Market Roundup
• US Fed’s labor market conditions Index -4.8% v -3.4 in April, lowest since May 2009.
• Fed’s Yellen: May jobs report was disappointing but one should never attach too much significance to a single monthly report.
• Fed's Yellen lightly downplays 'surprise' U.S. jobs report, data is meaningful only if it changes view of med/LT outlook.
• Fed’s Yellen: withdrawal of accommodation should start before Fed objectives reached.
• Fed’s Lockhart: doesn’t see a lot of cost waiting for July meeting to consider raising rates, more inclined to think in terms of 2 moves b/w now and YE ’16.
• Fed’s Bullard: will take time to know if job market truly downshifting, slower pace of job gains would be okay.
• Spread-betting firm IG: more money being spent on ‘out’ vote in EU referendum than ‘in’ vote.
• Central Bank of Chile will continue to normalize monetary policy at a slower pace than previously expected, sees ’16 inflation steady at 3.6%.
Looking Ahead - Economic Data (GMT)
• 23:30 Australia AIG Construction Index May 50.8- previous
• 23:50 Japan Foreign Reserves May 1262.50b- previous
• 05:00 Japan Coincident Indicator MM* Apr 0.5- previous
• 05:00 Japan Leading Indicator* Apr -0.5- previous
• Looking Ahead - Events, Other Releases (GMT)
• 04:30 Australia RBA Cash Rate* Jun forecast- 1.75%. 1.75%-previous
Currency Summaries
EUR/USD is likely to find support at 1.1280 levels and currently trading at 1.1356 levels. The pair has made session high at 1.1392 and hit lows at 1.1324 levels. The dollar declined to hit almost four weeks lows on Monday as Federal Reserve Chair Janet Yellen gave few hints a the Central Bank would hike interest rate in the next week’s meetings following Friday's weak U.S. payrolls report. The dollar incurred its largest one-day percentage fall against a basket of major currencies in four months on Friday after the jobs report, which was the weakest in nearly six years. The dollar index, which tracks the dollar against six major currencies, fell 0.2 percent to 93.745, its lowest since May 11, during Yellen's remarks. It was last down 0.04 percent at 93.995. Yellen sounded a generally upbeat tone, saying that interest rate increases would be forthcoming. But she removed a reference to the timing of the hikes.
GBP/USD is supported in the range of 1.4352 levels and currently trading at 1.4444 levels. It reached session high at 1.4473 and hit low at 1.4404levels. British pound fell to a one-week low on Monday, hurt by a poll showing support for those who want Britain to leave the European Union is rising, adding to growing uncertainty about the June 23 membership referendum. The campaign for Britain to leave the European Union has taken a 4-5 percent lead ahead of a June 23rd referendum. According to online pools by ICM and YouGuv, sending British pound against US dollar. British pound was last down 0.3 percent on the day at $1.4465, having fallen as far as $1.4352, its lowest for three weeks, in early Asian trading. It recovered from those lows in afternoon trade in London as the dollar came under pressure before a speech by Federal Reserve chair Janet Yellen.
AUD/USD is supported around 0.7305 levels and currently trading at 0.7366 levels. It hit session high at 0.7381 and made session lows at 0.7334 levels. The Australian dollar edged higher against US dollar on Monday following rise in oil prices and on growing doubts about Federal Reserve’s raising rates in the coming days. The Australian dollar rose towards to $0.7380 on the day, having met stiff resistance at a one-month peak of $0.7393. It was still holding hefty gains, having shot up 1.9 percent on Friday, its largest one-day gain in 12 months. The rise came after a disappointing U.S. nonfarm payrolls report prompted investors to scale back the chance of a hike in U.S. interest rates this month.
USD/CAD is supported at 1.2800 levels and is trading at 1.2819 levels. It has made session high at 1.2888 and lows at 1.2802 levels. The Canadian dollar strengthened to a two-week high against its U.S. counterpart on Monday as oil prices rose and investors turned their attention to a speech by U.S. Federal Reserve Chair Janet Yellen. U.S. crude prices were up 2.06 percent at $49.62 a barrel, lifted by a plunge in the greenback on Friday that could spur demand just as attacks on Nigerian oil infrastructure tighten supplies. Further bolstering oil, market intelligence firm Genscape reported a drawdown of 1.08 million barrels at the Cushing, Oklahoma delivery point for WTI futures during the week to June 3, traders who saw the data said. Canadian dollar-implied volatility, which traders use to price options on the currency, has dropped after much weaker-than-expected U.S. employment data on Friday lowered the chances of a Fed rate hike. For three-month options, implied volatility was at 9.2 percent on Monday, its lowest since January.
Equities Recap
European stocks edged up on Monday, helped by gains in major mining and oil company shares following weakness in the dollar prompted by Friday's weak U.S. jobs data.
UK's benchmark FTSE 100 closed up 1.2 percent, the pan-European FTSEurofirst 300 ended the day down by 0.87 percent, Germany's Dax ended up 0.3 percent, France’s CAC finished the day up by 0. 1 percent.
The S&P 500 hit a 7-month intraday high on Monday as investors digested comments from Federal Reserve Chair Janet Yellen, who painted a mostly upbeat picture of the economy but gave little sense of when a rate hike may be coming.
Dow Jones closed up by 0.63 percent, S&P 500 ended up by 0.49 percent, Nasdaq finished the day up by 0.53 percent.
Treasuries Recap
U.S. Treasuries reversed some price declines but still ended weaker on Monday after Federal Reserve Chair Janet Yellen said a strengthening economy means that interest rate increases are likely on the way, while also acknowledging Friday’s disappointing employment report.
Benchmark 10-year notes ended down 6/32 in price to yield 1.723 percent, up from a two-month low of 1.697 percent on Friday.
Commodities Recap
Gold edged up to a two-week high and then retraced some gains on Friday, holding steady after Federal Reserve chair Janet Yellen said she still expected gradual U.S. rate increases.
Spot gold was up 0.02 percent at $1,244.31 an ounce at 1:53 p.m. EDT (1753 GMT), after rising to its highest since May 24 at $1,248.40 an ounce.
U.S. gold futures for August delivery settled up 0.4 percent at $1,247.40 an ounce.
Oil prices rose on Monday as Nigeria's oil industry reeled from crippling attacks and traders cited data pointing to fresh draws in U.S. stockpiles, but crude futures pared gains after remarks from Federal Reserve Chair Janet Yellen fed expectations that U.S. interest rates could rise this year.
Brent settled up 91 cents, or 1.8 percent, at $50.55 a barrel. During the session, it hit $50.83, its highest since November.
WTI rose $1.07, or 2.2 percent, to settle at $49.69. It was WTI's biggest daily percentage gain since May 16.
