FX News Today
Asian Market Wrap: 10-year Treasury yields lost earlier gains and are unchanged at 2.877%, 10-year JGB yields are up 0.3 bp at 0.027%, while yields elsewhere mostly declined as stocks struggled for direction with trade concerns continuing to hang over markets. Japanese indexes moved up from lows and are at -0.21% and -0.07% respectively. The Hang Seng meanwhile is down -0.73% and the CSI 300 down -1.59% as the Yuan continued to weaken offshore amid fears that China’s liquidity squeeze will lead to corporate bond defaults in 2H, and the drive for deleveraging is limiting lending and pushing up borrowing costs. Energy companies were supported by an ongoing rise in oil prices. The front-end USOil future rose to a high of USD 70.98, and is currently at USD 70.71 per barrel, amid reports the US is pushing allies to halt imports of Iranian crude. US stock futures are also down.
FX Update: USDJPY has traded moderately lower, back under 110.00, after posting a three-session peak at 110.22. The pair was lifted by post-Tokyo fix demand, rising to 110.20, before selling overwhelmed and turned the Dollar lower. The Yen is also firmer against other currencies as stock markets ebb back again after yesterday’s reprieve. AUDJPY, a cross with relatively high beta characteristics that has been sensitive to the deepening trade spat, is down over 0.3%, earlier printing an eight-day low at 80.81. As for USDJPY, the pair is about at the halfway mark of the broadly sideways range that’s been seen over the last six weeks. USDJPY has Resistance at 110.20-22, levels which encompass recent daily highs. The net directionless path is illustrated by the flat profiles of both the 20- and 50-day moving averages, which are presently sandwiching prevailing levels, being respectively situated at 110.05 and 109.65. Fundamentally the picture would be a bullish one (divergent Fed versus BoJ policy paths) were it not for the safe-haven premium being installed in the Japanese currency amid the backdrop of rising trade protectionism.
Charts of the Day
Main Macro Events Today
- BoE Governor Carney Speech – Scheduled Press Conference following the the publication of the Financial Stability Report at 08:30 GMT
- US Durable Goods Orders – Expectations – Likely to inch up to -1.0% in May from -1.6% in April. Core Orders expected to sink to 0.5% from 0.9% last time
- FOMC Members Quarles and Rosengren Speech
- BoC Governor Poloz Speech – Scheduled for 19:00 (text released 15 minutes earlier) speech regarding Transparency and Understanding
- RBNZ Interest Rate Decision & Statement – No Change to rates expected and “timing of any change dependent on how the economy develops” no change in statement
Support and Resistance Levels
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