Asia markets set for mixed open as Powell's dovish tone sinks in

Jeremy Powell, the US Federal Reserve chair, made slightly dovish statements at the Sintra conference which influenced market sentiment overnight, causing a slower-tempo bull steepening of Treasury yields with muted volumes. US fixed income underperformed European counterparts with this development. The US Dollar traded mixed, with modest movements in select local markets such as South Africa’s ZAR near the NY close, while the Japanese yen remained above the 160 handle, and the EUR USD found support at 1.0700.

In the Asia Pacific region, upcoming events to observe include the Australian retail sales data predicted to show acceleration, which could contribute to AUD support, along with the People’s Bank of China’s fix potentially overshadowing Caixin China PMIs. A higher USDCNY fix may keep USDCNH restricted at 7.30.

Regarding the DXY dollar index, the authors anticipate a slightly lower ISM Services Data reading in June, from 53.8 in May. They maintain a positive outlook for DXY, as the market finds it tough to factor in more Fed rate cuts against conflicting economic data. Conversely, the Euro may encounter challenges due to US exceptionalism overwhelming regional developments.

An increment of 0.1% is foreseen in the producer prices Index (PPI) of key European countries. The significant contributor to that increase was Spain in the previous month, with Germany maintaining an unchanged PPI growth in the same period.

Some notable news is the record 30-year high on the AUD/JPY pair. Seven-day rolling currency trends highlight this remarkable achievement, as exchange rates can fluctuate considerably at any given time.

When it comes to global risk events, refer to the calendar from 1–6 July for updated time zones in AEST. Please bear in mind that the FX rates provided are intended for research purposes only. They have a unique source which may not match live exchange rates showcased on other platforms, and neither align with financial offers for buying or selling.

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