Tuesday 16th June: European Open Briefing

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Tuesday 16th June: European Open Briefing 1

Global Markets:

  • Asian stock markets: Nikkei up 0.30 %, Shanghai Composite fell 0.60 %, Hang Seng declined 1.70 %, ASX fell 0.40 %
  • Commodities: Gold at $1186 (+0.20 %), Silver at $16.03 (-0.30 %), WTI Oil at $60.60 (+1.00 %), Brent Oil at $64.30 (+0.70 %)
  • Rates: US 10 year yield at 2.35, UK 10 year yield at 2.03, German 10 year yield at 0.83

News & Data:

  • BoJ Gov Kuroda: Last Week Didn't Mean To Predict Future Nominal FX Rate, Focused On Real Effective Rate — BBG
  • BoJ Gov Kuroda: Never Said Don’t Want Yen To Weaken On Nominal Basis – RTRS
  • Asia shares slip on Greek default fears, Fed meeting awaited – RTRS
  • BOJ Kuroda says he made no assessment, prediction on nominal yen moves – RTRS
  • Europe Raises Heat on Greece to Make Further Concessions – BBG
  • RBA: some recent Chinese data had been more positive, policy easing to help
  • RBA: members discussed economic importance of fiscal conditions in states
  • RBA: labour data stronger in recent months, but outlook for only modest jobs growth
  • RBA: would take time to see effect of tightening of bank lending for property investment
  • RBA: inflation well contained, likely to remain that way
  • RBA: GDP growth to remain a little below trend before picking up in late 2016
  • RBA: AUD would need to be lower for sustained period to boost business investment
  • RBA: further fall in AUD both likely and necessary, especially given lower commodity prices
  • RBA: policy should be accommodative given domestic, international background

Markets Update:

USD/JPY rallied overnight after Bank of Japan Governor Kuroda said that his comments last week were only in regard to the real effective exchange rate, not the nominal one and that he never said that he doesn’t want the Yen to weaken on that basis. The pair reached a high of 123.78 and then settled in a 123.50-65 range for most of the session. Volatility in USD/JPY is likely to remain lower ahead of the FOMC meeting tomorrow evening. Intraday support at 123.20, 122.80 and then 122.40. To the topside, 124.20 is now the key short-term resistance level, followed by 124.60.

The Euro remains quite resilient despite all the negative news about Greece. EUR/USD spent the Asian session in a 1.1260-80 range. Immediate resistance eyed at 1.13, while decent selling interest is reported ahead of the 1.1350 level. To the downside, expect solid in the 1.1180/1.12 area, with 1.1150 now the key short-term support level.

In other news, the Reserve Bank of Australia released their meeting minutes, but didn’t say much new, so AUD/USD remains pretty much unchanged as we head into the European open. The bank said that the Australian Dollar needs to fall further, especially given the lower commodity prices, and that accommodative monetary policy will remain appropriate given the domestic and international situation.

Upcoming Events:

  • 07:00 BST – German CPI
  • 09:00 BST – Norwegian Trade Balance
  • 09:30 BST – UK CPI
  • 10:00 BST – German ZEW Economic Sentiment
  • 10:00 BST – Euro Zone ZEW Economic Sentiment
  • 13:30 BST – US Building Permits
  • 13:30 BST – US Housing Starts
  • 13:55 BST – US Redbook

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