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World stocks jumped in the Asian session after the weekend meeting between Donald Trump and Xi Jinping at the G20 summit in Japan. The two leaders agreed to return to the negotiation table and try to hammer a trade deal. The US also allowed US companies to continue supplying goods to Huawei, one of the biggest technology companies in China. In Asia, the Shanghai and Nikkei indices rose by 2.15% and 1.75% respectively. In the US, Dow and S&P futures rose by 0.75% and 0.84% respectively while in Europe, the DAX and Stoxx futures rose by 0.45% and 0.70% respectively.

The Japanese yen weakened against the USD in the Asian session. This weakness happened as the USD rallied following the G20 summit. In Japan, traders received the large and small manufacturing data released by Tankan. The Tankan big manufacturing outlook index in the second quarter declined to 7 from the previous 8. This was better than the expected 6. The large manufacturing outlook index declined to 7 from the previous 12. The large non-manufacturers index rose to 23 from the previous 21.

Later today, investors will receive the unemployment and PMI data from Germany. The German unemployment rate is expected to have remained unchanged at 5.0% in May. The country’s manufacturing PMI is expected to have remained unchanged at 45.4. In the European Union, the consensus estimate is that the manufacturing PMI will remain at 47.8 while in the UK, the PMI is expected to drop from 49.4 to 49.2. Later on, the US ISM manufacturing PMI for June is expected to drop to 51.0 from the previous 52.1.

EUR/USD

The EUR/USD pair declined slightly after the deal between US and China. Some investors believe that the deal could help reduce more rate cuts this year. The pair declined to a low of 1.1350, which is slightly above the important support shown below. It was also below the 28-day and 14-day moving averages while the RSI has continued to decline from 68 to the current 38. The pair could continue moving lower to test the 61.8% Fibonacci Retracement level of 1.1323.

USD/JPY

The USD/JPY pair rose sharply to a high of 108.50. This was the highest level since June 19. The pair then eased slightly and is now trading at the 108.22 level. On the hourly chart, the pair is below the 28-day and 14-day moving averages. The RSI had previously reached a high of 81 but it later moved slightly lower to the current level of 60. The price is slightly below the upper line of the Bollinger Bands. The pair will likely stay at the current level of 108 as traders think about the impact of the truce between US and China

XAU/USD

The gold price declined sharply today after the truce between US and China. The XAU/USD pair declined to a low of 1340, which was the lowest level since June 25. This drop ended the momentum that has been going on for the past few months, taking it to the six-year high. On the hourly chart, the pair is below the 28-day and 14-day moving averages while the RSI has dropped from the overbought level of 85 to the current 35. The pair will likely continue the upward momentum as the trade deal between US and China brings more certainty to the overall market.

Daily Pivots: (S1) 107.68; (P) 107.81; (R1) 108.06; More...

USD/JPY rebounds strongly today but stays below 108.80 resistance. Intraday bias remains neutral first. Considering bullish convergence condition in 4 hour MACD, firm break of 108.80 will confirm short term bottoming at 106.78. In this case, stronger rise should be seen back to 110.67 resistance. On the other hand, rejection by 108.80, followed by break of 107.56 will retain near term bearishness. Intraday bias will be turned back to the downside for 106.78 support instead.

In the bigger picture, decline from 118.65 (Dec 2016) is still in progress, with the pair staying inside long term falling channel. Break of 104.62 will target 100% projection of 118.65 to 104.62 from 114.54 at 100.51. For now, we'd expect strong support above 98.97 (2016 low) to contain downside to bring rebound. In any case, break of 112.40 is needed to the first serious sign of medium term bullishness. Otherwise, further decline will remain in favor in case of rebound.

Dollar and stocks are give a strong boost after Trump-Xi meeting in Japan delivered what the markets expected. For now, the greenback is trading as the strongest ones while traders are revisiting the chance of Fed cut in July. Canadian Dollar is steadily firm, partly helped by rally resumption in oil price, as WTI breaches 60 handle. Swiss France and Yen are broadly pressured but Euro and Australian Dollar are not far behind.

In short, Trump an Xi agreed to stop further escalations in tariffs for the time being. Trump agreed to loosen up the ban on Chinese tech giant Huawei while China agreed to buy large amount of American farm products. Additionally, Trump surprised the world by being the first sitting US president to visit the Demilitarized Zone between the two Koreas and met North Korean leader Kim Jong-un, for restarting nuclear talks.

