Market Roundup
- GBP/USD +0.08%, USD/JPY +0.02%, EUR/USD -0.12%
- DXY -0.03%, DAX -0.17%, Brent +0.45%, Iron -4.05%
- EZ Jul Sentix Idx 1.7 vs 9.9 previous, 5.0 exp
- Swiss sight domestic bank deposits CHF430.337 bln vs 423.466 bln previous
- UK Jun Construction PMI 46.0 vs 51.2 previous, 50.5 exp
- EZ May Producer Prices -3.9% y/y vs -4.4% previous, -4.1% exp
- UK UKIP’s Farage says done his bit, he will stand down
- David Smith in Sunday Times-Carney faces a battle to head off recession
- Sunday Telegraph-Britain hit by Brexit negotiator crisis.
- Australian election cliff-hanger leaves nation in limbo, vote close
- Australian political deadlock puts AAA rating at risk
- US 30-year Treasury yield hits lowest since 1950s as bond rally
- Brexit puts London’s offshore renminbi lead under threat – IFR.
- Brexit triggers surprise emerging market asset rally
- BoJ Jun Tankan – Jpn firms see CPI +0.7% yr from now, previous +0.8%
- CFTC IMM CTA data - Specs cut GBP shorts, USD longs post-Brexit
Economic Data Ahead
- (0930 ET/1330 GMT) The RBC will release Canada's Manufacturing PMI for the Month of June. The indicator stood at 52.1 in the prior month.
- (1030 ET/1430 GMT) The Bank of Canada will release its business outlook survey.
- (1800 ET/2200 GMT) The New Zealand Institute of Economic Research will release its Business Confidence Report for the second quarter. The index stood at 2 percent in the previous quarter.
- (1930 ET/2330 GMT) The Australian Industry Group reports it Performance of Service Index for the month of June. The index came in at 51.5 in May.
Key Events Ahead
- No Significant Events Scheduled
FX Beat
USD: The dollar index, against a basket of currencies trades lower at 95.61, hovering towards a low of 95.41 touched in the previous session.
EUR/USD: The euro edged up on the back slight risk aversion and mixed Eurozone data. However, the gains in the major were capped as markets remain wary on Brexit uncertainty, keeping it undermined across the board. Eurozone's May producer price index rose to 0.6 percent versus consensus 0.3 percent and previous -0.3 percent, while sentix investor confidence for May declined to 1.7 from prior 9.9. The pair trades flat at 1.1136, having touched an early low of 1.1097. The short term trend is slightly bullish as long as support 1.1000 holds. The major resistance is around 1.1188 and any break above 1.1188 will take the pair to next level till 1.1235 (61.8% retracement of 1.14278 and 1.109119)/1.1300. On the lower side any break below 1.100 will drag it till 1.0970 (Ju-27 Low) / 1.0900 (161.8% retracement of 1.14155 and 1.0971/1.0834 (61.8% retracement of 1.10852 and 1.09119). The minor support is around 1.1050.
USD/JPY: The greenback struggles to gain 103 level, as market continues to remain cautious over the political and economic uncertainty surrounding the Brexit decision. It initially rose from prevailing risk-on sentiment; however, it failed to sustain gains as risk sentiment deteriorated. The major trades between a tight range of 102.42-102.80. It will continue to track sentiments around equity markets, as U.S. markets remain closed in observance of Independence Day. The short term trend is slightly bearish as long as resistance 103.50 holds. The minor resistance is around 103.50 and any break above confirms minor trend reversal, a jump till 105/105.80 is possible. On the lower side, minor support is around 101.40 and any break below 101.40 will drag the pair till 100/98.80/98.
GBP/USD: Sterling bounced back after declining on downbeat construction sector PMI data, which suffered its worst contraction in seven years in the run up to the Brexit vote. Britain's construction PMI for the month of June slumped to 46.0 against consensus of 50.5 and previous 51.2. Sterling trades 0.3 percent higher at 1.3286, slightly off from last week's 31-year lows. Against the euro, the pound trades 0.1 percent up at 83.77 pence despite a fall after the data. On the higher side major resistance is around 1.3500 and any break above 1.3500 will take the pair till 1.3650/ 1.3800/ 1.4000. On the lower side any break below 1.3200 will drag it till 1.3110/ 1.3020.
USD/CHF: The Swiss franc edged down after rising for the previous three sessions. The greenback rose 0.1 percent to 0.9740, pulling away from a low of 0.9710 touched in the previous session. The short term trend is bearish as long as resistance 0.9840 holds. On the higher side, any break above 0.9840 will take the pair to next level till 0.99075/0.9960 level. The minor resistance is around 0.9780/0.9800. The major short term support is around 0.9700 and any break below targets 0.9670/0.9630/0.9580. Overall bullish invalidation is only below 0.9500 level.
