Market Roundup
- UK PM May's lead falls to 5 points ahead of June 8 vote - YouGov
- Japan April core CPI +0.3% y/y, Tokyo May core +0.1%, +0.4% and unch eyed
- Low but April nationwide growth best since April ’15
- Japan April service producer prices +0.7% y/y, March and February +0.8%
- St Louis Fed Bullard in Tokyo – Inflation path worrisome, Fed overly aggressive
- Japan end-’16 external assets up to Y349.11 trln, second highest on record
- Moody's: China's reforms not enough; another downgrade possible
- China to change yuan fixing calculation - Bloomberg
- U.S.-based stock funds post $10 bln in withdrawals -Lipper
- Foreign CB US debt holdings +$10.012 bln to $3.244 tln May 24 week
- Treasuries -$2.856 bln to $2.919 tln, agencies +$12.974 bln to $263.760 bln
- Trump faces G7 squeeze on climate change, trade at Sicily summit
Economic Data Ahead
- (0400 ET/0800 GMT) Italy May Mfg Business Confidence, 108.0 eyed; last 107.9
- (0400 ET/0800 GMT) Italy May Consumer Confidence, 107.3 eyed; last 107.5
Key Events Ahead
- N/A G7 summit in Taormina, Italy (to May 27)
- (0600 ET/1000 GMT) Italy 2YZ E3.500 bln auction
- (0600 ET/1000 GMT) Italy 9YI E0.750 bln auction
- (0600 ET/1000 GMT) Italy 24YI E0.750 bln auction
- (1600 ET/2000 GMT) ECB's Benoit Coeure participates in a program Organized by SNB
FX Beat
DXY: The greenback gained across the board as investors awaited preliminary US Q1 gross domestic product figures for further insights on the strength of the economy. The greenback against a basket of currencies traded 0.1 percent up at 97.27, rebounding from a low of 96.80 hit on Tuesday, it’s lowest since Nov. 9. FxWirePro's Hourly Dollar Strength Index stood at 39.40 (Neutral) by 0500 GMT.
EUR/USD: The euro edged lower, hovering away from a 6-1/2 month high of 1.1268 set this week, as the greenback gained after U.S. unemployment data showed a tightening labour market. The European currency traded 0.1 percent down at 1.1197, having touched a high of 1.1268 on Tuesday, its highest since Nov. 9. FxWirePro's Hourly Euro Strength Index stood at -7.76 (Neutral) by 0400 GMT. Investors’ attention will remain on the U.S. durable goods, prelim GDP and consumer sentiment data, as Eurozone's economic calendar remains absolutely data empty. The market expects an upward revision of the US Q1 GDP to 0.9 percent y/y from 0.7 percent, while the core personal consumption expenditure is seen rising 2 percent. Immediate resistance is located at 1.1268 (May 23 High), a break above targets 1.1300. On the downside, support is seen at 1.1176 (78.6% retracement of 1.0839 and 1.1267), a break below could drag it near 1.1104 (61.8% retrace)/1.1000.
USD/JPY: The dollar declined following the comments from St. Louis Fed President Bullard and San Fransisco Fed head Williams, who advocated a gradual rate hike path in order to sustain the US economic momentum. Moreover, risk-off sentiment across the board amid tumbling Asian equities and subdued oil, boosted the safe-haven flows in the yen. The major traded up at 111.59, having touched a high of 112.12 earlier in the week, its highest since May 17. FxWirePro's Hourly Yen Strength Index stood at -1.11 (Neutral) by 0400 GMT. Investors’ will continue to digest less hawkish Fed comments, ahead of U.S. durable goods, prelim GDP and consumer sentiment data. Immediate resistance is located at 112.37 (21-DMA), a break above targets 113.00. On the downside, support is seen at 111.39 (61.8% retracement of 110.23 and 112.12), a break below could take it near 110.95 (38.2% retrace).
GBP/USD: Sterling tumbled to a 10-day low against the dollar in response to yesterday's downbeat UK Q1 GDP figures and growing signs of UK PM May’s Conservative party losing ground ahead of the June 8 elections. The major trades 0.4 percent down at 1.2889, having hit a low of 1.2866 earlier, its lowest since May 19. FxWirePro's Hourly Sterling Strength Index stood at -41.59 (Neutral) by 0400 GMT. Markets attention will remain the U.S fundamental drivers, amid a lack of economic releases from the UK docket. Immediate resistance is located at 1.2952 (10-DMA), a break above could take it near 1.3033 (May 23 High), On the downside, support is seen at 1.2844 (May 12 Low), a break below targets 1.2800. Against the euro, the pound traded 0.4 percent down at 86.95 pence, having hit a near 2- month low of 86.96 earlier.
