Morning Markets: Nikkei punished as USDJPY breaks 109.0
- Australia: Retail sales (published)
- Australia: International trade in good and services (published)
- EU: PPI (0900 GMT)
- Eurozone: ECB interest rate announcement (1145 GMT)
- US: ADP national employment report (1215 GMT)
- US: Weekly jobless claims (1230 GMT)
- US: EIA weekly natural gas storage report (1430 GMT)
- US: EIA weekly petroleum status report, incl. crude oil and gasoline stocks (1500 GMT)
The yen strengthened significantly overnight to test and temporarily pass through the 109.00 zone to 108.85 after prime minister Shinzo Abe held back from unleashing a widely-expected stimulus package while postponing a sales-tax hike until 2019. USDJPY had risen to above 111.25 on May 30.
The stimulus move had been fuelled by media speculation with the Nikkei bearing the brunt of the disappointment for a 2.5% fall close to the end of the Asian session. Abe in the meantime appeared to be playing for time pledging "bold" initiatives for the economy to come later in the year.
Opec meets today and while kingpin Saudi Arabia will try to mollify disgruntled and, in some cases, desperate colleagues there is little prospect of a production freeze deal given Iran's refusal to participate after it returned to export markets in February. Any potential deal is unlikely to be binding and largely symbolic.
Both Brent and WTI were some way below the $50/barrel mark going into the European day as the fundamentals continue to legislate against a significant drive higher than the key number. The EIA report on US petroleum stocks will be keenly watched by bulls for further direction.
Sterling remains in the doldrums after that pummelling it took from that headline-grabbing Guardian poll late Tuesday that predicted the referendum vote could go the way of the Leave camp by a 52-to-48 margin. The polls may be generally supporting a Remain result for June 23 but the chequered performance of pollsters at the UK election in 2015, the still large proportion of 'Don't knows' and the fear that news-moving events could significantly alter sentiment on the EU means this remains on a knife edge.
The European Central Bank also meets today. We're not expecting fireworks. But, given the Brexit context and yet another refugee crisis looming on Europe's doorsteps. might Mario Draghi surprise? Markets will follow the president's comments closely.
- Top crude exporter Saudi Arabia is reportedly considering backing an Opec output ceiling
- The slide in the dollar against the yen weighed on sentiment in Tokyo
- Japan's Nikkei 225 took another sharp tumble, deepening Wednesday's slide
- The Nikkei 225 was down by a brutal 1.87% to just 16,637.91 at 0500 GMT
- China's Shanghai Composite dipped into negative territory before edging higher
- The Shanghai Composite was exactly even at 2,913.48 at 0520 GMT
- Hong Kong's Hang Seng index managed to make some slim gains
- The Hang Seng was up 0.14% to 20,789.37 at 0522 GMT
- Korea's Kospi Composite was up 0.22% to 1,987.13 at 0508 GMT
- India's S&P BSE Sensex was down 0.25% to 26,647.14 at 0527 GMT
- Australia's trade gap narrowed to just $1.58 bn in April, down from $2.26 bn in March
- Australian retail spending rose 0.2% in April, missing expectations of a 0.3% rise
- The iron ore price has slipped to a fresh three-month low. spelling pain for Aussie miners
- The S&P/ASX200 had its third day of falls; it was down 0.9% to 5,275.400 at 0551 GMT
- Apple is reportedly planning to offer 4-year and 8-year Australian dollar bond deal
- The US dollar lost ground against the yen; it was worth just ¥109.1600 at 0523 GMT
- USDJPY vols initially offered but vols increased when spot passed through 109.0
- The Aussie dollar jumped before the release of trade and retail data, before falling again
- The Aussie dollar was worth 0.7246 at 0522 GMT
- AUDUSD vols trading higher overnight
From the Floor
Up and up. "One-month cable traded all the way up to 21.5% vols", says Larsen.
Raised hopes. "We can anticipate some soothing talks from the [Opec] ministers that could be potentially short-term bullish", says Hansen.
Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.
No change is expected in European Central Bank monetary policy despite the worrisome data in the latest inflation report, writes James Picerno
ASX June selloff
There was some good news for Australia with the trade deficit shrinking more than expected, but retail sales disappointed, writes the team at Saxo Capital Markets (Australia)
The US economy scored an unexpected boost from manufacturing, writes the team from Saxo APAC Sales Trading.
A June or July interest-rate hike by the Federal Reserve has moved from a possibility to a probability, writes Neil Staines, but it's not cut and dried.
Skew's in for summer
Kurtosis skew may sound like a 1980s punk band but, says fxtime, there are many excellent reasons that it should form part of your trading toolbox through the seasons.
There was red ink aplenty on Asian bourses today, especially in Japan. But the mood was more upbeat in South Korea, with the Kospi Composite in Seoul (above) making gains. Photo: iStock
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