Sample Category Title

General Trend:

• China brokerage firms rise following meeting with regulators
• Apple suppliers rise in Hong Kong on Trump/Xi phone conversation
• Resources firms outperform in Australia, China iron ore futures rise over 5%
• Nomura rises over 8% on buyback
• China PBOC again offers more MLF funds than current maturities
• PBOC announces size of planned bill issuance in Hong Kong
• South Korea may delay adjustment to economic forecasts, no reason initially given (local press)
• Japan exports decline for 6th straight month, exports to Asia -12.1% y/y (China -9.7%)
• Japan’s May trade deficit with the EU was the largest on record, exports to the EU -7.1% y/y
• JGB Futures rise amid focus on recent comments from ECB’s Draghi, upcoming central bank meetings
• Japan 10-year JGB yields decline toward lower end of the BoJ’s yield curve control (YCC) range
• Bank of Japan (BOJ) due to announce rate decision on Thursday (June 20th)
• RBA Gov Lowe expected to speak on Thursday (0115 GMT) about labor markets and spare capacity
• NZ to release Q1 GDP on Thursday
• US Fed decision expected later today

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened +0.3%
• (NZ) NEW ZEALAND Q1 CURRENT ACCOUNT BALANCE (NZ$): +68M V +2ME; CURRENT ACCOUNT TO GDP RATIO YTD: -3.6% V -3.5%E
• GPT.AU Announces A$800M placement for acquisition; proposes acquisition of 25% stake in Darling Park property for A$531M; Cuts FY19 FFO/share growth guidance to 2.5% (guided +4% prior)
• GBT.AU Received revised higher proposal from Bravura Solutions for A$2.72/shr (prior A$2.50/shr)
• (NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: -3.8% v -3.4% prior (3rd consecutive decline)
• (AU) Australia sells A$2.0B v A$2.0B indicated in 1.50% June 2031 bonds, avg yield 1.4307% v 1.6073% prior, bid to cover 2.43x v 3.29x prior

Japan

• Nikkei 225 opened +1.2%
• (JP) Japan MOF Asakawa (Japan's top currency official): Maintaining G20 policy coordination is difficult compared to when G20 began and during crisis - speaking in Tokyo
• (JP) JAPAN MAY TRADE BALANCE: -¥0.97T V -¥1.20TE; ADJUSTED TRADE BALANCE: -¥609.1B V -¥754.5BE; Exports Y/Y: -7.8% v -8.2%e (6th consecutive decline); Exports to China -9.7% y/y; US +3.3% y/y; EU -7.1% y/y; Asia -12.1% y/y
• 7201.JP Reportedly proposing creation of a new board committee with seats for alliance partner Renault's Chairman and CEO – Nikkei; Follow Up: Renault to accept Nissan proposal for altered board appointments - Japanese Press
• (PM) Japan PM Abe will not hold one on one meeting with South Korea President Moon at G20 – Japan
• 6740.JP Continues talks with TPK on LCD alliance; havent got proposal for direct tie up with Oasis
• 9984.JP CEO: Vision Fund 1 will be ended pretty soon, most of its investors want to join Vision Fund 2, so will start discussing with them - AGM

Korea

• Kospi opened +1.0%
• (KR) Fitch cuts 2019 GDP outlook to 2.0% from 2.5% seen in Feb due to weaker underlying momentum
• (KR) Bank of Korea (BOK) May Minutes: Worried about slower than expected GDP for the remainder of the year, may not meet 2.5% GDP target in 2019
• (KR) South Korea thought to delay adjustment to economic forecasts until July - Korean press
• (CN) China President Xi Op Ed in Rodong Sinmun newspaper ahead of state visit: North Korea is taking the “right direction” by politically resolving issues on the Korean Peninsula
• (KR) Bank of Korea (BOK) sells 2-year Monetary Stabilization Bonds (MSB); avg yield 1.50% v 1.585% prior

