FX today experienced witnessed mixed market sentiment in Asia this Friday, with traders cautious amid heightening US-Iran geopolitical tensions, especially after the US suspected Iran behind the attacks on 2 oil tankers in the Gulf of Oman on Thursday. The biggest beneficiary of the geopolitical and trade risks was the traditional safe-haven Gold. Gold futures on Comex rallied and remained poised to test the yearly tops at 1356 levels. However, the safe-haven demand for the Yen remained muted, with USD/JPY holding ground near 108.30 levels. The spot was supported by positive US equity futures.
The biggest loser so far was the Kiwi and headed towards 0.65 handle, in the face of intensifying recession risks in New Zealand following downbeat manufacturing PMI numbers that flagged further RBNZ rate cuts. The Aussie followed suit and hit fresh 3-week lows below 0.6900 levels on the back aggressive RBA rate cut calls. The Loonie traded on the back foot despite the renewed uptick in oil prices.
Among the European currency pairs, EUR/USD and Cable traded little changed amid a broad-based US dollar consolidation.
Main Topics in Asia
Updates on US-Iran rift
UK agrees Iran responsible for tanker attacks – BBC reporter
Iran says it categorically rejects "US. unfounded claim" - Iranian mission to United Nations
Military: US has 'no interest' in new conflict in Middle East – Reuters
Rumour: US military have released video that shows Iranian involvement in tanker attacks
Other Headlines
Japan’s Motegi: Think Japan, US deepened understanding over each other’s position over trade issue
UK Foreign Minister: UK will be making its own assessment - BBC
UK’s Tory Candidate Leadsom: Could back PM Candidate Sajid Javid in leadership race – Times
China hikes dumping duties on US, EU steel tubes
Gold nearing the year’s high amid US-Iran rift
NAB forecasts RBA to cut cash rate to 0.75% in November
US cuts tariffs on South Korean made hot-rolled steel - Yonhap
Canadian PM Trudeau to visit Washington to seek support in China row
Asian stocks trade mixed amid rally in gold prices
Key Focus Ahead
Heading into the European session, the main focus remains on a flurry of China’s economic releases that were rescheduled by the Chinese National Bureau of Statistics (NBS) to 0700 GMT earlier today. The country’s industrial output, retail sales and urban investment data are likely to show mild improvement in the month of May. Ahead of the China data dump, Germany will publish the Wholesale Price Index (WPI) at 0600 GMT, which is likely to have a negligible impact on the EUR trades. The UK docket remains data-dry and hence, the speeches by the European Central Bank (ECB) policymakers De Guindos and Lautenschlager will be closely followed for fresh trading impulse.
The NA calendar remains quite eventful, in contrast, with the US Retail Sales report for May likely to headline at 1230 GMT, soon followed by the US Industrial Production data and Capacity Utilization figures due at 1315 GMT. The US UoM Preliminary Consumer Sentiment release at 1400 GMT will also hog the limelight. The US retail sales are likely to rebound while the consumer sentiment is expected to dip amid ongoing US-China trade concerns. Amidst the US macro news, the speech by the Bank of England (BOE) Governor Mark Carney will gain some market attention and drive fresh GBP moves. Later in the American session, the Bakers Hughes oil rigs count data will be reported at 1700 GMT that will somewhat influence oil prices, in the face of the suspected oil tanker attacks in the Gulf of Oman.
EUR/USD flirts with 100-day MA support ahead of China data
EUR/USD is sitting on the 100-day moving average (MA) support of 1.1270 with investors awaiting the release of China’s industrial production and retail sales data for May.
GBP/USD on a back foot as traders await fresh clues from Carney's speech
With the latest political developments at the UK likely favoring a hard Brexit, investors await fresh clues from the BOE’s Carney for fresh impulse while the GBP/USD pair trades unmotivated ahead of the UK open on Friday.
US: Key focus on core Retail Sales – Scotiabank
The Scotiabank analysts offer a sneak peek into what to expect from Friday’s US retail sales report due on the cards at 1230 GMT.
US Michigan Consumer Sentiment Preview: Happiness and caution
Michigan Consumer Sentiment Index predicted to decline slightly in June. Confidence may suffer from weak May non-farm payrolls
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