USD/JPY tops July 3 111.14 high, May 21, 22 highs next?

BUZZ-USD/JPY tops July 3 111.14 high, May 21, 22 highs next? * USD/JPY gets small lift in thinner PM trading, to 111.17 EBS. * July 3 111.14 high eclipsed, next 111.18 on May 22, 111.39 on May 21? * Whatever the case, move up if to continue likely a grind * Option expirations topside too, total USD788 mln 111.40-55. * 110.81 early Asia low, decent bids, option expiries below too. * Total USD1.48 bln below between 110.40-70 strikes.

BUZZ-EUR/USD bulls can stay hopeful if 1.1714 base holds * EUR/USD rally snuffed out for now as USD bounces in Asia * But bullish chart signals will prevail if 1.1714 holds on EBS * Base of daily Ichimoku Cloud also floor of uptrend channel * Bollinger uptrend channel if intact points to Cloud top 1.1965 * Profit-taking on USD-shorts in Asia as USD/CNY leads bounce * Headlines pose a risk to EUR/USD as Trump heads to Europe

BUZZ-China’s Telsa «concept stocks» rally on reports of Musk’s China visit

FOREX-British pound frail after key eurosceptic ministers quit * Sterling near 4-month low vs euro after Johnson, Davis quit * Markets have poor record of price in UK political risks — BNY * Dollar lacks momentum after Friday’s soft U.S. wages data * Yen weakens against dollar as investors buy riskier assets By Hideyuki Sano and Daniel Leussink TOKYO, July 10 (Reuters) — The British pound was frail on Tuesday after the departure of two key eurosceptic ministers raised worries about a «hard Brexit» while the yen retreated against the dollar as investors bid up riskier assets. Sterling stood at $1.3248, having fallen to as low as $1.3189 on Monday, after Prime Minister Theresa May’s foreign minister and Brexit negotiator quit in protest at her plans to keep close trade ties with the European Union. The currency regained some ground after several Conservative lawmakers said May is likely safe from a leadership challenge despite the resignation of Boris Johnson and Brexit minister David Davis. Still, after two years of wrangling, their departures shatter May’s own proclamation of cabinet unity last Friday in what she believed was an agreement on Britain’s biggest foreign and trading policy shift in almost half a century. Simon Derrick, London-based chief currency strategist at BNY Mellon, said the next few weeks could prove decisive, noting that financial markets have a poor track record of pricing in UK political risks, not to mention the 2016 Brexit referendum. «Current thinking is that May would win a party confidence vote. However, there is a risk that were May to make further compromises in the negotiations with Brussels, more hard line Conservative MPs might be theoretically prepared to abstain or even vote against her in a no confidence vote in Parliament,» he said. Markets still expect it is likely the Bank of England (BOE) will hike rates at its next policy meeting on Aug. 2, but analysts said a full-blown political crisis could dent those expectations. «Uncertainty is conquering the market at the moment regarding the possibility of a rate hike in August,» said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo. «If there were some negative comments about a possible rate hike from BOE officials ahead of the August (Monetary Policy Committee meeting), then we will see a big fall in sterling,» he said. Against the euro, the pound hit a four-month low of 89.025 pence per euro on Monday, and last stood at 88.68. The dollar’s index against a basket of six major currencies DXY, fell to as low as 93.711 on Monday, its lowest since mid-June, and last stood at 94.098. The dollar was not helped by Friday’s data showing U.S. wage growth remained tame despite a tight labour market. That kept the euro firm, trading at $1.1751, not far from three-week highs of $1.17905 touched on Monday. The common currency strengthened to one-month high of 1.16565 Swiss franc on Monday. Against the yen, it traded at 130.515 yen  EURJPY= , retreating slightly after hitting a seven-week high of 130.57 yen. The Japanese currency weakened against the dollar as investors appeared to be putting aside concerns of the trade conflict between the U.S. and China for now. The dollar changed hands at 111.045 yen, above the 111-yen handle for the first time since last Tuesday. The Chinese yuan tacked on 0.1 percent in offshore trade to 6.6114  CNH=D3  against the dollar. «It seems the market has digested the potential negative outcome stemming from the U.S.-China trade war, although I am not sure the market has really priced in the worst scenario,» said Mizuho Securities’ Yamamoto. The Australian dollar inched up 0.2 percent to $0.7479, extending its recovery from $0.7311 touched on Monday last week. Turkey’s lira on Tuesday made up some of the previous day’s losses, trading 0.8 percent higher at $4.6954. The currency had hit as low as $4.7506 after President Tayyip Erdogan on Monday named his son-in-law as Treasury and Finance minister in the new cabinet.

