• Asian equity markets were subdued amid book squaring heading into the end of H1 and ahead of the upcoming Trump-Xi meeting at the G20
• FX price action was uneventful across the board with the DXY little changed on the session as its major counterparts sat rangebound
• UK PM candidate Boris Johnson is reportedly preparing an emergency budget for no-deal
• Fed approved all 18 banks capital plans in its Comprehensive Capital Analysis Review
• Looking ahead, highlights include UK GfK, German Import Prices, UK GDP, EZ CPI, US Core PCE, Chicago PMI & University of Michigan Sentiment, Canadian GDP, G20 Meeting, ECB’s Lautenschlager and Fed’s Daly

ASIA-PAC

Asian equity markets were subdued amid book squaring heading into the end of H1 and ahead of the upcoming Trump-Xi meeting at the G20. ASX 200 (-0.5%) was led lower by mining names with BHP pressured as it is expected to pay AUD 250mln as settlement in the royalty dispute with Western Australia, although downside for the broader market was limited by outperformance in tech and financials, while Nikkei 225 (-0.6%) also suffered losses in the commodity-related sectors and with exporters weighed by detrimental flows into the currency. Hang Seng (-0.5%) and Shanghai Comp. (-0.9%) weakened amid continued PBoC inaction and as trade uncertainty remained rife heading into the US-China showdown at the G20. Finally, 10yr JGBs tracked the upside in their US counterparts with prices lifted by safe-haven flows and amid the BoJ presence in the market for JPY 720bln of government bonds in the belly to super-long end. 

PBoC skipped open market operations and were net neutral for the week vs. Prev. CNY 285bln injection last week. (Newswires) PBoC set CNY mid-point at 6.8747 (Prev. 6.8778)

US President Trump said he and India PM Modi will have very big trade deals to announce, while India PM Modi commented that wants to discuss Iran, 5G, as well bilateral and defense relations with US President Trump. (Newswires)

Japanese PM Abe said tensions over trade and geopolitical risks are increasing, while he added that trade restriction measures do not benefit any country and that any trade steps should be in line with WTO rules. (Newswires)

BoJ Summary of Opinions from June 19th-20th Meeting stated it is necessary to persistently continue with the current powerful monetary easing as the momentum toward 2% inflation is maintained. The summary added that the BoJ needs to consider measures that enhance sustainability of easing and that all policy measures including adjustments in short- and long-term interest rates, an acceleration in the pace of expansion in the monetary base, and an increase in the amount of assets to be purchased should be deliberated when considering additional easing. (Newswires)

UK/EU

UK PM candidate Boris Johnson is preparing an emergency budget for no-deal which includes aggressive tax cuts and overhaul of stamp duty if he becomes PM, while there were separate reports that Boris Johnson's allies stated he offered Home Secretary Javid the role of Chancellor of the Exchequer. (The Times/Newswires)

UK GfK Consumer Confidence (Jun) -13 vs. Exp. -11.0 (Prev. -10.0). (Newswires) UK Lloyds Business Barometer (Jun) 13 (Prev. 10)

FX

Price action was uneventful across the board with the DXY little changed on the session as its major counterparts sat rangebound with EUR/USD steady after support around its 200DMA held in yesterday’s session, while GBP/USD was lacklustre following a recent failed attempt to reclaim 1.2700. Elsewhere, the risk averse tone pressured USD/JPY and spurred a mild pullback for antipodeans which briefly compromised the 0.7000 and 0.6700 levels for AUD/USD and NZD/USD respectively, while the most action came from outside G10 currencies in which USD/HKD slipped below 7.8100 and USD/INR tripped through stops at 69.00 to the downside with the quote currency encouraged after US President Trump’s suggested that very large trade deals with India will be announced. 

COMMODITIES

Commodities were mixed overnight in which WTI crude futures were slightly softer as it navigated between near-term support and resistance levels at USD 59.00/bbl and USD59.50/bbl levels respectively, with participants tentative heading into the G20 and OPEC meeting early next week. Elsewhere, gold strengthened in a continued rebound from support at the USD 1400/oz level with the precious metal underpinned by safe haven demand and is on track for its biggest monthly gain since 2016, while copper was relatively kept flat as the tailwinds from the fresh record highs in Dalian iron ore was somewhat offset by the risk averse tone.

Russian President Putin said the oil output cut deal has been a positive for stabilising markets, which producers and consumers want. Russian President Putin said BRICS should work to reduce volatility on global energy markets, while he added we should work on bringing stability to Syria and that BRICS should take a more active role on the Syria issue. (FT/Newswires)

Codelco's Chuquicamata Mine workers unions are said to accept pay offer ending a 2-week strike. (Newswires)

GEOPOLITICS

US President Trump said there is absolutely no time pressure on Iran issue and that he thinks it will work out but added 'if it doesn't you will hear about it'. (Newswires)

Iranian official said the US wants talks but we are at an economic war and there needs to be a ceasefire for talks to begin. The official added that the first stage would be the allowance of Iran to sell its own oil and receive the money from it, while he suggested that export levels would need to return to levels before the US sanctions were re-imposed and commented that Europeans should either buy Iranian oil or give its money to us. (Newswires)

EU's Tusk said need to keep communication channels open with Iran and that the EU is committed to the deal as long as Iran is committed to uphold it. Furthermore, EU’s Tusk strongly urges Iran to fully implement all commitments and stated that the EU takes any breach seriously. (Newswires)

US

Yields fell by around 4bps across the curve on Thursday, ahead of Friday’s G20 meeting, with major curve spreads undergoing modest narrowing of around 1bps. Weak ESI out of the Eurozone provided some impetus to the FI complex, and gains extended into the US open, after more woes at Boeing saw equity futures come under pressure. A WSJ article which was negative on trade developments allowed the upside to continue. Pending home sales data and hawkish remarks from Kudlow on trade allowed the bulls to continue to reign. The US 7-year auction stopped through the screens by 0.2bps, and cover improved though remained beneath the six auction average. The direct bid was strong, and the indirect bid subsequently eased a touch. The complex was near highs at settlement. US T-note futures settled 11 ticks higher at 127-30.

Fed's Daly (Non-Voter, Dove) said it is too early to know whether the Fed should cut rates, or by how much in July. (Newswires)

Fed approved all 18 banks capital plans in its Comprehensive Capital Analysis Review, although Credit Suisse received conditional approval and must address weaknesses. (Newswires)

S&P affirmed US at AA+; Outlook Stable, while it commented that ratings are constrained by high general government debt and fiscal deficits, as well as relatively short-term policymaking. (Newswires)