EM ASIA CREDIT: Reliance Industries: Jio IPO pushed back

The BBDXY range overnight was 1207.76 - 1211.61, Asia is currently trading around 1209. The USD continues to find support back towards the pivotal 1200 area, though the price action remains heavy and the markets focus will turn to the US CPI tomorrow. 

• Bloomberg - “Asian currencies are poised to benefit even in the absence of clear developments on US-China trade talks, as the dollar failed to find support despite favorable headlines, bond market stability, and expectations of limited Fed rate cuts. The greenback remains under pressure from a confluence of headwinds, including upcoming long-duration Treasury auctions and ongoing concerns over US fiscal sustainability.”
• The BBDXY rejected the 1125 area pretty strongly, the USD should continue to be met with supply while this 1225/30 area caps price. 
• There is a broad consensus that the USD is set to embark on a decent move lower as the world reduces its exposure to the US and repatriates a lot of these flows.
• Because of this consensus the market will be positioned the same way and USD shorts could be prone to some challenging bounces.
• We are approaching some key Weekly support towards the 1200 area in the BBDXY and this has found some decent demand as we await the US CPI tomorrow. A break below here is needed to signal the move could be about to accelerate.

• Data/Events :  NFIB Small Business Optimism

  Fig 1: BBDXY Hourly Chart

  

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

In Tokyo morning trade, JGB futures are slightly firmer, +4 compared to settlement levels.

• Local news wire Yomiuri has reported that Japan's LDP has decided on cash handouts to support households. Note that the quote is translated via Google.
• "On the 9th, the Liberal Democratic Party decided to include in its campaign pledges for the summer House of Councillors election a cash handout of several tens of thousands of yen per person as a measure to combat rising prices. The government plans to use the upside of tax revenue to fund the payment. Whether or not to impose an income limit will be decided in the future."
• Cash US tsys are slightly cheaper in today’s Asia-Pac session.
• MNI: Bloomberg reports: "US-China trade talks in London will continue tomorrow”, according to a person familiar with the talks. Talks to resume at 10am in London" [0500ET]. Today's meeting began just after 1pm local time (0800ET), though there were basically no headlines emerging from the talks themselves. Little market reaction to the news that talks would continue - an extension into Tuesday was seen as a distinct possibility.
• Cash JGBs have twist-flattened across benchmarks, with the 5-year yield 1bp higher and the 30-year 3bps lower.
• Swap rates are 1bp higher to 1bp lower. 

Natural gas prices fell on Monday but are still higher so far this month. In Europe, they fell 1.9% to EUR 35.55, close the intraday low of EUR 35.42, but are still almost 4% higher in June. The sell-off was driven by renewed confidence in access to supplies for refilling as demand from China and India remain soft given the mild weather so far this season. 

• European refilling remains in focus with storage currently around 51% and injections have continued at a steady pace. However, the market remains sensitive to unplanned outages and forecasts predicting warm weather.
• US gas fell 4.6% to $3.61 but is still up almost 5% in June. It fell to a low of $3.58 before rising moderately and has started Tuesday higher at $3.62. Inventories are above the 5-year seasonal average and in a good position to meet cooling demand, which drove the sell off.
• Weather in the US has been mild and thus air conditioning consumption minimal. The Commodity Weather Group is looking for lower temperatures in eastern US in mid-June while higher in the southwest, according to Bloomberg.