AUD/USD: The Australian dollar extended gains above the 0.7500 level, despite opening with a bearish gap after Australia's general election during the weekend, produced no clear winner. The Aussie trades 0.4 percent higher at 0.7526, well off 0.7446 struck earlier in the session. Markets now await RBA monetary policy decision on Tuesday, which is expected to keep interest rate unchanged at record low 1.75 percent. On the higher side any break above major resistance will take the pair till 0.7580/0.7635. The major support is around 0.7420 and break below will drag the pair till 0.7370/0.7320/0.7280.
NZD/USD: The New Zealand dollar continues to rise for the fifth consecutive session, supported by persistent risk-on market profile. The Kiwi trades 0.5 percent higher at 0.7203, attempting to sustain gains above the 0.7200 level. Markets now await NZIER Business Confidence data for the second quarter and Global Dairy Auction for further momentum on the major. Immediate resistance is located 0.7231, break above targets 0.7271. On the lower side, support is seen at 0.7158 (Session Low).
Equities Recap
European shares edged lower after rising in early deals, as investors sentiments were weighed down by worries about the political and economic outlook in Europe.
Europe's FTSEurofirst 300 pares gains to trade 0.1 pct lower, Stoxx 600 fell 0.3 pct, Germany's DAX lost 0.2 pct, France's CAC slumped 0.4 pct and Britain's FTSE 100 edged down 0.04 pct.
Tokyo's Nikkei rose 0.60 pct at 15,775.80, Australia's S&P/ASX 200 index gained 0.52 pct at 5,273.70 points and South Korea's Kospi 200 added 0.47 pct.
Shanghai composite index climbed 1.9 pct at 2,988.60 points, while CSI300 index advanced 1.6 pct at 3,204.70 points. Hong Kong Hang Seng index rose 1.3 pct at 21,059.20 points.
Commodities Recap
Oil prices edged down, as investors wary on signs of slowing demand in Asia, despite comments from the Saudi energy minister that the market was heading towards balance. Brent crude oil was trading flat at $50.56 per barrel at 1023 GMT, while U.S. crude was down 1 percent at $49.14.
Gold gained, nearing last week's two-year high as political turmoil following Britain's vote to leave the European Union continued to hurt market sentiments. Spot gold was up 0.7 percent at $1,351.37 an ounce at 1027 GMT, while U.S. gold futures for August delivery were up $13.30 an ounce at $1,352.30. Silver was up 3.0 percent at $20.32 an ounce, breaking the $20-dollar level for the first time in nearly two years.
Treasuries Recap
The U.S. markets closed for the Independence Day holiday
The Eurozone periphery government bond yields rose for the first time in more than a week as investors took prices down to make room for some 20 billion euros of bond supply from the region this week, halting a post-Brexit slide in yields. The French 10-year bunds yield rose 2 basis points to 0.179 percent, Italian equivalents inched higher 4 basis points to 1.263 percent, Netherlands 10-year bonds yield jumped 1 basis point to 0.072 percent and the Spanish 10-year bonds yield bounced nearly 3 basis points to 1.173 percent.
The UK 10-year gilt yield dropped to a new record low of 0.78 percent, following the BoE's pre-announcement of rate cuts on Friday, but we reckon it will trade in a 0.80 to 1.00 percent range for a while, with the risks to the downside. The yield on the benchmark 10-year gilts rose 1 basis point to 0.876 percent, yield on super-long 30-year bonds climbed 1/2 basis point to 1.683 percent.
The German 10-year bund yield following an early-Friday-morning spike hovered between -0.14 to -0.10 percent range, which should prevail for short term basis in quiet trade. A downward bias comes from UK spillover as well as US 10-year Treasury yield trading below 1.50 and having tested their record lows from 2012 during Friday. The yield on the benchmark 10-year bond rose 1/2 basis points to -0.121 percent, yield on super-long 30-year bonds jumped 2-1/2 basis points to 0.419 percent and the yield on short-term 2-year note dipped 1 basis point to -0.659 percent.
The New Zealand government bonds ended modestly firmer. The yield on benchmark 10-year bond fell 1-1/2 basis point to 2.370 percent in the end session, yield on 7-year note also dipped 1/2 basis point to 2.090 percent and the yield on short-term 2-year note ended steady at 2.045 percent.
The Japanese government bonds traded modestly firmer after companies' inflation expectations fell slightly in June from three months ago, keeping the central bank under pressure for further stimulus. The yield on the benchmark 10-year bonds fell ½ basis points to -0.253 percent, short-term 2-year JGB yield dipped to record -0.34 percent, JGB 5-year yield tumbled to record low of -0.375 percent, super-long 40-year bonds slid more than 1 basis point to 0.123 percent and the yield on 30-year JGB slid 1 basis point to 0.095 percent.
The Australian government bonds slumped as investors awaited the Reserve Bank of Australia monetary policy decision, scheduled to take place on Tuesday. The yield on the benchmark 10-year Treasury note rose 2-1/2 basis points to 1.999 percent and the yield on short-term 2-year note also jumped 2-1/2 basis points to 1.601 percent.
