Holiday travel in China slumps, Korean airlines cut China flights on lower demand, tension 0 (0)

A couple of items re China and the faltering economic bounce.

Tourism data cited on China’s state TV(CCTV) reported travel during the June 22-24 Dragon Boat Festival holiday was up on 2022 but down 22.8% from the pre-COVID levels of 2019.

  • the number of railway trips jumped 12.8% higher than during the same period of 2019
  • road travel was down 33.3% from the same period in pre-COVID 2019
  • trips on down 43.6%
  • trips on flights up 3% from 2019

Meanwhile, at least two South Korean carriers have cut flights to and from China, citing lower demand and sour relations between the two countries. Yonhap reported on flight suspensions on some routes through late October by Korean Air Lines and Asiana Airlines.

Markets are monitoring data from China for signs of progress for the economy as its bounce from COVID dissipates. Eyes are also on stimulus measures. The latest were policy rates cuts (for example the central bankcut to LPRs), which were small in magnitude, more heavy-hitting fiscal stimulus would ease market concern a little more than these.

China’s leadership is more focused on political issues, support for Putin and threats to Taiwan are two, than the economy at present.

Anyway, I’ll let y’all get back to figuring out what’s going on in the Russian coup

This article was written by Eamonn Sheridan at www.forexlive.com.

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A full-scale mutiny is under way in Russia 0 (0)

A civil war has broken out in Russia with Wagner Group leader Yevgeny Prigozhin leading a convoy towards Moscow and loyal parts of the Russian military attacking it.

Reports are scattered and unreliable but helicopters are engaging the column and images suggest three of them were shot down. There are scattered videos of battles along the highways and other videos suggesting that other parts of the Russian military have switched sides.

“We will destroy everything around us, we are all ready to die – all 25 thousand, and then another 25 thousand, because the Russian people must be liberated,“ said Prigozhin who regularly publishes audio statements on Telegram.

Putin addressed the nation and here’s the full text:

I appeal to the citizens of Russia, to the personnel of the armed forces, law enforcement and security services, fighters and commanders currently fighting on their positions, repelling the enemy attacks, doing it heroically.

“I spoke to the commanders in all directions last night. I appeal also to those who were deceptively pulled into the criminal adventure, pushed towards a serious crime of an armed mutiny.

“Russia today is leading the most difficult war for its future, repelling the aggression of neo-Nazis and their handlers. Against us, the whole military, economical and information machines of the west are turned. We fight for the lives and security of our people. For our sovereignty and independence. The right to remain Russia, a state with 1,000 years of history.

“It’s a battle where the fate of our people is decided and requires uniting of all our forces, unity, consolidation and responsibility. Everything else that weakens us must be shoved to the side.

“Our external enemies are using any arguments to undermine us from within. Thus, actions splitting our unity is a betrayal of our people, our combat brothers who fight now at the frontline.

“It’s a strike in the back of our country and our people. Exactly this strike was dealt in 1917 when the country was in world war one, but its victory was stolen. Intrigues, and arguments behind the army’s back turned out to be the greatest catastrophe, destruction of the army and the state, loss of huge territories, resulting in a tragedy and a civil war. Russians were killing Russians, brothers killing brothers. But the beneficiaries were various political chevaliers of fortune and foreign powers who divided the country, and tore it into parts.

“We will not let this happen. We will protect our people and state from any threats, including internal betrayal.

“What we’re facing is exactly internal betrayal. Extraordinary ambitions and personal interests led to treason. Treason of their own country and people and of the case that fighters of Wagner were dying for alongside our soldiers. Heroes who liberated Soledar and Artemivsk, towns and cities of the Donbas. They fought and were giving lives to Novorossiya and the unity of the Russian world.

“Their name and glory were also betrayed by those who are trying to organise the mutiny, pushing the country into anarchy and brother-killing, to a defeat, in the end, and capitulation.

“Repeat: any internal mutiny is a deadly threat to our state, to us as a nation. It’s a strike against our nation, our people. And our actions to defend the fatherland from such a threat will be brutal. Anyone who consciously went on the path of betrayal, who prepared the armed mutiny, went on the path of blackmail and terrorist actions, will take an inevitable punishment. They will answer to the law and our people.

