OIL: Crude Holding Onto Week’s Gains Ahead Of Fed Decision & EIA Data

NZGBs closed 2bps cheaper across benchmarks after a subdued session of trading. 

• The ANZ business activity and confidence measures rose in June. On activity, we moved back to 40.9, from 34.8 in May, while confidence rebounded to 46.3, from 36.6 prior. The improvement in June follows a move lower in these headline indices since the end of Q1. We remain off cyclical highs for both measures, activity reached 50.3 in Dec last year, while confidence was at 65.7 in October last year. The Q2 averages for both activity and confidence were below the Q1 outcomes.
• ANZ noted: “In terms of what firms are actually experiencing, there’s been a bit of a slump recently in both activity and employment." (via BBG).
• Swap rates closed 1-3bps higher, with the 2s10s curve steeper.
• RBNZ dated OIS pricing closed slightly firmer across meetings. 4bps of easing is priced for July, with a cumulative 32bps by November 2025.
• Tomorrow, the local calendar will see the NZIER Business Opinion Survey.
• On Thursday, the NZ Treasury plans to sell NZ$225mn of the 4.50% May-30 bond, NZ$175mn of the 2.75% Apr-37 bond and NZ$50mn of the 2.75% May-51 bond.

The BBDXY has had a range of 1192.42 - 1197.35 in the Asia-Pac session, it is currently trading around 1194. The USD opened under pressure and gave back most of the gains it made on Friday after Canada rescinded its digital services tax. CHINA Official PMIs for June: The Official PMIs followed the familiar theme of recent releases with the PMI manufacturing in mild contraction and the PMI non-manufacturing barely holding in expansion.

• EUR/USD -  Asian range 1.1712 - 1.1739, Asia is currently trading 1.1720. While the USD remains on the back foot the EUR will continue to be supported, first support is back towards 1.1500. This move seems to be accelerating and will now be looking towards 1.2000 and beyond.
• GBP/USD - Asian range 1.3705 - 1.3730, Asia is currently dealing around 1.3715.This move higher now looks to have broken convincingly higher and with the USD looking like it is set for another leg lower Cable could potentially now target levels back towards 1.4200.
• USD/CNH - Asian range 7.1599 - 7.1706, the USD/CNY fix printed 7.1586. Asia is currently dealing around 7.1635. Sellers should be around on bounces while price holds below the 7.2500 area and the PBOC manages the fix lower.
• Cross asset : SPX +0.42%, Gold $3280, US 10-Year 4.285%, BBDXY 1193, Crude oil $65.20
• Data/Events : Ger Retail Sales & CPI, Spain Current Account Balance, Italy Deficit to GDP YTD & CPI, EZ M3 Money Supply

Fig 1: GBP/USD Spot Weekly Chart

Source: MNI - Market News/Bloomberg Finance L.P

As the June comes to a close, major bourses have delivered good returns in June, despite the trade war and Iran-Israel conflict.  China's major bourses enjoyed gains of 2-5% as Taiwan and the KOSPI were the biggest winners for the major bourses.  News filtered through over the weekend that top negotiators from Japan and India have remained in Washington for further talks on trade deals, signs the market has taken as positive following the S&P closing at a record on Friday.  

• The Hang Seng was one of the few decliners, down -0.42% today yet remains up +3.8% for June.  The CSI300 is flat today and up +2.1% for the month whilst Shanghai Comp gained +0.20% and is up +2.50% for the month.  The Shenzhen Comp was the best performer of the major bourses up +0.73% and up +5.10% for the month.  
• The TAIEX in Taiwan fell -0.6% today but remains over +14% higher over the month as record inflows continued and the currency surges.
• The KOSPI gained +0.96% today and since the election (and promised new budget) has performed strongly delivering +14.3% in June.  
• The FTSE Malay KLCI is flat today and up +1.30% for the month.  
• The Jakarta Composite is up +0.26% today and one of the few fallers for the month, losing ground by -3.2%
• The FSTE Straits Times in Singapore is flat and up +1.80% for the month and the PSEi in the Philippines is up +0.40% and +1.46% for June.  
• The NIFTY 50 is having a weak start to Monday down -0.35% yet remains up +3.3% for the month.