BUZZ-AUD/USD-Remains firm just below decent resistance * AUD/USD traded with a bid tone through the Asian morning * AUD/JPY buying underpinned as risk assets remained buoyant * AUD/JPY is up 0.40% from the NY close as we head into the afternoon * AUD/USD tested the Monday high at 0.7484 and isn’t backing off * Resistance at 50% of 0.7677/0.7311 at 0.7494 and 55-day MA at 0.7500 * A break above 0.7500 likely to see fresh round of short covering

JAPAN 5-YEAR JGB AUCTION BID-TO-COVER RATIO 4.87

BUZZ-GBP/USD-Plenty of flow in Asia — uncertainty reigns * -0.1% in Asia — at the base of a tight 1.3247/1.3261 range — busy day * EUR/GBP +0.1% in a 0.8860/73 range — plenty of interest in a tight range * Certainly fascinating to see how May’s reshuffled cabinet fares * Neutral momentum studies, 5, 10 & 20 DMAs conflict — little short term bias * 1.3363 London high then 1.3372, 76.4% June fall first resistance * 1.3189 NY low then 1.3170, 61.8% June/July bounce initial support

BUZZ-JPY on back-foot, risk-on, US yields bid, carries * JPY on back-foot on combo of factors — risk-on, US yields bid, carries. * Nikkei up 1%+, regains 22k handle, US yields tick up, summer carries. * USD/JPY 110.81 to 111.06 EBS but offers in abundance * Option expiries bracket — 110.40-70 USD1.48 bln, 111.40-55 788 mln. * EUR/JPY 130.26 to 130.57 EBS, now above descending 100-DMA at 130.29. * GBP/JPY 146.78 to 147.20, AUD/JPY 82.68 to 83.07, NZD/JPY 75.71 to 76.13.

U.S. President Donald Trump introduces his Supreme Court nominee judge Brett Kavanaugh in the East Room of the White House in Washington

BUZZ-EUR/USD-Consolidates gain in quiet Asian session * EUR/USD has traded in a 1.1746/62 range in Asia to consolidate Monday gains * Risk assets remained buoyant and underpinned EUR/JPY through the session * Resistance at 55-day MA at 1.1766 and a close above targets 1.1800-plus * S/T moving averages are aligned in a bullish formation and trending higher * Support at former resistance at 1.1722 and 10-day MA at 1.1670 * German ZEW out later today

Tropical Storm Chris to become hurricane on Tuesday- NHC          2018.07.10 05:14:41

Former Goldman Sachs banker in 1MDB plea talks with U.S.: WSJ

European Central Bank President Mario Draghi’s confidence in the euro zone’s economic prospects should give a boost to rejuvenated euro bulls, despite his comments that rates would need to stay low for a while yet in order to complete the job. According to the Financial Times, Draghi told lawmakers in Brussels that the measures put in place by the ECB would boost growth and inflation by 1.9 percentage points each between 2016 and 2020. While that is not a stunning recovery, it is strong by recent standards. Having survived heavy liquidation of euro longs in May and June, the bulls will be encouraged by the single currency’s ability to hold above 1.1500 and recover towards 1.1800 so far. The finishing touch would be a break of the June rebound high at 1.1853, which would confirm the double-bottom in place at 1.1510 and target a measured move towards 1.2200 over time. One major caveat to Draghi’s outlook is the move towards protectionism introduced by the current U.S. administration that may yet derail not just the EZ recovery, but economic prospects in the U.S., China and the whole global trading system.

BUZZ-DXY-USD heads for major support around 93.10/20 * Little changed in Asia as it was yesterday — modest cross risk on * Positive markets, E-mini S&P +0.2%, WTI +0.2%, Nikkei +0.9% & AsiaxJP +0.2% * Seven days of lower highs and a fresh 93.71 trend low yesterday weighs * Neutral momentum studies — bearish 5 DMA cross of cresting 10 DMA & 21 DMA * Bearish setup — 93.74, 76.4% June rise held — break targets 93.19 June low * Asian 94.01 low & NY 94.20 high initial support/resistance

