The expectations of an optimistic outcome from the Trump – Kim Summit drove the sentiment across the fx space in Asia this Tuesday, pushing the greenback to a four-day higher against its six major peers. The Summit kicked-off on a positive note, with both the leaders talking about peace and hoping for a successful meeting. This helped push the safe-haven Yen lower while the reports that exporters resorted to JPY selling also collaborated to the upside in USD/JPY. Although further gains remained capped after the Yen derived some support on Kim’s avoidance of the question on denuclearization.
Meanwhile, the Aussie shrugged-off downbeat NAB business outlook surveys, as risk-on trades in the Asian equities lifted the sentiment around the higher-yielding AUD, with the Kiwi also following suit. On the commodities’ front, both oil and gold prices traded on the defensive, as investors look forward to the developments from Trump- Kim working lunch that just got done at Singapore Summit.
Main topics in Asia – It’s all about the US – N. Korea Summit
Trump seeks a complete and verifiable denuclearization of the Korean peninsula while Kim is looking for the sanctions on the North to be eased.
Japan’s Kono: Depending on US-N. Korea Summit, Japan-US-S. Korea meeting likely
Comments from the Japanese Foreign Minister Kono crossed the wires just a few minutes ahead of the much-anticipated meeting between Trump and North Korea’s leader Kim Jong-Un meeting.
Kim Jong-Un: “Road to talks was not easy, we are here after overcoming everything”
As their private meeting begins in Singapore, the US President Trump and North Korea’s leader Kim Jong-Un were reported via Livesquawk, following their official greeting.
Dollar Index clocks four-day high in Asia, focus on Trump-Kim Summit
The dollar index (DXY), which tracks the value of the greenback against major currencies, rose to a four-day high of 93.89 in Asia as markets braced for a positive Trump-Kim Summit.
US-N. Korea Summit update: Trump, Kim emerge after one on one meeting, wider meeting gets underway
The latest updates on the US – North Korea Summit, via Reuters, cited that the US President Trump and North Korea’s leader Kim Jong-Un emerged after the 41-minute bilateral meeting and walked around at the Summit site.
US-N. Korea Summit update: ‘We will sign something, does not specify exactly what just yet’ – Trump
As the working lunch concluded, the US President Trump and North Korea’s leader Kim Jong-Un walked together on Capella Hotel grounds.
Australia business conditions and confidence dip in May, miss estimates
The National Australia Bank (NAB) is out with its monthly business outlook surveys, with May Business Conditions arriving at 15 versus 18 expected and April’s record high booked at 21.
Key Focus ahead
Heading into a busy EUR macro calendar, markets continue to keep an eye on any updates from the US – North Korea Summit, especially ahead of the Trump presser. Trump is scheduled to hold a press conference at 4 p.m. Singapore time (0800 GMT) before departing Singapore at 7 p.m. local time (1100 GMT). Also, his interview with Fox news will be closely heard for a fresh take on the Korean peninsula.
Data-wise, we see the key UK labor market report, with the earning figures likely to be the main market mover that will be followed by the German ZEW economic surveys due at 0900 GMT.
In the NA session, the US CPI report will hog the limelight, as investors gear for the two-day FOMC meeting starting later on Tuesday, with a 25 bps rate hike likely to be announced tomorrow at 1800 GMT.
EUR/USD: Puts gain value ahead of US CPI
The EUR/USD turned higher from 1.1510 on May 29, but the ensuing rally seems to have run out of steam in the 1.1840 neighbourhood. The back-to-back hammer candles as seen in the daily chart also convey a similar message. The bullish exhaustion seems to have revived interest in the EUR puts.
GBP/USD fumbles the 1.34 handle as UK Average Earnings close in
The Sterling tapped into a new low this week as the pair’s recovery to 1.3471 appears to be over. Average earnings for the UK are due at 08:30 GMT today, with the headline earnings (excluding bonuses) expected to print at 2.9%, in-line with the previous figure.
UK inflation Preview: Inflation set to pick up as fuel prices feed through
The UK inflation is expected to pick up to 2.5% y/y in May after decelerating to 2.4% over the year in April, the Office for National Statistics is set to report on Wednesday at 8:30 GMT.
US: May CPI to rise by 0.2% m/m and 2.8% y/y – Barclays
The Barclays Research Team is out with its take on the key US inflation report due later today at 1230 GMT, as investors await fresh insights on the US consumer prices ahead of Wednesday’s FOMC decision.
Here is why this week will be the most important for financial markets so far this year. Aside from the Fed rate hike and ECB press conference on Wednesday and Thursday respectively, there are key inflation and jobs figures from the UK, CPI from the US “¦
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