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Forex Today: Risk-off Asia drives Yen higher, Focus on Italy/ Spain politics and ECB-speaks

Dhwani Mehta FXStreet

The Yen was outperformed the G10 currencies, as risk-off sentiment extended into Asia this Tuesday amid ongoing political angst in Europe, particularly in Italy and Spain. As a result, Treasury yields were broadly sold-off, with the 10-year Treasury yields having hit six-week lows while oil prices also refreshed six-week lows. The commodity-linked Aussie and Kiwi traded on the back while Loonie was better bid amid news of the Canadian Trans Mountain pipeline deal.

While the Euro struggled to extend the bounce from multi-month troughs of 1.1608, Cable managed to regain the 1.33 handle heading into another data-light session ahead.

Main topics in Asia

US President Trump and Japan's Abe agree to meet before US-N. Korea summit - Reuters

According to Reuters, the White House has confirmed that President Trump and Japanese President Shinzo Abe have agreed to meet in person prior to the upcoming US-North Korea summit on June 12th.

Brexiteers, Brussels both angered by EU budget extension with UK - The Times

European countries within the EU angered both hard-line Brexiteers and EU leaders in Brussels after inviting the UK to help determine the EU's £1 trillion budget up to 2027, beyond Brexit and a date that …

Australia's Fraser: global trade tensions could increase market volatility further

Australia's Treasury Secretary, John Fraser, spoke on Australian economic conditions today, noting that Australian business conditions are at a record high.

Offshore Yuan rises to highest level since January 23

The offshore Yuan or USD/CNH rose to 6.4081 on Tuesday - the highest level since June 23.

US 10-year Treasury yield hit 6-week low in Asia

The yield on the 10-year benchmark US Treasury note fell to 2.88 percent in Asia, its lowest level since April 19, possibly in response to Italian uncertainty and a drop in oil prices.

Onshore Yuan weakens past 6.4/dollar for the first time since January 23

The onshore Yuan exchange rate weakened past 6.4 per dollar for the first time since January 23.

Fed’s Bullard: Aggressive pace of rate hikes could invert yield curve

St Louis Federal Reserve (Fed) President James Bullard is out on the wires now, via Reuters, commenting on the rate hike outlook and inflation expectations in Tokyo.

Spanish PM to face confidence vote on Friday

Spanish Prime Minister Mariano Rajoy will face a vote of confidence on Friday, according to Reuters News.

Key Focus ahead

Despite full markets returning, we have little of note to report in the European session, except for the Swiss trade figures and Eurozone money supply data. However, the political drama around Italy and Spain will continue to drive the fx moves in the session ahead. Among the central bankers’ speeches, we have the ECB policymakers Mersch and Lautenschlaeger up on the rostrum later today while the US Dallas Fed manufacturing index and CB consumer confidence data will offer some fresh trading impetus in the NA session ahead of the Reserve Bank of New Zealand’s (RBNZ) Financial Stability Report (FSR) due to out at 2100 GMT.

EUR/USD: Focus on Italy-German yield spread

The EUR/USD pair fell to 1.1607 on Monday - the lowest level since November 2017 as the Italy-German yield spread rose to a 5.5-year high of 232 basis points. The common currency may continue to lose altitude today if the Italian-German yield spread rises further in the EUR-negative manner.

GBP/USD can't seem to shed the 1.33 handle as UK markets return from their long weekend

Despite the UK session's return to the foray today, Tuesday is unlikely to bring much action for the GBP/USD, with only the BRC Shop Price Index on the data docket, dropping late at 23:01 GMT (last reading -1%).

Italy: A Crisis in the making?

EURUSD continues to buckle on haven USD flows given the heightened Italian political risk. , While near-term growth dynamics based on the recent run of weak economic data in the EU are also providing tailwinds for the USD.

RBNZ’s Financial Stability Report preview - Westpac

Westpac’s Analysts are out with their preview of the Reserve Bank of New Zealand’s (RBNZ) semi-annual Financial Stability Report (FSR) due to be reported later today at 2100 GMT, which will be followed by Governor Orr’s press conference at 2300 GMT.

China’s May official manufacturing PMI to remain unchanged at 51.4 - Nomura

Analysts at Nomura offer a brief preview on China’s official manufacturing PMI report due to be published this Thursday at 0100 GMT.

