants, coming in lower than market expectations. The German 10-year bond yields, which move inversely to its price, remained tad lower at 0.33 percent, the yield on 30-year note slid 1 basis point to 1.11 percent and the yield on short-term 3-year hovered around -0.58 percent.
The New Zealand bonds jumped at the time of closing as investors wait to watch the country’s trade balance data for the month of May and the Reserve Bank of New Zealand’s (RBNZ) monetary policy meeting, scheduled for June 26 and 27 by 22:45GMT and 21:00GMT respectively. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, slumped 2 basis points to 2.95 percent, the yield on the long-term 20-year note slumped 2-1/2 basis points to 3.27 percent while the yield on short-term 2-year closed flat at 1.92 percent.
The Japanese 10-year government bonds remained range-bound during Asian session amid a slew of global trade tensions initiated by the United States, in a bid to impose trade tariffs across all trading partners, mainly the EU and China. The yield on Japan’s benchmark 10-year bond, which moves inversely to its price, hovered around 0.03 percent, the yield on the long-term 30-year remained tad higher at 0.71 percent and the yield on short-term 2-year traded flat at -0.13 percent.
The Australian government bonds gained on the first trading day of the week after the latest signs of trade hostility between China and the US. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, fell 2 basis points to 2.633 percent, the yield on the long-term 30-year Note dipped 3-1/2 basis points to 3.123 percent and the yield on short-term 2-year down 1/2 basis point to 2.034 percent.
