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Home » Blogs » Asia roundup: Kiwi hits 6-month low on soft Q1 GDP, Dollar index at 11-month peak as U.S. treasury yields rebound, investors eye BOE policy decision – Thursday, June 21st, 2018

Asia roundup: Kiwi hits 6-month low on soft Q1 GDP, Dollar index at 11-month peak as U.S. treasury yields rebound, investors eye BOE policy decision – Thursday, June 21st, 2018

Asia roundup: Kiwi hits 6-month low on soft Q1 GDP, Dollar index at 11-month peak as U.S. treasury yields rebound, investors eye BOE policy decision – Thursday, June 21st, 2018

 

Market Roundup

  • China warns Washington’s trade actions will hurt U.S. workers, farmers
  • Iran may agree increase in OPEC oil output – minister
  • Euro zone to decide on Greek debt relief as bailout exit nears
  • U.S. identifies N.Korea missile test site it says Kim committed to destroy
  • Trump backs down on separating immigrant children, legal problems remain
  • BOJ’s Funo calls for strong easing to hit 2 pct inflation as prices weak
  • New Zealand Q1 GDP Production QQ, 0.5%, f’cast 0.5%, last 0.6%
  • New Zealand Q1 GDP-Annual-Avg, Prod-Basis, 2.7%, f’cast 2.8%, last 2.9%, rvsd 2.8%

Economic Data Ahead

  • (0245 ET/0645 GMT) France Jun Business Climate Mfg, f’cast 108, last 109
  • (0700 ET/1100 GMT) Great Britain Jun BoE Bank Rate, f’cast 0.50%, last 0.50%
  • (0700 ET/1100 GMT) Great Britain Jun BoE MPC Vote Unchanged, f’cast 7, last 7
  • (0700 ET/1100 GMT) Great Britain Jun BoE MPC Vote Hike, f’cast 2, last 2
  • (1000 ET/1400 GMT) EZ Jun Consumer Confidence Flash, f’cast 0.0, last 0.20

Key Events Ahead

  • (0315 ET/0715 GMT) Deutsche Bundesbank’s Joachim Wuermeling speaks on “Financial markets in the name of monetary policy normalization” – Stuttgart
  • (0330 ET/0730 GMT) Swiss National Bank Monetary policy assessment with news conference – Bern
  • (0400 ET/0800 GMT) Norway Central Bank announces Executive Board’s interest rate decision and publication of Monetary Policy – Oslo
  • (0545 ET/0945 GMT) Deutsche Bundesbank’s Jens Weidmann speaks at Bank of France and Bundesbank joint conference – Paris
  • (0700 ET/1100 GMT) BoE announces rate decision and publishes minutes of meeting – London
  • (0845 ET/1245 GMT) ECB’s Daniele Nouy speaks at De Nederlandsche Bank conference – Amsterdam
  • (0900 ET/1300 GMT) Fed’s Neel Kashkari participates in African Development Center event – Minneapolis
  • (1100 ET/1500 GMT) Finance ministers of EZ countries meet to decide possible new debt relief measures for Greece – Luxembourg City
  • (1115 ET/1515 GMT) Panel discussion with Deutsche Claudia Buch at Bank of France and Bundesbank joint conference – Paris
  • (1230 ET/1630 GMT) Polish central bank governor Adam Glapinski speaks on economic situaion in Poland – Brussels
  • (1400 ET/1800 GMT) British Finance Minister Philip Hammond and BoE’s Mark Carney make their annual Mansion House speeches – London
  • (1615 ET/2015GMT) BoE’s Mark Carney speaks at Lord Mayor’s Bankers and Merchants Dinner – London
  • N/A ECB’s Mario Draghi and Benoit Coeure participate in Eurogroup meeting – Luxembourg City

FX Beat

DXY: The dollar index rallied to a fresh 11-month peak as the U.S. Treasury yields rebounded from recent lows. The greenback against a basket of currencies trades 0.2 percent up at 95.32, having touched a high of 95.33, its highest since July 2017. FxWirePro’s Hourly Dollar Strength Index stood at 132.51 (Highly Bullish) by 0500 GMT.

EUR/USD: The euro declined, extending losses for the third straight session, as the European Central Bank Governing Council member Nowotny’s comments continued to weigh negatively on the euro. Moreover, divergent monetary policy outlooks between the Federal Reserve and global central banks dented investor sentiment. The European currency traded 0.1 percent down at 1.1561, having touched a low of 1.1531 on Tuesday, its lowest since May 30. FxWirePro’s Hourly Euro Strength Index stood at 39.75 (Neutral) by 0500 GMT. Investors’ attention will remain on the U.S. unemployment benefits claims, amid a lack of economic data from the Eurozone docket. Immediate resistance is located at 1.1600, a break above targets 1.1644 (June 19 High). On the downside, support is seen at 1.1510 (May 29 Low), a break below could drag it till 1.1434 (July 2017 Low).

USD/JPY: The dollar rallied to a 6-day peak against the Japanese yen as the long-term U.S Treasury yields bounced back from 3-week lows after Federal Reserve Chairman Jerome Powell said that the U.S. central bank should continue with a gradual pace of rate hikes The major was trading 0.3 percent up at 110.73, having hit a low of 109.55 on Tuesday, its lowest since June 11. FxWirePro’s Hourly Yen Strength Index stood at -59.65 (Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. unemployment benefits claims. 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 109.96 (June 12 Low), a break below could take it lower 109.55 (June 19 Low).

