Asia Roundup: Antipodeans near multi-month highs, yen eases on Japan's disappointing Merchandise trade balance, Brexit negotiations talks in focus – Monday, June 19th, 2017

Market Roundup

  • Britain and EU launch Brexit talks in Brussels
  • UK households turn gloomier as inflation bites -survey
  • Japan May trade deficit Y203.4 bln, Y76.0 bln surplus eyed
  • Exports +14.9% y/y, imports +17.8%, +16.1% and +14.8% eyed
  • Exports best since ’15, to US +11.6%, China +23.9%, Asia +16.8%
  • Japan May crude oil imports -13.5% y/y, LNG +13.0%, thermal coal -10.8%
  • Japan PM to reshuffle cabinet as ratings slump-media
  • China May new home prices +0.7% m/m vs +0.7% in Apr
  • China home prices y/y growth in May +10.4% vs Apr +10.7%
  • Australia May new vehicles sales +2.9% vs +0.3% in Apr
  • New Zealand's May S/A PSI rises to 58.8 from 53.2 in Apr -private survey
  • RBNZ seen holding rates steady next week –poll
  • Macron wins strong parliamentary majority, estimates show


Economic Data Ahead


  • No major economic events scheduled 

Key Events Ahead

  • N/A EU Foreign Affairs Council meeting in Luxembourg City
  • (0500 ET/0900 GMT) ECB's Lautenschlager speaks at a meeting on cyber resilience
  • (0900 ET/1400 GMT) ECB's Nouy speaks before the Committee on Economic and Monetary Affairs

FX Beat

DXY: The dollar eased across the board as investors remained cautious ahead of New York Fed President William Dudley speech later in the day. The greenback against a basket of currencies traded flat at 97.18, having touched a high of 97.56 last week, it’s highest since May 30. FxWirePro's Hourly Dollar Strength Index stood at -33.94 (Neutral) by 0500 GMT.

EUR/USD: The euro edged up following broad-based greenback selling, with investors awaiting comments by Federal Reserve official for clues on whether recent strength can be sustained. The European currency traded flat at 1.1197, having touched a low of 1.1132 on Thursday, its lowest since May 30. FxWirePro's Hourly Euro Strength Index stood at 5.74 (Neutral) by 0400 GMT. Investors’ attention will remain on Eurozone construction output, ahead of Fed William Dudley and Evan's speech for further clues on the pair. Immediate resistance is located at 1.1216 (10-DMA), a break above targets 1.1269 (June 8 High). On the downside, support is seen at 1.1132 (June 15 Low), a break below could drag it near 1.1100.

USD/JPY: The dollar rose against the Japanese yen after Japan's Merchandise Trade balance data showed a surprise deficit of ¥-203.4 billion for May as compared to a surplus of ¥76.0 billion expected and previous month's ¥481.1 billion. Moreover, the prevalent risk-on sentiment around Asian equity markets further dented demand for traditional safe-haven assets. The major traded 0.1 percent up at 110.94, rebounding from a low of 108.81 touched on Wednesday, its lowest since Apr. 20. FxWirePro's Hourly Yen Strength Index stood at -107.18 (Highly Bearish) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of Fed William Dudley and Evan's speech. Immediate resistance is located at 111.41 (June 16 High), a break above targets 112.00. On the downside, support is seen at 110.40 (61.8 % retracement of 108.81 and 111.41), a break below could take it near 110.09 (50.8 % retracement).

GBP/USD: Sterling edged down as Britain's Prime Minister Theresa May is due to start Brexit negotiations with the European Union today. The likelihood of a ‘Hard Brexit’ has eased significantly after the elections of June 8 left the Conservatives as the largest party with no majority. Sterling traded down at 1.2774, having hit a low of 1.2635 earlier in the month, its weakest since Apr 18. FxWirePro's Hourly Sterling Strength Index stood at 23.21 (Neutral) by 0400 GMT. Investors’ focus now shifts on the Brexit negotiations, ahead of Fed officials' speech scheduled later in the day. Immediate resistance is located at 1.2807 (50.0% retrace of 1.2977 and 1.2365), a break above could take it near 1.2847 (38.2% retrace). On the downside, support is seen at 1.2700, a break below targets 1.2635. Against the euro, the pound traded flat at 87.63 pence, having hit a 1-week high of 87.19 on Friday.

