The Yen was outperformed the G10 currencies, as risk-off sentiment extended into Asia this Tuesday amid ongoing political angst in Europe, particularly in Italy and Spain. As a result, Treasury yields were broadly sold-off, with the 10-year Treasury yields having hit six-week lows while oil prices also refreshed six-week lows. The commodity-linked Aussie and Kiwi traded on the back while Loonie was better bid amid news of the Canadian Trans Mountain pipeline deal.
While the Euro struggled to extend the bounce from multi-month troughs of 1.1608, Cable managed to regain the 1.33 handle heading into another data-light session ahead.
Main topics in Asia
US President Trump and Japan's Abe agree to meet before US-N. Korea summit - Reuters
According to Reuters, the White House has confirmed that President Trump and Japanese President Shinzo Abe have agreed to meet in person prior to the upcoming US-North Korea summit on June 12th.
Brexiteers, Brussels both angered by EU budget extension with UK - The Times
European countries within the EU angered both hard-line Brexiteers and EU leaders in Brussels after inviting the UK to help determine the EU's £1 trillion budget up to 2027, beyond Brexit and a date that …
Australia's Fraser: global trade tensions could increase market volatility further
Australia's Treasury Secretary, John Fraser, spoke on Australian economic conditions today, noting that Australian business conditions are at a record high.
Offshore Yuan rises to highest level since January 23
The offshore Yuan or USD/CNH rose to 6.4081 on Tuesday - the highest level since June 23.
US 10-year Treasury yield hit 6-week low in Asia
The yield on the 10-year benchmark US Treasury note fell to 2.88 percent in Asia, its lowest level since April 19, possibly in response to Italian uncertainty and a drop in oil prices.
Onshore Yuan weakens past 6.4/dollar for the first time since January 23
The onshore Yuan exchange rate weakened past 6.4 per dollar for the first time since January 23.
Fed’s Bullard: Aggressive pace of rate hikes could invert yield curve
St Louis Federal Reserve (Fed) President James Bullard is out on the wires now, via Reuters, commenting on the rate hike outlook and inflation expectations in Tokyo.
Spanish PM to face confidence vote on Friday
Spanish Prime Minister Mariano Rajoy will face a vote of confidence on Friday, according to Reuters News.
Key Focus ahead
Despite full markets returning, we have little of note to report in the European session, except for the Swiss trade figures and Eurozone money supply data. However, the political drama around Italy and Spain will continue to drive the fx moves in the session ahead. Among the central bankers’ speeches, we have the ECB policymakers Mersch and Lautenschlaeger up on the rostrum later today while the US Dallas Fed manufacturing index and CB consumer confidence data will offer some fresh trading impetus in the NA session ahead of the Reserve Bank of New Zealand’s (RBNZ) Financial Stability Report (FSR) due to out at 2100 GMT.
EUR/USD: Focus on Italy-German yield spread
The EUR/USD pair fell to 1.1607 on Monday - the lowest level since November 2017 as the Italy-German yield spread rose to a 5.5-year high of 232 basis points. The common currency may continue to lose altitude today if the Italian-German yield spread rises further in the EUR-negative manner.
GBP/USD can't seem to shed the 1.33 handle as UK markets return from their long weekend
Despite the UK session's return to the foray today, Tuesday is unlikely to bring much action for the GBP/USD, with only the BRC Shop Price Index on the data docket, dropping late at 23:01 GMT (last reading -1%).
Italy: A Crisis in the making?
EURUSD continues to buckle on haven USD flows given the heightened Italian political risk. , While near-term growth dynamics based on the recent run of weak economic data in the EU are also providing tailwinds for the USD.
RBNZ’s Financial Stability Report preview - Westpac
Westpac’s Analysts are out with their preview of the Reserve Bank of New Zealand’s (RBNZ) semi-annual Financial Stability Report (FSR) due to be reported later today at 2100 GMT, which will be followed by Governor Orr’s press conference at 2300 GMT.
China’s May official manufacturing PMI to remain unchanged at 51.4 - Nomura
Analysts at Nomura offer a brief preview on China’s official manufacturing PMI report due to be published this Thursday at 0100 GMT.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.