Forex - Asia Open - Overnight Highlights


 00:11 (GMT) 11 Jul

  [Forex Highlights]

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Asia Open - Overnight Highlights (0101-MKWS-C01)

Asia Overnight Highlights - 11 Jul 2019

MAJORS

FX Highlights:

Fed Chairman Powell came across as dovish in his testimony. Markets increased expectations of Fed easing, fully pricing a 25bp cut in July and nearly fully pricing 50bp of rate cuts by September. The USD slipped on the initial statement and further through the testimony below 108.50 on USD/JPY and above 1.1250 on EUR/USD. The minutes had a similar tone but the response was modest.
The BoC left rates unchanged as expected but the statement placed heavy emphasis on ongoing trade tensions, and was seen as dovish. USD/CAD initially reversed the move seen on Powell's statement, but after peaking at 1.3150 fell to post-Powell lows, assisted by gains in oil and USD weakness. AUD/USD and NZD/USD rebounded on USD weakness on Powell.

Data/Events Highlights:

-Fed's Powell said trade uncertainties and concerns about global economy continue to weigh, will act as necessary to sustain growth. Baseline solid growth and inflation back to target, risk weak inflation will be more persistent than Fed currently anticipates.

-FOMC minutes said many thought near term ease warranted if trade and other risks continued to weigh, several others said easing could be appropriate if data deteriorated further.

- VIX index: 13.03 (-7.52%)

- Gold Spot: $1,423.75/oz (+0.34%)

- ICE Brent front contract: $67.01 (+$2.85)

- Nymex WTI front contract: $60.47 (+$0.04)

- Reuters/Jefferies Commodities Index: 184.17 (+1.92%)

- 10y UST: 2.047% (-1bp) (Asia morning)

- DJI: 26,860.20 (+0.29%); S&P: 2,993.07 (+0.45%); Nasdaq: 8,202.53 (+0.75%)

Data/Events Ahead:

US CPI data will be a focus on Thursday following the Powell testimony, but it would be a major surprise if there is anything in the numbers that makes the markets doubt the dovish view that the Fed will ease in July. We look for core CPI to be in line with market expectations at 0.2%, while we see a 0.1% rise in headline, slightly above market expectations.

Asia Open - Overnight Highlights (0101-MKWS-C02)

EMERGING ASIA

FX Highlights:

Asian currencies have rallied against a weaker dollar overnight after Federal Reserve Chairman Jerome Powell boosted expectations of a rate cut from the central bank this month. CNH gained by 0.34% against greenback, while SGD and CNY gained 0.22%. MYR was in mild gains. IDR, INR, PHP are all set for a catch-up rally after their onshore markets open. Other currencies were relatively stable.

USD/CNH sank to a 1-week low of 6.8700 overnight, below 50MA level, on Fed meeting minutes. The pair held onto losses into early Asian hours. Risk remains on the downside, next support is seen at 6.8499 level. 1Y NDFs dropped from 6.9250 level overnight to stabilize at around 6.9050 levels at last look. The onshore spot also slipped to a 1-week low of 6.8730 overnight. A firm break of 6.8700 level will likely open door for further downside.

USD/SGD saw overnight decline to 1.3570 level from around 1.3610 before the FOMC minutes. Upside momentum has faded somewhat, focus turns back to support level at 1.3575 ahead of lower one at 1.3545. Singapore's Q2 GDP and May's retail sales due on Friday, a disappointment in growth may see SGD pared back some gains.

USD/IDR 1M NDFs plunged to 14160 levels from around 14220 overnight on Wednesday. Onshore spot is poised for further downmove after onshore market open today. The pair traded with a downside bias and closed at 14133 on Wednesday. A key level to watch will be 14100. On the domestic front, Indonesia lowered its growth estimate for next year, weighing on sentiment as BI rate cuts become more probable.

USD/INR 1M NDFs dropped further overnight, from 68.800 to 68.600 levels. Onshore spot gapped higher to open at 68.620 on Wednesday vs. last close of 68.540 amid gains in oil prices. The pair consolidated lower to 68.550 before close on Wednesday. USD/INR is poised for downmove after market open on Thursday, with strong support level seen at 68.345.

Data/Events Highlights:

The latest trade data from the Philippines showed that exports saw modest gains in May, rising by 1% y/y, while imports disappointed, down by 5.4% y/y.

China's CPI inflation stayed at 2.7% y/y for the second consecutive month. This was a monthly drop in inflation. Food inflation climbed further to 8.3% y/y from 7.7% a month ago. Meanwhile, PPI was flat, continuing to highlight the concerns from manufacturers on flat factory price growth.

Data/Events Ahead:

No key data releases are due in the day ahead in Asia.

DATA RELEASES DUE TODAY

01:30 GMT - AU: Housing Finance (May) 4cast: % m/m (Mkt: -1 Prev: -1.1)

04:30 GMT - JP: METI Tertiary activity index (May) 4cast: % m/m (Mkt: -0.1 Prev: 0.8)

12:30 GMT - US: Initial Claims (Jul 6) 4cast: k (Mkt: 221 Prev: 221)

12:30 GMT - US: CPI (ex Food & Energy) (Jun) 4cast: 0.2% m/m (Mkt: 0.2 Prev: 0.1)

12:30 GMT - US: CPI (Jun) 4cast: 0.1% m/m (Mkt: 0 Prev: 0.1)

12:30 GMT - CA: House Price Index (May) 4cast: % (Mkt: 0.1 Prev: 0)

18:00 GMT - US: Monthly Budget Statement (Jun) 4cast: USD bn (Mkt: -7.7 Prev: -207.8)

EVENTS & AUCTIONS

- JP: Enhanced Liquidity Auction

- 09:30 GMT - UK: BoE Financial Stability Report and Record

- 10:15 GMT - EU: ECB's Coeure Speaks in Frankfurt

- 11:30 GMT - EU: ECB Publishes Account of June 5-6 Policy Meeting

- 13:10 GMT - AU: RBA's Debelle speaks in New York via Videolink

- 14:00 GMT - US: Fed's Powell Testifies to Senate Banking Committee

- 15:30 GMT - US: 4wk Bills Auction

- 15:30 GMT - US: 8wk Bills Auction

- 16:15 GMT - US: Fed's Bostic speaks on monetary policy

- 16:30 GMT - US: Fed's Barkin speaks at Rocky Mountain Economic Summit

- 17:00 GMT - US: 30yr Bond Auction(USD 16bn)

- 17:30 GMT - US: Fed's Quarles speaks on regulation and monetary policy

- 17:30 GMT - US: Fed's Williams speaks in Albany

- 17:30 GMT - US: Fed's Williams speaks in Albany


Forex - Singapore Flows: USD/SGD prints a more than 2-week high at 1.3625, all eyes on Fed


 02:56 (GMT) 10 Jul

 [Forex Flows]

USD/SGD edged higher to retest the MTD 1.3624 high. Pair printed a more than 2-week high at 1.3625, before reversing back down to 1.3619 at last look. All eyes are on Wednesday's June FOMC minutes and Fed Chair Powell's congressional testimony during NY hours. We are expecting Powell to sing the same tune expressed in the June FOMC statement: economic outlook is healthy, but uncertainties around that outlook were mounting. Pair may eye the 1.3631 resistance next. We expect the 1.3631 resistance to remain safe prior to the FOMC minutes and Powell's testimony. SGD NEER was 1.59% above midpoint while STI was up 0.45% at last look.


Forex - Philippines May Imports -5.4% y/y (Prev: -1.9 Mkt: -1.1 4CAST: -1.2)


 01:00 (GMT) 10 Jul

 [Economic Data]

Please view the story for more information...


Forex - China Flows: USD/CNH remains within range, as key data releases later the week provide fresh clues on economy


 02:40 (GMT) 09 Jul

 [Forex Flows]

USD/CNH remained relatively calm on Tuesday. Pair last at 6.8888. CPI, PPI and trade data key to watch this week. We see higher inflation, although PPI is likely to remain subdued. Weak trade data may cause further upsides to the pair, even though we suspect much is priced in. A move beyond the 6.9000 can trigger further upside momentum towards the 6.9102 resistance.

