Holiday-thinned light trading characterized the Asian session on the first day of this new week, as the Chinese traders were out celebrating the Dragon Boat Festival. Amid slowing volumes, risk-off remained the key theme, with a sense of caution ahead of the key OPEC meeting and European Central Bank (ECB) Forum in Sintra kept investors unnerved.
The higher-yielding Antipodeans were hit by poor risk appetite while the Yen benefited the most from increased demand for safe-havens and better Japanese trade figures. The Kiwi was the weakest, followed by the Euro, as the US dollar was the most preferred bet amid escalating US-China trade tensions and monetary policy divergence.
Amongst the commodities, gold prices managed to recover some ground and regained the $ 1280 barrier while both crude benchmarks were hammered, with the US oil down almost 2% below the $ 64 threshold.
Main topics in Asia
Over the weekend: OPEC members want to block production limit hikes
Trouble over the weekend as OPEC members Iran, Venezuela, and Iraq are all saying they will move to block Saudi Arabia's joint move with Russia to increase oil production limits.
US instigation of a trade war is extremely destructive to global trade - China State Media
An editorial in the ruling Communist Party's official People's Daily called Trump administration's protectionist policies as "obsession with playing the disgraceful role of global economic disruptor", according to Reuters News.
Japan May exports rise at a fastest rate in 4 months
Japanese export growth picked up the pace in May, hitting a four-month high, the official data released on Monday showed.
Gold fell to lowest level since Dec. 26, calls lose value
Gold fell to fresh 2018 low of $1,275 on Friday, having failed to scale the key resistance at $1,302.76 in a convincing manner for three straight weeks.
Germany's Seehofer: Migrant row with Merkel can be overcome
Germany's Interior Minister Horst Seehofer said on Sunday that the migrant row between Bavarians and Chancellor Angela Merkel is serious but can be overcome, according to Reuters News.
Asian stocks retreat on trade concerns, Japan's Nikkei 225 back into ¥22,600.00
Asian stocks are falling back on renewed trade war fears, and Japan's Nikkei 225 index is backing into 22,600.00.
Key Focus ahead
Heading into Europe, we have an absolutely data-empty event calendar, except for the German Bundesbank monthly economic report, which is likely to have virtually no impact on the EUR markets. In the US session, the second-liner US NAHB housing market index will be reported ahead of the central bankers’ speech.
1545 GMT BOC Patterson’s speech.
1700 GMT Fed Bostic’s speech.
1730 GMT ECB Chief Draghi’s speech.
1945 GMT Fed Williams’ speech.
EUR/USD: Bearish setup intact, Draghi's speech eyed
The common currency will likely run into fresh offers if Draghi reiterates ECB's dovish stance - rates will stay low well past the end of the QE program and could go higher at the end of 2019.
GBP/USD lacking the momentum to recover to 1.34
The first half of this week is shaping up to be a quiet affair for the Sterling, with little of note on the economic calendar until the Bank of England's (BoE) next rate decision due on Thursday.
Upcoming Week - The Big Three - TDS
Analysts at TDS enlist three major event risks due on the cards in the week ahead, which is likely to have a major bearing on the financial markets across the globe.
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