GMT	Event	Actual	Consensus	Previous
Monday, May 28
24h	USD Memorial Day
24h	GBP Spring Bank Holiday
24h	EUR Holy Spirit Monday
14:00	MXN Jobless Rate	3.4%	3.2%	2.9%
21:00	KRW Consumer Sentiment Index	108		107
23:30	JPY Unemployment Rate	2.5%	2.5%	2.5%
23:30	JPY Jobs/applicants ratio	1.59	1.60	1.59
Tuesday, May 29
24h	IDR Waisak Day
24h	SGD Vesak Day
04:40	USD Fed's Bullard speech
06:00	CHF Exports (MoM)			19,855M
06:00	CHF Imports (MoM)			18,087M
06:00	CHF Trade Balance		2,230M	1,768M
06:45	EUR Consumer Confidence		101	101
07:00	HUF Unemployment Rate (3M)			3.9%
07:00	SEK Consumer Confidence (MoM)		101.0	100.3
n/a	CHF Employment Level (QoQ)		4.999M	4.962M
08:00	EUR Consumer Confidence		116.5	117.1
08:00	EUR Business Confidence		107.2	107.7
08:00	EUR Private loans (YoY)		3.2%	3.0%
08:00	EUR M3 Money Supply (3m)			4.2%
08:00	EUR M3 Money Supply (YoY)		3.9%	3.7%
08:30	EUR Business Confidence			2.1
08:30	EUR Consumer Confidence			2.4
09:00	ISK Consumer Price Index (MoM)			0%
09:00	ISK Consumer Price Index (YoY)			2.3%
10:30	EUR ECB's Mersch speech
11:00	BRL Inflation Index/IGP-M		1.29%	0.57%
12:00	BRL Unemployment Rate		13.0%	13.1%
12:30	EUR Current Account Balance EUR			€-205B
13:00	USD S&P/Case-Shiller Home Price Indices (YoY)		6.5%	6.8%
14:30	USD Dallas Fed Manufacturing Business Index		23.3	21.8
15:30	USD 4-Week Bill Auction			1.72%
15:30	USD 3-Month Bill Auction			1.895%
15:30	USD 6-Month Bill Auction			2.08%
16:30	EUR ECB's Lautenschläger Speech
21:00	NZD RBNZ Financial Stability Report
22:45	NZD Building Permits s.a. (MoM)			14.7%
23:01	GBP BRC Shop Price Index (YoY)			-1%
23:01	EUR Consumer Confidence			104
23:50	JPY Large Retailer's Sales		-0.5%	0.1%
23:50	JPY Retail Trade s.a (MoM)		0.0%	-0.7%
23:50	JPY Retail Trade (YoY)		1%	1%
Wednesday, May 30
00:00	JPY Bank of Japan Governor Kuroda Speech
01:10	NZD RBNZ Governor Orr Speech
01:30	AUD Building Permits (MoM)		-3.0%	2.6%
01:30	AUD Building Permits (YoY)		4.1%	14.5%
05:00	JPY Consumer Confidence Index		43.9	43.6
06:00	EUR Import Price Index (MoM)		0.7%	0.0%
06:00	EUR Import Price Index (YoY)		0.8%	-0.1%
06:00	EUR Retail Sales (YoY)		1.2%	1.3%
06:00	EUR Retail Sales (MoM)		0.6%	-0.6%
06:00	DKK Industrial Outlook			1
06:00	ZAR M3 Money Supply (YoY)			6.42%
06:00	ZAR Private Sector Credit			5.96%
06:00	NOK Retail Sales		0.2%	1.1%
06:45	EUR Consumer Spending (MoM)		-0.2%	0.1%
06:45	EUR Gross Domestic Product (QoQ)		0.3%	0.3%
07:00	EUR Consumer Price Index (YoY)		2.0%	1.6%
07:00	EUR Harmonized Index of Consumer Prices (MoM)		0.3%	-0.1%
07:00	EUR Harmonized Index of Consumer Prices (YoY)		1.8%	1.4%
07:00	EUR Consumer Price Index (MoM)		0.3%	0.0%
07:00	TRY Foreign Arrivals			34.83%
07:00	TRY Economic confidence index			98.3
07:00	EUR HICP (YoY)		1.7%	1.1%
07:00	EUR Retail Sales (YoY)			1.9%
07:00	EUR Producer Price Index (MoM)			0%
07:00	EUR Producer Price Index (YoY)			1.3%
07:00	CHF KOF Leading Indicator		104.5	105.3
08:00	EUR Unemployment Change		-10K	-7K