PBoC fixed mid-point at 6.8853 vs. previous close of 6.8827. USD/CNY last at 6.8829, with 1Y NDFs also staying range-bound at 6.9244. Without fresh developments, 6.9000 big figure remains key to watch, on whether expectations shift next towards the 6.9300 resistance.


Forex - Hong Kong Chart Hang Seng Index Update: Retains downside pressure


 01:39 (GMT) 09 Jul

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Forex - Hong Kong Chart Hang Seng Index Update: Opening gap-down jeopardising upmove from 26672 low


 01:49 (GMT) 08 Jul

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Forex - Asia Open - Overnight Highlights


 23:52 (GMT) 04 Jul

 [Forex Highlights]

Asia Overnight Highlights - 05 Jul 2019

MAJORS

FX Highlights:

The Bloomberg dollar spot index traded horizontally around 96.750 on Thursday as U.S. markets were shut for the July 4 holiday and focus remained on the U.S. payrolls release on Friday which will be a key input for the Fed.

USD/JPY was steady around 107.80, while EUR/USD erased the advance to 1.1295. We expect to see modest m/m gains in German orders and production data, despite market expectations of small declines.

GBP/USD has found decent short term support in the 1.2550/60 area, the lows seen as the end of May. But it has so far failed to bounce from this area. With political risk also undimmed, GBP weakness looks likely to extend, though we would be wary of short GBP/USD positioning as long as the 1.2550 area holds.

In Australia, where the RBA have already cut rates by 50bp in the last two meetings, we have seen further stimulus from fiscal policy announced on Thursday, as the Senate voted to deliver the government's promise of A$158bn of tax cuts over the decade. This should be doubly supportive for the AUD, as it should both boost growth expectations and remove risks of another near term RBA rate cut. Another 25bp rate cut is still currently priced in for year end, but Lowe's speech after the latest RBA rate cut suggests that the RBA is likely to see the fiscal boost as removing near term pressure for another cut in the absence of clear news. In a risk positive environment, this suggests there should be some significant upside risks for the AUD, even though current yield spreads suggests it is close to fair near 0.70.

Data/Events Highlights:

- Australia's retail sales rose a pedestrian 0.1% m/m in May after falling 0.1% April.

- Gold Spot: $1,421.46/oz (+0.38%)

- ICE Brent front contract: $63.30 ($-0.52)

- Nymex WTI front contract: $56.89 ($-0.45)

Data/Events Ahead:

In the U.S., Jun's non-farm payroll will be released, though Fed speakers have suggested mixed attitudes as to how significant it will be in Jul's rates decision. We expect a 135k increase, up from 75k in Jul but consistent with trend having lost some momentum, wet weather possibly playing a part. Average hourly earnings should see a slightly firmer 0.3% monthly gain but yr/yr growth should remain at 3.1%. We also expect unemployment to be stable at 3.6%.

German industrial orders are also scheduled, where we look for a 0.6%m/m increase. Even though this will be the third consecutive rise in the index it still only reflects some correction higher following a very weak start to the year.

UK Halifax house price data will be examined to see if its implied resilience dissipates so that it chimes with the array of other (more sobering house price surveys).

EMERGING ASIA

FX Highlights:

Dollar movement was subdued on a U.S. public holiday on Thursday. Most Asian currencies posted gains against the dollar. Market watchers await the key US non-farm payroll data on Friday, to gauge expectations of a Fed policy easing. INR led the pack with 0.55% up against the greenback as the budget announcement was eyed. KRW gained 0.22% vs. USD, followed by the Chinese currencies CNH (+0.15%) and CNY (+0.14%). Thai baht was in losses of 0.30% against USD.

USD/CNH gave up the 6.8800 handle on Thursday and traded horizontally around 6.8750. A move beyond the 6.9000 is likely to trigger further pressure towards the 6.9102 resistance. 1Y NDFs also slid from 6.9200+ levels to trade horizontally around 6.9100 overnight. USD/CNY consolidated around 6.8700, somewhat lower than Wednesday 6.8800+ levels. With onshore pair at the upper end of our previous range, we believe expectations of going above 6.9000 is rising.

USD/SGD dipped to 1.3545 earlier on Thursday but this was erased and pair traded horizontally around 1.3560 thereafter. We expect pair to remain range bound between 1.3545 and 1.3580, with risks tilted to the downside.

USD/IDR 1M NDFs remained below 14200 on Thursday. Onshore spot gapped lower to open at 14115 on Thursday after previous close of 14123 and dipped to lows of 14104 in early trading as the USD weakened from a slew of disappointing economic data reported the night before. Pair however pared the losses and inched back above 14120 ahead of noon - and traded horizontally thereafter. Some selling may be seen as the pair approaches 14200, but we do not expect a drop below 14100 unless risk aversion abates.

USD/INR 1M NDFs traded heavily to drop below 68.800-levels on Thursday from 69+ levels earlier. Onshore spot was also offered in late trading and printed fresh 3-month lows of 68.480. Our expectation of 68.830 support giving away has come true too soon, and fiscal consolidation with reform measures will see the pair test 68.345.

Data/Events Highlights:

Malaysia's May export growth climbed up to 2.5% y/y in May from 1.1% y/y in April. Import growth, however, fell below market expectations to 1.4% y/y in May from 4.4% y/y in April. These lead to an overall trade surplus of MYR 9.08 billion

Data/Events Ahead:

Philippines and Taiwan release their June inflation prints.

India's budget announcement will be on tap to assess government priorities in the new term.

DATA RELEASES DUE TODAY

01:00 GMT - PH: CPI (Jun) 4cast: 2.7% y/y (Mkt: 2.8 Prev: 3.2)

05:00 GMT - JP: Leading Indicator (May P) 4cast: (Mkt: 95.4 Prev: 95.9)

07:30 GMT - UK: Halifax House Price Index (Jun) 4cast: % 3m y/y (Mkt: 5.7 Prev: 5.2)

07:30 GMT - UK: Halifax House Price Index (Jun) 4cast: % m/m (Mkt: -0.4 Prev: 0.5)

08:00 GMT - TW: CPI (Jun) 4cast: % y/y (Mkt: 0.81 Prev: 0.94)

12:30 GMT - US: Average Hourly Earnings (Jun) 4cast: 0.3% m/m (Mkt: 0.3 Prev: 0.2)

12:30 GMT - US: Unemployment (Jun) 4cast: 3.6% (Mkt: 3.6 Prev: 3.6)

12:30 GMT - US: Private Payrolls (Jun) 4cast: 130k (Mkt: 155 Prev: 90)

12:30 GMT - US: Non-farm Payrolls (Jun) 4cast: 135k (Mkt: 164 Prev: 75)

12:30 GMT - CA: Unemployment (Jun) 4cast: 5.5% (Mkt: 5.5 Prev: 5.4)

12:30 GMT - CA: Employment (Jun) 4cast: 35 k (Mkt: 9.9 Prev: 27.7)

14:00 GMT - CA: Ivey PMI (Jun) 4cast: (Mkt: Prev: 55.9)

EVENTS & AUCTIONS

- 04:30 GMT - JP: 3mth Bills Auction

- 05:30 GMT - IN: FY20 Budget Presentation

- 10:00 GMT - UK: 182 days Bills Auction (GBP 2.5bn)

- 10:00 GMT - UK: 28 days Bills Auction (GBP 0.5bn)

- 10:00 GMT - UK: 91 days Bills Auction (GBP 2bn)


Forex - Asia Open - Overnight Highlights


 23:52 (GMT) 04 Jul

 [Forex Highlights]

Asia Overnight Highlights - 05 Jul 2019

MAJORS

FX Highlights:

The Bloomberg dollar spot index traded horizontally around 96.750 on Thursday as U.S. markets were shut for the July 4 holiday and focus remained on the U.S. payrolls release on Friday which will be a key input for the Fed.

