Sample Category Title

The forex markets are generally steady in Asian session today. Trading is rather subdued with US markets on holiday. But volatility will definitely come back with job data tomorrow. For the week, Canadian Dollar is currently the strongest one but USD/CAD is still struggling take out last week's firmly. Australian Dollar is currently the second strongest for now. On other hand, European majors are generally lower, led by Swiss Franc, followed by Sterling then Euro.

Technically, AUD/USD's break of 0.7022/34 resistance is tentatively taken as a sign of near term bullish reversal. Further rise is expected as long as 0.6956 support holds, for 0.7205 resistance. USD/CAD is still pressing 1.3052/68 cluster support zone. Firm break there will carry medium term bearish implications. Dollar's rebounds versus Euro, Swiss and Sterling are losing momentum. Some sideway trading is likely for the rest of the day.

In Asia, Nikkei closed up 0.27%. Hong Kong HSI is up 0.01%. China Shanghai SSE is down -0.17%. Singapore Strait Times is up 0.23%. Japan 10-year JGB yield is up 0.0013 at -0.155. Overnight, DOW rose 0.67%. S&P 500% rose 0.77%. NASDAQ rose 0.75%. 10-year yield dropped -0.023 to 1.953.

WH Kudlow: Won't lift tariffs during trade talks with China

White House Economic Adviser Larry Kudlow said US-China trade negotiations will "continue in earnest this coming week". The teams are "on the phone" and are "going to be on the phone this coming week". He doesn't know "precisely when" but the teams will be scheduling face-to face meeting.

Meanwhile, Kudlow emphasized that "We've been accommodative. We will not lift tariffs during the talks" He added, "we are hoping that China will toe its end of it by purchasing a good many of American imports."

Australia retail sales rose 0.1%, missed expectations

Australia retail sales rose 0.1% mom in May, below expectation of 0.2% mom.

ABS Director of Quarterly Economy Wide Surveys, Ben James said: "There were mixed results across the industries with rises in Cafes, restaurant and takeaway food services (0.7%), Household goods retailing (0.5%), and Other retailing (0.6%). These rises were offset by falls in Food retailing (-0.3%), Department stores (-0.4%), and Clothing, footwear and personal accessory retailing (-0.2%)."

In seasonally adjusted terms, there were rises in Victoria (0.6%), South Australia (0.5%), the Australian Capital Territory (0.7%), and the Northern Territory (0.5%). There were falls in Queensland (-0.3%), New South Wales (-0.1%), Western Australia (-0.2%), and Tasmania (-0.4%).

Looking ahead

Swiss CPI and Eurozone retail sales will be released in European session. US calendar is empty today for holiday. Focus will mainly be on job data from US and Canada tomorrow.

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.6998; (P) 0.7019; (R1) 0.7051; More...

AUD/USD's rebound from 0.6831 resumed by breaking 0.7034 temporary top. Current development confirmed short term bottoming at 0.6831. Intraday bias is turned back to the upside for 61.8% retracement of 0.7295 to 0.6831 at 0.7118 first. Sustained break till target 0.7295 resistance next. On the downside, break of 0.6956 support, however, will indicate completion of the rebound. Intraday bias will be turned back to the downside for retesting 0.6831 low.

In the bigger picture, with 0.7393 key resistance intact, medium term outlook remains bearish. The decline from 0.8135 (2018 high) is seen as resuming long term down trend from 1.1079 (2011 high). Decisive break of 0.6826 (2016 low) will confirm this bearish view and resume the down trend to 0.6008 (2008 low). However, firm break of 0.7393 will argue that fall from 0.8135 has completed. And corrective pattern from 0.6826 has started the third leg, targeting 0.8135 again.

Economic Indicators Update

Market movers today

We are looking at a quiet day on the release front with the US markets closed for the 4 July celebrations.

In the Eurozone, we get retail sales which are expected to edge up slightly. While investments have been facing headwinds amid the trade uncertainty, retail sales have remained fairly steady.

The tensions between Iran and US is rising after Trump warned Iran yesterday about stepping up its uranium enrichment. Iran has called for EU economic guarantees by 7 July or else it will proceed with the nuclear programme.

