BOJ Leaves Rates And Policy Unchanged

Jun 20 19, 05:57 GMT

General Trend:

USD weaker across the region as US Fed signaled a rate cut in the future but left policy unchanged for now, US 10-yr bond yields decline 2016 low and gold touches 5 year high
Bank of Japan (BOJ) left rates and policy unchanged, noted must watch how downside risks in overseas economies impacts sentiment. Dissenter Kataoka called for additional easing.
RBA Govt Lowe signals another rate cut and more than 0.25bps, does not think that little of a cut would have enough impact on growth path, analysts update forecasts see RBA cutting in July and Sept
In Australia Rio Tinto cut its FY19 iron ore shipment guidance due to challenges at Brockman hub, shares declined as much as 5% in the day
PBOC sets yuan at the strongest setting in the last month, continued to use 14-day reverse repos
China President Xi arrives in North Korea for state visit
China 6.18 shopping day saw record sales (shopping event to promote sales in second and third tier cities)
Oracle reported strong Q4 results and expects FY20 results to improve y/y
Looking ahead: Will have rate decisions from Norway, Philippines, Taiwan, Indonesia and UK today

Headlines/Economic Data

Australia/New Zealand

ASX 200 opened flat
(AU) RBA Gov Lowe in Adelaide: “Not unrealistic” to expect further reduction in cash rate; “Unrealistic” to think one 25 bps rate cut can alter growth path
RIO.AU Cuts FY19 Iron ore shipments 320-330Mt (prior (333-343Mt); currently experiencing mining challenges for great Brockman hub; to update unit costs in Q2 (overnight)
AIR.NZ CEO Christopher Luxon resigns, effective September 25th
(NZ) NEW ZEALAND Q1 GDP Q/Q: 0.6% V 0.6%E; Y/Y: 2.5% V 2.3%E
CTX.AU Guides H1 (A$) RCOP Net 120-140M; EBIT 240-270M [-22%]
(AU) Australia May RBA Govt FX Transactions (A$):-1.53B v -0.99B prior

Japan

Nikkei 225 opened +0.4%
(JP) BOJ LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%; AS EXPECTED
9984.JP Revised FY17/18 tax return because ¥400B of the ¥2.0T loss booked in FY17 related to Arm Holdings deal should not have been booked that year – Nikkei
(FR) France govt official: Pres Macron and PM Abe will talk about Nissan at their meeting in Japan
7201.JP Reportedly resolved corporate governance issues with Renault; Renault CEO Bolloré to get audit committee seat on Nissan board – press
3938.JP Close to getting approval from Japan regulators for a crypto exchange, BitMax; will allow Line’s 80M users access to Bitcoin

Korea

Kospi opened -0.1%
(KR) Bank of Korea Gov Lee: Markets see heightened chance of US rate cut later this year; reiterates that BoK does not mechanically follow US Fed decisions
(KR) US Envoy to North Korea Biegun: US has every expectation that Pres Xi will send constructive messages on North Korea denuclearization during Pyongyang trip
(CN) South Korea and China held vice ministerial economic cooperation talks and early stage free trade agreement talks – Yonhap
(KR) South Korea May PPI Y/Y: 0.4% v 0.6% prior

China/Hong Kong

Hang Seng opened +0.4%; Shanghai Composite opened flat
(CN) China President Xi and US President Trump expected to meet over dinner June 29th in Japan – Nikkei
(CN) China PBoC Open Market Operation (OMO): Injects CNY30B in 14-day reverse repos v CNY40B prior; Net CNY30B injected v CNY25B injected prior
(CN) China PBoC sets yuan reference rate: 6.8805 v 6.8893 prior (strongest fix in a month)
(US) Trade Rep Lighthizer: Will speak with China Vice Premier Liu He before the end of the week and will meet with him during G20 ahead of Trump’s meeting with Xi – congressional hearing comments
(HK) Hong Kong Monetary Authority (HKMA): HK$ FX is smooth, expect Fed policy uncertainty it increase
(CN) China Regulator said to have suspended certain developers bond offerings
(CN) China MoF Sells CNY5.0B in 2-year and 5-year bonds in Hong Kong

Other

OPEC Delegate: OPEC+ agrees to move meeting date to July 1-2nd period (in-line with recent speculation), moved from June 25-26

North America

(US) FOMC LEAVES TARGET RANGE UNCHANGED BETWEEN 2.25-2.50%; AS EXPECTED; DROPS ‘PATIENT’ LANGUAGE ON FUTURE POLICY ADJUSTMENTS, SAYS ‘WILL ACT AS APPROPRIATE’ TO SUSTAIN EXPANSION
(US) Fed Chair Powell: Many FOMC participants see stronger case for rate cuts; changes made to today’s statement were “significant” – post rate decision press conference
(US) US Pres Trump will not remove Fed Chair Powell for now but does think he has authority to replace him – US Financial Press
ORCL Reports Q4 $1.16 v $1.07e, Rev $11.1B v $11.0Be; Guides Q1 $0.80-0.82 (including $0.01 FX headwind) v $0.81e, Rev (cc) +1-3% v +1.4%e – earnings call
(MX) Mexico Senate ratifies the USMCA North American trade agreement (as expected)
(US) DOE CRUDE: -3.1M V -1.5ME; GASOLINE: -1.7M V +0.5ME; DISTILLATE: -0.6M V +0.5ME

Europe

(UK) UK Conservative Party announces results of 3rd leadership ballots; Rory Stewart eliminated from contest
(IT) Italy PM Conte response to possible EU deficit procedure said to contain €2.0B in spending cuts – financial press

Levels as of 01:20ET

Hang Seng +0.8%; Shanghai Composite +2.1%; Kospi +0.2%; Nikkei225 +0.4%; ASX 200 +0.3%
Equity Futures: S&P500 +0.4%; Nasdaq100 +0.7%, Dax +0.3%; FTSE100 -0.5%
EUR 1.1226-1.1273; JPY 107.56-108.15 ; AUD 0.6877-0.6907; NZD 0.6535-0.6582
Commodity Futures: Gold +2.6% at $1,383/oz; Crude Oil +1.4% at $54.75/brl; Copper +0.5% at $2.71/lb