• Asian equities traded with little direction after losses seen on Wall Street which were led by tech and healthcare names
• Most FX majors continued to gain against the greenback, with commodity linked currencies outperforming during Asia trade
• Looking ahead, highlights include US Trade data, pending home sales, DoEs and a slew of central bank speakers

ASIA

Asian equity markets traded mixed after a slight improvement from the losses on Wall St. where there was a renewed sell-off in tech names and healthcare suffered after the Senate delayed the vote to repeal and replace Obamacare. This weighed on Nikkei 225 (-0.3%) from the open although downside was stemmed by yesterday's JPY weakness, while ASX 200 (+0.6%) was kept afloat by strength in miners and materials stocks. Shanghai Comp. (+0.1%) and Hang Seng (-0.3%) were both initially lower after the PBoC refrained from liquidity operations for the 4th consecutive session, before mainland sentiment gradually recovered amid an optimistic forecast of 6.8% growth for China this year by Bank of China and after reports that a PBoC adviser expects no further tightening of monetary policy during H2. 10yr JGB are marginally lower despite the risk averse tone in Japan and a moderate BoJ Rinban announcement of JPY 880bln, while a slight underperformance was seen in the long-end resulting to a mildly steeper curve.

PBoC refrained from open market operations for the 4th consecutive day. (Newswires)

PBoC set CNY mid-point at 6.8053 (Prev. 6.8292).

PBoC adviser said to see no further tightening of monetary policy during H2 2017. (Newswires)

China Beige Book International Survey stated that China's economy continued to improve in Q2 amid increases in corporate profits and employment, although it also included evidence of harder financial conditions going forward. (Newswires)

EUROPE/UK

BoE Deputy Governor Cunliffe states its a standard risk taking environment now, adds BoE rate is very small fraction in bank lending rates and wants to see how exports and consumer slowdown plays out. GBP-based inflation gives the bank a more difficult trade-off. (Newswires)

FX

Most majors continued to gain against the greenback, with commodity linked currencies outperforming during Asia trade in which AUD/USD breached 0.7600 to the upside and USD/CAD fell to 4-month lows. This was also in the wake of ECB President Draghi’s hawkish comments yesterday, which buoyed EUR/USD above 1.1300 and in turn lambasted the USD-Index to 8 month lows. The cautious tone spurred mild flows into safe-haven JPY, resulting to a pull-back in USD/JPY and a test of the support at 112.00.

COMMODITIES

WTI crude futures are back above the USD 44/bbl level after having recovered most of the losses seen from the surprise build in API crude oil inventories. Gold (+0.4%) rose as the greenback lingered around 8-month lows, while copper traded sideways as the cautious risk sentiment in markets dampened the red metal.

US API Crude Oil Inventory Report (Jun 23) W/W 851K (Prev. -2720K). (Newswires)

US

Yields were higher across the curve, with 10s the standout sector as yields rose above the 2.2% mark. Real 10-year yields were higher by around 6-7bps, which kept USD/JPY supported. Tsys managed to stay negative despite a slight move towards safety after the health care news broke in the US weighing on risk sentiment. Meanwhile, the US Treasury’s auction 5-year notes was poor, seeing a tail of 0.7bps, and cover was the lowest since February and the Sep 17 10-Year T-Note future settled down 16 ticks at 126-09.

US Senate Republicans delayed a vote on the healthcare bill until after next week's Independence Day holiday. (ABC) In related news, 3 more senators were said to oppose the GOP Healthcare bill which brings the total to 9. (The Hill).

Fed Chair Yellen (Dove) stated rates are to remain low as Fed normalises policy and reiterated a gradual hike trajectory. Yellen also commented that inflation has continued to run below objectives and that they are not getting a consistent story on inflation. (Newswires)

Fed's Kashkari (Voter, Dove) stated there is no rush to increase rates and that there may still be slack in the labour market. (Newswires)