Global Markets:

  • Japan (JPY) Corporate Service Price (MAY) (y/y): 3.6%, Expected: 3.2%, Previous: 3.4%
  • Japan Prime Minister: Abe declares end of deflation, citing bold monetary + fiscal policy, good growth strategy as reasons
  • PBOC’s Liu: China’s economy is currently in reasonable range
  • Fed’s Williams: Nothing stopping Fed from Rate increase when needed, also noted that a lot of people dropped out of the labor force
  • Fed’s Williams: US about two years away from full employment
  • Asia stock markets: Nikkei and Shanghai Composite both down 0.50 %, Hang Seng unchanged on the day, ASX lost 0.60 %
  • Commodities: Gold at $1312, Silver at $20.76, Crude Oil at $106.71
  • Bonds: US 10 year yield at 2.579

FX Update:

  • AUD – AUD/USD dropped almost 80 pips from yesterday’s high as short-term specs got frustrated with the inability to push the pair above the 0.9450 barrier option. Trailing stops got triggered on the way down and better than expected US econ data added to the pressure on commodity currencies. Large bids resting towards 0.9320, while intraday resistance lies at 0.9390 and 0.9430. Dealers say they expect to see AUD-positive flows towards month-end.
  • CAD – USD/CAD bounced as the Dollar strengthened after solid econ data out of the States. Speculators continue to have good selling interest in the pair and larger supply is noted towards 1.0780. To the downside, bids from local names at 1.0720 and option players ahead of the 1.07 barrier option.
  • EUR – EUR/USD flows were light overnight. Macro funds have offers placed at 1.3680, while bids from corporate names resting at 1.3570-80. Unlikely we’ll see a breakout soon, so playing the 1.3550-1.3650 range remains the preferred strategy. There was a small short squeeze in EUR/GBP yesterday, but dealers note that there will be plenty of selling interest from the leveraged community from 0.8050 up to 0.8080.
  • GBP – Dovish comments from the BoE Governor Carney led to a sharp decline in GBP/USD and the pair is now consolidating around 1.6970. The key level to the downside is now 1.6920; a break below would see sizeable stops getting triggered + momentum selling from specs.
  • JPY  – USD/JPY rallied to 102.16 yesterday, but momentum quickly faded away. Overnight, flows were very light with the pair stuck in a 10 pips range. Importer bids at 101.80, leveraged funds bidding at 101.50-60, large stops through 101.40. To the topside, exporter offers at 102.20 and selling interest from Asian sovereign names noted from 102.20 to 102.30.

Upcoming Events:

  • 06:00 GMT – German Consumer Climate (8.5)
  • 12:30 GMT – US Durable Goods Orders (0.2 % MoM)
  • 12:30 GMT – US Core Durable Orders (0.4 % MoM)
  • 12:30 GMT – US GDP (-1.7 % QoQ)