AUD/USD: The Australian dollar eased to a 1-week low, due to weakness in commodity prices after an extension of output curbs by OPEC and other producing countries disappointed investors betting on longer or larger supply curbs. The Aussie trades 0.24 percent down at 0.7433, hovering towards a low of 0.7422 hit earlier, it’s lowest since May. 19. FxWirePro's Hourly Aussie Strength Index stood at -13.76 (Neutral) by 0500 GMT. Investors will continue to track broad based market sentiment, ahead of the U.S economic releases. Immediate support is seen at 0.7422 (50.0% retracement of 0.7328 and 0.7517), a break below targets 0.7400 (38.2% retrace). On the upside, resistance is located at 0.7473 (5-DMA), a break above could take it near 0.7500.
NZD/USD: The New Zealand dollar edged down, extending losses from the previous session, following a decline in crude oil prices on the back of the OPEC announcements. Moreover, a rebound in the greenback from recent lows also undermined the bid tone around the major. The Kiwi trades down at 0.7019, having touched a peak of 0.7058 on Wednesday, its strongest since May 27. FxWirePro's Hourly Kiwi Strength Index was at 166.95 (Highly Bullish) by 0500 GMT. Investors’ will continue to digest OPEC announcement, ahead of U.S. economic data. Immediate resistance is located at 0.7047 (Apr 24 High), a break above could take it near 0.7072 (Mar 22 High). On the downside, support is seen at 0.7006 (78.6% retracements of 0.6818 and 0.7058), a break below could drag it till 0.6966 (61.8% retrace).
Equities Recap
Asian shares eased as crude prices were on the defensive after an agreement by OPEC to extend existing supply curbs disappointed investors, prompting them to move away from riskier assets.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.2 percent, but was on track for 1.4 percent weekly gain.
Tokyo's Nikkei fell 0.6 percent to 19,688.66 points, Australia's S&P/ASX 200 index declined 0.6 percent to 5,755.60 points and South Korea's KOSPI added 0.5 percent to 2,354.46 points.
Shanghai composite index gained 0.05 percent to 3,108.99 points, while CSI300 index was trading 0.2 percent down at 3,477.40 points.
Hong Kong’s Hang Seng was trading 0.1 percent lower at 25,610.71 points. Taiwan shares shed 0.2 percent to 10,081.95 points.
Commodities Recap
Crude oil prices declined, extending session losses, after OPEC and other producers extended output cuts, but disappointed investors betting on larger supply curbs. International benchmark Brent crude was trading 0.3 percent up at $51.31 per barrel by 0407 GMT, having hit a high of $54.63 the day before, its strongest since Apr. 19. U.S. West Texas Intermediate fell 0.3 percent to $48.50 a barrel, after rising as high as $51.97 on Thursday, its highest since Apr. 19.
Gold prices edged higher, reversing some of its previous session losses, as weakness in commodity currencies after OPEC announcement triggered risk-off sentiment. Spot gold was trading 0.2 percent up at $1,257.66 per ounce by 0413 GMT, having touched a near 3-week high last week. U.S. gold futures slipped 0.2 percent to $1,254.2 an ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.246 percent lower by 0.009 bps, while 5-year yield was 0.008 bps down at 1.781 percent.
The Australian bonds rallied on the last day of the week, tracking strength in the U.S. counterpart after reading the slightly higher initial jobless claims release later yesterday. The yield on the benchmark 10-year Treasury note plunged a little over 3 basis points to 2.42 percent, the yield on 15-year note also slumped 3 basis points to 2.82 percent and the yield on short-term 2-year traded 1-1/2 basis points lower at 1.58 percent.
The New Zealand government bonds rose, sending yields five basis points lower on the long end of the curve.
The Canadian government bond prices were mixed across a flatter yield curve. The two-year dipped half a Canadian cent to yield 0.718 percent, and the 10-year rose 16 Canadian cents to yield 1.461 percent.
