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

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  • 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
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