GLOBAL MARKETS-Asia shares rise for a 3rd day, pound bewildered by politics

BUZZ-USD/CNH leads USD/AXJ by the nose, bounce underway * USD/CNH bounces after failed test of 6.6000 psych barrier * Rebound from day-low 6.6007 to 6.6175 triggers USD/AXJ jump * Turnaround from sharp drop yest not triggered by news or data * USD/KRW, USD/SGD most reactive to nascent relief rally * Trader says market still trading regional pairs on USD/CNH * Shanghai stocks stay up 0.4% after strong rise on Mon

BUZZ-China June CPI picks up, PPI highest since Dec 2017 * China June CPI 1.9% y/y vs forecast 1.9%, May 1.8% * Down 0.1% m/m vs forecast +0.1%, May -0.2% * Food CPI +0.3% y/y vs +0.1% in May; non-food +2.2% vs +2.2% in May * June PPI 4.7% y/y, highest since Dec (4.9%), vs forecast 4.5%, May 4.1% * Rising price pressures cld complicate easier PBOC stance as trade risks rise * June new loans seen rising as policymakers pre-empt growth risks

BUZZ-USD/CNY will enter next wave of breakdown below 6.6000 * USD/CNY opens 6.6018 vs prev close 6.6117 after as-expected fix * Break of 6.6000 psych barrier will trigger next round of selling * Primary chart target is 20 DMA support at 6.5400, then 200 DMA * Strong turn in Shanghai stocks Mon keeps FX market upbeat* China continues to free up foreign investment curbs * China tells banks to slash small biz lending rates

Gold prices inch up amid Brexit uncertainty, subdued dollar

Nikkei rises to 1-1/2-week high after Wall St rally; Yahoo Japan soars

Japan to use reserve funds in fiscal 2018 budget for flood disasters – Aso TOKYO (Reuters) — Japanese Finance Minister Taro Aso said on Tuesday that the government would tap reserve funds set aside in the fiscal 2018 budget to help restore lifelines and infrastructure in the flood stricken areas in western Japan. Aso told reporters after a cabinet meeting that he would consider compiling an extra budget if the reserve funds were not sufficient.

BUZZ-COMMENT: AUD/USD recovery impressive but can it last? The AUD/USD has gained over 2.2% since July 1 and the immediate technical outlook is positive, but there’s little reason to expect sustained appreciation. The move higher was driven by short-covering as concerns over US-China trade tensions have faded and Chinese markets have stabilized. While the reasons behind the recovery are valid, they hardly make a case for a significantly higher AUD/USD over the medium term. The fading of trade fears is based on hopes of a back-down before a full-blown trade war evolves, rather than any evidence that calmer heads will prevail to prevent one. And while the FX market isn’t focused on central bank expectations for now, the widening of the yield differential between the U.S. and Australia in favour of the USD undermines the AUD’s role as a ‘carry trade currency’. When the RBA removed the warning that a stronger Australian dollar would be a drag on growth and inflation in last week’s statement it was likely due to an assumption that AUD/USD upside was so limited, there was no need to warn against it. Until the trade tensions between the U.S. and its major trading partners are resolved, AUD/USD should be a sell on significant rallies above 0.7500. Shorting ahead of the 100-day MA (0.7612) with a stop above the 200-day MA (0.7692) is the favoured strategy.

BUZZ-USD/SGD rejection of 200-wk line will put uptrend to test * USD/SGD soundly rejected its 200-week MA 1.3654, will spook longs * Likely to probe base of weekly Bollinger uptrend channel 1.3498 * Failure to hold will lead to deeper collapse toward 1.3400 * Key driver remains USD/CNY, which has shrugged off US trade tariffs * Risk appetite unexpectedly robust even as China retaliates to US * But risk events from Trump visit to Europe may temper sentiment

BUZZ-GBP/USD, GBP/JPY bouncing after Cabinet to-do * GBP/USD off to 1.3189, GBP/JPY to 146.06 post-UK Cabinet to-do. * Resignations of key ministers since taken in stride, both bouncing. * Cable to 1.3270 late New York, cross still bouncing, to 147.17. * Early Asia GBP/JPY low 146.78, now up against descending 55-DMA resistance. * 55-DMA 147.23, high yesterday pre-Boris Johnson resignation 147.59. * Break back above 55-DMA bullish, would put 148.26 100-DMA in sights.