AUD/USD: The Australian dollar consolidated near 2-1/2-month highs touched last week after RBA governor Philip Lowe expressed confidence economic activity will gain momentum, citing a recovery in global growth and strength in employment. The Aussie trades up at 0.7617, having hit a high of 0.7635 on Wednesday, it’s strongest since Apr 3. FxWirePro's Hourly Aussie Strength Index stood at 53.69 (Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of Fed officials' speech. Immediate support is seen at 0.7600, a break below targets 0.7572 (5-DMA). On the upside, resistance is located at 0.7635 (June 14 High), a break above could take it near 0.7662 (Mar 31 High).

NZD/USD: The New Zealand dollar rose towards a 4-1/2 month high as investors await the Reserve Bank of New Zealand's rate decision on Thursday, where it is expected to keep rates at a record low 1.75 percent. The Kiwi trades 0.4 percent up at 0.7276, having touched a peak of 0.7319 on Wednesday, its strongest level since Feb. 8. FxWirePro's Hourly Kiwi Strength Index was at 5.91 (Neutral) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of Fed officials’ speech. Immediate resistance is located at 0.7300, a break above could take it near 0.7350. On the downside, support is seen at 0.7229 (5-DMA), a break below could drag it till 0.7171 (June 12 Low).

Equities Recap

Asian shares rose following upbeat Chinese house price data, while sterling steadied after a van rammed into worshippers leaving a mosque in London, while markets braced for the start of Brexit negotiations

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.5 percent.

Tokyo's Nikkei rose 0.6 percent to 20,061.19 points, Australia's S&P/ASX 200 index advanced 0.5 percent to 5,805.20 points and South Korea's KOSPI climbed 0.3 percent to 2,370.10 points.

Shanghai composite index gained 0.5 percent to 3,139.75 points, while CSI300 index was trading 0.7 percent up at 3,546.06 points.

Hong Kong’s Hang Seng was trading 1.1 percent higher at 25,885.11 points. Taiwan shares added 0.9 percent to 10,250.60 points.

Commodities Recap

Crude oil prices declined after falling to a 2-week low in the previous session, weighed down by high supplies despite an OPEC-led initiative to cut production to tighten the market. International benchmark Brent crude was trading 0.1 percent down at $47.22 per barrel by 0413 GMT, having hit a low of $46.75 on Thursday, its weakest since May 5. U.S. West Texas Intermediate traded 0.1 percent down at $44.58 a barrel, after falling as low as $44.22 on Thursday, its lowest since May 5.

Gold prices declined to a fresh 3-week as markets awaited comments by Federal Reserve official for clues on whether recent strength can be sustained, after last week's soft economic data. Spot gold was down 0.1 percent at $1,252.72 per ounce, as of 0421 GMT, having hit its weakest since May 24 at $1,250.97 earlier. U.S. gold futures for August delivery fell 0.2 percent to $1,254 per ounce.

Treasury Recap

The 10-year U.S Treasury yield stood at 2.174 percent lower by 0.002 bps, while 5-year yield at 1.746 percent.

The Australian bonds traded flat at the start of the trading week tracking mild movement in the U.S. counterpart amid a softer trading week. The yield on the benchmark 10-year Treasury note rose close to 1 basis point to 2.43 percent, the yield on 15-year note hovered around 2.78 percent while the yield on short-term 2-year traded 1 basis point higher at 1.69 percent.

The New Zealand bonds remained mixed at the time of closing Monday as investors are eyeing the GlobalDairyTrade (GDT) price auction, scheduled to be held on June 20. At the time of closing, the yield on the benchmark 10-year bond fell 1 basis point to 2.78 percent, the yield on 7-year note hovered around 2.68 percent and the yield on short-term 2-year note jumped 2-1/2 basis points to 1.98 percent.

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