Technically, while Dollar is strong today, it has yet to take out key near term resistance levels against others. More is needed to confirm bottoming and bullish reversal in the greenback. 1.1317 minor support in EUR/USD, 1.2642 support in GBP/USD, 0.9854 resistance in USD/CHF and 108.80 resistance in USD/JPY need to be taken out firmly, better together, to confirm Dollar strength.

In other markets, Nikkei closed up 2.14%. China Shanghai SSE is up 1.97%. Singapore Strait Times is up 1.38%. Hong Kong is on holiday. Japan 10-year JGB yield is up 0.0175 at -0.144.

Trump claims winning, Kudlow talks down loosening of Huawei ban

A day after the meeting with Xi, Trump claimed on Sunday, in South Korea, that the US is "winning big because we have created an economy that is second to none". And, "we're collecting 25 percent on $250 billion, and China is paying for it, as you know, because, as you notice, our inflation hasn't gone up."

Trump further claimed that "China has devalued their currency in order to pay for the tariffs... And in addition to devaluing, they've also pumped a lot of money into their economic model... They've been pumping money in. We haven't. We've been retracting. We've been raising interest rates and they've been lowering interest rates."

Separately, the loosening up of Huawei ban triggered some criticism from Trump's Republican party. South Carolina Republican Senator Lindsay Graham warned "there will be a lot of pushback if it is a major concession."

But National Economic Council chairman Larry Kudlow tried to tone it down on Fox News Sunday. He said "all that is going to happen is Commerce will grant some additional licenses where there is a general availability" of the parts the company needs. And, companies "are selling products that are widely available from other countries ... This not a general amnesty ... The national security concerns will remain paramount."

China Daily: US-China remain widely apart even on the conceptual level

On the Chinese side, the official China Daily welcomed the agreement between Trump and Xi to " make way for negotiations". However, it warned "agreement on 90 percent of the issues has proved not to be enough, and with the remaining 10 percent where their fundamental differences reside, it is not going to be easy to reach a 100-percent consensus, since at this point, they remain widely apart even on the conceptual level."

USD/CNH (offshore Yuan) drops sharply today and the Yuan rebounds on trade news. With 55 day EMA firmly taken out, the rise from 0.6699 should have completed at 0.6920, after failing 6.9800 resistance. Imminent pressure on breaking the psychologically important 7 handle is eased. Deeper fall could be seen back towards 6.6699 could be seen for the near term. But strong support should be seen around there to contain downside. Eventual break of 6.9800 is still expected at a later stage.

China Caixin PMI manufacturing dropped to 49.4, second lowest since Jun 2016

China Caixin PMI Manufacturing dropped to 49.4 in June, down from 50.2, and missed expectation of 50.1. It's also the second lowest since June 2016, and below neutral 50-mark dividing expansion from contraction again. It's noted that output and new work intakes declined for first time since January. There was renewed reduction in export sales while goods producers cutback input purchasing and payroll numbers

Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said: "Overall, China's economy came under further pressure in June. Domestic demand shrank notably, foreign demand was still underpinned by front-loading exports, and business confidence fell sharply. It's crucial for policymakers to step up countercyclical policies. New types of infrastructure, high-tech manufacturing and consumption are likely to be the main policy focuses."

Also released over the weekend, the official China PMI Manufacturing was unchanged at 49.4 in June, below expectation of 49.5. Official PMI Non-Manufacturing dropped to 54.2, down from 54.3, matched expectations.

Australia AiG PMI manufacturing dropped to 49.4, lowest since Aug 2016

Australia AiG Performance of Manufacturing Index dropped -3.3 pts to 49.4 (seasonally adjusted) in June, below 50-points threshold and was the lowest level since August 2016. In trend terms, PMI dropped -0.4 to 51.9. Three of the six sectors are in deep contraction including metal products, TCF paper & printing, and machinery and equipment. Though, food & beverages, building materials and chemicals are holding first.

Employment data are mixed. average wage index rebounded by 4.2 points to 59.7, indicating a faster rate of wage increases (seasonally adjusted). However, employment index fell by -5.5 points to be broadly stable at 50.1.

Japan Tankan large manufacturing index dropped to near three year low

Japan Q2 Tankan survey showed large manufacturing index deteriorated to the worst level in nearly three years. But, improvements was seen in the non-manufacturing sector. Capital expenditure also held up well. Overall, the set of data argues that while the economy is stagnating, it's not falling off the cliff. And, BoJ will likely maintain its baseline of moderate expansion.

