Risk-off sentiment remained the main underlying theme in Asia for the second straight session this Tuesday, as the renewed fears of the US-China trade war spook the markets on reports that the US President Trump seeks additional tariffs on $200 billion worth of Chinese goods.
The safe-havens Yen, Swiss franc and gold rallied hard amid a typical risk-off market profile, with the Yen benefiting the most. The USD/JPY pair came under further selling pressure after China’s Commerce Ministry warned over the new US tariffs proposal. The spot accelerated declines below the 110 handle while gold prices headed back towards the $ 1290 upside barrier. The USD/CHF pair was on track to test the 0.9900 support area amid escalating US-Sino trade tensions.
On the other hand, the higher-yielding/ risk assets took a beating across the board, with the Aussie the main laggard, despite RBA’s upbeat outlook on Australia’s economic growth. The Kiwi was better offered near 0.6930 levels. The main loser in the fx space so far this Tuesday remains the AUD/JPY cross. Meanwhile, the Asian equities tumbled to four-month troughs, mainly dragged down by heavy selling in China stocks while both crude benchmarks traded with moderate losses.
Main topics in Asia
Fed’s Williams: US growth is doing well, growth should continue
The US Fed’s John Williams noted that inflation within the US economy is approaching the Fed’s target, which is a big plus, as major central banks around the world are largely grappling with missed growth projections in 2018.
US President Trump seeks additional tariffs on $200 billion of Chinese goods
The US President Donald Trump has apparently asked a US trade rep to source another raft of tariffs on China, seeking a 10% tariff on $200 billion of Chinese imports.
RBA Minutes: Rise in AUD would slow inflation and growth
The Reserve Bank of Australia (RBA) is out with its June monetary policy minutes, with the key headlines found below.
US Treasury: US tariffs on Chinese goods are prepared at Trump’s direction
The US Treasury Department is out with a statement, citing that the US tariffs on the Chinese products are prepared at President Trump’s direction.
China’s Commerce Ministry: China to hit back if US rolls out new tariff list
Latest headlines crossed the wires via Reuters from China’s Commerce Ministry, as they react to the latest development around the US-Sino trade spat.
N. Korea’s Leader Kim Jong-Un visits Beijing today
North Korea’s state media reports that the North’s Leader Kim Jong-Un is in Beijing today, confirming earlier reports by the Nikkei, citing that Kim could visit China’s capital as early as Tuesday.
Key Focus ahead
We have a quite EUR macro calendar again today, as the second-liner Eurozone current account and construction output will be eyed in absence of the first-tier releases. Ahead of the Eurozone data, the Swiss State Secretariat for Economic Affairs (SECO) will publish its quarterly economic forecasts.
Also, in focus will remain the speeches by the global central bankers, as the European Central Bank’s (ECB) two-day Forum on central banking commences today in Sintra, Portugal.
The speeches schedule is found below.
0800 GMT ECB Chief Draghi’s speech
0830 GMT ECB Praet’s speech
1100 GMT ECB Praet’s speech again alongside FOMC member Bullard’s speech
Also, BOE’s Forbes and ECB’s Lane will be seen participating in a panel discussion on Macroeconomics of price and wage-setting.
In the NA session, the US housing data will be published that includes the housing permits and building starts, followed by New Zealand’s fortnightly dairy auction results, which will have a significant impact on the Kiwi.
EUR/USD: Puts in demand ahead of Draghi’s speech
The common currency could revisit post-ECB low of 1.1543 and could possibly break below the recent low of 1.1510 on escalating US-China trade tensions and political uncertainty in Germany.
GBP/USD making a hopeful run for 1.34 for a quiet Tuesday
Tuesday sees little action on the Sterling side of things, and overall market sentiment can be expected to remain in the captain’s chair. Markets have turned cautious in early Tuesday action after the US ramped up the trade war rhetoric.
SNB to keep rates on hold this Thursday – Reuters poll
According to the latest Reuters poll of 40 economists, the Swiss National Bank (SNB) is expected to leave the benchmark interest rates unchanged when it announces its quarterly monetary policy assessment on Thursday.
Banxico to leave rate on hold at 7.50% – Rabobank
“We expect Banxico to leave the Mexican policy rate on hold at 7.50% on Thursday, 21st June,” Rabobank analysts argue.
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