GBP/USD: Sterling slumped to a 7-month low ahead of the Bank of England’s policy-setting meeting later in the day, where it is expected to stand pat on policy. However, investors will scrutinize the policy statement for clues on the possibility of rate increases at the next policy meetings in August and December. The major traded 0.2 percent down at 1.3144, having hit a low of 1.3143 earlier; it’s lowest since Nov 15. FxWirePro’s Hourly Sterling Strength Index stood at -54.24 (Bearish) 0500 GMT. Investors’ attention will remain on the BoE interest rate decision, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.3224 (5-DMA), a break above could take it near 1.3307 (10-DMA). On the downside, support is seen at 1.3130 (Nov.15 Low), a break below targets 1.3110 (Oct. 25 Low). Against the euro, the pound was trading 0.1 percent down at 87.91 pence, having hit a low of 88.01 pence the day before, it’s lowest since June 14.

AUD/USD: The Australian dollar eased, extending losses for the sixth straight session, as the Reserve Bank of Australia’s Governor Philip Lowe sounded cautious on the outlook for a rise in wages at a central bank event in Portugal on Wednesday. The Aussie trades 0.2 percent down at 0.7354, having hit a low of 0.7347 on Tuesday; it’s lowest since June 2017. FxWirePro’s Hourly Aussie Strength Index stood at -42.97 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7347 (June 19 Low), a break below targets 0.7328 (May 28, 2017, Low). On the upside, resistance is located at 0.7427 (June 19 High), a break above could take it near 0.7480.

NZD/USD: The New Zealand dollar tumbled to a 6-month low after NZ government data confirmed the economy was slowing and inflation remained too low for comfort, raising doubts for a rise in interest rates for months to come. New Zealand’s economy grew a modest 0.5 percent in the first quarter, while annual growth edged back to 2.7 percent. The Kiwi trades 0.4 percent down at 0.6832, having touched a low of 0.6827, its lowest level since Dec. 8. FxWirePro’s Hourly Kiwi Strength Index was at -131.75 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6880, a break above could take it near 0.6916 (June 20 High). On the downside, support is seen at 0.6818 (Oct. 27 Low), a break below could drag it below 0.6780 (Nov. 17 Low).

 

Equities Recap

Asian shares edged up amid rising tensions in the oil market ahead of an OPEC meeting that could expand the supply of crude, while sterling fell to a 7-month low as investors awaited the Bank of England’s policy meeting outcome.

MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.4 percent.

Tokyo’s Nikkei rose 0.6 percent to 22,693.04 points, Australia’s S&P/ASX 200 index gained 0.9 percent to 6,232.10 points, and South Korea’s KOSPI eased 0.9 percent to 2,343.50 points.

Shanghai composite index declined 0.9 percent to 2,890.67 points, while CSI300 index was trading 0.6 percent down at 3,611.59 points.

Hong Kong’s Hang Seng was trading 1.1 percent lower at 29,376.46 points. Taiwan shares added 0.1 percent to 10,941.07 points.

 

Commodities Recap

Crude oil prices declined amid robust U.S. fuel demand seen in record refinery runs, strong travel data and a large drop in crude inventories. International benchmark Brent crude was trading 0.2 percent up at $74.30 per barrel by 0449 GMT, having hit a low of $72.44 Monday, its lowest since May 2. U.S. West Texas Intermediate was trading 0.2 percent up at $65.47 a barrel, after falling as low as $63.62 on Monday, its lowest since April 10.

Gold prices slumped to a fresh 6-month low as the dollar hovered near an 11-month high against a basket of currencies, supported by a rise in U.S. yields. Spot gold was 0.2 percent down at $1,265.74 an ounce by 0455 GMT, having touched a low of $1,264.74 earlier, its lowest since Dec. 22. U.S. gold futures for August delivery were down 0.3 percent at $1,271.30 per ounce.

 

Treasuries Recap

The 10-year U.S Treasury yield stood at 2.937 percent higher by 0.009 bps, while 5-year yield was 0.013 bps up at 2.809 percent.

The Japanese 10-year government bonds remained tad lower during late Asian session as investors remained side-lined in a muted trading day ahead of the country’s national consumer price inflation (CPI) for the month of May, scheduled to be released today by 23:50GMT. The yield on Japan’s benchmark 10-year bond, which moves inversely to its price, rose 1/2 basis point to 0.04 percent, the yield on the long-term 30-year also remained tad higher at 0.72 percent and the yield on short-term 2-year traded nearly 1 basis point higher at -0.12 percent.

The Australian government bonds plunged as concerns simmered about an escalation of a trade war between the U.S. and China. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, rose 4 basis points to 2.690 percent, the yield on the long-term 30-year Note climbed 2 basis points to 3.188 percent and the yield on short-term 2-year up 2-1/2 basis points to 2.075 percent.

The Canadian government bond prices were mixed across the yield curve, with the two-year flat to yield 1.846 percent and the 10-year falling 18 Canadian cents to yield 2.182 percent. The 2-year yield fell 2.1 basis points further through its U.S. equivalent to a spread of -72.0 basis points, its widest since March 2007.

Source: FXWire Media Round Ups

 

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