08:00	EUR Unemployment Rate s.a.		5.3%	5.3%
08:00	PLN Consumer Price Index (YoY)			1.6%
08:00	PLN Consumer Price Index (MoM)			0.5%
08:00	CHF ZEW Survey - Expectations			7.2
09:00	PLN Gross Domestic Product Qtr (YoY)			5.1%
09:00	EUR Producer Price Index (YoY)			0.6%
09:00	EUR Services Sentiment		14.5	14.9
09:00	EUR Consumer Confidence		0.2	0.2
09:00	EUR Industrial Confidence		6.7	7.1
09:00	EUR Economic Sentiment Indicator		112.1	112.7
09:00	EUR Business Climate		1.30	1.35
n/a	EUR 10-y Bond Auction			1.7%
n/a	EUR 5-y Bond Auction			0.56%
11:00	USD MBA Mortgage Applications			-2.6%
n/a	EUR Gross Domestic Product (YoY)			2.1%
n/a	EUR Gross Domestic Product (QoQ)			0.4%
11:00	EUR Consumer Price Index (MoM)			0.3%
11:00	EUR Consumer Price Index (YoY)			1.52%
12:15	USD ADP Employment Change		189K	204K
12:30	USD Gross Domestic Product Price Index		2%	2%
12:30	USD Gross Domestic Product Annualized		2.3%	2.3%
12:30	USD Wholesale Inventories		0.4%	0.3%
12:30	USD Goods Trade Balance		$-71.20B	$-68.04B
12:30	USD Personal Consumption Expenditures Prices (QoQ)		2.7%	2.7%
12:30	USD Core Personal Consumption Expenditures (QoQ)		2.5%	2.5%
12:30	CAD Industrial Product Price (MoM)		0.7%	0.8%
12:30	CAD Raw Material Price Index		-0.5%	2.1%
12:30	CAD Current Account		-18.00B	-16.35B
12:55	USD Redbook index (YoY)			3.2%
12:55	USD Redbook index (MoM)			0%
13:00	EUR Gross Domestic Product (QoQ)			0.4%
14:00	CAD BoC Rate Statement
14:00	CAD BoC Interest Rate Decision		1.25%	1.25%
14:45	CHF SNB Chairman Jordan Speech
18:00	USD Fed's Beige Book
20:30	USD API Weekly Crude Oil Stock			-1.3M
21:00	MXN Fiscal Balance, pesos
21:00	MXN Fiscal Balance, pesos			-24.13B
23:00	KRW Industrial Output Growth			-2.5%
23:00	KRW Industrial Output (YoY)			-4.3%
23:00	KRW Service Sector Output			0.4%
23:01	GBP Gfk Consumer Confidence		-8	-9
23:30	JPY Industrial Production (YoY)		3.6%	2.4%
23:50	JPY Industrial Production (MoM)		1.2%	1.4%
23:50	JPY Foreign investment in Japan stocks			¥99.1B
23:50	JPY Foreign bond investment			¥948.9B
Thursday, May 31
24h	BRL Corpus Christi
24h	PLN Corpus Christi
24h	EUR Corpus Christi
24h	EUR Corpus Christi
24h	EUR G7 Meeting
01:00	CNY NBS Manufacturing PMI			51.4
01:00	CNY Non-manufacturing PMI		54.8	54.8
01:00	NZD ANZ Activity Outlook			17.8%
01:00	NZD ANZ Business Confidence			-23.4
01:30	AUD Private Sector Credit (YoY)			5.1%
01:30	AUD Private Sector Credit (MoM)		0.4%	0.5%
01:30	AUD Private Capital Expenditure		0.7%	-0.2%
04:00	JPY Vehicle Production (YoY)			0.2%
05:00	PEN Inflation
05:00	JPY Annualized Housing Starts			0.895M
05:00	JPY Housing Starts (YoY)		-8.9%	-8.3%
05:00	JPY Construction Orders (YoY)			-4%
05:45	CHF Gross Domestic Product s.a. (QoQ)		0.5%	0.6%
05:45	CHF Gross Domestic Product (YoY)		2.3%	1.9%
06:00	GBP Nationwide Housing Prices n.s.a (YoY)		2.9%	2.6%
06:00	GBP Nationwide Housing Prices s.a (MoM)		0.2%	0.2%
06:00	NOK Credit Indicator			6.3%
06:45	EUR Producer Prices (MoM)			0.4%