Large Manufacturing Index dropped to 7, down from 12 and missed expectation of 9, lowest since September 2016. Large Manufacturers Outlook dropped to 7, down from 8, but beat expectation of 6. Large Non-Manufacturing Index rose to 23, up from 21, beat expectation of 20. Large Non-Manufacturing Outlook dropped to 17, down from 20, missed expectation of 19. All industry capex rose 7.4%, up from 1.2% but missed expectation of 8.1%.

Also from Japan, PMI manufacturing was finalized at 49.3, revised down from 49.5, below the 50 no-change threshold for the second consecutive month. Consumer confidence dropped to 38.7 in June, down from 39.4 and missed expectation of 39.2.

Looking ahead: RBA to cut interest rates, NFP and ISMs to guide Fed move

RBA is generally expected to cut cash rate again by 25bps to 1.00% this week. Originally, some expected the rate cut to happen in August. But such expectation was pulled ahead after Governor Philip Lowe said after June's cut that it would be "unrealistic to expect that lowering interest rates by ¼ of a percentage point will materially shift the path we look to be on." And, "it is not unrealistic to expect a further reduction in the cash rate as the Board seeks to wind back spare capacity in the economy and deliver inflation outcomes in line with the medium-term target."

Some might argue that RBA could hold fire first and wait until new economic projections before acting. But the problem is, Lowe has already set up expectations with his unusually blunt language. Failure to deliver this week would shoot up the exchange, which should offset some of the effect of prior rate cut. Thus, even though it's far from certain, RBA is much more likely to cut this week than not.

The string of economic data from the US this are more important than ever. Now that the threat of further trade war escalations is delayed, economic data will be crucial to for Fed to decide on whether to cut interest rate "immediately" in July or not. Let's recall Chair Jerome Powell just emphasized last week, "we are also mindful that monetary policy should not overreact to any individual data point or short-term swing in sentiment. Doing so would risk adding even more uncertainty to the outlook." It seems like Fed doesn't really something stellar in this week's NFP and ISMs for it to hold its hand. Rather, having the readings back to "normal" would be enough for standing pat for now.

In addition, Japan Tankan, UK PMIs, China PMIs, Australia trade balance and retail sales, Canada employment, will also be closely watched.

• Monday: Japan Tankan survey; Australia AiG manufacturing, MI inflation gauge; China Caixin PMI manufacturing; Swiss retail sales; Eurozone PMI final, M3 money supply, unemployment rate; UK PMI manufacturing, M4; US ISM manufacturing, construction spending.
• Tuesday: New Zealand building permit; RBA rate decision; Germany retail sales; UK PMI construction; Eurozone PPI; Canada PMI manufacturing.
• Wednesday: Australia trade balance, building approvals; Eurozone PMI services final; UK PMI services; US ADP employment, trade balance, jobless claims, ISM services, factory orders; Canada trade balance.
• Thursday: Australia retail sales; Swiss CPI; Eurozone retail sales.
• Friday: Japan household spending, leading indicators; Germany factor orders; Swiss foreign currency reserves; Canada employment, Ivey PMI; US non-farm payrolls.

USD/JPY Daily Outlook

Daily Pivots: (S1) 107.68; (P) 107.81; (R1) 108.06; More...

USD/JPY rebounds strongly today but stays below 108.80 resistance. Intraday bias remains neutral first. Considering bullish convergence condition in 4 hour MACD, firm break of 108.80 will confirm short term bottoming at 106.78. In this case, stronger rise should be seen back to 110.67 resistance. On the other hand, rejection by 108.80, followed by break of 107.56 will retain near term bearishness. Intraday bias will be turned back to the downside for 106.78 support instead.

In the bigger picture, decline from 118.65 (Dec 2016) is still in progress, with the pair staying inside long term falling channel. Break of 104.62 will target 100% projection of 118.65 to 104.62 from 114.54 at 100.51. For now, we'd expect strong support above 98.97 (2016 low) to contain downside to bring rebound. In any case, break of 112.40 is needed to the first serious sign of medium term bullishness. Otherwise, further decline will remain in favor in case of rebound.

