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ForexLive Asia FX news wrap: RBA minutes give AUD a mini (very minor) shake

June 15, 2021 11:02   Forexlive Latest News   Market News  

Forex news for Asia trading on
Tuesday
15
June 2021

Major
forex rates traded in limited ranges during the session here with the
market looking ahead to the weeks’ major event, Wednesday’s
Federal Reserve Federal Open Market Committee meeting. For today
there was, however, some interest in the Reserve Bank of Australia
June meeting minutes. The June meeting was seen as something of a
‘placeholder’ ahead of the more important July meeting, when some
indication of policy wind-back is expected, but the minutes were
looked to for clues to July. There was not a lot in
the minutes, however one notable part was anecdotal evidence cited by
the RBA for firms using non-wage incentives to attract staff, and, if
that failed, firms slowing output, instead of paying higher
compensation to workers. If this is more than just anecdotal (the RBA
cite ‘liaison’, i.e. talking with their contacts) then it
presents a challenge for the Bank – policy makers are looking for
wage pressure to help drive inflation higher towards their target.
The Bank has said repeatedly it will hold policy easy until targets
are met and have even indicated an overshoot in inflation, to some
extent, is acceptable. Without wage pressure it cpould take longer to
hit RBA target.

The
Australian dollar dipped following the release of the minutes, losing
around 15 pips or so to lows circa 0.7695. NZD/USD lost a few points
alongside. Both have since retraced somewhat.

EUR/USD
is a few tics higher, as is cable, USD/CAD and USD/JPY. The ranges
for all of these have been small. 

Bitcoin had another try at its US-time high of $41K and is circa $40.2 as I post.

AUD today:

aud chart after RBA minutes for June 2021

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South Korea Money Supply Growth above forecasts (9%) in April: Actual (10.7%)

June 15, 2021 11:02   FXStreet   Market News  

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.




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US Retail sales data for May is due Tuesday, auto sales will be a drag

June 15, 2021 10:40   Forexlive Latest News   Market News  

Data is coming up on 15 June 2021 at 1230GMT, retail sales the focus (NY Fed Manufacturing index for June also).

The headline is expected to be dragged down because of weak auto sales due to the lack of supply. Excluding auto sales are seen as gaining m/m 

Via Scotia, snippet from their preview:

  • Total sales may dip by around -½% m/m while sales ex-autos post a mild gain of a comparable magnitude. 
  • Vehicle sales carry about a one-fifth weight and should drag on the headline given we know that new vehicle sales were down 8.2% m/m in May partly due to chip shortages while auto prices in CPI were up by 1.6% m/m. 
  • The other ~70% of retail sales that are not made up of gas and new vehicle sales could be more resilient on reopening effects.

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Goldman Sachs expands crypto desk with Ether options, futures despite recent correction

June 15, 2021 10:33   FXStreet   Market News  

  • Goldman Sachs is looking to expand its crypto offerings beyond Bitcoin as institutional adoption continues.
  • The investment bank intends to offer options and futures on Ether in the coming months.
  • The head of digital assets at the firm stated that clients are banking on current price levels following the recent downswing. 

Investment banking giant Goldman Sachs plans to offer options and futures trading in Ethereum in the coming months, just months after reopening its crypto trading operations.

Institutional demand rises as firms look to buy the dip

While institutional demand for cryptocurrency has been surging in the past few months with the rise of digital asset prices, Goldman Sachs decided to reactivate its crypto trading desk. 

According to Matt McDermott, the bank’s head of digital assets said that a recent survey found around 61% of the firm’s clients plan to increase their holdings in the new asset class over the next year.

McDermott added that the bank plans to offer options and futures trading in Ether in the coming months, moving beyond Bitcoin. 

Just a month ago, the investment bank started to offer investors access to non-deliverable forwards, a derivative product tied to Bitcoin price and pays out in cash. He said the firm is also planning to facilitate trades via exchange-traded notes tracking Ether. 

Despite the recent crypto market crash and warnings from regulators due to Bitcoin’s heightened volatility, hedge funds’ enthusiasm to trade digital assets has not faded. McDermott said:

“We’ve actually seen a lot of interest from clients who are eager to trade as they find these levels as a slightly more palatable entry point. We see it as a cleansing exercise to reduce some of the leverage and the excess in the system, especially from a retail perspective.”

He highlighted that other large banks have also expanded their crypto operations, including Cowen and Standard Chartered. 

The head of digital assets highlighted through conversations with clients that show cryptocurrencies are not just a passing trend and are likely here to stay. 

Through a survey of 850 institutions last week, the investment bank found that around 10% of clients are trading digital assets, and 20% are interested in it. McDermott added:

“Institutional adoption will continue. Despite the material price correction, we continue to see a significant amount of interest in this space.”

In fact, due to the recent market crash, McDermott said a lot of clients find these price levels as a “slightly more palatable entry point.” He concluded:

“We see it as a cleansing exercise to reduce some of the leverage and the excess in the system, especially from a retail perspective.”

