Citi
European Open
The Chinese reopening story dominated in the Asian morning, with a drop in cases in Beijing and Shanghai, and moves towards an ease in restrictions. CNH soared higher and China-related assets fared well. Oil prices continued their march higher, and NOK performed well in the G10 complex. USD was pressured lower. COP’s Presidential elections saw independent Rudolfo Hernandez advance to the runoff election alongside Gustavo Petro (left) in a surprise outcome. European nations did not agree on an oil embargo, although talks are expected to continue during the week.
Looking ahead, we expect volumes to be lighter with USD and COP out on holiday. However, we flag that Fed’s Waller will speak today. EUR will see Eurozone economic confidence prints alongside German CPI. BRL will look towards FGV Inflation IGPM.
In focus
What happened in markets?
Chinese recovery hopes started to creep into markets as covid cases saw a drop in both Beijing and Shanghai, and signs of continued paring back of restrictions boosted stocks. HSI was up 2.15%, and ChiNext up 1% on the day. Meanwhile, US equity futures continued their upward trend seen last Friday.
G10FX: Dollar continued to be pressured lower, and DXY was in the red by around 0.23%, while the complex was led by outperformance of high beta currencies. NOK in particular was up 0.44% as oil marched higher. AUD and NZD were up almost 0.3% on the back of a stronger CNH, which was up 0.9%.
EMFX saw tech related FX rally. KRW was up 0.86%, with a higher open a part of the reason. Meanwhile, TWD was up 0.57%. Over in Latam, COP’s Presidential elections saw Gustavo Petro (left) and Rudolfo Hernandez (independent) advance to the runoff on June 19. More below
Rates: USTs traded flat across the curve. NZ yields saw a 3-5bps increase following comments from RBNZ Chief Economist Conway.
Oil prices marched towards the end of the Europe close last Friday, and WTI and brent continued upwards in the Asian session by 0.98^ and 0.6% respectively.
Volumes were as much as 35% lower than 30d averages, according to our etrading team. CNH volumes were up 5% in comparison to 30d averages.
–USD was overall sold – mainly by leveraged & banks, while others had 2-way action
–They saw JPY and HKD selling from leveraged names, and buying in SGD, EUR, AUD and CHF
–Investors sold EUR, while Corporates solid AUD and NZD, while buying CNH
–Banks sold CHF, EUR, SGD and bought JPY, AUD, NZD, HKD
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.