Cautious optimism prevailed across the financial markets in Asia on Monday, following the weekend news that the US-China trade talks have kicked-off heading into the Trump-XI meeting at the G20 Summit later this week. However, escalating US-Iran geopolitical tensions kept the investors slightly unnerved while the US dollar continued to trade on the back foot across its main competitors, as Treasury yields lagged amid dovish Fed rate expectations.
The top performer this session was the Australian dollar that jumped on the upbeat remarks from the Reserve Bank of Australia’s (RBA) Governor Lowe. The AUD/USD pair rallied 0.50% to reach fresh multi-day tops at 0.6961. Meanwhile, its OZ peer, the NZD/USD pair also followed suit and traded firmer around the 0.66 handle. The USD/JPY pair recovered from a dip to near 107.30 region amid firmer S&P 500 futures. But the further upside appeared capped near 107.50 amid a broadly weaker US dollar. The USD/CAD pair also suffered moderate losses on higher oil prices. Gold prices on Comex held onto last week’s gains and kept its range above the key 1400 level.
Main Topics in Asia
Trade: United States should drop its win-at-all-costs mentality – People’s Daily/Reuters
US to impose major new sanctions on Iran – Bloomberg
Erdogan dealt stunning blow as Istanbul elects rival candidate – BBG
Australian economists explore QE options – Bloomberg
RBA’s Governor Lowe: risks to global economy are tilted to downside
RBA’s Lowe: Don’t ‘really understand’ markets – AFR
WTI clings to monthly top as geopolitics play their parts
Gold technical analysis: 1433 comes as the Aug 2013 highs
Chinese assistant foreign minister: G20 should ensure unity and cooperation
PBOC’s Deputy Governor: Some countries have limited room for monetary policy easing
Chinese Vice CommerceMin: Hopes US can use spirit of free trade to remove unilateral measures on Chinese firms
Asian stocks cautiously bid on US-Sino trade talks
China’s CommerceMin: Discussions between Chinese and US trade teams are underway
NZIER: RBNZ should keep rates on hold this week
USD/IDR: Rupiah shrugs-off upbeat Indonesian trade data
Key Focus Ahead
We have a quiet start to the G20 week ahead, with the macro calendar docket data-sparse this Monday. The German IFO survey will be released at 0800 GMT, which will be closely eyed, especially after a sharp deterioration in the German ZEW Economic Sentiment Index. Meanwhile, all eyes will remain on the UK political scenario and US-China trade talks, in absence of fresh first-tier economic releases from both the UK and the US docket.
However, the ECB-speak and a couple of US regional data will offer some trading impetus in the day ahead.
EUR/USD trades above 200-day MA ahead of German IFO survey
The path of least resistance is on the higher side and the pair will likely rise well above 1.14 later today if the German IFO survey for June, scheduled for release at 08:00 GMT, show signs of green shoots in the Eurozone’s largest economy.
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