USD/JPY was steady around 107.80, while EUR/USD erased the advance to 1.1295. We expect to see modest m/m gains in German orders and production data, despite market expectations of small declines.

GBP/USD has found decent short term support in the 1.2550/60 area, the lows seen as the end of May. But it has so far failed to bounce from this area. With political risk also undimmed, GBP weakness looks likely to extend, though we would be wary of short GBP/USD positioning as long as the 1.2550 area holds.

In Australia, where the RBA have already cut rates by 50bp in the last two meetings, we have seen further stimulus from fiscal policy announced on Thursday, as the Senate voted to deliver the government's promise of A$158bn of tax cuts over the decade. This should be doubly supportive for the AUD, as it should both boost growth expectations and remove risks of another near term RBA rate cut. Another 25bp rate cut is still currently priced in for year end, but Lowe's speech after the latest RBA rate cut suggests that the RBA is likely to see the fiscal boost as removing near term pressure for another cut in the absence of clear news. In a risk positive environment, this suggests there should be some significant upside risks for the AUD, even though current yield spreads suggests it is close to fair near 0.70.

Data/Events Highlights:

- Australia's retail sales rose a pedestrian 0.1% m/m in May after falling 0.1% April.

- Gold Spot: $1,421.46/oz (+0.38%)

- ICE Brent front contract: $63.30 ($-0.52)

- Nymex WTI front contract: $56.89 ($-0.45)

Data/Events Ahead:

In the U.S., Jun's non-farm payroll will be released, though Fed speakers have suggested mixed attitudes as to how significant it will be in Jul's rates decision. We expect a 135k increase, up from 75k in Jul but consistent with trend having lost some momentum, wet weather possibly playing a part. Average hourly earnings should see a slightly firmer 0.3% monthly gain but yr/yr growth should remain at 3.1%. We also expect unemployment to be stable at 3.6%.

German industrial orders are also scheduled, where we look for a 0.6%m/m increase. Even though this will be the third consecutive rise in the index it still only reflects some correction higher following a very weak start to the year.

UK Halifax house price data will be examined to see if its implied resilience dissipates so that it chimes with the array of other (more sobering house price surveys).

EMERGING ASIA

FX Highlights:

Dollar movement was subdued on a U.S. public holiday on Thursday. Most Asian currencies posted gains against the dollar. Market watchers await the key US non-farm payroll data on Friday, to gauge expectations of a Fed policy easing. INR led the pack with 0.55% up against the greenback as the budget announcement was eyed. KRW gained 0.22% vs. USD, followed by the Chinese currencies CNH (+0.15%) and CNY (+0.14%). Thai baht was in losses of 0.30% against USD.

USD/CNH gave up the 6.8800 handle on Thursday and traded horizontally around 6.8750. A move beyond the 6.9000 is likely to trigger further pressure towards the 6.9102 resistance. 1Y NDFs also slid from 6.9200+ levels to trade horizontally around 6.9100 overnight. USD/CNY consolidated around 6.8700, somewhat lower than Wednesday 6.8800+ levels. With onshore pair at the upper end of our previous range, we believe expectations of going above 6.9000 is rising.

USD/SGD dipped to 1.3545 earlier on Thursday but this was erased and pair traded horizontally around 1.3560 thereafter. We expect pair to remain range bound between 1.3545 and 1.3580, with risks tilted to the downside.

USD/IDR 1M NDFs remained below 14200 on Thursday. Onshore spot gapped lower to open at 14115 on Thursday after previous close of 14123 and dipped to lows of 14104 in early trading as the USD weakened from a slew of disappointing economic data reported the night before. Pair however pared the losses and inched back above 14120 ahead of noon - and traded horizontally thereafter. Some selling may be seen as the pair approaches 14200, but we do not expect a drop below 14100 unless risk aversion abates.

USD/INR 1M NDFs traded heavily to drop below 68.800-levels on Thursday from 69+ levels earlier. Onshore spot was also offered in late trading and printed fresh 3-month lows of 68.480. Our expectation of 68.830 support giving away has come true too soon, and fiscal consolidation with reform measures will see the pair test 68.345.

Data/Events Highlights:

Malaysia's May export growth climbed up to 2.5% y/y in May from 1.1% y/y in April. Import growth, however, fell below market expectations to 1.4% y/y in May from 4.4% y/y in April. These lead to an overall trade surplus of MYR 9.08 billion

Data/Events Ahead:

Philippines and Taiwan release their June inflation prints.

India's budget announcement will be on tap to assess government priorities in the new term.

DATA RELEASES DUE TODAY

01:00 GMT - PH: CPI (Jun) 4cast: 2.7% y/y (Mkt: 2.8 Prev: 3.2)

05:00 GMT - JP: Leading Indicator (May P) 4cast: (Mkt: 95.4 Prev: 95.9)

07:30 GMT - UK: Halifax House Price Index (Jun) 4cast: % 3m y/y (Mkt: 5.7 Prev: 5.2)

07:30 GMT - UK: Halifax House Price Index (Jun) 4cast: % m/m (Mkt: -0.4 Prev: 0.5)

08:00 GMT - TW: CPI (Jun) 4cast: % y/y (Mkt: 0.81 Prev: 0.94)

12:30 GMT - US: Average Hourly Earnings (Jun) 4cast: 0.3% m/m (Mkt: 0.3 Prev: 0.2)

12:30 GMT - US: Unemployment (Jun) 4cast: 3.6% (Mkt: 3.6 Prev: 3.6)

12:30 GMT - US: Private Payrolls (Jun) 4cast: 130k (Mkt: 155 Prev: 90)

12:30 GMT - US: Non-farm Payrolls (Jun) 4cast: 135k (Mkt: 164 Prev: 75)

12:30 GMT - CA: Unemployment (Jun) 4cast: 5.5% (Mkt: 5.5 Prev: 5.4)

12:30 GMT - CA: Employment (Jun) 4cast: 35 k (Mkt: 9.9 Prev: 27.7)

14:00 GMT - CA: Ivey PMI (Jun) 4cast: (Mkt: Prev: 55.9)

EVENTS & AUCTIONS

- 04:30 GMT - JP: 3mth Bills Auction

- 05:30 GMT - IN: FY20 Budget Presentation

- 10:00 GMT - UK: 182 days Bills Auction (GBP 2.5bn)

- 10:00 GMT - UK: 28 days Bills Auction (GBP 0.5bn)

- 10:00 GMT - UK: 91 days Bills Auction (GBP 2bn)


Forex - Asia Open - Overnight Highlights


 23:52 (GMT) 04 Jul

 [Forex Highlights]

Asia Overnight Highlights - 05 Jul 2019

MAJORS

FX Highlights:

The Bloomberg dollar spot index traded horizontally around 96.750 on Thursday as U.S. markets were shut for the July 4 holiday and focus remained on the U.S. payrolls release on Friday which will be a key input for the Fed.

USD/JPY was steady around 107.80, while EUR/USD erased the advance to 1.1295. We expect to see modest m/m gains in German orders and production data, despite market expectations of small declines.

GBP/USD has found decent short term support in the 1.2550/60 area, the lows seen as the end of May. But it has so far failed to bounce from this area. With political risk also undimmed, GBP weakness looks likely to extend, though we would be wary of short GBP/USD positioning as long as the 1.2550 area holds.

In Australia, where the RBA have already cut rates by 50bp in the last two meetings, we have seen further stimulus from fiscal policy announced on Thursday, as the Senate voted to deliver the government's promise of A$158bn of tax cuts over the decade. This should be doubly supportive for the AUD, as it should both boost growth expectations and remove risks of another near term RBA rate cut. Another 25bp rate cut is still currently priced in for year end, but Lowe's speech after the latest RBA rate cut suggests that the RBA is likely to see the fiscal boost as removing near term pressure for another cut in the absence of clear news. In a risk positive environment, this suggests there should be some significant upside risks for the AUD, even though current yield spreads suggests it is close to fair near 0.70.

Data/Events Highlights:

- Australia's retail sales rose a pedestrian 0.1% m/m in May after falling 0.1% April.

