Market Roundup
• US employment trends 132.64, 131.58 –previous.
• France-German bond yield spread hits 6-month low after Macron victory.
• Fed’s Bullard: low growth in labor force and worker productivity, and high demand for safe assets, to continue to anchor rates at low level.
• Fed's Mester: repeats call for further rate hikes, trimming portfolio this year.
• Fed's Mester: weak recent GDP, inflation data likely transitory.
• South Korea heads for presidential election tomorrow.
• G7 Fin Mins' final statement will maintain FX language used by G20 in Germany in march – sources.
• OPEC, non-OPEC oil producers considering extending global supply cut for nine months or more – sources.
Looking Ahead - Economic Data (GMT)
• 01:30 Australia retail sales MM* 0.3% forecast, -0.1% - previous
• 01:30 Australia retail trade QQ* 0.4% forecast, 0.9% - previous
Looking Ahead - Events, Other Releases (GMT)
• --:-- ECB’s Merch to participate in 2017 Central Bank Governance Group meeting in Tokyo
Currency Summaries
EUR/USD is likely to find support at 1.0880 levels and currently trading at 1.0931 levels. The pair has made session high at 1.0951 and hit lows at 1.0915 levels. Euro pulled back from daily highs touched after Emmanuel Macron's victory in France's presidential election, as traders booked profits and avoided making big bets on euro. Macron's overwhelming win on Sunday briefly pushed the euro sharply higher against the greenback, the highest since the U.S. presidential election in November. The French centrist's defeat of nationalist Marine Le Pen spelled relief for investors who had feared another populist upheaval after Britain's vote to exit the European Union and Donald Trump's shock election as U.S. president. The euro rose as high as $1.1023, a six-month peak. It also jumped to a one-year high of 124.58 yen.But by late trading in New York, the euro fell 0.6 percent to $1.0929 against the dollar and 0.4 percent against the yen to 123.56 yen. The dollar index, which tracks the U.S. currency against six rivals, added 0.4 percent to 99.067.
GBP/USD is supported in the range of 1.2897 levels and currently trading at 1.2943 levels. It reached session high at 1.2948 and dropped to session low at 1.2927 levels. Sterling dipped against the dollar on Monday as investors attention turned to Bank of England meeting and a domestic election campaign after the French election result calmed fears the country would follow Britain out of the European Union. The pound has gained more than 3 percent against the dollar since Prime Minister Theresa May three weeks ago called a surprise early national vote for June 8, reflecting hopes among investors it will give her a stronger hand to compromise in Brexit talks. Yet that recovery has stalled in the past week, even as May's Conservatives won a decisive victory in local council elections on Thursday. The Bank of England meets on Thursday to discuss policy and issue its quarterly inflation report. The Bank surprised markets earlier this year by delivering a hawkish message on the chances of rises in interest rates, generally read as reflecting concern that further falls for pound would boost inflation and weaken consumer spending power. By 1945 GMT, the pound traded down a third of a percent at $1.2939, having hit a high of $1.2990 for the first time in seven months in early trading in Asia.
USD/CAD is supported at 1.3635 levels and is trading at 1.3688 levels. It has made session high at 1.3733 and lows at 1.3675 levels. The Canadian dollar declined against its U.S. counterpart on Monday as the dollar was buoyed after pro-EU candidate Emmanuel Macron's won the French presidential election, offsetting a bounce in oil prices. The loonie had rebounded on Friday from a 14-month low as U.S. oil prices bounced back from levels not seen in five months. Canada is a major producer of commodities, including oil and metals. Copper prices slid to a four-month low after data showed a sharp drop in imports into China, the world's biggest consumer, feeding pessimism about demand following hefty inflows into London Metal Exchange inventories last week. Oil prices, which hit almost six-month lows last week on worries about a global glut of crude, edged up after OPEC hinted there could be an extension to the current production cuts, which expire in June. The Canadian dollar was trading at C$1.3697 to the greenback, or 73.04 U.S. cents, down 0.3 percent. The currency traded in a range of C$1.3675 to C$1.3733.
AUD/USD is supported around 0.7365 levels and currently trading at 0.7388 levels. It hit session high at 0.7397 and made session lows at 0.7376 levels. The Australian dollars stood near multi-month lows on Monday as Australian dollar was dragged down by firmer dollar and lower metal price. The Australian dollar slipped to $0.7398, from $0.7413 late on Friday, pulling closer to a four-month trough of $0.7328 touched last week. Immediate support was found around $0.7383.The Aussie slipped 1 percent last week for the third consecutive week of decline, having dropped around four cents since a peak in late March. Lower prices for iron ore, Australia's biggest export earner, along with lower copper price weighed on the Aussie. Even strong trade data from China, Australia's top export market, combined with a 1.4 percent rise in Australian jobs ads in April and improving local business confidence and conditions failed to reverse sentiment. Australia's federal budget will be released on Tuesday, but the Aussie is unlikely to react much since most of the proposed measures have already been leaked to the press.
Equities Recap
European shares dipped on Monday as the relief rally that greeted Emmanuel Macron's victory in the French presidential election petered out although strong earnings growth continued to underpin demand for the region's equities.
The UK's benchmark FTSE 100 closed down by 0.1 percent, FTSEurofirst 300 ended the day down by 0.18 percent, Germany's Dax ended down 0.1, and France’s CAC finished the day down by 1 percent.
The S&P 500 ended flat on Monday after briefly touching an intraday record, while Wall Street's "fear gauge" dropped to its lowest in over a decade following centrist Emmanuel Macron's victory in the French presidential election.
Dow Jones closed up by 0.01 percent, S&P 500 ended down 0.01 percent, Nasdaq finished the day up by 0.02 percent.
Treasuries Recap
U.S. Treasury yields rose on Monday with benchmark yields hitting a four-week high in advance of the sale of $62 billion in bond supply at this week's quarterly refunding and following centrist Emmanuel Macron's victory in the French presidential run-off.
The benchmark 10-year note yield was up 2 basis points at 2.374 percent after touching 2.390 percent earlier Monday which was the highest since April 10.
The yield on 30-year bonds was 2 basis points higher at 3.011 percent, while the two-year yield was up 1 basis point at 1.330 percent.
Commodities Recap
Gold prices bounced off a seven-week low on Monday as safe-haven demand ebbed away following pro-EU candidate Emmanuel Macron's victory in the French presidential election.
Spot gold steadied after touching 1,224.86 an ounce, its lowest since March 17 and just above the 100-day moving average. By 2:24 p.m. EDT (1824 GMT), it was up 0.01 percent at $1,227.77.U.S. gold futures settled up 0.02 percent at $1,227.10.
Oil prices rose on Monday in volatile trading, bolstered by statements from major oil-producing countries suggesting that OPEC and non-OPEC supply cuts could be extended into 2018.
Benchmark Brent crude settled up 24 cents, or 0.5 percent, at $49.34 a barrel. U.S. light crude gained 21 cents to $46.43 a barrel.