Selected market news

The European government bond markets continue to see spread compression between the core-EU markets and the Periphery. 10Y Greece is now close to breaking through 2% ahead of the general election in Greece on Sunday. The combination of the nomination of IMF's Largarde to be head of the ECB, soft economic data, fiscal discipline in Italy as well as the hunt for yield combined with expectations of more upgrades of e.g., Greece from rating agencies is supporting the rally in the periphery.

The positive sentiment in Europe is also supporting US Treasuries from the long end, where the 2-10Y curve has flattened in recent days. Rate cuts have been priced into the 2Y segment and thus the long end has to rally ahead of the US labour market report released on Friday.

US equity markets continue to rise ahead of the 4 th of July holiday, but the move has not been followed in Asia this morning, where we have seen a mixed picture in the equity markets.

In the Scandi markets we see a significant increase in prepayments of 2% 30Y callables in the Danish market see more in the link above. The Riksbank did not change much in their policy at yesterday's meeting see more in the 'Selected reading' links above.

There are limited data releases today and the US markets are closed. Hence, we expect to see modest activity in the markets.

In Denmark, today brings figures for bankruptcies and forced home sales in June. The number of forced home sales has generally been falling in recent years but remains higher than prior to the financial crisis. In contrast, the number of bankruptcies has been rising in the past few years. However, this can also be seen as a healthy sign, as it indicates greater competition between Danish companies.

General Trend:

• Australia S&P ASX 200 trades at highest level since 2007, banks outperform
• Alumina [AWC.AU] declines in Australia, Trump said to have privately raised aluminum issue related to Australia at the June G20 meeting
• Japanese retail companies expected to report later today include Seven & I, Kewpie, Aeon Mall and ABC-Mart
• Utilities outperform in Hong Kong on comments from China's NDRC regarding gas connection fees
• Hong Kong PMI contracts for 15th straight month, data weighed down by US/China trade dispute and extradition bill related protests
• China said to make first ever purchase of US rice (financial press)
• Little initial impact seen from Aussie retail sales
• USD trades generally weaker after Trump commented on currency manipulation, US data mixed ests (ADP employment and ISM Services)
• Korean Won (KRW) rises as current account returned to surplus in May, tracks gain in yuan (CNY
• Reminder US markets are closed July 4th for holiday
• China Commerce Ministry (MOFCOM) sometimes holds weekly press conference on Thursday's

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened +0.1%
• (AU AUSTRALIA MAY RETAIL SALES M/M: 0.1% V 0.2%E
• (AU) Australia May Job Vacancies: -1.1% v 1.4% prior
• (AU) US President Trump said to have privately raised aluminum issue related to Australia at the June G20 meeting - Australian Press
• (AU) Australia government seen as having enough votes in cross-bench to support A$158B tax package, passage may come by as early as today - US financial press

Japan

• Nikkei 225 opened +0.5%
• 5202.JP To raise certain product prices by 5-15%, effective in Oct - US financial press
• (JP) Japan PM Abe: Pres Trump has brought up revision of Japan-US security pact 'many times'
• (JP) Japan MoF sells ¥699.3B v ¥700B indicated in 0.4% (prior 0.50%) coupon 30-year JGBs, avg yield: 0.357% v 0.319% prior, bid to cover 4.01x v 3.47x prior

Korea

• Kospi opened +0.3%
• (KR) South Korea May Current Account: $4.95B v -$664.8M prior; Goods Balance: $5.39B v $5.7B prior (smallest since Jan 2014)
• (KR) South Korea Fin Min Hong: Economic conditions have changed, Japan's curbs are obvious economic retaliation; BoK will make appropriate rate decision while considering changes in economic conditions
• 128940.KR Announces Janssen decided to return global license for developing obesity and diabetes treatment HM12525A to Hanmi as some results of phase 2 clinical trial failed to meet target

China/Hong Kong

• Hang Seng opened +0.1%; Shanghai Composite opened flat
• (CN) Importer from China purchased about 40 tons of medium-grain rice from California-based Sun Valley Rice, represented the US' first ever rice sale to China - financial press
• (CN) China PBOC sets yuan reference rate: 6.8705 v 6.8640 prior
• (CN) China PBoC Open Market Operation (OMO): Skips for the 9th consecutive; Net drains CNY30B v drain CNY40B prior
• (CN) China State Council: China will support the pilot free trade zones in undertaking more experiments with reform and opening up, and refine policy incentives for cross-border e-commerce to facilitate more innovative models in foreign trade