- Gold Spot: $1,421.46/oz (+0.38%)

- ICE Brent front contract: $63.30 ($-0.52)

- Nymex WTI front contract: $56.89 ($-0.45)

Data/Events Ahead:

In the U.S., Jun's non-farm payroll will be released, though Fed speakers have suggested mixed attitudes as to how significant it will be in Jul's rates decision. We expect a 135k increase, up from 75k in Jul but consistent with trend having lost some momentum, wet weather possibly playing a part. Average hourly earnings should see a slightly firmer 0.3% monthly gain but yr/yr growth should remain at 3.1%. We also expect unemployment to be stable at 3.6%.

German industrial orders are also scheduled, where we look for a 0.6%m/m increase. Even though this will be the third consecutive rise in the index it still only reflects some correction higher following a very weak start to the year.

UK Halifax house price data will be examined to see if its implied resilience dissipates so that it chimes with the array of other (more sobering house price surveys).

EMERGING ASIA

FX Highlights:

Dollar movement was subdued on a U.S. public holiday on Thursday. Most Asian currencies posted gains against the dollar. Market watchers await the key US non-farm payroll data on Friday, to gauge expectations of a Fed policy easing. INR led the pack with 0.55% up against the greenback as the budget announcement was eyed. KRW gained 0.22% vs. USD, followed by the Chinese currencies CNH (+0.15%) and CNY (+0.14%). Thai baht was in losses of 0.30% against USD.

USD/CNH gave up the 6.8800 handle on Thursday and traded horizontally around 6.8750. A move beyond the 6.9000 is likely to trigger further pressure towards the 6.9102 resistance. 1Y NDFs also slid from 6.9200+ levels to trade horizontally around 6.9100 overnight. USD/CNY consolidated around 6.8700, somewhat lower than Wednesday 6.8800+ levels. With onshore pair at the upper end of our previous range, we believe expectations of going above 6.9000 is rising.

USD/SGD dipped to 1.3545 earlier on Thursday but this was erased and pair traded horizontally around 1.3560 thereafter. We expect pair to remain range bound between 1.3545 and 1.3580, with risks tilted to the downside.

USD/IDR 1M NDFs remained below 14200 on Thursday. Onshore spot gapped lower to open at 14115 on Thursday after previous close of 14123 and dipped to lows of 14104 in early trading as the USD weakened from a slew of disappointing economic data reported the night before. Pair however pared the losses and inched back above 14120 ahead of noon - and traded horizontally thereafter. Some selling may be seen as the pair approaches 14200, but we do not expect a drop below 14100 unless risk aversion abates.

USD/INR 1M NDFs traded heavily to drop below 68.800-levels on Thursday from 69+ levels earlier. Onshore spot was also offered in late trading and printed fresh 3-month lows of 68.480. Our expectation of 68.830 support giving away has come true too soon, and fiscal consolidation with reform measures will see the pair test 68.345.

Data/Events Highlights:

Malaysia's May export growth climbed up to 2.5% y/y in May from 1.1% y/y in April. Import growth, however, fell below market expectations to 1.4% y/y in May from 4.4% y/y in April. These lead to an overall trade surplus of MYR 9.08 billion

Data/Events Ahead:

Philippines and Taiwan release their June inflation prints.

India's budget announcement will be on tap to assess government priorities in the new term.

DATA RELEASES DUE TODAY

01:00 GMT - PH: CPI (Jun) 4cast: 2.7% y/y (Mkt: 2.8 Prev: 3.2)

05:00 GMT - JP: Leading Indicator (May P) 4cast: (Mkt: 95.4 Prev: 95.9)

07:30 GMT - UK: Halifax House Price Index (Jun) 4cast: % 3m y/y (Mkt: 5.7 Prev: 5.2)

07:30 GMT - UK: Halifax House Price Index (Jun) 4cast: % m/m (Mkt: -0.4 Prev: 0.5)

08:00 GMT - TW: CPI (Jun) 4cast: % y/y (Mkt: 0.81 Prev: 0.94)

12:30 GMT - US: Average Hourly Earnings (Jun) 4cast: 0.3% m/m (Mkt: 0.3 Prev: 0.2)

12:30 GMT - US: Unemployment (Jun) 4cast: 3.6% (Mkt: 3.6 Prev: 3.6)

12:30 GMT - US: Private Payrolls (Jun) 4cast: 130k (Mkt: 155 Prev: 90)

12:30 GMT - US: Non-farm Payrolls (Jun) 4cast: 135k (Mkt: 164 Prev: 75)

12:30 GMT - CA: Unemployment (Jun) 4cast: 5.5% (Mkt: 5.5 Prev: 5.4)

12:30 GMT - CA: Employment (Jun) 4cast: 35 k (Mkt: 9.9 Prev: 27.7)

14:00 GMT - CA: Ivey PMI (Jun) 4cast: (Mkt: Prev: 55.9)

EVENTS & AUCTIONS

- 04:30 GMT - JP: 3mth Bills Auction

- 05:30 GMT - IN: FY20 Budget Presentation

- 10:00 GMT - UK: 182 days Bills Auction (GBP 2.5bn)

- 10:00 GMT - UK: 28 days Bills Auction (GBP 0.5bn)

- 10:00 GMT - UK: 91 days Bills Auction (GBP 2bn)


Forex - Asia Open - Overnight Highlights


 23:52 (GMT) 04 Jul

 [Forex Highlights]

Asia Overnight Highlights - 05 Jul 2019

MAJORS

FX Highlights:

The Bloomberg dollar spot index traded horizontally around 96.750 on Thursday as U.S. markets were shut for the July 4 holiday and focus remained on the U.S. payrolls release on Friday which will be a key input for the Fed.

USD/JPY was steady around 107.80, while EUR/USD erased the advance to 1.1295. We expect to see modest m/m gains in German orders and production data, despite market expectations of small declines.

GBP/USD has found decent short term support in the 1.2550/60 area, the lows seen as the end of May. But it has so far failed to bounce from this area. With political risk also undimmed, GBP weakness looks likely to extend, though we would be wary of short GBP/USD positioning as long as the 1.2550 area holds.

In Australia, where the RBA have already cut rates by 50bp in the last two meetings, we have seen further stimulus from fiscal policy announced on Thursday, as the Senate voted to deliver the government's promise of A$158bn of tax cuts over the decade. This should be doubly supportive for the AUD, as it should both boost growth expectations and remove risks of another near term RBA rate cut. Another 25bp rate cut is still currently priced in for year end, but Lowe's speech after the latest RBA rate cut suggests that the RBA is likely to see the fiscal boost as removing near term pressure for another cut in the absence of clear news. In a risk positive environment, this suggests there should be some significant upside risks for the AUD, even though current yield spreads suggests it is close to fair near 0.70.

Data/Events Highlights:

- Australia's retail sales rose a pedestrian 0.1% m/m in May after falling 0.1% April.

- Gold Spot: $1,421.46/oz (+0.38%)

- ICE Brent front contract: $63.30 ($-0.52)

- Nymex WTI front contract: $56.89 ($-0.45)

Data/Events Ahead:

In the U.S., Jun's non-farm payroll will be released, though Fed speakers have suggested mixed attitudes as to how significant it will be in Jul's rates decision. We expect a 135k increase, up from 75k in Jul but consistent with trend having lost some momentum, wet weather possibly playing a part. Average hourly earnings should see a slightly firmer 0.3% monthly gain but yr/yr growth should remain at 3.1%. We also expect unemployment to be stable at 3.6%.

German industrial orders are also scheduled, where we look for a 0.6%m/m increase. Even though this will be the third consecutive rise in the index it still only reflects some correction higher following a very weak start to the year.

UK Halifax house price data will be examined to see if its implied resilience dissipates so that it chimes with the array of other (more sobering house price surveys).

