FXStreet (Mumbai) – Amid fresh developments on the Greek front overnight, with EU finally delivering a 5-day deadline to Greece to submit a new detailed proposal while even mentioning that the union was prepared for a Grexit, risk-off sentiment has heightened boosting safe-haven assets such as yen, US dollar, treasuries etc. Moreover, China stock markets rout also adds to risk-aversion denting commodities and equities across the board.
Key headlines in Asia
Greek crisis: Last make-or-break summit on Sunday
EU leaders attack Tsipras – party time over for Greece
Chaos hits China’s stock market, half companies suspend trading!
Japan Current Account n.s.a. came in at ¥1880.9B, above expectations (¥1542B) in May
Dominating themes in Asia – centered on JPY, AUD, NZD
A low keep affair in Asia, with above mentioned Greek updates and crashing Chinese stocks souring moods, thereby dragging most G10 currencies lower. While the yen emerged the biggest winner this session, knocking-off USD/JPY near 122 handle on increased safe-haven bids.
On the contrary, the Aussie was main laggard, tumbling nearly 0.50% to trade at 0.7420 levels so far. AUD/USD remains pressured on the back of slowdown concerns in China, stronger greenback, falling commodities and Grexit fears. While the Kiwi recovered losses, although remains undermined on weaker Aussie and increased RBNZ rate cut bets given the recent softer NZ fundamentals and China woes.
Among the Asian indices, China stocks keeps falling and opened 8% gap down in news that 50% of companies listed have been suspended for trading. The Shanghai composite index now trades -3.88% lower at 3582.50. The Nikkei 225 in Tokyo falls -2.50%, to trade at 19846, while Australian benchmark the ASX 200 also follows suit, down -1.80% and trades at 5481. South Korea’s Kospi is losing -1% and trades at 2020.
Heading into Europe – centered on EUR, GBP
A data-empty European calendar with the main focus likely to be the continuing Euro group meetings as the EU leaders discuss possible outcomes to rescue Greece from bankruptcy.
While EU delivered a 5-day ultimatum for Greece to submit a detailed reform proposal, European leaders announced late-Tuesday, a the final make-or-break summit next Sunday in order to determine Greece’s future in the Eurozone, with a no deal likely to result in a Grexit.
Besides, UK Chancellor of the Exchequer George Osborne is scheduled to announce tax and spending changes in his first budget since the Conservative Party won a parliamentary majority in May.
While ECB Board member Benoit Coeure will deliver a speech on the occasion of the publication of the report “The International Role of the Euro” in Frankfurt.
Looking ahead, the North American session offers housing data from Canada, while no economic data from the US is lined up for release today. However, the minutes from the June 16/17 meeting released on Wednesday afternoon will therefore be the highlight of the week in terms of US marco-releases. When the statement unveiling no change in the ultra-ease stance money policies was released last month, markets are expecting a dovish minutes today.
EUR/USD Technicals
Valeria Bednarik, Chief Analyst at FXStreet explains, “Technically, however, the bearish bias remains intact in the short term, as the 1 hour chart shows that the price has extended further below its moving averages, with the 20 SMA now reinforcing the static support around 1.1000, whilst the technical indicators have stabilized below their mid-lines, after bouncing from oversold levels. In the 4 hours chart, the indicators are still near oversold territory, whilst the 20 SMA heads strongly lower in the 1.1050 region, supporting the shorter term view. Renewed selling pressure below 1.0920 will likely see the pair resuming its decline down to the 1.0820 region, May 27th daily low. ”
(Market News Provided by FXstreet)