Economic Indicators Update

The GBP/USD is expected to move up higher as part of a wave C but only after it completes a bearish wave B (green) first. Price is expected to bounce at the 50 or 61.8% Fibonacci retracement level of wave B vs A for a bullish bounce and continuation towards the 50% Fib of wave 4 vs 3.

The GBP/USD is probably building a bearish ABC (orange) within the wave B (green) of the larger bullish ABC (green). Price seems to have completed a bullish wave C (brown) in wave B (orange) at the 61.8% Fibonacci and might bow be ready for a move lower to complete wave C (orange).

General Trend:

• Trade-sensitive IT and Telecom Services firms outperform in Shanghai
• Chinese telecom equipment firm ZTE outperforms, Trump said he will partially ease restrictions on Huawei
• Chipmaker Sanan Optoelectronics rises over 7% in China, may be removed from US ‘red flag’ list
• China’s official and Caixin manufacturing PMIs both contracted in June, new orders decline
• BoJ Q2 Tankan Large Manufacturers survey eases in Q2 (in line with BSI data released in early June)
• Trade dispute now erupts between South Korea and Japan
• Brent Crude Futures rise over 2%, Russia and Saudi Arabia said the oil production cut agreement will be extended
• AUD/JPY reverses gain ahead of Tuesday’s RBA meeting (July 2nd)
• US Soybean Futures rise over 3%, Trump said China will resume purchases of some US farm products
• Trump’s makes surprise visit to North Korea
• Few comments seen from China’s Xi after his meeting with Trump

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened +0.3%
• (AU) Australia Jun AIG Performance of Manufacturing Index: 49.4 v 52.7 prior
• (NZ) Reserve Bank of New Zealand (RBNZ) releases submissions on bank capital review, expects final decision in November; Some note that plan may raise borrowing costs; Some question whether increases are too large
• HZN.AU Raises FY19 oil sales 1.86M bbl; Rev ~$126M (prior $100-120M); expects to be in net cash position mid-2020
• ADA.AU Guides FY19 pretax loss A$1.7-1.9M; Names Daniel Verret as acting CEO
• (NZ) New Zealand Treasury: Forward indicators of activity are mixed; mixed outlook poses downside risk to growth

Japan

• Nikkei 225 opened +1.4%
• (JP) JAPAN Q2 TANKAN LARGE MANUFACTURING INDEX: 7 V 9E ; OUTLOOK SURVEY: 7 V 6E; LARGE ALL INDUSTRY CAPEX: 7.4% V 8.1%E
• (JP) Japan Jun Final PMI Manufacturing: 49.3 v 49.5 prelim
• (JP) Japan METI confirms will adopt stricter rules on some exports related to key display panel and chip materials, including polymide, resist, HF to South Korea, effective July 4th due to worsening relations with South Korea
• (JP) Japan Tax Agency: In 2018 domestic land prices rose for the 4th consecutive year
• (JP) Japan Deputy Chief Cabinet Sec Nishimura: No change to Japan's plan to raise sales tax, economic fundamentals are solid, economy remains in moderate recovery

Korea

• Kospi opened +0.5%
• (KR) South Korea Jun Trade Balance $4.2B v $4.1Be; Exports Y/Y: -13.5% v -13.5%e (7th straight decline, fastest decline since Jan 2016); Semiconductor exports Y/Y: -25.5% y/y
• (KR) South Korea Deputy Industry Min Park: South Korea will sternly respond to Japan's export curbs, curbs would violate WTO rules
• (KR) US President Trump: "I am in South Korea now. President Moon and I have "toasted" our new Trade Deal, a far better one for us than that which it replaced...Today I will visit with, and speak to, our Troops - and also go to the the DMZ (long planned). My meeting with President Moon went very well!" - tweet
• (KR) On Sunday (June 30th), US President Trump shook hands with North Korea leader Kim Jong Un, Trump also took 20 steps into North Korea – Press
• (KR) South Korea Jun PMI Manufacturing: 47.5 v 48.4 prior (4 month low)
• (KR) Bank of Korea Deputy Gov Yoon: June export data confirms recovery in semiconductor market; medium to long-term uncertainty still high despite US/China agreement
• (KR) South Korea sells 3-year Govt bonds, avg yield 1.47% v 1.575% prior; bid to cover 3.16x v 2.93x prior

