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Tuesday 20th June: European Open Briefing

Global Markets:

  • Asian stock markets: Nikkei up 1.10 %, Shanghai Composite gained 0.05 %, Hang Seng fell 0.15 %, ASX 200 lost 0.50 %
  • Commodities: Gold at $1246 (+0.05 %), Silver at $16.50 (+0.10 %), WTI Oil at $44.50 (+0.15 %), Brent Oil at $47.00 (+0.20 %)
  • Rates: US 10-year yield at 2.19, UK 10-year yield at 1.03, German 10-year yield at 0.29

News & Data

  • Australia House Price Index q/q 2.2 % vs 2.2 % expected
  • Australia ANZ-Roy Morgan Weekly Consumer Confidence: 112.4 (prior 112.9)
  • Japan Tankan Manufacturers Index +26 (prior +24)
  • New Zealand ANZ Roy Morgan Consumer Confidence +3.1% m/m (prior +1.8%)
  • Fed’s Evans says worth waiting until year-end to assess next rate hike – RTRS
  • Asia shares near two-year high as U.S. hi-tech rebound boosts mood – RTRS
  • Oil prices hold near seven-month lows, glut keeps dragging – RTRS

RBA Meeting Minutes:

  • Appropriate to keep accommodative stance of policy unchanged
  • Watching labour and housing markets carefully
  • House prices rising briskly in some markets, tentative signs pressure starting to ease
  • Wage growth to remain low for some time, noted isolated reports of higher pay deals
  • Recent faster pace of jobs growth to continue, but underemployment still high
  • GDP growth to accelerate to 3 % over time, despite soft Q1
  • Repeats a rising A$ would complicate economic adjustment

Markets Update:

USD/JPY extended gains in Asia, as the rally in stock markets continued. The pair reached a high of 111.78 so far, and is likely to test 112 resistance soon. Should price break above that level, there is little resistance until 113.

The US Dollar regained some strength against the other major currencies as well. EUR/USD is under pressure after another failure at 1.12, although losses have been limited to 1.1140 so far. Overall, more consolidation seems likely.

The Pound is likely to remain weak, as the Brexit negotiations will weigh on the currency. Key support is noted at 1.2640, followed by 1.25. To the topside, resistance is seen at 1.2780 and 1.2820.

AUD/USD is consolidating, but not showing any signs of weakness yet. As long as the pair can hold above 0.7520 support, the outlook is mildly positive.

Upcoming Events:

  • 09:00 BST – Euro Zone Current Account
  • 13:00 BST – FOMC Member Fischer speaks
  • 13:30 BST – US Current Account
  • 20:00 BST – FOMC Member Kaplan speaks

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