The recent enthusiasm seen around the Asian equity markets was shot down by the latest less dovish rhetoric from the Fed officials that scaled back aggressive rate cut expectations. Meanwhile, investors turned cautious heading into the G20 Summit, commencing this Friday.
Therefore, the USD/JPY pair struggled to take on the recovery beyond the 107.50 figure, despite a broadly firmer US dollar and rallying Treasury yields. The Aussie consolidated its recovery below 0.6970 region while the Kiwi failed to chew the offers at two-week tops of 0.6662 following the Reserve Bank of New Zealand’s (RBNZ) rates on hold decision, as the Kiwi central bank left doors open for an August rate cut. Both the Euro and GBP suffered moderate losses amid a pick up in the USD buying across the board while the Canadian dollar failed to benefit from the oil-price rally. Meanwhile, gold prices on Comex extended its correction and headed back towards 1410 levels.
Main Topics in Asia
IMF: RBNZ's current monetary policy stance fits subdued inflation conditions
Richmond Fed President Barkin: Don’t know whether rate cut or cuts will be needed this year
Fed's Bullard: Thinks 2 rate cuts by year end would provide a soft landing
Chinese Embassy confirmed that China has halted Canadian meat imports
Trade wars: Chinese exporters warn that their business is growing at its slowest pace in three years
Japan to hold upper house election on July 21
BOJ maintains JGB buying, JPY drops further
China’s Beige Book: Modest improvement in China’s economy in Q2
Reserve Bank of New Zealand keeps rates on hold at 1.50%, NZD drops and pops
N. Korea: The US extension of sanctions is an extreme act of hostility - KCNA
Asian stocks dip as Fed pushes back on aggressive rate cut views
WTI: Buyers await fresh clues to cross the key MA resistance
RBNZ’s Bascand: Renewing the RBNZ's approach to financial stability
Key Focus Ahead
Amid a data-light EUR macro calendar this Wednesday, the Bank of England (BOE) hearings before the UK Parliament’s Treasury Select Committee (TSC) will be closely eyed. Carney and company will testify on May inflation report at 0915 GMT, keeping in mind the June economic forecasts. However, no fresh surprises on the monetary policy is expected after the central bank tilted to a dovish bias at this month’s monetary policy decision.
On the macro events front, the ECB non-monetary policy meeting is scheduled at 0700 GMT. Ahead of that, the German Gfk Consumer Confidence Survey will be published at 0600 GMT. Meanwhile, the Swiss ZEW Survey and UK BBA Mortgage Approvals data will drop in at 0800 GMT and 0830 GMT respectively.
The NA session, in contrast, reports the key US Durable Goods Orders and Goods Trade Balance figures at 1230 GMT among other minority reports. The US Energy Information Administration (EIA) weekly crude stockpiles data, due at 1430 GMT, will also grab some attention. Besides, the speech by the FOMC member Daly will be eyed for fresh insights on the US interest rates outlook.
EUR/USD: Bearish outside day as Fed tempers aggressive rate cut expectations
Tuesday’s bearish outside day makes today’s close pivotal. Fed officials pushed back on aggressive rate cut calls, pushing the USD higher. An above-forecast US durable goods data could yield a bearish daily close.
GBP/USD offers fewer moves ahead of Carney’s speech
Having reversed from the 50-day SMA, mainly because of renewed Brexit fears and sluggish data from the UK’s CB retail sales survey, the GBP/USD pair trades modestly flat near 1.2685 ahead of the London open.
Gold Hit Its Price Target. Now What?
“Gold is trading at highs not seen since 2013. Will the rally continue? First, let’s talk about how we got here …”
US Durable Goods Orders Preview: Recovery but where is the trend?
Durable goods orders are predicted to gain 0.2% in May after falling 2.1% in April. Orders ex-transport are expected to increase 0.1% after a flat April. Orders outside of government defense procurement are expected to rise 1.4% following the April 2.5% decline.
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