“The armed forces and other departments were properly instructed. Extra anti-terrorist measures are now being implemented in Moscow, Moscow region, and a number of other regions. Decisive actions will be taken to stabilise the situation in Rostov-on-Don.

“It remains difficult. The operation of civilian and military control departments is practically blocked. As a president of Russia and the supreme commander, as a citizen of Russia, I will do everything to defend the country, protect the constitution, lives and safety, liberty of the citizens.

“Those who prepared the military mutiny, who raise weapons against combat brothers, have betrayed Russia, and will pay for this. And those who are being pulled into the crime, I’m asking to not make this crucial, tragic, unrepeatable mistake. Do the one right choice – stop participating in criminal actions.

“I believe that we will defend and preserve what’s sacred for us. And together with the motherland, we will overcome all challenges, and become even stronger.”

This is a truly precarious moment in world history. Putin’s repeated references to Russian history and the survival of the statemake me fearful of how far he will go to defend his position.

Initially, Wagner comments were directed at the Russian defense ministry and possible change there but they’re increasingly directed at Putin himself.

Obviously, this is a mullti-faceted development but it’s an incredible development for Ukraine. So far there are no indications of change at the front lines but you have to imagine that Ukraine will regroup for a stronger offensive, especially if Wagner forces (and those who are joining them) withdraw.

The scope of possibilities here is too wide to even contemplate but I’d much rather be holding safe haven assets when the market opens.

This article was written by Adam Button at www.forexlive.com.

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Russia accuses Wagner boss of armed mutiny. Tanks in the streets in Moscow 0 (0)

There was a very late bid in the oil market today that may have materialized as major events started to unfold in Russia.

In a video last week, Wagner founder Yevgeny Prigozhin appeared to say that his 25,000 strong militia was heading to Moscow to oust the leadership of the defense ministry.

„Those who destroyed our lads, who destroyed the lives of many tens of thousands of Russian soldiers, will be punished. I ask that no one offer resistance… We will consider anyone who tries to resist a threat and quickly destroy them,“ he said.

Not surprisingly, Russian officials didn’t take that well and today accused Prigozhin of armed mutiny.

They appear to be genuinely afraid of some kind of civil war after the deputy commander of Russia’s forces said in a video to „stop the columns and return them to their permanent bases.“

The Russian Federal Security Service (FSB) also released a statement saying not to obey “Criminal and Dangerous Orders by Yevgeny Prigozhin and to assist the Russian Armed Forces and FSB in apprehending him alongside other Wagner Commanders.”

Along with that, there are all kinds of rumours about what’s happening on the ground.

This could amount to nothing or to civil war but keep a very close eye on Russia this weekend.

This article was written by Adam Button at www.forexlive.com.

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Forexlive Americas FX news wrap: USD/JPY continues to make new highs despite risk aversion 0 (0)

Markets:

  • WTI crude oil down 22-cents to $69.29
  • US 10-year yields down 6.4 bps to 3.73%
  • Gold up $6 to $1919
  • Bitcoin up $2.4% to $30,850
  • S&P 500 down 0.8%
  • USD leads, AUD lags

The US dollar was in demand once again, despite falling Treasury yields. Some of that might have been a result of relative values as bund yields fell much further than Treasuries.

In any case, it was a classic risk-off day with the exception that the yen couldn’t sustain a bid. That’s a red flag because there was some initial JPY-buying after the hot Japan core CPI print earlier. Some of that extended early in US trade with USD/JPY falling to a session low of 142.77 but it was a quick turn and 100 pip rally from there to a new 9-month high.

More broadly, the peak of the US dollar strength was early in North American trade as the commodity currencies sagged and cable hit 1.2688 alongside heavy equity selling. The moves ebbed from there as buyers waded into some stocks and oil bounced more than $2. USD/CAD hit a 9-month low yesterday but 80 pips today before recovering about half the move.

AUD/USD struggled but the damage was mostly done early in the day and it sagged to the finish line. A week ago, it looked like AUD/USD could be breakout out to the upside but the lack of meaningful fiscal stimulus from China rapidly turned the tide and the pair is right back into the middle of the four-month range. Today was particularly bruising with a 75 pip loss.