EMERGING ASIA

FX Highlights:

Dollar movement was subdued on a U.S. public holiday on Thursday. Most Asian currencies posted gains against the dollar. Market watchers await the key US non-farm payroll data on Friday, to gauge expectations of a Fed policy easing. INR led the pack with 0.55% up against the greenback as the budget announcement was eyed. KRW gained 0.22% vs. USD, followed by the Chinese currencies CNH (+0.15%) and CNY (+0.14%). Thai baht was in losses of 0.30% against USD.

USD/CNH gave up the 6.8800 handle on Thursday and traded horizontally around 6.8750. A move beyond the 6.9000 is likely to trigger further pressure towards the 6.9102 resistance. 1Y NDFs also slid from 6.9200+ levels to trade horizontally around 6.9100 overnight. USD/CNY consolidated around 6.8700, somewhat lower than Wednesday 6.8800+ levels. With onshore pair at the upper end of our previous range, we believe expectations of going above 6.9000 is rising.

USD/SGD dipped to 1.3545 earlier on Thursday but this was erased and pair traded horizontally around 1.3560 thereafter. We expect pair to remain range bound between 1.3545 and 1.3580, with risks tilted to the downside.

USD/IDR 1M NDFs remained below 14200 on Thursday. Onshore spot gapped lower to open at 14115 on Thursday after previous close of 14123 and dipped to lows of 14104 in early trading as the USD weakened from a slew of disappointing economic data reported the night before. Pair however pared the losses and inched back above 14120 ahead of noon - and traded horizontally thereafter. Some selling may be seen as the pair approaches 14200, but we do not expect a drop below 14100 unless risk aversion abates.

USD/INR 1M NDFs traded heavily to drop below 68.800-levels on Thursday from 69+ levels earlier. Onshore spot was also offered in late trading and printed fresh 3-month lows of 68.480. Our expectation of 68.830 support giving away has come true too soon, and fiscal consolidation with reform measures will see the pair test 68.345.

Data/Events Highlights:

Malaysia's May export growth climbed up to 2.5% y/y in May from 1.1% y/y in April. Import growth, however, fell below market expectations to 1.4% y/y in May from 4.4% y/y in April. These lead to an overall trade surplus of MYR 9.08 billion

Data/Events Ahead:

Philippines and Taiwan release their June inflation prints.

India's budget announcement will be on tap to assess government priorities in the new term.

DATA RELEASES DUE TODAY

01:00 GMT - PH: CPI (Jun) 4cast: 2.7% y/y (Mkt: 2.8 Prev: 3.2)

05:00 GMT - JP: Leading Indicator (May P) 4cast: (Mkt: 95.4 Prev: 95.9)

07:30 GMT - UK: Halifax House Price Index (Jun) 4cast: % 3m y/y (Mkt: 5.7 Prev: 5.2)

07:30 GMT - UK: Halifax House Price Index (Jun) 4cast: % m/m (Mkt: -0.4 Prev: 0.5)

08:00 GMT - TW: CPI (Jun) 4cast: % y/y (Mkt: 0.81 Prev: 0.94)

12:30 GMT - US: Average Hourly Earnings (Jun) 4cast: 0.3% m/m (Mkt: 0.3 Prev: 0.2)

12:30 GMT - US: Unemployment (Jun) 4cast: 3.6% (Mkt: 3.6 Prev: 3.6)

12:30 GMT - US: Private Payrolls (Jun) 4cast: 130k (Mkt: 155 Prev: 90)

12:30 GMT - US: Non-farm Payrolls (Jun) 4cast: 135k (Mkt: 164 Prev: 75)

12:30 GMT - CA: Unemployment (Jun) 4cast: 5.5% (Mkt: 5.5 Prev: 5.4)

12:30 GMT - CA: Employment (Jun) 4cast: 35 k (Mkt: 9.9 Prev: 27.7)

14:00 GMT - CA: Ivey PMI (Jun) 4cast: (Mkt: Prev: 55.9)

EVENTS & AUCTIONS

- 04:30 GMT - JP: 3mth Bills Auction

- 05:30 GMT - IN: FY20 Budget Presentation

- 10:00 GMT - UK: 182 days Bills Auction (GBP 2.5bn)

- 10:00 GMT - UK: 28 days Bills Auction (GBP 0.5bn)

- 10:00 GMT - UK: 91 days Bills Auction (GBP 2bn)


Forex - Asia Open - Overnight Highlights


 23:36 (GMT) 03 Jul

 [Forex Highlights]

Asia Overnight Highlights - 04 Jul 2019

MAJORS

FX Highlights:

The Bloomberg dollar spot index traded mixed on Wednesday, remaining capped at 96.872 and dipping to lows of 96.600 as well amid a slew of weak economic data. Thin markets given a shorter Wednesday and July 4th holiday today.

GBP/USD remained below 1.26 and EUR/GBP got as high as .8990, given a softer UK services PMI.

Reaction to US data was modest but EUR/USD briefly rallied when Trump tweeted that Europe was manipulating the EUR lower, before quickly reversing. Pair now seen with an upward bias approaching 1.1290.

USD/JPY edged up to near 107.90 despite mostly soft US data.

Canada reported an unexpected trade surplus of C$0.76bn in May, and USD/CAD subsequently fell as low as 1.3060. However the CAD still underperformed a rising AUD/USD, with AUD/CAD touching above .92.

Data/Events Highlights:

- US Jun ADP employment +102k vs 140k exp.

- US initial claims fell to 221k from 229k vs 223k exp.

- US May trade deficit $55.5bn from $51.2bn in Apr and $54.0bn exp.

- US May factory orders -0.7% vs -0.6% exp.

- US Jun ISM non-manufacturing fell to 55.1 from 56.9 vs 56.0 exp.

- UK services PMI was weaker than expected at 50.2.

- VIX index: 12.57 (-2.78%)

- Gold Spot: $1,417.39/oz (-0.09%)

- ICE Brent front contract: $63.82 (+$1.42)

- Nymex WTI front contract: $57.25 ($-0.09)

- Reuters/Jefferies Commodities Index: 180.48 (+1.48%)

- 10y UST: 1.950% (-2bp) (Asia morning)

- DJI: 26,966.00 (+0.67%); S&P: 2,995.82 (+0.77%); Nasdaq: 8,170.23 (+0.75%)

Data/Events Ahead:

A quiet day ahead in the developed markets as U.S. is away for the Independence Day holiday. Only Australia's May's retail sales will be released. We expect retail sales to pick up to 0.2% m/m in May from -0.1% in April.

EMERGING ASIA

FX Highlights:

Asian currencies were a mixed bag on Wednesday. KRW was the biggest loser down 0.44% against the dollar as the South Korean government cut its growth and inflation forecasts. TWD was down 0.25% against the dollar. They were followed by PHP (-0.17%) and CNY (-0.22%). THB was the biggest winner, up 0.40% against the greenback.

USD/CNH was unable to break above 6.9000 earlier on Wednesday and flatlined around 6.8850 in thin NY afternoon markets. A move beyond the 6.9000 is likely to trigger further pressure towards the 6.9102 resistance. 1Y NDFs also peaked at 6.9335 and traded just above 6.9200 overnight. USD/CNY were bid up to 2-week highs of 6.8935 but traded flat at 6.8800 subsequently. With onshore pair at the upper end of our previous range, we believe expectations of going above 6.9000 is rising.

USD/SGD traded choppily around 1.3560 levels, bidding up to 1.3575 but then falling back in range. We expect pair to edge higher and test the 1.3580 resistance. If broken, we will turn our attention to the 1.3600 big figure next.

USD/IDR 1M NDFs could not sustain the gains to 14240 seen earlier on Wednesday and slid below 14200 overnight. Onshore spot traded with a bid tone to fresh WTD highs of 14170 in early trading on Wednesday before sliding back to trade on either side of 14140. Concerns about global growth slowdown, and lingering trade tensions, continue to keep risk aversion at play - also prompting further bets for a BI rate cut. Some selling may be seen as the pair approaches 14200, but we do not expect a drop below 14100 unless risk aversion abates.