China/Hong Kong

• Hang Seng opened closed; Shanghai Composite opened +1.5%
• (CN) CHINA JUNE OFFICIAL MANUFACTURING PMI: 49.4 V 49.5E (second straight contraction)
• (CN) CHINA JUN CAIXIN PMI MANUFACTURING: 49.4 V 50.1E (1st contraction reading since Feb)
• (G20) Pres Trump: negotiations with China are continuing, believe we are "back on track" with China; Had an excellent meeting, as good as it was going to be; Will allow US companies to sell their equipment to Huawei
• (G20) China and US have agreed to restart trade talks; US agrees not to impose any new tariffs - Chinese state media
• (CN) China PBOC sets yuan reference rate: 6.8716 v 6.8747 prior
• (CN) China PBoC Open Market Operation (OMO): Skips for the 6th consecutive session; Net drains CNY150B v nil prior
• (HK) Macau June Gaming Rev (MOP) 23.8B v 25.9B prior; Y/Y: +5.9% v +1.8% prior
• 600703.CN Has been removed from the US government's 'red flag' list - Chinese Press
• (CN) China has asked PPP projects to avoid excess debt financing
• (CN) Armyworms said to be discovered at large corn producer in the Shandong province (China) - financial press

Other Asia

• (SG) Singapore Q2 Private Residential Prices q/q: +1.3% v -0.7% q/q - URA

North America

• BA Reportedly DOJ has expanded Boeing investigation to look at allegations of shoddy workmanship on 787 Dreamliners produced in South Carolina - Seattle Times

Europe

• (G20) Russia Energy Min Novak: agreement to extend the oil production cut deal is consolidated; other countries are supporting an extension; Russia agreed with Saudi Arabia to extend the supply reductions for another 6-9 months
• (FR) France sees possible securing of ECB Presidency
• (UK) PM Candidate Hunt announces £20B no-deal Brexit 'war chest' to financially support industries; plans to 'ramp up' no deal preparations; plans to cut corporate taxes to 12.5% regardless of Brexit deal - UK Press
• (UK) British Chambers of Commerce (BCC): Balance of UK manufacturing firms reporting improved domestic orders at 7-year low

Levels as of 01:20ET

• Hang Seng closed; Shanghai Composite +2.0%; Kospi +0.1%; Nikkei225 +2.1%; ASX 200 +0.6%
• Equity Futures: S&P500 +1.0%; Nasdaq100 +1.4%, Dax +0.7%; FTSE100 +0.4%
• EUR 1.1326-1.1372; JPY 108.11-108.50; AUD 0.6996-0.7035; NZD 0.6700-0.6727
• Commodity Futures: Gold -1.4% at $1,393/oz; Crude Oil +2.5% at $59.90/brl; Copper +0.7% at $2.75/lb

Market movers today

We are starting the week with a host of PMI manufacturing releases, which will give an indication of where the global manufacturing cycle is heading amid the uncertainty prompted by the trade stand-off between the US and China. Markets will also keep an eye on the aftermath of the trade ceasefire over the weekend.

In Europe, there will be ongoing discussions on who will head key European institutions after difficulties agreeing on the candidates.

In the UK , the PMI manufacturing index for June is set to be released today. The index is likely to fall further, as it remains elevated compared with the equivalent euro area index and stockpiling ahead of Brexit.

In the US , we start the week with ISM manufacturing for June. We expect ISM to decrease and come in at 50.8, down from 52.2. In our view, the US manufacturing sector is not immune to the global slowdown but we think the index will remain just above the important 50 threshold. That said, risk is skewed to the downside.

Sweden's industrial PMI has done well compared with the German PMI. However, there is still a risk that the Swedish June PMI turns down, as Swedish new orders and German industrial PMI have been negative over the past months. Likewise, we see a risk of a correction in manufacturing production on the back of weak German production.

In Norway, we expect the PMI to rise moderately to 54.5 in June, given that strong growth in oil-related industries has meant industrial activity has held up well despite the slowdown in global manufacturing. Industrial production increased by 2.2% in April after a relatively weak Q1 and is thus back in line with the underlying trend seen since mid-2017. Given the strong rise in April, we estimate a slight correction for May, with a decrease of 0.4% m/m.

Selected market news

The key event during the weekend was the truce between the US and China. The US and China are set to restart the trade negotiations. Furthermore, the restrictions on Huawei were eased a bit, as US companies are allowed to sell some products to Huawei. However, it is still very uncertain how long this truce is going to last and thus this should only bring a short-term relief to the markets. The JPY has weakened modestly, while commodity currencies have strengthened. 10Y JGBs have risen with some 2bp and most Asian equities are up 0.5%-2% this morning.