Notably, today is also the seven-year anniversary of Brexit and it remains down about 20 big figures against the dollar since. Cable softened in Asia but treaded water afterwards.

Have a wonderful weekend.

This article was written by Adam Button at www.forexlive.com.

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Nasdaq ends an eight-week winning streak 0 (0)

I would attribute a big chunk of this week’s equity selling to quarter-end rebalancing flows and/or the front-running of those flows. There were plenty of dip buyers in Nasdaq stocks, particularly in the magnificent seven mega stocks that have been responsible for nearly all of the equity market rally this year.

On the day:

  • S&P 500 -29 points, or -0.8%, to 4395
  • Nasdaq Comp -0.9%
  • Russell 2000 -1.0%
  • DJIA -0.6%
  • Toronto TSX Comp -2.7%

On the week:

  • S&P 500 -1.3%
  • Nasdaq Comp -1.4%
  • Russell 2000 -3.0%
  • DJIA -1.7%
  • Toronto TSX Comp -2.7%

Here’s an early hint: The first two weeks of July are, seasonally, the strongest time of the year.

This article was written by Adam Button at www.forexlive.com.

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MUFG trade of the week: Staying long EUR/USD and long AUD/NZD 0 (0)

MUFG maintains a long EUR/USD position to its TOTW portfolio (spot ref:
1.0920), with a target at 1.1320, and a stop at 1.0620. MUFG also
maintains a long AUD/NZD position targeting a move towards 1.1200, with a
stop at 1.0700.

„We are maintaining a long EUR/USD trade idea. The pair retested the top
of this year’s trading range between 1.0500 and 1.1000, and we expect
the pair to move closer to the year to date high from April at just
below the 1.1100-level,“ MUFG notes.

„We are maintaining our long AUD/NZD trade idea to reflect expectations
for narrowing policy divergence between the RBA and RBNZ,“ MUFG adds.

MUFG sees three reasons why sustained strength in the USD is unlikely.

  1. Rebounding USD: The US dollar has rebounded and has been stronger against most G10 currencies over the week following a
    previous week of weakness. MUFG suggests that this pattern of alternating between strength and weakness could continue.
  2. Tightening Cycles Uncertainty: The market has arrived at a stage in the
    tightening cycles where it’s harder to determine how much further
    tightening is necessary. This means that both central banks and markets
    will become more sensitive to incoming economic data. For example, the
    sharp depreciation of the EUR today was due to weak PMI data.
  3. Potential Weakening of USD: MUFG maintains that there is a likelihood
    that the Federal Open Market Committee (FOMC) will continue with its
    pause in tightening, and if this happens, it could weaken the US dollar.
    However, this assumes that there is no significant decline in growth
    outside of the US. In other words, if upcoming US economic data supports
    the notion of the FOMC extending its pause in tightening policy, gains
    in the US dollar could be reversed.

In summary, MUFG suggests that the US dollar’s strength may not be
sustained in the longer term due to the uncertainty surrounding
tightening cycles and the sensitivity to economic data. They believe
that if the FOMC continues to pause its tightening, and if the economic
data supports this stance, it could result in a weakening of the US
dollar.

For bank trade ideas, check out eFX Plus. For a limited time, get a 7 day free trial, basic for $79 per month and premium at $109 per month. Get it here.

This article was written by Adam Button at www.forexlive.com.

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Oil claws back most of its losses but still finishes 35-cents lower to $69.16 0 (0)

Worries about the global economy continue to weigh on oil. Crude fell as low as $67.35 today in a test of the post-Saudi cut lows but the bulls made a stand it rebounded to close only modestly lower.

Still, it was the second day of selling third weekly decline in the past four weeks. A larger theme that weighed this week was increasing evidence that Iran’s exports are getting to market.

The idea that Iran is exporting much more than believed, and possibly near full capacity, helps to explain how global oil markets are much looser than they appear. If there’s any silver lining in that for the bulls, it means that there’s less spare capacity to come online if/when an Iran deal is ever reached. Also, should Trump be re-elected, the US could also return to a harder line on Iran and take some of that oil out of the market.

