EQUITIES
Shares in Asia-Pacific extends its decline on Friday trade. In Japan, the Nikkei 225 led losses among the region’s major markets as it fell 2.29% as the country sees rising COVID-19 cases.
South Korea’s KOSPI dropped 1.76% after the government announced that Seoul will be placed under the toughest social distancing rules of Level 4. Australian stocks also declined as the S&P/ASX 200 shed 1.42% as Sydney’s COVID-19 restrictions would be extended by another week.
The S&P BSE Sensex in India fell 0.92%, while the mainland Chinese stocks also slipped, as the Shanghai composite shedding 0.54%.
The broader Hang Seng index in Hong Kong rebounded after nine consecutive sessions in the red, to sat at 0.55% higher. Over in Singapore, the Straits Times index rose 0.18%.
Overnight on Wall Street, the Dow Jones Industrial Average fell 0.75%, to 34,421.93, the S&P 500 lost 0.86%, to 4,320.82 and the Nasdaq Composite dropped 0.72%, to 14,559.79.
OIL
Oil prices has seen a rebound following an improved inventory draw. Although concerns about the resurging pandemic cases still weighed on prices.
The Brent now traded at $74.02 per barrel, and U.S. crude futures traded at $73.00 per barrel.
Overnight, the Brent closed at $74.12, while WTI ended at $72.94 per barrel.
CURRENCIES
Bond market rallied on a flight to safety, weighting on the yield. Overnight, the yield on 10-year Treasury notes fell as low as 1.25%, while the 30-year Treasury bond slipped to 1.925%.
Benchmark U.S. 10-year Treasury yields on Friday languished near more than 4-month low, at 1.316%, on track to the eighth straight session of declines.
The dollar index retreated from a 3-month peak against its rivals, holding at 92.446.
The safe-haven yen and Swiss franc stood tall on Friday, while risk-sensitive currencies including the Australian and New Zealand dollars languished near multi-month lows as investors turned cautious about the global economic recovery.
GOLD
Gold prices on Friday were set for the third straight weekly gain, as a pullback in the dollar and Treasury yields offered support to the safe-haven metal.
The spot gold added to $1,805.10 an ounce and advanced to $1,807.00 per ounce for gold futures. Previously closed at $1,803.10 and $1,800.20, respectively.
Silver edged up to $25.99 per ounce, palladium fell 0.43% to $2,798.00, and platinum slipped 0.14% to $1,073.00.
ECONOMIC OUTLOOK
Asian shares stumbled on Friday and were set for their worst weekly performance since February as global spread of the Delta virus variant hampered confidence of worldwide economic recovery. Investors flocked to the safety of bonds overnight with 10-year U.S. Treasury yields reaching levels not seen since February.
Beijing's ongoing clampdown on U.S.-listed Chinese companies fed into the risk-averse mood.
U.S. crude inventories fell by 6.9 million barrels last week to 445.5 million barrels, EIA data showed. Analysts had expected a 4 million drop. Gasoline stocks fell by 6.1 million barrels in the week to 235.5 million barrels.
The number of U.S. workers filing first-time applications for unemployment benefits unexpectedly ticked up to 373,000 last week, a sign that the U.S. labor market recovery remains choppy.
China’s National Bureau of Statistics on Friday showed the CPI for June rose 1.1%, lower than expectations for a 1.3%. Meanwhile, the PPI came in in line with expectations, rose 8.8%.
TECHNICAL OUTLOOK
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 110.694 and 111.133.
- Support line of 109.272 and 108.833.
Commentary/ Reason:
The safe haven yen changed hands at 109.956 per dollar, slightly erasing gains from the previous session's 0.8% rally.
A sharp decline in global equity markets on Friday boosted the safe-haven demand for the yen.
While the dollar was under pressure after a slide in U.S. Treasury yields, as well as negative carry-over from Wednesday’s dovish minutes of the June 15-16 FOMC meeting.
The 10-year T-note yield dropped to a new 4-1/2-month low of 1.248% overnight is negative for the dollar since the lower yields weaken the dollar’s interest rate differentials.
The USD/JPY pair bounced modestly, now trading in the 109.90 price zone. Intraday bias in USD/JPY remains on the downside at this point, although the pair has reached oversold conditions in the near-term.
Breaking the support line will press on the price to achieve additional decline that its next main target reaches 108, while breaching 110.80 represents the key to resume the bullish trend that its first target located at 110.69.
