The Asian traders cheered the US-Mexico trade progress and increased bets of a Fed rate cut at the start of a brand-new holiday-thinned week, as reflected by the risk-on rally in the Asian equities. However, the optimism soon faded somewhat after the Chinese trade data showed the country’s imports slumped the most in nearly three months, leading to a bigger-than-expected expansion in the trade surplus. The poor data re-ignited the China slowdown fears and weighed on the domestic currency and the Chinese proxies, the Antipodeans.
The Kiwi was the biggest loser and fell back below the 0.6650 barrier while the Aussie lost nearly 0.40% to test the 0.6970 level. Meanwhile, the USD/CNY pair hit fresh yearly tops of 6.9358. The USD/JPY pair was boosted by better risk sentiment and flirted with daily tops near 108.60 region, having witnessed a bullish opening gap on positive trade news.
On the other hand, both the European currency pairs, EUR/USD and Cable traded on the back foot amid a broad-based US dollar recovery Amongst the commodities, both crude benchmarks advanced on Saudi’s bullish view on the output cut policy while gold futures on Comex fell back towards 1330 levels amid higher equities and Treasury yields.
Main Topics in Asia
USD/MXN plummets to 19.27 as Mexican Peso cheers deal to avoid US tariffs
G20: Trade and geopolitical tensions have “intensified”
PBoC governor says no specific level for the yuan is important - BBG
EU to warn business not to expect help over a no-deal Brexit – Financial Times
Gold snaps back on risk-on start to Asia
China FX Regulator (SAFE): Volatility in global financial Markets may increase
China’s trade balance (CNY): Surplus expands in May, a big beat
China’s May trade data (USD): Exports unexpectedly rebound, imports plunge
China trade surplus with US arrived at $26.89B in May vs. $21.01B previous
China rare earth exports drop 16% in May
NZ Treasury: Annual trade deficit narrows and terms of trade improve
S. Korea, UK agree to sign free trade deal ahead of Brexit - Reuters
WTI recovers previous losses amid China-positive catalysts
Key Focus Ahead
The focus in today’s EUR macro calendar will be on a slew of fresh UK economic releases, including the monthly GDP, trade balance, industrial and manufacturing production data, all of which will be reported at 0830 GMT. At the same time, markets will look forward to the Eurozone June Sentix Investor Confidence data for some trading impetus on the Euro, as the German, Swiss and French markets are closed today in observance of Whit Monday.
The NA session remains data-sparse, with Canadian housing starts and building permits data due on the cards at 1215 GMT, followed by the US JOLTS job openings data release at 1400 GMT. The speech by the Bank of England (BOE) board member Saunders at 1700 GMT will also grab some attention.
EUR/USD: Off 11-week highs, but risk reversals greater bias for strong EUR
EUR/USD has pulled back to 1.1310 from Friday’s 11-week high of 1.1348, but the path of least resistance is still on the higher side, according to risk reversals.
GBP/USD on the back foot ahead of UK’s monthly production details
With the latest risk-on sentiment helping the US Dollar (USD) to recover some of its latest losses and political uncertainty surrounding the UK, the GBP/USD pair remains on a back foot heading into the London open on Monday.
GBP/USD Forecast: Conservative Contest may end the Powell-powered recovery
MPs of the ruling party begin a process in which they will eliminate members who receive the fewest number of votes before the membership chooses between the last two. The economic calendar features monthly GDP for April – the first peek into the second quarter.
1990s vs. 2010s. Which Expansion Will be Better for Gold?
Gold remains in the sideways trend not without a reason: the Goldilocks economy feels good right now, but it might jump out the window later.
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