The key going forward is inventory drawdowns. The US SPR selling finally ends this month with no more scheduled until 2026. Combine that with summer driving season and Saudi cuts starting July 1 and the market will be in deficit in H2. But that deficit is long anticipated so it’s not clear that it’s going to move the needle. I suspect we would have to see some large US draws, along with aggressive China

stimulus to turn the tide.

This article was written by Adam Button at www.forexlive.com.

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NZDUSD Technical Analysis 0 (0)

Last week the Fed opted to pause
its tightening cycle, maintaining interest rates at 5.00-5.25%. The decision
was driven by their intention to accumulate additional economic data before
making further determinations regarding rate hikes. Their goal is to find the
optimal level of policy restraint that can effectively bring inflation down to
their target of 2% without triggering a severe recession.

Up until now, the economic
data in the United States has been encouraging, particularly within the housing
sector. Since the Federal Reserve initiated the process of scaling back its
rate hikes in December 2022, the housing market has exhibited significant
strength. It is possible that this robust performance has contributed to the
recent strength seen in the USD.

NZDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that NZDUSD couldn’t
sustain the breakout above the 0.6182 resistance and
pulled back. The price should now find some support at the red 21 moving average where
the buyers should position for another extension to the upside.

NZDUSD Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that besides the
daily 21 moving average we also have a previous swing high resistance at 0.61
and the 50% Fibonacci retracement level.
The buyers should lean on this support zone with a defined risk below 0.6084
and target the 0.63 handle. The sellers, on the other hand, may want to wait
for the price to break below the 0.6084 to pile in and extend the fall into the
0.5987.

NZDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
sellers can also lean on the trendline for
more shorts where they can also find the red 21 moving average for confluence. The
buyers, on the other hand, may wait for the price to break above the trendline
to pile in and target more higher highs.

Today
we will see the US PMIs and we can expect more downside for the pair if the
data surprises to the upside as the market would price more hikes, conversely
if the data misses expectations we may see more upside as the market would price
in less hikes.

This article was written by FL Contributors at www.forexlive.com.

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ForexLive European FX news wrap: Euro slides as PMI data disappoints heavily 0 (0)

Headlines:

Markets:

  • USD leads, AUD lags on the day
  • European equities lower; S&P 500 futures down 0.4%
  • US 10-year yields down 6.2 bps to 3.736%
  • Gold up 0.3% to $1,918.66
  • WTI crude down 1.4% to $68.53
  • Bitcoin down 0.3% to $30,079

The risk mood in markets was already leaning towards the softer side earlier today but the sentiment worsened after a rather disappointing set of PMI data from Europe.

In particular, there was a stark drop in French services activity and that alongside softer numbers in Germany is leading the euro area economy to stagnation towards the end of Q2.

The miss on estimates has reignited recession fears in the region and we saw yields fall as a result, with traders getting a little less certain about a September rate hike by the ECB.

EUR/USD fell from 1.0920 to a low of 1.0845 as sellers take charge, with the pair now down 0.8% on the day at around 1.0870. USD/JPY was also briefly dragged down by lower yields to 142.80 but has bounced back to 143.20 as the dollar holds firmer across the board.

Commodity currencies remain the laggard though as risk aversion takes hold with European equities and US futures keeping lower, alongside the bid in bonds after the PMI data.

USD/CAD is up 0.4% to retest the 1.3200 mark while AUD/USD is keeping 1% down on the day at around 0.6690, not much changed after the drop in Asia trading.

It’s now over to Wall Street to see if the risk-off wave will continue or if tech shares can pull off another bounce to wrap up the week.

This article was written by Justin Low at www.forexlive.com.

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ECB’s de Cos: We will hike rates again in July, not possible to say what comes after that 0 (0)

  • Core inflation is more resistant than expected
  • We still have ground to cover
  • We will raise interest rates again in July
  • Not possible to say what we will do afterwards

They have pretty much pre-committed to a rate hike already next month, so there’s no backing down from that. But the PMI data today will certainly increase the debate about a September rate hike, especially if the trend continues into the summer.

This article was written by Justin Low at www.forexlive.com.

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