 Market sentiments somewhat stabilized in Asian session today. Major indices opened lower, following the selloff in US. But losses are so far rather limited. Indeed, in the currency markets, Yen and Swiss Franc are paring some of yesterday's strong gains while Gold also retreats back to below 1300. USD/CNH also dips back below 6.9 handle as Yuan recovers mildly. The stage for this round of US-China trade war is set, with US tariffs effective last Friday and China's retaliation ready for June 1. Next is US tariffs on USD 300B of essentially all other Chinese products. The public comments process has begun with hearing to be held on June 17. Between now and then, we'll see if there is other progress that could pave the way for a Trump-Xi meeting at G20 meeting on June 28/29. Or, tensions could just continue to escalate. In the currency markets, technically, USD/JPY dropped to as low as 109.02 yesterday but quickly recovered. EUR/JPY also holds on to 122.48 temporary low. We'll see if Yen's retreat is going to extend further. 110.40 minor resistance in USD/JPY is a level to watch. EUR/GBP is pressing 0.8681 resistance and break will suggests bullish reversal. That would be a strong indication of weakness in the Pound for near term. EUR/USD, while recovered yesterday, is considered to be in corrective pattern from 1.1111. Euro will look into today's German ZEW to decide whether to extend the correction, or resume larger decline. In Asia, currently, Nikkei is down -0.59%. Hong Kong HSI is down -1.58%. China Shanghai SSE is down -0.36%. Singapore Strait Times is down -0.85%. Japan 10-year JGB yield is down -0.0018 at -0.048. Overnight, DOW dropped to as low as 25222.51 but ended just down -2.38% or -617.38 pts at 25324.99. S&P 500 lost -2.41% while NASDAQ suffered more and dropped -3.41%. What's more serious was in treasury yields. 10-year yield dropped to as low as 2.389 then closed down -0.050 at 2.405. However, 3-month yield closed at 2.395. Thus, 3-month-10-year curve is technically not inverted. |
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