North America

• (US) Pres Trump accuses China and Europe of 'big currency manipulation game' and says the US should 'match' them
• S T-Mobile/Sprint deal reportedly nears DOJ approval; official decision could come as soon as next week - press

Europe

• (FR) ECB's Villeroy (France): Lagarde will make a great ECB President; she can count on my full support in the Governing Council
• (UK) Labour party said to define its Brexit position before the summer recess - financial press
• (UK) BOE's Cunliffe: Reiterates stance that risk of a no-deal Brexit and no transition have risen - Conference in Lisbon
• (DE) German Verdi Union: Reached a labor deal of a for banks in Germany; the deal includes a 4% pay raise; union members must now approve deal

Levels as of 1:20 ET

• Nikkei 225, +0.3%, ASX 200 0.6%, Hang Seng flat; Shanghai Composite -0.3%; Kospi +0.2%
• Equity Futures: S&P500 flat; Nasdaq100 flat, Dax -0.2%; FTSE100 flat
• EUR 1.1296-1.1277 ; JPY 107.83-107.70 ; AUD 0.7049-0.7026 ;NZD 0.6721-0.6697
• Gold +0.1% at $1,422/oz; Crude Oil -0.6% at $57.00/brl; Copper -0.4% at $2.675/lb

For the 24 hours to 23:00 GMT, the EUR marginally declined against the USD and closed at 1.1287.

On the macro front, Euro-zone's final services PMI rose to a level of 53.6 in June, compared to a level of 52.9 in the prior month. Market consensus and preliminary figures had indicated an advance to 53.4.

Separately, in Germany, the final Markit services PMI advanced to a level of 55.8 in June, compared to a level of 55.4 in the previous month. Market expectations and preliminary figures had indicated the PMI to record a rise to a level of 55.6.

In the US, data showed that the Markit final services PMI unexpectedly rose to a level of 51.5 in June, compared to a reading of 50.9 in the previous month. Market participants and preliminary figures had envisaged the PMI to ease to a level of 50.7. Also, the US seasonally adjusted initial jobless claims dropped to a level of 221.0K in the week ended 29 June 2019, more than market expectations for a drop to a level of 223.0K. In the prior week, initial jobless claims had recorded a revised reading of 229.0K.

On the flipside, the US ISM non-manufacturing index fell to a level of 55.1 in June, more than market expectations of a fall to a level of 56.0. The PMI had registered a reading of 56.9 in the prior month. Moreover, the nation's trade deficit widened to a 5-month high level of $55.5 billion in May, amid rise in imports and more than market consensus for a deficit of $54.0billion. The nation had posted a revised deficit of $51.2 billion in the previous month. Additionally, the US factory orders slid 0.7% on a monthly basis in May, declining for the second straight month and surpassing market anticipations for a drop of 0.6%. In the prior month, factory orders had registered a revised fall of 1.2%. Further, the final durable goods orders declined 1.3% on a monthly basis in May, meeting market expectations and confirming the preliminary figures. In the previous month, durable goods had recorded a revised drop of 2.8%. Similarly, the MBA mortgage applications fell 0.1% in the week ended 28 June 2019, following an advance of 1.3% in the previous week. Meanwhile, the ADP private sector employment climbed to a level of 102.0K in June, undershooting market anticipations for a gain to a level of 140.0K. The private sector employment had recorded a revised increase of 41.0 K in the previous month.

In the Asian session, at GMT0300, the pair is trading at 1.1284, with the EUR trading slightly lower against the USD from yesterday's close.

The pair is expected to find support at 1.1265, and a fall through could take it to the next support level of 1.1245. The pair is expected to find its first resistance at 1.1308, and a rise through could take it to the next resistance level of 1.1331.

Going forward, traders would keep an eye on Euro-zone's retail sales for May followed by Germany's construction PMI for June, slated to release in a few hours.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the GBP declined 0.14% against the USD and closed at 1.2579.

In economic news, UK's services PMI unexpectedly eased to a level of 50.2 in June, defying market expectations for a steady reading. In the prior month, the PMI had registered a reading of 51.0.