USD/INR 1M NDFs traded horizontally around 69.100 earlier on Wednesday but slid to the 69 handle in the NY close. Onshore spot remained below the 69 handle on Wednesday. Pair gapped lower to open at 68.850 from previous close of 68.925 and slid to fresh 3-month lows of 68.800 as oil prices slid the night before. Pair however erased some of these losses and inched back to 68.900-levels in the afternoon as market participants eagerly awaited the fiscal announcements. With the 68.830 support now looking weaker, we see room for downslide to 68.345.

Data/Events Highlights:

Singapore's June PMI followed the regional trend, sliding to 49.6 from 49.9 previously. Electronics PMI also eased to 49.2 in June from 49.4 previously.

Data/Events Ahead:

Malaysia's May trade number will be reported in Asia today.

DATA RELEASES DUE TODAY

01:30 GMT - AU: Retail Sales (May) 4cast: 0.2% m/m (Mkt: 0.2 Prev: -0.1)

03:30 GMT - TH: Consumer Confidence (Jun) (Prev: 77.7)

04:00 GMT - MY: Imports (May) 4cast: 7% y/y (Mkt: 3.1 Prev: 4.4)

04:00 GMT - MY: Exports (May) 4cast: 4.5% y/y (Mkt: 2.3 Prev: 1.1)

04:00 GMT - MY: Trade Balance (May) 4cast: 6.64MYR bn (Mkt: 8.45 Prev: 10.86)

09:00 GMT - EU: Retail Sales (May) % m/m (Mkt: 0.4 Prev: -0.4)

09:00 GMT - EU: Retail Sales (May) % y/y (Mkt: 1.6 Prev: 1.5)

EVENTS & AUCTIONS

- US: Market Holiday - Independence Day

- 03:35 GMT - JP: 30yr Bonds Auction

- 06:30 GMT - IN: Economic Survey

- 07:00 GMT - EU: ECB's Lane speaks in Frankfurt


Forex - Asia Open - Overnight Highlights


 23:50 (GMT) 02 Jul

 [Forex Highlights]

Asia Overnight Highlights - 03 Jul 2019

MAJORS

FX Highlights:

The Bloomberg dollar spot index traded slightly lower on Tuesday, touching 96.600 after printing highs of 96.875 earlier in the week as the U.S. jobs data was eyed.

North America saw USD/JPY slip below 108.00, with UST yields lower in response to weakness in oil. EUR/USD was mostly stable near 1.13, but did see a dip below when the IMF's Lagarde was nominated to lead the ECB, a surprise not coming from a central bank background.

GBP was the weakest major currency, undermined firstly by more weak UK construction PMI. While some recovery was seen from that, a bigger hit came as BoE's Carney appeared to admit to greater risks of global weakness impinging on the UK, promising a reassessment in the August Inflation Report. GBP/USD saw a low of 1.2582 before a modest correction back above 1.26.

AUD/USD gains that touched .70 followed a speech by RBA governor Lowe in which he suggested that fiscal policy was a more appropriate response to support the economy than further monetary easing. He noted the weakness of the currency and the strength of iron ore prices as being supportive factors for the economy. The CAD was resilient to weakness in oil, eventually touching below 1.31. AUD/CAD remained on a .91 handle.

Data/Events Highlights:

- Christine Lagarde nominated to head ECB, Usula von der Leyen for President of EU Commission.

- Fed's Mester said prefers to see more information before changing policy stance.

- UK construction PMI fell to its lowest level since 2009 in June, with many respondents to the survey citing Brexit uncertainty.

- The Reserve Bank of Australia (RBA) cuts its official cash rate further to a record low at 1.00% on 2 July.

- VIX index: 12.93 (-8.04%)

- Gold Spot: $1,425.88/oz (+0.51%)

- ICE Brent front contract: $62.40 ($-2.66)

- Nymex WTI front contract: $56.53 (+$0.28)

- Reuters/Jefferies Commodities Index: 177.84 (-1.82%)

- 10y UST: 1.974% (-5bp) (Asia morning)

- DJI: 26,786.68 (+0.26%); S&P: 2,973.01 (+0.29%); Nasdaq: 8,109.09 (+0.22%)

Data/Events Ahead:

U.S. ADP releases its report on private sector job growth on Wednesday. We expect a 130k increase, again after a weak May, and matching what we expect from private sector non-farm payrolls.
U.S. ISM releases its Jun survey on non-manufacturing, which should also lose momentum, slowing to 54.5 from May's improved 56.9.

Also due are U.S. May factory orders and weekly initial claims, the latter brought forward from Thursday due to the 4 July holiday.

The final services and composite PMIs for the Eurozone will be released and should be in line with the flash survey, services at 53.4 and the composite at 52.1.

U.K. June services PMI numbers are also due - and we do not envisage a change.

EMERGING ASIA

FX Highlights:

Asian currencies paring some earlier gains against the USD on Tuesday, as trade optimism post-G20 faded somewhat. South Korean Won extended losses for a second day, down by 0.63% against the greenback. That was followed by CNY and CNH, both down by over 0.3% against USD, and THB (-0.23%), IDR (-0.18%), TWD (-0.16%), MYR (-0.16%), PHP (-0.12%).

USD/CNH traded with a bid tone on Tuesday, inching towards the 6.8900 handle in the NY hours. USD/CNH should now trade within 6.8157-6.8914 in the absence of significant data points. 1Y NDFs meanwhile broke above 6.9200 to highs of 6.9282. USD/CNY erased the postG20 losses and inched back up to 6.8700+ levels on Tuesday. For USD/CNY we see the pair staying within 6.8000-6.9000 range until new U.S.-China trade developments.

USD/SGD was broadly range bound, and traded horizontally around 1.3560 on Tuesday as trade as well as FOMC direction is awaited. Singapore's June Purchasing Manager Index will be released on Wednesday. We expect a slight slip in June from May figures. We expect pair to eye the 1.3580 resistance next. If broken will turn our attention to the 1.3600 big figure.

USD/IDR 1M NDFs consolidated around 14200 in Tuesday's overnight session after being bid up from 14140-levels earlier in the day. Onshore spot traded with a bullish tone on Tuesday morning and inched above 14140 to intraday highs of 14146 as risk aversion prevailed with the US now slapping further tariffs on EU goods. Pair however eased back to sub-14130 levels in the afternoon before a final leg up into the close. Gains to 14150+ may be in order as G-20 driven improvement in risk sentiment is likely to be temporary and calls for BI rate cuts will pick up.

USD/INR 1M NDFs traded lower to 69.100 levels in the NY session from 69.300 earlier in the day. Onshore spot remained stuck around the 69 handle on Tuesday, after gapping slightly higher to open at 68.9725 from previous close of 68.9450. Pair moved just above the 69 handle in early trading as a ramp up in US trade tariffs on EU goods weighed on sentiment. Pair was however contained at intraday highs of 69.0600 and closed at 68.9250. We continue to see limited room for the pair below the 69.000 handle as 68.830 support will likely hold.

Data/Events Highlights:

No key data was reported in Asia on Tuesday.

Data/Events Ahead:

After a run of dismal Asia PMIs on Monday, Singapore's June PMI will be closely watched - due at 1300GMT.

