Global Markets:
- Asian equity markets: Nikkei up 0.75 %, Shanghai Composite rose 0.10 %, Hang Seng rallied 0.85 %, ASX 200 gained 0.60 %
- Commodities: Gold at $1210 (+0.10 %), Silver at $15.50 (+0.30 %), WTI Oil at $44.60 (0.80 %), Brent Oil at $47.10 (+0.90 %)
- Rates: US 10 year yield at 2.39, UK 10 year yield at 1.31, German 10 year yield at 0.57
News & Data:
- China CPI (Y/Y) Jun: 1.50% (Est 1.60%, Prev 1.50%)
- China PPI (Y/Y) Jun: 5.50% (Est 5.50%, Prev 5.50%)
- Japan Machine Orders (M/M) May: -3.60% (Est 1.70%, Prev -3.10%)
- Japan Machine Orders (Y/Y) May: 0.60% (Est 7.60%, Prev 2.70%)
- PBoC Fixes USDCNY Reference Rate At 6.7964 (Prev 6.7914)
- BoJ Gov Kuroda: Will Maintain QQE With Yield Curve Control For As Long As Needed To Achieve 2% Inflation In Stable Manner
- BoJ Gov Kuroda: Japan’s Economy Expected To Continue Expanding Moderately
CFTC Positioning Data:
- EUR long 77K vs 59K long last week. Longs increased by 18K
- GBP short 28K vs 39K short last week. Shorts trimmed by 11K.
- JPY short 75K vs 61K short last week. Shorts increased by 14K
- CHF short 0K vs 5K short last week. Shorts trimmed by 5K
- CAD short 39K vs 49K short. Shorts trimmed by 10K.
- AUD long 32k vs long 20k last week. Longs increased by 12K.
- NZD long 29K vs 25K long last week. Longs increased by 4K
Markets Update:
Asian stock markets rose overnight, as risk appetite increased. In FX, the US Dollar failed to sustain the momentum from Friday and fell against most major currencies except the Japanese Yen.
USD/JPY looks quite bullish. It is back above 114 and a test of 115.50 resistance seems likely. The reason why the Yen has been underperforming is that the BoJ is maintaining its loose monetary policy while many other central banks are signaling changes. Therefore, JPY weakness is likely to persist.
The Euro managed to get back above 1.14 in Asia. Demand remains strong for the currency. Should it break above 1.1450, there is little resistance until 1.16.
The Canadian Dollar rallied on Friday after better than expected employment data. The market is speculating that the Bank of Canada might hike interest rates this week. This week should decide the near-term direction for USDCAD. A rate hike and hawkish BoC could send the currency pair towards 1.26, while a disappointment would trigger a short squeeze and pave the way for a 1.32 retest.
Upcoming Events:
- 07:00 BST – German Trade Balance
- 09:30 BST – Euro Zone Sentix Investor Confidence
The Week Ahead
- Tuesday: US JOLTs Job Openings
- Wednesday: UK employment data, Bank of Canada rate decision, Fed Chair Yellen testifies
- Thursday: US PPI
- Friday: US CPI & Retail Sales
