Wednesday’s Asia-Pacific outlook

Asia-Pacific traders face a risk-off open after a volatile session of losses in New York sent US equity indexes lower. Technology stocks underperformed the broader market, with the high-beta Nasdaq-100 Index (NDX) closing 3.09% lower, bringing the total loss for the index close to 8% on the month as July approaches. Chinese markets, however, are set to close out the month with gains after the economic powerhouse eased Covid-19 restrictions. Bitcoin prices fell amid the risk aversion. The cryptocurrency may trade higher if Asian equity markets buck the overnight weakness.

Beijing slashed the period that international travelers need to spend in quarantine on Tuesday, the latest sign that policymakers are willing to pull back from the ‘Zero-Covid’ policy. Travelers from outside China are now only required to spend one week in quarantine. The same pent-up demand effect seen in Western economies, where restrictions were eased largely early this year and late last year, may be seen in China over the coming months, assuming restrictions continue to recede.

Meanwhile, the Group of Seven (G7) is trying to nail down the details of a reported price cap on Russian oil. The move would limit the prices that outside entities can pay for Russia’s oil. The American Petroleum Institute’s report stated that US crude oil inventory fell by 3.8 million barrels for the week ending June 24, beating the 100k draw that analysts were expecting. The EIA’s report is expected to drop tonight after a two-week blackout due to technical issues on the agency’s servers.

Today, Japan’s retail sales report for May is set to cross the wires. Analysts expect to see a 4.0% year-over-year rise, according to a Bloomberg survey. That would be a solid improvement from April’s 2.9% y/y increase, and a surprise above expectations may help drive some JPY strength. Australia’s preliminary retail sales report for May will follow the Japanese data. A 0.4% increase is expected to cross the wires, down from the prior 0.9% increase. Aussie dollar strength may follow if the report beats expectations.

Notable events for June 29:

• Japan – Consumer Confidence (June)
• Singapore – Export Prices (May)
• South Korea – Business Confidence (June)

BTC/USD technical forecast

Bitcoin prices fell for a third day, with prices nearing the critical 20,000 level. A break below the psychological support level would likely see bears press the attack, potentially sending prices to test the June swing low set earlier this month. Alternatively, a rebound would aim to reverse early-week losses, with the falling 20-day Simple Moving Average (SMA) also a potential target.

BTC/USD daily chart

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Thomas Westwater | Analyst, DailyFX, New York City
29 June 2022