The expected weekend news of the US-China trade truce triggered some opening gap across the financial markets in Asia this Monday, with the safe-havens Gold and the Yen sold-off into the improvement in the trade sentiment. However, the skepticism over how far the trade ceasefire will last combined with weak Asian manufacturing sector activity reports kept the trade optimism in check.
The USD/JPY pair jumped to 108.50 levels but quickly lost ground to 108.10 lows before bouncing back towards 108.30 levels. The Aussie hit 7-week tops at 0.7035 and then slipped to near 0.70 handle following disappointing Chinese Caixin manufacturing PMI and RBA rate cut expectations. The Kiwi followed suit and reversed from 0.6730 highs. Meanwhile, both the European currencies, the Euro and the pound lost ground amid broad-based US dollar strength, led by the rally in Treasury yields.
On the commodities’ front, Gold prices on Comex struggled to fill the bearish opening gap and remained around 1395 region while both crude benchmarks consolidated the early gains to multi-week tops ahead of the OPEC + meeting, starting later today.
Main Topics in Asia
Trump and Xi Agree to a Second Trade Truce
Long road ahead for deal with US post-trade truce – China Press
Russia’s Novak: Russia, Saudi deal shows commitment to oil market stability, focus on OPEC meeting
US Pres. Trump meets N. Korea’s Kim, says “It’s a great day for the world”
Gold aims to fill in the gap to $1400 as traders ascertain risk sentiment
WTI retraces from 5-week top as supply concerns, geopolitics question trade optimism
RBNZ’s Bascand & Macroprudential Policy: Past, Present And Future – full speech
Iraq’s oil minister: Prices are on the low side, $70 plus is a good price
China’s Caixin manufacturing PMI slips into contraction at 49.4 in June, Aussie gives up 0.70
EU top jobs consideration: Timmermans for the commission, EPP (Weber) for the Parliament – FT
NZ Treasury: Lead indicators of activity pose a downside risk to near term growth forecasts
Japan to tighten curbs on tech exports to South Korea – Reuters
Iran’s OilMin: “Some OPEC member countries have adopted path of hostility with our nation”
Indonesia’s CPI rises 3.28% y/y in June, beats estimates (IDR uninspired)
Asian stocks show mixed reaction to US-China trade truce
Key Focus Ahead
Following a busy weekend, markets gear up for a busy start to a brand-new week, with the EUR macro calendar filled with a slew of manufacturing PMI reports from across the Euro area and the UK the will be dropping in from 0715 GMT. The German and Eurozone employment numbers alongside the credit growth data will also gain markets’ attention. The main influencing factor for the Euro is expected to be the decision on the EU’s to jobs while the USD dynamics will also play a pivotal role.
In the NA session, the US manufacturing PMI releases, both from ISM and Markit, around 1400 GMT will hog the limelight while development around the US-China trade front will also keep the markets entertained. Apart from the data, the speeches by the ECB policymakers, UK political headlines and development around the OPEC meeting will be closely eyed.
EUR/USD pressured amid EU top jobs indecision; Eurozone/US PMIs eyed
The EUR/USD pair remains under pressure around the midpoint of the 1.13 handle amid a rally in the US Treasury yields and a lack of consensus om the EU top jobs, as we progress towards the European opening bells.
GBP/USD clings to 21-D EMA ahead of UK manufacturing PMI
With the global traders re-thinking on how the US-China could go along after the recent trade truce, coupled with observing the UK political plays, the GBP/USD pair trades modestly flat near 1.2700 while heading into the London open.
EU Markit Manufacturing PMI Preview: doom and gloom not yet over
On Monday, Markit will release the final versions of its manufacturing PMI for June, included those of the Euro area. The preliminary estimates released early June brought some relief to the shared currency.
US Manufacturing PMI Preview: Trade is the measure of all things
The purchasing managers’ index (PMI) for the manufacturing sector is predicted to drop slightly to 51.0 in June May from 52.1 in May. The prices paid index is expected to fall to 53.1 from 53.2.
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