Brent leads crude prices higher as Norway oil workers prepare to strike

TECHNICALS-Brent oil may end bounce around $78.59

Rolling Stones sign new deal with Universal Music Group LONDON, July 9 (Reuters) — The Rolling Stones on Monday signed a new deal with Universal Music Group covering the legendary rock band’s music and audio-visual catalogue, global merchandising and brand management, the music company said. The deal continues a partnership that covers the band’s catalogue including classic albums like Sticky Fingers that was released in 1971. «After a decade of working in partnership together we are thrilled to expand and extend our relationship with the Rolling Stones,» Universal Music Group chief executive Lucian Grainge, said in a statement. The statement gave no financial details of the deal. Vocalist Mick Jagger, guitarist Keith Richards and others formed the Stones in England in 1962 and together they recorded a long string of hits including (I Can’t Get No) Satisfaction. The band continues to perform globally to large audiences.

US mergers help bank fees spike to record highs

BUZZ-World Cup: With four teams to go, Nike beating Adidas

Russian President Putin visits the World Cup Football Park in central Moscow

U.S. President Donald Trump walks from Air Force One as he arrives in Great Falls, Montana

U.S. President Donald Trump gestures during a Make America Great Again rally in Great Falls, Montana

Britain will not put Brexit deal to a new referendum — PM May

BUZZ-USD-Quiet markets allow for Fed back into focus * Relief rally in China triggers broader improvement in risk sentiment * USD slips, overbought condition consolidating but downside lacks legs * U.S. rate market firmer, focus on solid jobs report, big household survey * Futures see 50% chance of 4th Fed rate hike in 2018, new cycle high * Fed hiking, accelerated balance sheet runoff keep dollar supply tight * USD good risk/reward play against DXY 93.00

BUZZ-S&P 500 Q2 earnings: Fewer beats, but higher rewards — Goldman Sachs

FOREX-Dollar retraces losses as sterling dives on Boris Johnson exit

UK Labour leader Corbyn blasts PM May over Brexit struggles LONDON, July 9 (Reuters) — The leader of Britain’s opposition Labour Party, Jeremy Corbyn, accused Prime Minister Theresa May of being incapable of negotiating a Brexit deal with the European Union given the deep splits among her own ministers over her plans. Boris Johnson and David Davis, who have opposed the kind of Brexit plans proposed by May, stepped down within hours of each other, plunging the government into chaos on Monday. Corbyn, addressing May in parliament, said May’s government should be ended if it was incapable of governing.

BUZZ-Johnson resignation reignites Cable option demand * Cable down 100 pips since Boris Johnson resignation * Implied vols off early lows as gamma (short dated vols) back en-vogue * Long gamma ideal to capture near term spot volatility (play strike vs spot) * 1-week vol regains 8.0 from 7.0, 1-month 7.6 from 7.3 * Latest resignation places more pressure on PM May job, raises downside fears * 1-month risk reversals highlight — increased vol premium for GBP put options

BUZZ-BlackRock warns European, Japanese stocks vulnerable to trade skirmish

EU’s Tusk raises «no Brexit» idea in tweet on Johnson

British PM May says EU needs to change course or risk ‘no deal’ Brexit

BUZZ-COMMENT-Cable’s gains fleeting amid UK political angst GBP/USD got a boost as the market takes PM May at her word that progress on a Brexit deal is on the way. Thus, for the moment, if Cable can continue to consolidate above the 30-DMA, at 1.3272, there is potential for further gains. However, there are significant headwinds on a number of fronts. First, the resignations of David Davis  and Boris Johnson highlight the continued division between PM May’s soft-Brexit allies and those within the government who want a clean break with the EU. Therefore, further resignations and increased political uncertainty remain risks. Second, despite a tenuous deal among UK ministers, there are no guarantees that EU negotiators will accept the British proposal and a Brexit deal may not be in the cards by the March 2019 deadline. Although cable had some positive momentum, owing to rising sentiment for an August BoE rate hike (BOEWATCH), bears are likely remain in control without a rise above the 1.3472 June 7 high and the 200-DMA by 1.3587.

BUZZ-US Equities: Time to go «full on defensive» -Morgan Stanley

BUZZ-GBP/USD drops after UK foreign minister Johnson resigns * Cable falls to 1.3259 after UK foreign minister Boris Johnson resigns * 1.3259 = intra-day low. 1.3363 was Ldn am high * 1.3310 was low after Robert Peston tweeted about Johnson, before exit news * Johnson exit increases risk of Tory leadership challenge * 1.3285 was low for GBP/USD in Asia after David Davis quit

Foreign minister Boris Johnson resigns — PM May’s office LONDON (Reuters) — British foreign minister Boris Johnson resigned on Monday, following former-Brexit minister David Davis out of the cabinet just days after Prime Minister Theresa May secured a hard-won agreement from senior ministers on an EU exit strategy.»This afternoon, the Prime Minister accepted the resignation of Boris Johnson as Foreign Secretary. His replacement will be announced shortly. The Prime Minister thanks Boris for his work,” an emailed statement from May’s office said.