DATA RELEASES DUE TODAY

00:30 GMT - JP: Composite PMI (Jun) (Mkt: Prev: 50.7)

00:30 GMT - JP: Services PMI (Jun) (Mkt: Prev: 51.7)

01:00 GMT - NZ: ANZ Commodity Price (Jun) % (Prev: 0)

01:30 GMT - AU: Building approvals (May) % m/m (Mkt: 0 Prev: -4.7)

01:30 GMT - AU: Trade Balance (May) 4cast:5370 AUD mn [Mkt: 5250, Prev: 4871]

05:00 GMT - IN: Composite PMI (Jun) index (Prev: 51.7)

05:00 GMT - IN: Services PMI (Jun) index (Prev: 50.2)

08:00 GMT - EU: Composite PMI (Jun F) index (Mkt: 52.1 Prev: 52.1)

08:00 GMT - EU: Services PMI (Jun F) index (Mkt: 53.4 Prev: 53.4)

08:30 GMT - UK: CIPS / Markit Services PMI (Jun) 4cast:51 index [Mkt: 51, Prev: 51]

12:15 GMT - US: ADP Employment Survey (Jun) 4cast: 130k (Mkt: 140 Prev: 27)

12:30 GMT - US: Initial Claims (Jun 29) k (Mkt: 221 Prev: 227)

12:30 GMT - US: Trade Balance (May) 4cast: -53.4USD bn (Mkt: -53.5 Prev: -50.8)

12:30 GMT - CA: Trade Balance (May) 4cast: -1.7CAD bn (Mkt: Prev: -0.97)

13:00 GMT - SG: Purchasing Managers Index (Jun) 4cast: 49.8 (Mkt: 49.8 Prev: 49.9)

14:00 GMT - US: Durable Ex Transportation (May F) (Prev: 0.3)

14:00 GMT - US: Durable Goods Orders (May F) (Mkt: -1.3 Prev: -1.3)

14:00 GMT - US: Factory Orders (May) % m/m (Mkt: -0.5 Prev: -0.8)

14:00 GMT - US: ISM Non-Manufacturing (Jun) 4cast: 54.5index (Mkt: 56 Prev: 56.9)

23:00 GMT - KR: Current Account Balance (May) USD bn (Prev: 0.6648)

EVENTS & AUCTIONS

- 02:00 GMT - TH: Bank of Thailand's MPC Minutes

- 10:00 GMT - UK: BoE's Cunliffe Speaks in Lisbon

- 12:15 GMT - UK: BoE's Broadbent speaks in London

- 15:30 GMT - US: 4wk Bills Auction

- 15:30 GMT - US: 8wk Bills Auction


Forex - Asia Open - Overnight Highlights


 23:47 (GMT) 01 Jul

 [Forex Highlights]

Asia Overnight Highlights - 02 Jul 2019

MAJORS

FX Highlights:

The Bloomberg dollar spot index traded with a bid tone in the NY session on Monday as the restarting of the trade talks between U.S. and China underpinned an improvement in risk sentiment. Mixed US ISM data also underpinned.

EUR sustained a mild negative tone through the European morning, before correcting back above 1.1350 as North America opened. A sharp bearish tone was seen later and pair dropped to sub-1.1300 levels amid dovish ECB comments and Trump's announcement of more tariffs on $4bn of EU goods.

USD/JPY kept to a tight range, with little upside above 108.50.

Cable fell below 1.2650 on weak UK manufacturing PMI. UK lending data was also on the weak side. A rise in EUR/GBP was reversed as EUR/USD losses built.

The commodity currencies lost ground after the US data, which came with USD/CAD and AUD/USD precariously poised near 0.70 and 1.31 respectively. Oil lost some of its early gains, with eyes on OPEC's meeting.

Data/Events Highlights:

- US Jun ISM manufacturing index fell to 51.7 from 52.1 vs 51.0 exp.

- US May construction spending -0.8% vs 0.0% exp.

- Fed's Clarida said baseline is positive, uncertainties have increased.

- Fed's Barkin said too soon to say whether global weakness could compel a July ease.

- Eurozone final manufacturing PMI was revised down to 47.6 from 47.8, following what had been slightly more optimistic provisional data.

- UK manufacturing PMI was weaker than expected at 48.0 - the weakest since 2013.

- Japan's Q2 Tankan survey revealed that the overall diffusion index for the assessment of business conditions among Japan's large manufacturers has extended its decline from 12 to 7 in Q2, the lowest level in three years.

- VIX index: 14.06 (-6.76%)

- Gold Spot: $1,386.91/oz (+0.20%)

- ICE Brent front contract: $65.06 (+$0.32)

- Nymex WTI front contract: $58.81 ($-0.28)

- Reuters/Jefferies Commodities Index: 181.14 (+0.05%)

- 10y UST: 2.024% (+2bp) (Asia morning)

- DJI: 26,717.43 (+0.44%); S&P: 2,964.33 (+0.77%); Nasdaq: 8,091.16 (+1.06%)

Data/Events Ahead:

A quiet day ahead on Tuesday with only the RBA decision on the wires. We expect a 25 bps cut to the OCR, bringing it down to a record low at 1.00%. We believe rather than delaying the inevitable, RBA will make another cut now to hasten and more effectively drive unemployment down towards their target of 4.5%.

EMERGING ASIA

FX Highlights:

A trade truce between the U.S. and China helped to boost sentiment in Asian markets as Monday started. Safe haven currencies were down, while risk assets rallied. PHP (+0.36%) led the pack, followed by CNY (+0.22%), TWD (+0.22%), THB (+0.19%) and CNH (+0.15%). IDR and INR were also in mild gains of 0.11% each. KRW (-0.35%) and SGD (-0.21%) however continued to decline as trade deal was still not expected.

USD/CNH traded higher on Monday and broke above the 6.8600 handle to highs of 6.8650. Despite the trade truce in US-China, and better-than-expected lifting of Huawei sanctions, CNH remains range-bound on concerns on China economy and future negotiations. USD/CNH should now trade within 6.8157-6.8914 in the absence of significant data points. 1Y NDFs likewise touched highs of 6.9100 in the NY hours and was last seen trading just below that. USD/CNY onshore spot was seen at lows of 6.8350 eralier on Monday but closed higher at 6.8530. We see the pair staying within 6.8000-6.9000 range.

USD/SGD reversed a drop to near-1.3500 levels following the U.S.-China trade truce over the weekend and returned to 1.3550+ levels in the NY hours as the USD rallied. We see downside risks returning for the pair if the trade situation improves, pair may break below the 1.3500 big figure and edge towards the 1.3444 support next.

USD/IDR 1M NDFs traded horizontally around 14140 on Monday, lower than Friday's 14180. Onshore spot slid to its lowest levels since April as it opened at 14083 on Monday following a truce in U.S.-China trade spat at the G20 meetings over the weekend. Pair however could not sustain a dip below 14100 and returned to 14120-levels. Gains to 14150 may be in order as G-20 driven improvement in risk sentiment is likely to be temporary and calls for BI rate cuts will pick up.

USD/INR 1M NDFs flatlined around 69.200 overnight despite gains in the USD. Onshore spot gapped lower to open below the 69 handle again on Monday and slid to fresh 11-week lows of 68.8275 in the morning as a U.S.-China trade truce over the weekend helped a mild recovery in sentiment. Expectations of a trade deal are however bleak, and pair was picking up to t69 handle in the afternoon. Trump-Modi meeting also had a positive tone, but details are scanty - keeping investors cautious. Market participants are eagerly awaiting the fiscal announcements, and we continue to see limited room for the pair below the 69.000 handle as 68.830 support will likely hold.

Data/Events Highlights:

China's Caixin manufacturing PMU also slid to 49.4 in June from 50.2 previously.

Indonesia's June CPI remained soft at 3.28% y/y, but the core print jumped to 2-year highs. Thailand June CPI was also muted at 0.87% y/y from 1.15% y/y previously.

India's June manufacturing PMI also softened to 52.1 from 52.7 previously.

Data/Events Ahead:

Only HK's May retail sales are on tap on Tuesday.

DATA RELEASES DUE TODAY

04:30 GMT - AU: RBA - Cash Rate Target (Jul 2) 4cast: 1% (Mkt: 1 Prev: 1.25)

08:30 GMT - HK: Retail Sales (Value) (May) % y/y (Mkt: -4.9 Prev: -4.5)

09:00 GMT - EU: PPI (May) % m/m (Mkt: Prev: -0.3)

09:00 GMT - EU: PPI (May) [Prev: 2.6]

22:30 GMT - AU: AIG Services PMI (Jun) [Prev: 52.5]

EVENTS & AUCTIONS

- 03:35 GMT - JP: 10yr Bond Auction

- 09:30 GMT - EU: ECB Main Refinancing Operation Result

- 09:30 GMT - UK: 2049 Bonds Auction 1.75% (GBP 2.25bn)

- 09:30 GMT - AU: RBA's Lowe speaks in Darwin

- 10:35 GMT - US: Fed's Williams speaks on economic and global outlook

- 14:30 GMT - UK: 2025 Bonds Auction 0.625% (GBP 3bn)

- 15:00 GMT - US: Fed's Mester speaks on economy


Forex - Asia Open - Overnight Highlights


 23:44 (GMT) 27 Jun

 [Forex Highlights]

Asia Overnight Highlights - 28 Jun 2019

MAJORS

FX Highlights:

The Bloomberg dollar spot index reversed the gains to 96.400 seen earlier on Thursday and traded mostly horizontally around 96.200 in the NY hours as the US-China outcome from the G20 meetings was awaited. Although expectations of a deal are low, postponement of tariffs and beginning of talks would itself be a sentiment lifter.

