Market Roundup
• Mexico urges Trump to back down on 'unfair' tariff threat
• China threatens corporate hit-list on eve of new tariffs on U.S. imports
• Fed's Williams sees case for aggressive action when steep downturns loom
• US Apr Core PCE Price Index MM, 0.2%, 0.2% forecast, 0.0% previous
• US Apr Core PCE Price Index YY, 1.6%, 1.6% forecast, 1.6% previous
• US Apr PCE Price Index YY, 1.5%, 1.5% previous
• US Apr Personal Income MM, 0.5%, 0.3% forecast, 0.1% previous
• CA Q1 GDP QQ, 0.1%, 0.1% previous
• CA Q1 GDP QQ Annualized, 0.4%, 0.7% forecast 0.4% previous.
• CA Q1 GDP YY, 1.32%, 1.57% previous
• CA Apr Producer Prices YY, 1.8%, 1.5% previous
• CA Apr Raw Materials Prices YY, 3.2%, -1.5% previous
Looking Ahead - Economic Data (GMT)
• 2 Jun 22:30 Australia May AIG Manufacturing Index, 54.8 previous
• 3 Jun 00:30 Japan May Nikkei Mfg PMI, 49.6 previous
• 3 Jun 01:30 Australia Q1 Business Inventories, 0.0% forecast, -0.2% previous
• 3 Jun 01:45 China May Caixin Mfg PMI Final, 50.0 forecast, 50.2 previous
Looking Ahead - Events, Other Releases (GMT)
• 08:00 Former Bank of England governor Mervyn King speaks at Bank of Greece's event on "Monetary policy in turbulent times"
• 12:00 French Finance Minister Bruno Le Maire and EU Competition Commissioner Margarthe Vestager to speak at a competition conference at the OECD in Paris
• 15:30 ECB's head of supervisory board Andrea Enria to attend a seminar in memory of Giorgio Lunghini, Milan
• 16:40 Fed's Barkin speaks on "Challenges to Women's Labor Force Participation" before the Charlotte Economics Club
• 17:25 Fed's Bullard gives presentation on the U.S. economy and monetary policy before a "Lunch@65West" event hosted by the Union League Club of Chicago
Currency Summaries
EUR/USD: The euro strengthened against the U.S. dollar on Friday, as fears of a global recession and the Sino-U.S. trade dispute weighed on greenback. Opening a new front in the trade war, U.S. President Donald Trump said Washington will impose a 5% tariff on imports from Mexico from June 10, which would then rise steadily to 25% until illegal immigration across the southern border was stopped. Trump announced the decision on Twitter late Thursday, completely blindsiding markets.The euro was up 0.35 percent at $1.1168. An index that tracks the dollar versus a basket of six major currencies was down 0.41 at 97.77. Immediate resistance can be seen at 1.1182 (21 DMA), an upside break can trigger rise towards 1.1209 (50 DMA).On the downside, immediate support is seen at 1.1157 (5 DMA), a break below could take the pair towards 1.1110 (Lower Bollinger Band).
GBP/USD: Sterling strengthened against the dollar on Friday, as currency markets were swept by rising risk aversion. U.S. President Donald Trump's shock threat to slap new tariffs on Mexico sent investors to the perceived safe haven of government bonds and the Japanese yen, with political uncertainty in Britain also undermining demand for the currency. In Britain, politics are mired in Brexit and nearly a dozen candidates are now vying for the prime minister's job, with the bookmakers' favourite, Boris Johnson, saying the UK should leave the European Union on Oct. 31 even without an agreement on the terms of its departure. The pound erased earlier losses against the dollar and was broadly steady at $1.2624. It had fallen as much as a third of a percent at $1.2573.Immediate resistance can be seen at 1.2640 (5 DMA), an upside break can trigger rise towards 1.2671 (11 DMA).On the downside, immediate support is seen at 1.2559 (Session low), a break below could take the pair towards 1.2476 (Lower Bollinger Band).
USD/CAD: The Canadian dollar weakened to a five-month low against the greenback on Friday, as potential U.S. tariffs on Mexico threatened a new North American trade deal and as data showed barely any growth for the domestic economy in the first quarter. Global stocks fell as investors feared that U.S. President Donald Trump's shock threat of tariffs on Mexico could risk pushing the world's largest economy into a recession. Canada, the United States and Mexico have signed a new trade agreement, known as the United States-Mexico-Canada Agreement (USMCA), but the deal has yet to be ratified by any of the three countries. The Canadian dollar was trading 0.3% lower at 1.3540 to the greenback, or 73.86 U.S. cents. The currency, which was on track to fall for the fourth straight month, touched its weakest level since Jan. 3.Immediate resistance can be seen at 1.3565 (Daily high), an upside break can trigger rise towards 1.3600 (Psychological level).On the downside, immediate support is seen at 1.3492 (5 DMA), a break below could take the pair towards 1.3462 (11 DMA).
USD/JPY: The dollar weakened against the Japanese yen on Friday, as Investors rushed into the perceived safety of Japanese yen after U.S. President Donald Trump's threat to impose tariffs on Mexico roiled financial markets and stoked recession fears. Taking aim at what he said was a surge of illegal immigrants across the southern border, Trump vowed on Thursday to impose a tariff on all goods coming from Mexico, starting at 5% and ratcheting higher until the flow of people ceases. The dollar was last trading 1.14 percent lower versus the Japanese yen at 108.36. Strong resistance can be seen at 108.88 (38.2 % retracement level), an upside break can trigger rise towards 109.30 (50 % retracement level).On the downside, immediate support is seen at 108.31 (23.6 % retracement level), a break below could take the pair towards 108.00 (Psychological level).
Equities Recap
European stocks tanked on Friday, with auto-makers hit especially hard, after U.S. President Donald Trump widened the scope of his trade wars by threatening to impose new tariffs on Mexican imports.
The UK's benchmark FTSE 100 closed down by 0.8 percent, FTSEurofirst 300 ended the daydown by 0.81 percent, Germany's Dax ended down by 1.5 percent, and France’s CAC finished the down by 0.9 percent.
U.S. stocks dropped on Friday, as the S&P 500 closed out the month with its biggest May slump since 2010, after President Donald Trump's surprise threat of tariffs on Mexico fueled fears that a trade war on multiple fronts could lead to a recession.
Dow Jones closed up by 1.40 percent, S&P 500 ended down 1.32 percent, Nasdaq finished the day up by 1.52 percent.
Treasuries Recap
Benchmark U.S. Treasury yields tumbled to 20-month lows on Friday after U.S. President Donald Trump said the United States would impose a tariff on Mexican goods, sparking broad risk aversion.
Benchmark 10-year yields dropped as low as 2.145 percent, the lowest since September 2017.
Commodities Recap
Gold climbed to a seven-week peak on Friday and was headed for its first monthly gain in four months, as investors sought the safe haven investment after U.S. President Donald Trump threatened tariffs on imports from Mexico, which fed fears of a global downturn.
Spot gold jumped 1.3% to $1,305.17 an ounce by 1:51 p.m. ET (1751 GMT), having hit its highest since April 11 at $1,306.64.
Oil slumped over 3% on Friday and posted its biggest monthly drop in six months, after U.S. President Donald Trump stoked global trade tensions by threatening tariffs on Mexico, a key U.S. trade partner and major supplier of crude oil.
Brent crude futures fell $2.38, or 3.6%, to settle at $64.49 a barrel. U.S. West Texas Intermediate (WTI) crude futures fell $3.09 to $53.50 a barrel, a 5.5% loss.