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Yuan faces stronger depreciation in H2 2021 – China Press

June 15, 2021 10:33   FXStreet   Market News  

The Chinese yuan is likely to remain vulnerable to downside pressures in the second half of this year, as the US dollar may rebound on accelerated recovery and tightening of monetary policy, the PBOC-run newspaper Financial News reports, citing analysts.

Key quotes

“The Federal Reserve is expected to release a signal of QE reduction in Q3 amid increased inflation, and China will not follow up any interest rate hikes quickly, possibly leading to further narrowed spread over the two countries’ interest rates, or even a reversed spread that may push the dollar stronger.”

“The US and other developed countries are expected to basically achieve herd immunity in Q3, and the growth gap may narrow if the Chinese economy slows down in H2 while the US recovery speeds up.”

Related reads

PBOC issues CNY200 billion via one-year MLF at 2.95%

Fed to keep flexibility on tapering at the meeting – Morgan Stanley

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US 10-year Treasury yields snap two-day uptrend amid cautious mood

June 15, 2021 10:21   FXStreet   Market News  

  • US 10-year Treasury yields retreats below 1.50% after two-day rise.
  • Confusion over the Fed’s next moves amid recovering US inflation expectations weighs on sentiment.
  • US Retail Sales will be the key ahead of Wednesday’s FOMC.

US 10-year Treasury yields, a popular gauge of market sentiment, drops 1.4 basis points (bps) to 1.48% amid the early Tuesday. In doing so, the risk barometer drops for the first time in three days amid indecision over the US Federal Reserve’s (Fed) next moves. The same should have ideally weighed on the US dollar index (DXY) but the greenback gauge seems to benefit from the risk-off mood by the press time.

Read: US Dollar Index Price Analysis: DXY battles monthly resistance after Monday’s Doji

The recent recovery in the US inflation expectations, per data conveyed by the St. Louis Fed and New York Fed, could be traced to the latest weakness in the US T-bond yields. While New York Fed’s one-year inflation expectations jumped to a record high and the three-year gauge rose to an eight-year peak, St. Louis Fed’s inflation indicator for 10-years took a U-turn from a two-month low flashed on Friday.

It’s worth mentioning that the recovery in the inflation expectations questions the Fed policymakers’ recent outlook suggesting that the price pressure is the short-term challenge that does not push for any tapering and rate hikes. On the same line could be the recently positive US data, mainly relating to inflation as well as consumer sentiment.

Other than the reflation fears, chatters over the Delta variant of the coronavirus (COVID-19) and vaccine’s inability to tame the spread with one does pending also weigh on the market sentiment.

However, hopes from the US infrastructure spending and global policymakers’ push for more covid vaccine donation to the needy nations battle the pessimism, which in turn keeps S&P 500 Futures mildly bid around record top.

Although tomorrow’s FOMC becomes the key event, US Retail Sales for May, up for published today at 12:30 PM GMT, will also be important as traders gather extra proofs for probing the Fed members if they disappoint markets.

Read: US May Retail Sales Preview: Analyzing major pairs’ reaction to previous releases

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Ex-RBA’s Gregory: Australia’s bright recovery overshadows clouded horizon

June 15, 2021 10:09   FXStreet   Market News  

Former Reserve Bank of Australia (RBA) board member Bob Gregory said on Tuesday that the Australian policymakers are delighted with the robust economic recovery, which draws their attention to policy changes in the short term. However, it overshadows darkening clouds in the longer term, per Bloomberg.

Key quotes

“The tension between what’s best in the short run and what’s best in the long run hasn’t ever been as sharp as it is now.”

“We are going in directions which are going to make it hard down the track.”

“I’m firmly of the view that a lot of the positive things that came for Australia’s economic growth over the last two decades came out of China.”

“The cost of us losing wine, potentially students, is perhaps not the end of the world today, but it’s the growth you’ve got to look at.”

“I can guarantee the following: If inflation was to develop in the U.S., then it comes here, it doesn’t matter what we do.”

“You can be optimistic about the Australian economy in the short run because you can say all government action, virtually, is to make sure the next year is a really good one.”

“The bad or worrying things aren’t hurting at all in the next year. But when you look ahead, the tradeoff is going to become quite difficult.”

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Silver Price Analysis: XAG/USD extends three-day downtrend below $28.00 amid firmer USD

June 15, 2021 10:02   FXStreet   Market News  

  • Silver refreshes intraday low as US dollar picks up bids.
  • Greenback shrugs off downbeat Treasury yields ahead of US Retail Sales, FOMC.
  • Risk catalysts keep driver’s seat, Fed’s move eyed.

Silver (XAG/USD) remains on the back foot for the third consecutive day, taking offers around an intraday low of $27.59 amid early Tuesday. In doing so, the white metal reacts to the latest pick-up in the US dollar index (DXY) amid cautious markets.

DXY regains upside momentum, following a sluggish start to the week, while picking up bids near 90.53, up 0.05% intraday, by the press time. The greenback gauge seems to ignore the recent fall in the US 10-year Treasury yields amid the market’s indecision ahead of Wednesday’s Federal Open Market Committee (FOMC). That said, the US 10-year Treasury yields drop for the first time in three-day, down 1.4 basis points (bps) to 1.487% while writing.