USD/JPY, having been lifted in Asia to 108.15 on reports of a truce between the US and China, moved back to around 107.70 as the WSJ reported China would make a list of demands on the US, notably regarding Huawei, which the US might have trouble accepting. Kudlow followed by suggesting the US may still move ahead with tariffs.

EUR/USD, having inched below 1.1350 early, got some support from generally firmer German State CPI data, the national index up 0.3% in Jun with yr/yr growth rising to 1.6% from 1.4%. Market response was however modest, with no threat seen to 1.14.

EUR/CHF got as high as 1.1144 but slipped back below 1.11 as optimism faded on a US-China deal. EUR/GBP extended the upside a little further above .8975, Boris Johnson refusing to rule out suspending Parliament to deliver Brexit. EUR/SEK is holding above 10.50.

The commodity currencies remain supported, AUD/USD nudging above .70, USD/CAD slipping below 1.31 and NZD/USD reaching .67.

Data/Events Highlights:

- US Final Q1 GDP unrevised at 3.1% vs 3.2% exp, core PCE prices revised to 1.2% from 1.0% vs 1.0% exp.

- US initial claims rose by 10k to 227k vs 220k exp.

- US May pending home sales +1.1% vs 1.0% exp.

- VIX index: 15.82 (-2.41%)

- Gold Spot: $1,409.46/oz (-0.02%)

- ICE Brent front contract: $66.55 (+$0.06)

- Nymex WTI front contract: $59.35 ($-0.08)

- Reuters/Jefferies Commodities Index: 182.48 (+0.06%)

- 10y UST: 2.014% (-3bp) (Asia morning)

- DJI: 26,526.58 (-0.04%); S&P: 2,924.92 (+0.38%); Nasdaq: 7,967.76 (+0.73%)

Data/Events Ahead:

- G20 meetings kick off in Osaka. President Trump and Chinese President Xi Jinping will meet on the G-20 sidelines to resume trade negotiations that broke down in May. Trump also is expected to meet with Indian Prime Minister Narendra Modi and Turkish President Recep Tayyip Erdogan.

- In the U.S., see a weak 0.1% increase in May's core PCE price index, with a 0.4% rise in personal income and a 0.5% increase in spending.

- Canada's April GDP is also due. Bank of Canada publishes its quarterly Business Outlook Survey of senior management from about 100 firms as well.

EMERGING ASIA

FX Highlights:

The emerging Asian currencies traded mixed again on Thursday relative to the USD as G20 meetings were eyed, despite little hopes of a trade deal. PHP (+0.45%) outperformed vs. the peers amid expectations of a rate cut. IDR (+0.25%), CNH (+0.24%), INR (+0.13%) and TWD (+0.13%) were in modest gains as well. THB (-0.13%) however was in the red despite the central bank avoiding a dovish shift on Wednesday. KRW (-0.13%) saw similar losses as well.

USD/CNH traded with an offered tone on Thursday amid expectations of a truce between US and China over the weekend, and pair drifted to 6.8700 lows at last look. If markets turn more risk averse ahead of G20 meeting in Osaka, pair may return above 6.9000 handle. 1Y NDFs likewise broke below 6.9200 and touched 6.9150 overnight. USD/CNY onshore spot traded in a tight range around 6.8800 on Thursday. We continue to watch for the key psychological level 6.9000.

USD/SGD touched 1.3550+ levels earlier on Thursday but reversed the gains and extended the drop to 1.3530 levels in the NY session. We expect the 1.3581 resistance to be safe ahead of the uncertainty leading up to Trump and Xi's meeting at the G20 summit.

USD/IDR 1M NDFs traded broadly horizontally around 14220 earlier on Thursday but dropped to 14190-levels as the court upheld President Jokowi's victory in the April elections. Onshore spot saw some gains to fresh highs of 14185 in early trading amid risk of protests following the court ruling on President Jokowi's re-election, but pair traded lower to 14170 soon after and a drop to 14142 was seen in the afternoon. Markets are awaiting developments from the G20 meetings, and are likely to be quiet into the end of the week. Resistance at 14210 is coming in view, but a break above may have to wait until G20 trade discussions are out of the way.

USD/INR 1M NDFs consolidated around 69.600 earlier on Thursday but later slid to sub-69.400 levels. Onshore spot gapped higher to open at 69.260 on Thursday vs. previous close of 69.150 and rallied to 69.300 levels in early trading amid gains in Brent crude oil price on a drop in U.S. crude stocks. G20 jitters are also spreading, and President Trump called India's tariffs on U.S. good 'unacceptable'. Pair however dropped to fresh 3-week lows of 69.060 in the afternoon. Market participants are eagerly awaiting the fiscal announcements, and we continue to see limited room for the pair below 69.500 amid a fragile risk sentiment.

Data/Events Highlights:

Thursday was quiet in Asia in data terms.

Data/Events Ahead:

It's a quiet end to the week today, but look out for China's June manufacturing and non-manufacturing PMIs due over the weekend.

DATA RELEASES DUE TODAY

23:50 GMT - JP: Industrial Production (May P) % m/m (Mkt: 0.7 Prev: 0.6)

23:50 GMT - JP: Industrial Production (May P) 4cast:-2.5 % y/y [Mkt: -2.9, Prev: -1.1]

01:30 GMT - AU: Private Sector Credit (May) [Mkt: 0.2, Prev: 0.2]

05:00 GMT - JP: Construction Orders (May) % y/y (Prev: -19.9)

05:00 GMT - JP: Housing starts (May) % y/y (Mkt: -4.2 Prev: -5.7)

05:00 GMT - JP: Housing starts (Ann.) (May) JPY mn (Mkt: 0.945 Prev: 0.931)

08:30 GMT - UK: Balance of Payments (Q2) 4cast: -37.5 (Mkt: -32 Prev: -23.7)

08:30 GMT - UK: GDP (1Q F) 4cast: 0.5% q/q (Mkt: 0.5 Prev: 0.5)

09:00 GMT - EU: CPI Estimate (Jun) 4cast: 1.2% y/y (Mkt: 1.2 Prev: 1.2)

09:00 GMT - EU: HICP - Core (Jun A) 4cast: 0.8% y/y (Mkt: 1 Prev: 0.8)

12:30 GMT - US: PCE Core (May) 4cast:0.1 % m/m [Mkt: 0.2, Prev: 0.2]

12:30 GMT - US: Personal income (May) 4cast: 0.4% m/m (Mkt: 0.3 Prev: 0.5)

12:30 GMT - US: Personal spending (May) 4cast: 0.5% m/m (Mkt: 0.5 Prev: 0.3)

12:30 GMT - CA: GDP (Apr) 4cast: 0.2% m/m (Mkt: 0.2 Prev: 0.5)

12:30 GMT - CA: Industrial product price index (May) % m/m (Mkt: -0.1 Prev: 0.8)

12:30 GMT - CA: Raw Materials Price Index (May) % m/m (Mkt: -3 Prev: 5.6)

14:00 GMT - US: Univ of Mich Sentiment (Jun F) index (Mkt: 98 Prev: 97.9)

EVENTS & AUCTIONS

- 03:30 GMT - JP: 3mth Bills Auction

- 10:00 GMT - UK: Bills Auction

- 10:00 GMT - UK: Bills Auction

- 14:30 GMT - CA: Bank of Canada Business Outlook Survey


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