06:45	EUR Consumer Price Index (EU norm) (YoY)			1.8%
07:00	TRY Trade Balance			-5.86B
07:00	DKK Gross Domestic Product (QoQ)			0.9%
07:00	EUR Gross Domestic Product (QoQ)		0.7%	0.7%
07:00	EUR Gross Domestic Product (YoY)		2.9%	3.1%
07:00	HUF Producer Price Index (YoY)			3.5%
07:00	CHF SNB Gov Board Member Zurbrugg Speech
07:15	CHF Real Retail Sales (YoY)		-0.7%	-1.8%
08:00	EUR Unemployment			11%
08:00	EUR Current Account Balance			€-0.45B
08:30	GBP Net Lending to Individuals (MoM)			£5.4B
08:30	GBP Consumer Credit		£1.387B	£0.254B
08:30	GBP Mortgage Approvals		63.190K	62.914K
08:30	GBP M4 Money Supply (MoM)		0.5%	-1.4%
08:30	GBP M4 Money Supply (YoY)			2.2%
08:30	HKD Retail Sales			11.4%
09:00	EUR Retail Sales (YoY)			-0.1%
09:00	EUR Unemployment Rate		8.4%	8.5%
09:00	EUR Consumer Price Index (YoY)		1.6%	1.2%
09:00	EUR Consumer Price Index - Core (YoY)		1.0%	0.7%
09:30	ZAR Producer Price Index (MoM)			-0.2%
09:30	ZAR Producer Price Index (YoY)			3.7%
10:00	INR Federal Fiscal Deficit, INR			7,156.99B
10:00	INR Federal Fiscal Deficit, INR
11:00	EUR Consumer Price Index (EU Norm) (MoM)			0.5%
11:00	EUR Consumer Price Index (MoM)			0.1%
11:00	EUR Consumer Price Index (EU Norm) (YoY)			0.6%
11:00	EUR Consumer Price Index (YoY)			0.5%
11:30	USD Challenger Job Cuts (YoY)			36.081K
11:30	INR Infrastructure Output (YoY)
11:30	INR Infrastructure Output (YoY)			4.1%
12:00	CLP Industrial Production (YoY)			-2.4%
12:00	ZAR Trade Balance (in Rands)			9.47B
12:30	USD Core Personal Consumption Expenditure - Price Index (YoY)		2.0%	1.9%
12:30	USD Personal Spending		0.3%	0.4%
12:30	USD Personal Consumption Expenditures - Price Index (MoM)		0%	0%
12:30	USD Personal Income (MoM)		0.3%	0.3%
12:30	USD Personal Consumption Expenditures - Price Index (YoY)		1.9%	2.0%
12:30	USD Core Personal Consumption Expenditure - Price Index (MoM)		0.1%	0.2%
12:30	USD Continuing Jobless Claims		1.744M	1.741M
12:30	USD Initial Jobless Claims		225K	234K
12:30	CAD Gross Domestic Product Annualized (QoQ)		1.7%	1.7%
12:30	CAD Gross Domestic Product (MoM)		0.5%	0.4%
13:00	RUB Central Bank Reserves $			$456.3B
13:45	USD Chicago Purchasing Managers' Index		58.0	57.6
14:00	USD Pending Home Sales (YoY)			-4.4%
14:00	USD Pending Home Sales (MoM)		0.4%	0.4%
14:30	USD EIA Natural Gas Storage change		127B	91B
14:30	USD EIA Crude Oil Stocks change		2.214M	5.778M
15:00	COP National Jobless Rate
15:00	INR Gross Domestic Product Quarterly (YoY)			7.2%
16:45	USD FOMC Member Bostic speech
17:00	USD FOMC Member Brainard Speech
19:00	ARS Industrial Output n.s.a (YoY)			1.2%
20:00	COP Interest rate
21:00	KRW BOK Manufacturing BSI			77
21:45	NZD Terms of Trade Index			0.8%
22:30	AUD AiG Performance of Mfg Index			58.3
23:00	KRW Gross Domestic Product Growth (YoY)			2.8%
23:00	KRW Gross Domestic Product Growth (QoQ)			1.1%
23:50	JPY Capital Spending		-1.7%	4.3%
Friday, Jun 01
24h	IDR Pancasila Day
00:00	KRW Trade Balance
24h	EUR G7 Meeting
n/a	AUD HIA New Home Sales (MoM)			-2%