In the Asian session, at GMT0300, the pair is trading at 1.2580, with the GBP trading a tad higher against the USD from yesterday's close.

The pair is expected to find support at 1.2560, and a fall through could take it to the next support level of 1.2539. The pair is expected to find its first resistance at 1.2598, and a rise through could take it to the next resistance level of 1.2615.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD declined 0.06% against the JPY and closed at 107.79.

In the Asian session, at GMT0300, the pair is trading at 107.76, with the USD trading marginally lower against the JPY from yesterday’s close.

The pair is expected to find support at 107.57, and a fall through could take it to the next support level of 107.38. The pair is expected to find its first resistance at 107.92, and a rise through could take it to the next resistance level of 108.08.

In absence of key economic releases in Japan today, investor sentiment would be determined by global macroeconomic events.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

Australia retail sales rose 0.1% mom in May, below expectation of 0.2% mom.

ABS Director of Quarterly Economy Wide Surveys, Ben James said: "There were mixed results across the industries with rises in Cafes, restaurant and takeaway food services (0.7%), Household goods retailing (0.5%), and Other retailing (0.6%). These rises were offset by falls in Food retailing (-0.3%), Department stores (-0.4%), and Clothing, footwear and personal accessory retailing (-0.2%)."

In seasonally adjusted terms, there were rises in Victoria (0.6%), South Australia (0.5%), the Australian Capital Territory (0.7%), and the Northern Territory (0.5%). There were falls in Queensland (-0.3%), New South Wales (-0.1%), Western Australia (-0.2%), and Tasmania (-0.4%).

Full release here.

AUD/JPY is steady despite the data miss. AUD is lifted this week despite RBA rate cut. Strong rise in iron ore price and solid export data are supporting the Aussie. A short term bottom should be in place at 73.93 after hitting 61.8% retracement of 70.27 to 80.71 at 74.25. For now, further rise is in favor as long as 75.13 minor support holds. Break of 76.28 resistance and sustained trading above 55 day EMA will bring stronger rebound to 61.8% retracement of 80.71 to 73.93 at 78.12. However, rejection by 55 day EMA, followed by 75.13 minor support, will likely resume the fall from 80.71 through 73.93 low.

For the 24 hours to 23:00 GMT, the USD rose 0.08% against the CHF and closed at 0.9862.

In the Asian session, at GMT0300, the pair is trading at 0.9863, with the USD trading slightly higher against the CHF from yesterday’s close.

The pair is expected to find support at 0.9842, and a fall through could take it to the next support level of 0.9822. The pair is expected to find its first resistance at 0.9878, and a rise through could take it to the next resistance level of 0.9894.

Trading trend in the Swiss Franc today, is expected to be determined by Switzerland’s consumer price index for June, scheduled to release in a while.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0.36% against the CAD and closed at 1.3057.

On the macro front, Canada posted a trade surplus of C$0.76 billion in May, compared to a revised deficit of C$1.08 billion in the previous month.

In the Asian session, at GMT0300, the pair is trading at 1.3067, with the USD trading 0.08% higher against the CAD from yesterday’s close.

The pair is expected to find support at 1.3042, and a fall through could take it to the next support level of 1.3018. The pair is expected to find its first resistance at 1.3105, and a rise through could take it to the next resistance level of 1.3144.

Amid lack of economic releases in Canada today, traders would focus on global macroeconomic events for further direction.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the AUD rose 0.57% against the USD and closed at 0.7034.

LME Copper prices rose 0.6% or $36.0/MT to $5874.0/MT. Aluminium prices declined 0.1% or $1.0/MT to $1754.5/MT.

In the Asian session, at GMT0300, the pair is trading at 0.7034, with the AUD trading flat against the USD from yesterday's close.

Overnight data showed that Australia's seasonally adjusted retail sales rose 0.1% on a monthly basis in May, undershooting market expectations for a rise of 0.2%. Retail sales had recorded a fall of 0.1% in the prior month.

The pair is expected to find support at 0.6999, and a fall through could take it to the next support level of 0.6963. The pair is expected to find its first resistance at 0.7059, and a rise through could take it to the next resistance level of 0.7083.

Looking ahead, investors would await Australia's AiG performance of construction index for June, set to release overnight.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.