In Japan the Tankan survey showed that the sentiment among Japanese manufacturers fell to the lowest level in three years. The survey was conducted before the G20 meeting this weekend. However, domestic-focused companies were more upbeat on the economy.

Australia AiG Performance of Manufacturing Index dropped -3.3 pts to 49.4 (seasonally adjusted) in June, below 50-points threshold and was the lowest level since August 2016. In trend terms, PMI dropped -0.4 to 51.9. Three of the six sectors are in deep contraction including metal products, TCF paper & printing, and machinery and equipment. Though, food & beverages, building materials and chemicals are holding first.

Employment data are mixed. average wage index rebounded by 4.2 points to 59.7, indicating a faster rate of wage increases (seasonally adjusted). However, employment index fell by -5.5 points to be broadly stable at 50.1.

Full release here.

For the 24 hours to 23:00 GMT, the EUR marginally rose against the USD and closed at 1.1371 on Friday.

On the data front, the Euro-zone's preliminary consumer price index (CPI) rose 1.2% on a yearly basis in June, meeting market expectations. In the prior month, the CPI had registered a similar rise.

In the US, data indicated that the personal spending advanced 0.4% on a monthly basis in May, undershooting market expectations for a gain of 0.5%. In the prior month, personal spending had recorded a revised rise of 0.6%. Moreover, the nation's personal income climbed 0.5% on a monthly basis in May, compared to a similar rise in the previous month. Markets had envisaged personal income to register an increase of 0.3%.

On the other hand, the final Reuters/Michigan consumer sentiment index declined to a level of 98.2 in June, compared to a level of 100.0 in the prior month. Market participants and preliminary figures had expected the index to fall to a level of 97.9. Also, the US Chicago Fed Purchasing Managers' Index contracted to a level of 49.7 in June, compared to a reading of 54.2 in the previous month. Market had anticipated the index to drop to a level of 53.5.

In the Asian session, at GMT0300, the pair is trading at 1.1353, with the EUR trading 0.16% lower against the USD from Friday's close.

The pair is expected to find support at 1.1336, and a fall through could take it to the next support level of 1.1320. The pair is expected to find its first resistance at 1.1381, and a rise through could take it to the next resistance level of 1.1410.

Looking ahead, traders would keep an eye on the Euro-zone's unemployment rate and the Markit manufacturing PMI, both for June, set to release across the euro bloc. Additionally, Germany's unemployment rate for June, will also be on investors' radar. Later in the day, the US Markit manufacturing PMI and the ISM manufacturing, both for June along with construction spending for May, will garner significant amount of investors' attention.

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

For the 24 hours to 23:00 GMT, the GBP rose 0.22% against the USD and closed at 1.2699 on Friday.

Data revealed that UK's final gross domestic product (GDP) advanced 0.5% on a quarterly basis in 1Q 2019, in line with market expectations and confirming the preliminary print. In the preceding quarter, the GDP had recorded a gain of 0.2%.

In the Asian session, at GMT0300, the pair is trading at 1.2699, with the GBP trading flat against the USD from Friday's close.

The pair is expected to find support at 1.2664, and a fall through could take it to the next support level of 1.2630. The pair is expected to find its first resistance at 1.2734, and a rise through could take it to the next resistance level of 1.2770.

Going ahead, traders would closely monitor UK's net consumer credit and mortgage approvals for May along with the Markit manufacturing PMI for June, scheduled to release in a few hours.

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

For the 24 hours to 23:00 GMT, the USD slightly rose against the JPY and closed at 107.81 on Friday.

In economic news, Japan's housing starts tumbled 8.7% on an annual basis in May, surpassing market consensus for a drop of 4.2%. In the previous month, housing starts had recorded a drop of 5.7%. Moreover, the nation's construction orders plunged 16.9% on an annual basis in May, following a fall of 19.9% in the previous month.

In the Asian session, at GMT0300, the pair is trading at 108.23, with the USD trading 0.39% higher against the JPY from Friday's close.

The pair is expected to find support at 107.69, and a fall through could take it to the next support level of 107.15. The pair is expected to find its first resistance at 108.64, and a rise through could take it to the next resistance level of 109.05.

Trading trend in the Japanese Yen today, is expected to be determined by Japan's consumer confidence index for June, slated to release in a while.

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