00:30	USD FOMC Member Kaplan Speech
00:30	KRW Nikkei Markit Manufacturing PMI			48.4
00:30	JPY Nikkei Manufacturing PMI		53.0	52.5
01:45	CNY Caixin Manufacturing PMI		51.0	51.1
04:00	IDR Inflation (MoM)			0.1%
04:00	IDR Inflation (YoY)			3.41%
04:00	IDR Core Inflation (YoY)			2.69%
05:00	JPY Vehicle Sales (YoY)			0.5%
06:00	EUR Purchasing Manager Index Manufacturing			55.3
06:00	RUB HSBC Manufacturing PMI			51.3
06:30	AUD RBA Commodity Index SDR (YoY)		1.2%	-1.4%
06:30	SEK Purchasing Managers Index Manufacturing (MoM)			54.5
07:00	PLN Purchasing Manager Index			53.9
07:00	EUR Gross Domestic Product (QoQ)			0.7%
07:00	EUR Gross Domestic Product Qtr Prelim (YoY)			2.7%
07:00	EUR Unemployment Rate			7.7%
07:00	EUR Unemployment			308.9K
07:00	HUF Purchasing Manager Index			53.3
07:00	CZK Gross Domestic Product (YoY)			4.5%
07:15	EUR Markit Manufacturing PMI		53.7	54.4
07:30	CZK Markit PMI			57.2
07:30	CHF SVME - Purchasing Managers' Index			63.6
07:30	SEK Current Account (QoQ)			33.3B
07:45	EUR Markit Manufacturing PMI		52.9	53.5
07:50	EUR Markit Manufacturing PMI		55.1	55.1
07:55	EUR Markit Manufacturing PMI		56.8	56.8
08:00	EUR Gross Domestic Product (YoY)		1.4%	1.6%
08:00	EUR Gross Domestic Product (QoQ)		0.3%	0.3%
08:00	EUR Markit Manufacturing PMI			52.9
08:00	EUR Markit Manufacturing PMI		55.5	55.5
08:30	GBP Markit Manufacturing PMI		53.6	53.9
n/a	TRY Exports			$13.55B
09:00	INR Reverse Repo Rate			5.75%
09:00	NOK Registered Unemployment n.s.a			2.4%
09:00	NOK Registered Unemployment s.a			83.43K
11:30	INR FX Reserves, USD			$415.05B
12:00	BRL HSBC PMI Manufacturing			52.3
12:00	CZK Budget Balance			0.77B
12:30	USD Nonfarm Payrolls		185K	164K
12:30	USD Average Weekly Hours		34.5	34.5
12:30	USD Average Hourly Earnings (YoY)		2.7%	2.6%
12:30	USD Average Hourly Earnings (MoM)		0.2%	0.1%
12:30	USD Unemployment Rate		3.9%	3.9%
12:30	USD Labor Force Participation Rate			62.8%
12:55	USD FOMC Member Kashkari Speech
13:00	ZAR Total New Vehicle Sales			36,346
13:30	CAD Markit Manufacturing PMI		55.4	55.5
13:45	USD Markit Manufacturing PMI		56.2	56.6
14:00	USD ISM Prices Paid		80.4	79.3
14:00	USD ISM Manufacturing PMI		57.7	57.3
14:00	USD Construction Spending (MoM)		1.1%	-1.7%
17:00	USD Baker Hughes US Oil Rig Count			859
19:00	BRL Trade Balance			6.142B
19:30	USD CFTC USD NC net positions			$185.2K
19:30	USD CFTC Oil NC net positions			633.4K
19:30	USD CFTC Gold NC net positions			$91K
19:30	USD Total Vehicle Sales		17.20M	17.15M
19:30	GBP CFTC GBP NC net positions			£5.7K
19:30	JPY CFTC JPY NC net positions			¥-2.8K
19:30	EUR CFTC EUR NC net positions			€109.7K
19:30	AUD CFTC AUD NC net positions			$-21.1K
20:00	ARS Tax Revenue (MoM)			236.23B
23:00	KRW Consumer Price Index Growth (YoY)			1.6%
23:00	KRW Consumer Price Index Growth			0.1%
Saturday, Jun 02
24h	EUR Republic Day
24h	EUR G7 Meeting

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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