China/Hong Kong

• Hang Seng opened +2.6%; Shanghai Composite opened +1.9%
• (CN) Pres Trump tweets: "Had a very good telephone conversation with President Xi of China. We will be having an extended meeting next week at the G-20 in Japan. Our respective teams will begin talks prior to our meeting."; China State media confirms the call between Xi and Trump
• (CN) China PBoC offers CNY240B 1-year medium term lending facility (MLF) v CNY200B due to mature today at 3.3% v 3.3% prior
• (CN) China PBoC sets yuan reference rate: 6.8893 v 6.8942 prior
• (CN) China PBoC Open Market Operation (OMO): Injects CNY40B in 14-day reverse repos v CNY90B prior; Net CNY25B injected v CNY80B injected prior
• (HK) Hong Kong Chief Executive Lam issued a personal apology to HK public, asked for another chance, indicated that HK is unlikely to try and revive the China extradition bill - speaking at press conference

North America

• (US) Weekly API Oil Inventories: Crude: -0.8M v +4.9M prior
• X Guides Q2 $0.40 v $0.48e, cuts Q2 adj EBITDA $250M (prior ~$285M); idling two blast furnaces in the US and one blast furnace in Europe to better align global production with order book
• JNJ Ordered by judge in California to face possible punitive damages related to trial for TALC poisoned woman - US financial press
• (US) President Trump asked White House lawyers on options for removing Fed Chair Powell, they found removal would be very questionable

Europe

• (EU) ECB's Draghi: Committed to price stability objective; more rate cuts are part of tool kit; If outlook does not improve then additional stimulus will be needed - speaking at ECB forum in Sintra
• (EU) ECB POLICYMAKERS SAID TO BE DIVIDED ON NEXT STEP; RATE CUT, GUIDANCE CHANGE AND FURTHER QE ALL POSSIBILITIES – PRESS
• (UK) Labour's Corbyn (opposition) expected to back Labour move to change its Brexit policy and support second referendum in all circumstances - UK press

Levels as of 01:20ET

• Hang Seng +2.5%; Shanghai Composite +1.6%; Kospi +1.3%; Nikkei225 +1.7%; ASX 200 +1.1%
• Equity Futures: S&P500 +0.0%; Nasdaq100 +0.1%, Dax +0.0%; FTSE100 -1.0%
• EUR 1.1187-1.1203; JPY 108.34-108.62 ; AUD 0.6871-0.6886; NZD 0.6525-0.6539
• Commodity Futures: Gold -0.1% at $1,349/oz; Crude Oil +0.4% at $54.31/brl; Copper 0.0% at $2.71/lb

The Thomson Reuters/INSEAD Asian Business Sentiment Index dropped sharply from 63 to 53 in Q2. Worries over US-China trade war sent sentiments down to the worst reading since Q2 of 2009. The index tracks companies' six-month outlook. The survey interviewed 95 companies in 11 Asia-Pacific countries that together contribute about a third of GDP and are home to 45% of the world's population. It was conducted from May 31 to June 14.

Antonio Fatas, professor at global business school INSEAD said "it was the uncertainty about the trade war and people were worried about the future". And, "after four quarters of low numbers that now, it's not just uncertainty. This is a true slowdown in growth. We see activity declining — it's not just the expectation that activity will decline."

Full release here.

Market movers today

Following ECB President Mario Draghi's hint at future easing yesterday, it is today the Fed's turn to turn more dovish. At the FOMC meeting tonight we look for the Fed to open the door for a rate cut in July and a total of 75bp cuts in H2. Lower inflation expectations, trade war uncertainty and signs of a manufacturing recession point to the need for a lower Fed funds rate. Comparing the current Fed funds rate with measures of the neutral rate also suggests that monetary policy is not too tight. The Fed meeting will include new projections (dot plot).

On the data front we get UK inflation data where consensus looks for a further decline in the core inflation rate to 1.7% y/y in May from 1.8% y/y in April. Core inflation has been trending lower since the peak at 2.7% in early 2018.

In Scandi focus turns to Swedish key figures on economic and consumer confidence as well as unemployment. Sweden's NIER also publishes new forecasts.

