MNI EXCLUSIVE: MNI Discusses BoJ's Hiking Strategy

The EUR/USD range overnight was 1.1575-1.1620, Asia is currently trading around 1.1610. The pair continues to stall toward its first resistance as the broader Dollar looks unable to build on its recent reversal for the moment. The market is more comfortable selling US dollars, and while the pair holds above its 1.1400-1.1500 support it should keep those Bears interested. On the day, the first resistance remains around 1.1600-1.1620 and then the 1.1650-1.1700 area. Until we have confirmation of ships flowing through the Straits and a peace deal being honoured, I suspect we might do some work up there. The 1.1400-1.1900 range going back well over a year now continues to hold. The FOMC tomorrow morning could hopefully add some volatility, could the MOU allow Warsh to be dovish in his first meeting as Chair ?  

• MNI: EU Leaders To Discuss FX In Meeting On Imbalances. Currencies and monetary policies will form one component of European leaders' discussion on global imbalances when they meet for a strategic-level discussion in Brussels from Thursday, EU officials told MNI.
• MNI - Makhlouf Warns On Potential For Lingering Price Pressures: ECB's Makhlouf has warned in a speech that price pressures could linger despite a US-Iran peace deal, coming from a Governing Council member who is somewhat hawkish leaning but certainly not at the most hawkish end of the spectrum. ECB-dated OIS has 5bp of hikes priced for the July meeting before a cumulative ~20bp with the projection meeting in September vs the full pricing of a hike for the latter on Friday before the US-Iran agreement. 
• Options : Closest significant option expiries for NY cut, based on DTCC data: 1.1450(EU974m), 1.1500(EU560m), 1.1560(EU496m). Upcoming Close Strikes :  1.1500(EU8.73b June 18 ), 1.1500(EU2.29b June 19), 1.1640(EU3.36b June 18 ) - BBG
• The EUR/USD Average True Range for the last 10 Trading days: 46 Points

Fig 1 : EUR/USD Spot Daily Chart

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

• Ahead of China auctioning CNY130 Bn 5-Yr bonds today, bond markets are quiet with the 5-Yr steady at 1.45%, near to where it closed Tuesday at 1.449%
• The 10-Yr sees yields lower by -0.5bps at 1.72% today having peaked Friday at 1.75%
• The 10-Yr bond future is up +.005 at 108.965 and consolidate its position just above the 20-day EMA of 108.93.
• There is limited tier 1 data releases for the remainder of the week given China's out Friday.  
• Expect bonds to remain well supported and the 5-Yr to price later in line with current market levels.  

Headlines crossing from PBoC Governor Pan at Lujiazui forum. 

"*PAN: 7-DAY REVERSE REPO RATE HAS HAD GOOD TRANSMISSION TO MKT" - BBG

'CHINA CENTRAL BANK GOVERNOR: TO ADD OVERNIGHT REVERSE REPO INSTRUMENTS AT THE APPROPRIATE TIME - [RTRS]"

"*PAN: PILOT FOR OFFSHORE RMB/FX TRADNG IN SHANGHAI FTZ" - BBG 

"CHINA CENTRAL BANK GOVERNOR: SIX BANKS AUTHORISED TO CONDUCT OFFSHORE FOREIGN EXCHANGE TRANSACTIONS IN SHANGHAI FREE TRADE ZONE - [RTRS]"