It should, however, be noted that the recent recovery in the US inflation expectations, per the data conveyed by the Federal Reserve banks of New York and St. Louis, underpin safe-haven demand of the greenback amid fears of Fed’s tapering.

Also on the same line could be the chatters that more Fed policymakers will convey their bullish bias for the dot-plot in Wednesday’s meeting.

Furthermore, fears of the Delta variant of the covid and full markets’ reaction to the Group of Seven (G7) meeting updates, mainly concerning China news, exerts additional downside pressure on the market sentiment and weighs on the silver prices.

Today’s US Retail Sales may offer intermediate bounce to the white metal if the actual readings for May match downbeat forecasts, by probing the odds of the Fed’s tapering. However, traders are likely to remain cautious and may choose to extend the previous downtrend ahead of the Fed’s verdict.

Read: Federal Reserve Preview: First up, then down? Playbook for trading the Fed

Technical analysis

A clear downside break of 21-day SMA directs silver prices to an ascending support line from April 29.

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Silver Price Analysis: XAG/USD traders await the Fed

June 15, 2021 09:51   FXStreet   Market News  

  • Silver is holding in bullish territory but is vulnerable.
  • All attention is on the Fed for the days ahead.

The price of silver is trading flat in early Asia following a semi bearish close on Wall Street. XAG/USD was lower by some 0.27% by the close of the US session but performing better than gold. The gold to silver ratio was down by 0.36%.

Traders are now looking ahead to the Federal Open Market Committee that will meet on Tuesday. A statement followed by the Fed’s Chair, Jerome Powell, speaking in a presser will be what to watch for. 

The Fed Powell will be expected to say that the most likely course is that inflation decelerates over the coming months, settling back at more normal levels later this year. Therefore, the transitory mantra should keep a lid on the US dollar and help to underpin a recovery in precious metal prices.  On the other hand, if there are upward revisions for PCE inflation in 2021 then this could be feeding through to a more sustained rise in inflation over the medium term. This would be more hawkish than what the markets are priced for.

Silver technical analysis

A spike in the greenback will expose the vulnerability of the 27 figure and prior daily lows that meet the bullish 10-day moving average. 

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AUD/USD bears attack 0.7700 on RBA minutes

June 15, 2021 09:49   FXStreet   Market News  

  • AUD/USD extends early Asian losses after RBA minutes for June meeting.
  • RBA minutes confirm policymakers’ cautious optimism, no tapering/rate hike until 2024.
  • Pause in US Treasury yields’ recovery test market sentiment ahead of US Retail Sales, FOMC.
  • Aussie trade deal with UK, covid improvements fail to get accolades.

AUD/USD remains on the back foot, down 0.08% while refreshing intraday low to 0.7705, after the RBA minutes reiterate policymakers’ cautious mood during early Tuesday. In addition to the RBA board’s rejection of rate-hike and tapering concerns, downbeat market sentiment also weigh on the quote.

RBA minutes conveyed, “Board agreed it would be ‘premature to consider ceasing’ the bond-buying program,” during the latest release. The same joins the policymakers’ cautious optimism despite signaling the July meeting as the key.

Read: RBA Minutes: Policy would need to remain highly accommodative to reach full employment

Given the AUD/USD pair’s risk barometer status, the recent drag on the market’s mood ahead of tomorrow’s Fed meeting, not to forget today’s US Retail Sales, also weigh on the quote. In doing so, the AUD/USD prices ignore upbeat sentiment concerning a post-Brexit trade deal with the UK as well as improving virus conditions at home.

It’s worth noting that the Aussie traders’ return after an extended weekend seems to react to the latest catalysts from the Group of Seven (G7) meeting, which challenges China, also weigh on the AUD/USD of late.

Amid these plays, US 10-year Treasury yields snap two-day recovery while the S&P 500 Futures print mild gains by the press time.

While market fears ahead of Wednesday’s Federal Open Market Committee (FOMC) meeting can weigh on the AUD/USD prices, US Retail Sales for May, up for publishing at 12:30 PM GMT today, could offer intermediate direction to the pair.

Read: US May Retail Sales Preview: Analyzing major pairs’ reaction to previous releases

Technical analysis

AUD/USD seesaws between 0.7690 and 0.7730, comprising 100-day SMA and a seven-month-old support line, with gradually firming bearish bias. Hence, sellers aim for a clear downside break of 0.7690 trend line support to aim for another support line, near 0.7655. It should, however, be noted that an upside break of 100-day SMA, around 0.7730, should aim for the 0.7800 threshold.

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Australia House Price Index (YoY) up to 7.5% in 1Q from previous 3.6%

June 15, 2021 09:45   FXStreet   Market News  

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.




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PBOC issues CNY200 billion via one-year MLF at 2.95%

June 15, 2021 09:40   FXStreet   Market News  

The People’s Bank of China (PBOC) pumped in CNY200 billion via one-year medium-term lending (MLF) facility on Tuesday.

The Chinese central bank left the rate for one-year MLF operation rate steady for the 12th straight month at 2.95%.

more to come ….

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