TREASURIES-U.S. yields up ahead of $69 bln in new supply, ebbing trade fears By James Thorne NEW YORK, July 9 (Reuters) — Treasuries yields rose on Monday as investors moved into equities and freed up cash for new Treasuries auctions this week, following a strong U.S. jobs report on Friday and a muted response to the start of U.S. tariffs on Chinese imports. “We had flight to quality because of the trade tariffs. But I think at the end this doesn’t mean a trade war is really taking place,” said Tom di Galoma, managing director at Seaport Global Securities LLC in New York. The yield curve remained near its flattest spread since 2007 on low inflation expectations and rate hikes from the Federal Reserve. Last week’s jobs report showed lower-than-expected wage gains, suggesting that inflation is not accelerating ahead of this Thursday’s core CPI inflation report. Investors also made room for $69 billion worth of auctions in 3-year and 10-year Treasury notes and 30-year bonds starting Tuesday. Monday’s risk-on trade sent global stocks to a two-week high, marked by a 1.3 percent rise in MSCI’s broadest index of Asia-Pacific shares outside Japan. The Nasdaq, S&P 500 and Dow Jones Industrial average all opened the week higher than Friday’s close. The benchmark U.S 10-year note  US10YT=RR  yielded 2.860 percent at 9:42 a.m. EDT (1342 GMT), up 2.7 basis points from Friday. The yield curve between two-year and 10-year notes was slightly higher from the previous week’s close at 28.90 basis points.

Norway’s salmon exports to China seen tripling after restrictions end By Lefteris Karagiannopoulos OSLO (Reuters) — China’s decision last week to lift a ban on some Norwegian salmon imports will triple the volume of the trade in the second half of 2018 and drive up prices, the Norwegian Seafood Council (NSC) said on Monday. Imports of whole salmon from three major Norwegian areas, accounting for 40 percent of the country’s total output, were banned by China in 2015 over concerns about the presence of salmon anaemia and other variants of the virus. Imports of partially processed salmon without heads, gills and entrails were allowed under the ban. Lifting the restrictions on farmed salmon, Norway’s second-largest export after oil and gas, could add 1.4 billion Norwegian crowns ($175 million) to annual export earnings from the industry, NSC said. «During the first half of 2018, Norway exported 7,000 tonnes of salmon to China. With the ban lifted, we have estimated the volume to reach 21,000 tonnes for the second half of 2018,» NSC’s China director Sigmund Bjoergo told Reuters in an email. Combined with higher demand from China’s growing middle class, Chinese total salmon consumption could climb to 100,000 tonnes this year and 240,000 tonnes in 2025, he said, up from a previous NSC estimate for 2025 of 156,000 tonnes. Based on NSC’s estimates, China would consume 12 percent of global salmon production by 2025, up from 4 percent in 2017. Norway could secure 65 percent of China’s salmon market in the long term from below 30 percent expected this year, Bjoergo said, without giving precise date for achieving the higher market share. Prices were likely to rise because Norway’s highly regulated salmon farming industry had little room to boost output, he said. China’s decision to scrap import restrictions could push up the salmon price by 1.20 Norwegian crowns ($0.15) a kg, NSC said. Last week, spot prices for salmon averaged around 57 crowns ($7.08) per kilo for delivery in Oslo. The world’s largest fishfarmer, Norway’s Marine Harvest , welcomed an end to the Chinese ban. «China is a huge and interesting market for Marine Harvest, and we are looking forward to supplying (it),» public affairs manager Eivind Naevdal-Bolstad said. Two more Norwegian fish farmers, Leroy Seafood and Salmar , whose salmon production comes mostly from the regions affected by China’s restrictions, told Reuters they expected salmon prices to rise as a result of the move. «The Chinese market could increase the demand. At the same time, we do not expect any substantial growth in production in the coming years. That could effect the price,» a Leroy spokesman said, in comments echoed by Salmar. ($1 = 8.0075 Norwegian crowns)

 

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