Asia Round up Euro Dives As Uncertainty Looms, Greece Calls Referendum – June 29th, 2015

Market Roundup

  • Greece PM Tsipras announces bank holiday, capital controls, and referendum on bailout July 5, and report cash machines running dry, long gas queues.
  • BOJ not considering emergency liquidity injections on Greece yet.
  • Japan FinMin Aso – Don’t see further declines in Japan stocks, JPY gains on Greece.
  • BOJ Gov Kuroda – Uncertainty poses risk to BOJ’s price target, target to be achieved later April-November ’16 target hit at H1 previously.
  • BIS – Global interest rates excessively low, fuels financial-debt-growth instability, policy error risk for inflation-targeting central banks, rising rates pose new risks for banks, credit-real estate booms raising EM risks.
  • Ex-ECB Mini- Smaghi – ECB can give no more liquidity to Greece.
  • IMM CTA data – Specs boost USD longs in latest week.
  • Japan May industrial output -2.2% m/m, -0.8% eyed, +1.5% eyed in June, and previous forecast -0.5%, +0.6% eyed in July, government cuts assessment, “stagnating”.
  • Japan May retail sales +3.0% y/y, +2.3% eyed.
  • Japan May LNG average import price lowest since ’09, imports -11.4% y/y, thermal coal -15.3%, crude +7.7%.
  • China PBOC cuts benchmark lending-deposit rates 25 bps, fourth cut since Nov, reserve ratios cut for some banks to aid rural-small firms.
  • NY Fed Dudley – September rate hike very much in play.
  • NZ Q2 employee confidence index 102.8, Q1 108.5.

Economic Data Ahead

  • (0300 ET/0700 GMT) Spain June HICP – flash, -0.3% y/y eyed; last -0.3%.
  • (0300 ET/0700 GMT) Spain May retail sales; last +4.0% y/y.
  • (0400 ET/0800 GMT) Norway May retail sales ex-autos, -1.5% eyed; last +2.0%.
  • (0430 ET/0830 GMT) UK May mortgage approvals, 68.7k eyed; last 68.08k.
  • (0430 ET/0830 GMT) UK May mortgage lending, bln eyed; last bln.
  • (0430 ET/0830 GMT) UK May consumer credit, GBP1.1 bln eyed; last bln.
  • (0500 ET/0900 GMT) Euro Zone June industrial sentiment index, -3.0 eyed; last -3.0.
  • (0500 ET/0900 GMT) Euro Zone June economic sentiment index, 103.8 eyed; last 103.8.
  • (0500 ET/0900 GMT) Euro Zone June services sentiment index, 8.0 eyed; last 7.8.
  • (0500 ET/0900 GMT) Euro Zone June consumer confidence index – final, -5.6 eyed; prelim -5.5.
  • (0530 ET/0930 GMT) Belgium June CPI; last +0.16% m/m, +0.56% y/y.
  • (0800 ET/1200 GMT) Germany June HICP – prelim, +0.2% m/m, +0.4% y/y eyed; last +0.1%, +0.7%.
  • (1000 ET/1400 GMT) US May pending home sales, +1.2% m/m eyed; last +3.4%, index 112.4.
  • (1030 ET/1430 GMT) US Jun Dallas Fed mfg business index; last -20.8.

Key Events Ahead

  • (0300 ET/0700 GMT) ECB/Austria CB Nowotny speech in Vienna.
  • N/A Swiss International Financial Forum in Berne, various speakers.
  • N/A Germany E1.5 bln 12-mo Bubill, France 3/6/12-mo BTF tsy note auctions.
  • N/A Norway NOK5 bln 12-mo NST31 bill auction.

FX Recap

EUR/USD is supported around 1.1000 levels and currently trading at 1.1011 levels. It has made intraday high at 1.1031 and low at 1.0952 levels. Greek Prime Minister Alexis Tsipras has decided to hold a referendum on accepting austerity measures set out by the nation’s creditors, sending the euro sharply lower against its major trading peers on Monday. Greece is due to repay €1.6 billion to the IMF on June 30, however, Greece currently has no means of paying the debt unless an extension to its bailout funds are agreed upon. Looking ahead, Greece headlines will remain in the spotlight, while the macro calendar remains fairly light with German CPI – the only significant data to be reported. Initial support is seen around 1.0914 and resistance is seen around 1.1218 levels.USD/JPY is supported below 123.00 levels and posted a high of 123.18 levels. It has made intraday low at 122.09 and currently trading at 122.60 levels. The Japanese yen was one of the strongest performing currencies at the start of the new week, with investors bidding up the safe-haven currency as fears that Greece may leave the EU eroded investor sentiment Monday, sending stocks sharply lower with the euro. Greece will hold a referendum on July 5 on whether or not to meet its creditors’ austerity demands, but until then the debt-ridden nation has been advised to keep banks closed to avoid a bank run, following large withdrawals on Friday and over the weekend. A vote against accepting austerity measures would likely lead to an exit from the European Union, causing financial instability across Europe and possibly beyond. There was also some positive data out of Japan on Monday, with retail sales growing 3% year-on-year last month, the second-consecutive increase in sales. However, this positive news was offset by preliminary industrial production, which reportedly fell 2.2% over the same period. Near term resistance is seen at 124.57 and support is seen at 122.10 levels.GBP/USD is supported around $1.5700 levels. It made an intraday high at 1.5726 and low at 1.5661 levels. Pair is currently trading at 1.5705 levels. Today UK will release money supply and mortgage approval data. In the absence of major economic data releases, the focus is entirely on the Greek issue and the market’s overall appetite for the US dollars. Initial support is seen at 1.5624 and resistance is seen around 1.5835 levels.USD/CHF is supported below 0.9400 levels and trading at 0.9374 levels and made intraday low at 0.9362 and high at 0.9414 levels. Today is data thin calendar, market will eye on US pending home sales data and Greece story for the further movement. Near term support is seen at 0.9279 levels and resistance is seen at 0.9428 levels.AUD/USD is supported below 0.7700 levels and trading at 0.7650 levels. It has made intraday high at 0.7692 levels and low at 0.7585 levels. The pair erased early losses and climbed higher as traders continued to cheer Saturday’s Chinese rate cut announcement. China is New Zealand’s and Australia’s largest export market. Moreover, higher gold prices on increased safe-haven bids on Greece crisis are also supports the resource-linked Aussie. However, the upside remains capped on underlying Greek concerns continues to dampen investors’ sentiments, weighing on risk-sensitive currencies lower. Initial support is seen at 0.7568 and resistance at 0.7838 levels.

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