Selected market news

It was a fairly volatile trading session in global bond and stock markets. US treasuries initially rallied from the opening following Draghi's dovish comments signalling further ECB easing, but erased most of the gains later in the day, as news broke from both U.S. and China administrations that Trump and Xi will meet once again at the upcoming G-20 meeting in Japan next week regarding the ongoing trade war. Thus, 10Y US treasuries ended the day 3.5bp lower covering an 8bp intraday range. US curves flattened 2s10s to 20bp as the short end was held close to unchanged. A total of 63bp worth of cuts is currently priced by the end of this year.

Equities, on the other hand, merely extended gains from earlier in the day following the renewed trade talk optimism. S&P ended the day 0.97% per cent higher, while in Asia Hong Kong shares (Hang Seng) is currently up 2.4%.

Oil prices rose 2% (brent crude up USD 1.3 per bbl.) as OPEC and its allies are nearing on a date for its next meeting regarding oil production cuts (Vienna July 1-2). This ends a one-month dispute regarding time and place for the upcoming meeting and finally some good news for oil, which has seen prices drop USD 10 per bbl. since late May. The oil price is set to remain highly volatile on the back of the current conflict in the Gulf of Oman and volatility indices have surged to the highest level in five months.

Japanese 10y bond yields fell 2bp to -15bp ahead of the BoJ tomorrow and are thus currently trading close to the lower bound of the target range of -20bp. The Yen initially slid on the trade optimism, but quickly erased the deficit. We currently target a stronger JPY.

Finally, Swedish house prices (Valuegard HOX Index) rose 0.7% m/m and 1.8% y/y.

The current wave patterns on the GBP/USD are suggesting a downtrend continuation but this wave outlook is dependent on how price will respond to the larger daily support level around 1.2420. For the moment bearish pressure is likely to send price lower to test that daily support zone. This remains the most probable situation as long as price stays below the resistance area (dark red).

The GBP/USD seems to have completed a bearish wave 3 (orange) momentum. The current bullish price swing could be a wave 4 (orange) retracement as long as price stays below the Fibonacci levels of wave 4 vs 3. The two most likely scenarios are that price makes a pullback up to the 38.2% Fibonacci or goes sideways (corrective pattern) and then breaks lower.

Dow Jones Futures (YM_F) broke above June 10 high (26289) suggesting that the next leg higher has started. The Index is now showing an incomplete sequence from June 3 low (24610), favoring further upside. Short term Elliott Wave view calls the rally to 26289 on June 10 as wave 1 and pullback to 25898 as wave 2. This indicates that the entire rally from June 3 low is unfolding as an impulse Elliott Wave structure. Wave 2 unfolded as a double zigzag where wave ((w)) ended at 26050, wave ((x)) ended at 26261, and wave ((y)) of 2 ended at 25898.

Wave 3 is currently in progress and subdivides as an impulse in lesser degree. Up from wave 2 low at 25898, wave (i) ended at 26153 and wave (ii) ended at 26001. Expect the Index to see a few more highs to end 5 waves up from 25898 low. This 5 waves up will end wave ((i)) of 3. Index should then pullback in wave ((ii)) to correct cycle from June 13 low before the rally resumes. We do not like selling the Index and expect buyers to appear as dips continue to hold above 25898 in 3, 7, or 11 swing.

Dow Jones Futures (YM_F) 1 Hour Elliott Wave Chart

For the 24 hours to 23:00 GMT, the EUR declined 0.23% against the USD and closed at 1.1195

after the European Central Bank's President, Mario Draghi, pledged to ease the monetary policy or provide more asset purchases, if the inflation continues to deaccelerate further and deviate from its 2.0% target.

On the data front, the Euro-zone's seasonally adjusted trade surplus narrowed to a 5-month low level of €15.3 billion in April, as exports dropped more than imports. The region had posted a revised surplus of €18.6 billion in the prior month, while markets had expected to post a surplus of €17.0 billion. Moreover, the ZEW economic sentiment index eased to a level of -20.2 in June, compared to a reading of -1.6 in the prior month. Meanwhile, the nation's final consumer price index advanced 1.2% on an annual basis in May, in line with market expectations and confirming the preliminary print. In the prior month, the CPI had recorded a rise of 1.7%.

