Forex today: Markets jittery ahead of G20 weekend summit in Japan

• Antipodeans run higher despite G20 risk and pessimistic headlines.
• US yields continue to bleed, with 10-year dropping to 2.00%.

FX today was a mixed bag ahead of the G20 as headlines rolled through with quite different expectations for the event with respect to the anticipated meeting between Xi and Trump in Osaka, Japan. The Wall Street Journal was pessimistic in its prelude to the event by arguing that China will insist the US remove its ban on US technology sales to Huawei and lift existing tariffs on Chinese imports. They were not alone in that respect, and in the same vein, we Chinese media and commentators have also been discouraging. 

Hu Xijin, Chief in Editor for The Global Times who warned earlier this week that no Chinese official now speaks with optimism was tweeting overnight:

"Regarding the China-US summit, only two things are certain to me:1, The summit will be held. 2, China will stick firm to its core interests no matter what is the result. In the future, China will focus more on doing its own things well. This principle won't change any more."

Meanwhile, the greenback was a touch softer leading into the New York session falling from 96.39 to a low of 96.14 while yields dropped from 1.80% to 1.74% in the two-years. The ten-year yields went from 2.07% to 2.00%. 

We had San Francisco Fed president Daly say that that tariffs are having a modest impact on inflation and growth and it was too early to say a rate cut was needed. On the data front, US pending home sales climbed 1.1% in May, likely due to prospects of lower interest rates. However, the key focus was with the US Q1 GDP growth that fell unrevised at a 3.1% annualised pace, and in the end had no impact on the market. 

Currency action

• EUR ranged was stuck in a 30 pip range between 1.1350 and 1.1380. 
• GBP/USD was a little choppy on Thursday, but in the main, it was consolidating between 1.2725 an 1.2661.
• USD/JPY was unchanged at 107.75, having spent a spell on the 108 handle printing a high of 108.16. 
• AUD kept on taking space on the upside for a seventh consecutive day between 0.6990 to 0.7007. 
• NZD/USD also climbed in the face of trade wars and possible progress on at the G20, rising from 0.6680 to 0.6702. 
• AUD/NZD dropped in a 30 pip move from 1.0475 to 1.0445.

Key notes from Wall Street:

Wall Street ends mixed as traders get set for the G20

Key events ahead:

Australia May private sector credit (11:30am Syd/9:30am Sing/HK) is expected to show continued sluggish growth of 0.2%