Separately, in Germany, the ZEW economic sentiment index unexpectedly declined to a 7-month low level of 21.1 in June, compared to market expectations for a fall to a level of -5.6. The index had registered a reading of -2.1 in the previous month. Further, the nation's ZEW current situation index fell to a level of 7.8 in June, compared to a level of 8.2 in the preceding month. Market had anticipated the index to record a fall to a level of 6.1.

In the US, data showed that building permits advanced 0.3% on a monthly basis, to an annual rate of 1294.0K in May, surpassing market expectations for a reading of 1292.0K. In the prior month, building permits had recorded a revised reading of 1290.0K. Meanwhile, the US housing starts slid 0.9% on a monthly basis, to an annual rate of 1269.0K in May, compared to a revised level of 1281.0K in the prior month. Market participants had expected housing starts to record a decline to a level of 1239.0K.

In the Asian session, at GMT0300, the pair is trading at 1.1192, with the EUR trading a tad lower against the USD from yesterday's close.

The pair is expected to find support at 1.1168, and a fall through could take it to the next support level of 1.1143. The pair is expected to find its first resistance at 1.1230, and a rise through could take it to the next resistance level of 1.1267.

Moving ahead, traders would keep an eye on the Euro-zone's construction output for April along with Germany's producer price index for May, slated to release in a few hours. Later in the day, the US Federal Reserve's interest rate decision followed by the MBA mortgage applications, will keep traders on their toes.

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 GBP rose 0.16% against the USD and closed at 1.2558.

In the Asian session, at GMT0300, the pair is trading at 1.2562, with the GBP trading slightly higher against the USD from yesterday’s close.

The pair is expected to find support at 1.2522, and a fall through could take it to the next support level of 1.2482. The pair is expected to find its first resistance at 1.2586, and a rise through could take it to the next resistance level of 1.2610.

Looking ahead, traders would await UK’s house price index for April, the CBI trends total orders for June, consumer price index and retail price index, both for May, scheduled to release in a few hours.

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

For the 24 hours to 23:00 GMT, the USD declined 0.06% against the JPY and closed at 108.49.

In the Asian session, at GMT0300, the pair is trading at 108.46, with the USD trading marginally lower against the JPY from yesterday’s close.

Overnight data showed that Japan posted a total trade deficit of ¥967.1 billion in May, following a surplus of ¥60.4 billion in the previous month. Market participants had expected the nation to record a deficit of ¥1200.0 billion.

The pair is expected to find support at 108.12, and a fall through could take it to the next support level of 107.78. The pair is expected to find its first resistance at 108.74, and a rise through could take it to the next resistance level of 109.02.

Moving forward, traders would await the Bank of Japan’s June interest rate decision, slated to release overnight.

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

For the 24 hours to 23:00 GMT, the USD rose 0.16% against the CHF and closed at 1.0003.

In the Asian session, at GMT0300, the pair is trading at 1.0011, with the USD trading 0.08% higher against the CHF from yesterday’s close, extending previous session gains.

The pair is expected to find support at 0.9980, and a fall through could take it to the next support level of 0.9948. The pair is expected to find its first resistance at 1.0029, and a rise through could take it to the next resistance level of 1.0046.

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

For the 24 hours to 23:00 GMT, the USD declined 0.25% against the CAD and closed at 1.3377.

In economic news, Canada's manufacturing shipments unexpectedly eased 0.6% on a monthly basis in April, compared to a revised advance of 2.6% in the previous month. Markets participants had expected manufacturing shipments to record a gain of 0.4%.

In the Asian session, at GMT0300, the pair is trading at 1.3378, with the USD trading marginally higher against the CAD from yesterday's close.

The pair is expected to find support at 1.3351, and a fall through could take it to the next support level of 1.3325. The pair is expected to find its first resistance at 1.3418, and a rise through could take it to the next resistance level of 1.3459.

Trading trend in the Loonie today is expected to be determined by Canada's consumer price index for May, slated to release later in the day.

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