Market Roundup
- Trump plays down chances of quick breakthrough as N. Koreans bring letter
- U.S. allies hit back at Washington's steel, aluminum tariffs
- Canada to impose tariffs on U.S., challenge at WTO
- Mexico aims tariffs at Trump country, sees NAFTA complications
- BOJ's Kuroda calls for 'rational' G7 debate on trade
- Japan calls on U.S. for joint action on China investment practices
- Japan May Nikkei Mfg PMI 52.8, last 52.5
- Japan Q1 Business Capex (MOF) YY, 3.4%, last 4.3%
- China May Caixin Mfg PMI Final 51.1, f'cast 51.0, last 51.1
- U.S. job growth seen picking up, wage growth likely moderate
- Italy's anti-establishment leaders revive governing coalition
- Australia home prices post first annual fall in six years
- Australian banking in shock as ANZ faces criminal charges
- New Zealand consumer confidence edges up in May -ANZ survey
- U.S. muni bond funds post $77.2 mln in inflows-Lipper
- U.S. fund investors pull $1.2 bln from emerging market stocks -Lipper
- Foreign CB US debt holdings $11.977 bln to $3.394 tln May 30 week
- Treasuries $5.501 bln to $3.032 tln, agencies $6.565 mln to $286.598 bln
Economic Data Ahead
- (0355 ET/0755 GMT) Germany May Markit/BME Mfg PMI, f'cast 56.8, last 56.8
- (0400 ET/0800 GMT) EZ May Markit Mfg Final PMI, f'cast 55.5, last 55.5
- (0430 ET/0830 GMT) GB May Markit/CIPS Mfg PMI, f'cast 53.5, last 53.9
Key Events Ahead
- (0855 ET/1255 GMT) Fed's Kashkari participates in a panel discussion on "collaborative strategies to build tomorrow's workforce", Minnesota
- (0910 ET/1310 GMT) BoE chief economist Andy Haldane gives lecture, Glasgow, Scotland
FX Beat
DXY: The dollar index steadied as the 10-year U.S. Treasury yield rose almost 5 basis points to 2.871 percent, rising further from this week's low of 2.759 percent. The greenback against a basket of currencies trades 0.2 percent up at 94.16, having touched a high of 95.03 on Tuesday, its highest since Nov. 7. FxWirePro's Hourly Dollar Strength Index stood at -28.44 (Neutral) by 0500 GMT.
EUR/USD: The euro declined after the United States moved ahead with tariffs on aluminium and steel imports from Canada, Mexico, and the European Union. However, easing concerns over Italian political crises limited the downside in the major. The European currency traded 0.2 percent down at 1.1665, having touched a low of 1.1510 on Tuesday, its lowest since Jul. 20. FxWirePro's Hourly Euro Strength Index stood at 50.01 (Bullish) by 0500 GMT. Investors’ attention will remain on manufacturing PMI’s from the Eurozone economies, ahead of U.S. non-farm payrolls, unemployment rate and Manufacturing PMI from both ISM and Markit. Immediate resistance is located at 1.1728, a break above targets 1.1789 (May 23 High). On the downside, support is seen at 1.1600, a break below could drag it till 1.1518 (May 30 Low).
USD/JPY: The dollar rose to a 3-day high above the 109.00 handle after the BoJ reduced the purchases of Japanese Government Bond maturing in 5-10 years to JPY 430 billion from the previous JPY 450 billion. Additionally, a rise in the 10-year U.S. Treasury yield and easing worries in Italian politics provided an additional boost to the major. The pair was trading 0.2 percent up at 109.05, having hit a low of 108.11 on Tuesday, its lowest since May 8. FxWirePro's Hourly Yen Strength Index stood at -14.71 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. non-farm payrolls, unemployment rate and Manufacturing PMI from both ISM and Markit. Immediate resistance is located at 109.46, a break above targets 109.72 (21-DMA). On the downside, support is seen at 108.11 (May 29 Low), a break below could take it lower 107.65 (Apr. 23 Low).
GBP/USD: Sterling slumped below the 1.3300 handle as signs of weakness in the UK economy and a sharp pullback in market forecasts for a Bank of England interest rate rise weighed on investor sentiment. The major traded 0.2 percent down at 1.3264, having hit a low of 1.3204 on Tuesday, it’s lowest since Nov. 28. FxWirePro's Hourly Sterling Strength Index stood at -73.08 (Slightly Bearish) by 0500 GMT. Investors’ attention will remain on the UK Markit manufacturing PMI, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.3347 (10-DMA), a break above could take it near 1.3444 (21-DMA). On the downside, support is seen at 1.3204 (May 29 Low), a break below targets 1.3169 (Nov. 17 Low). Against the euro, the pound was trading 0.1 percent down at 87.99 pence, having hit a high of 86.97 pence on Tuesday, it’s highest since Apr. 27.
AUD/USD: The Australian dollar extended losses for the second straight session despite China Caixin PMI showing manufacturing activity expanded at a steady pace in May. China Caixin Purchasing Managers' Index, which focuses on small and medium-sized export-oriented units, was unchanged at 51.1 in May from April, and just above forecast for a slowdown to 51.0. The Aussie trades 0.3 percent down at 0.7543, having hit a low of 0.7479 on Wednesday; it’s lowest since May 16. FxWirePro's Hourly Aussie Strength Index stood at 19.46 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7530 (21-DMA), a break below targets 0.7498 (May 29 Low). On the upside, resistance is located at 0.7605 (May 22 High), a break above could take it near 0.7682 (Apr. 23 High).
NZD/USD: The New Zealand dollar eased below the 0.7000 handle after data showed domestic terms of trade fell 1.9 percent in the March quarter, largely due to softer dairy prices. The economy’s export prices declined 2.2 percent, while imports edged down 0.3 percent. The Kiwi trades 0.1 percent down at 0.6993, having touched a high of 0.7023 the day before, its highest level since May 8. FxWirePro's Hourly Kiwi Strength Index was at 48.64 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7030, a break above could take it near 0.7055. On the downside, support is seen at 0.6950 (5-DMA), a break below could drag it below 0.6905.
Equities Recap
Asian shares traded in a volatile market amid rekindled concerns about U.S. protectionist trade policies, while easing Italian political fears supported investor sentiment.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.1 percent.
Tokyo's Nikkei declined 0.1 percent to 22,184.82 points, Australia's S&P/ASX 200 index plunged 0.4 percent to 5,990.40 points and South Korea's KOSPI advanced 0.7 percent to 2,438.94 points.
Shanghai composite index fell 1.09 percent to 3,062.62 points, while CSI300 index was trading 1.2 percent down at 3,757.27 points.
Hong Kong’s Hang Seng was trading 0.2 percent lower at 30,411.88 points. Taiwan shares shed 0.7 percent to 10,949.08 points.
Commodities Recap
Crude oil prices declined, with the U.S. market set for a second week of drop on pressure from record U.S. production and expectations of OPEC increasing output. International benchmark Brent crude was trading 0.4 percent up at $77.45 per barrel by 0455 GMT, having hit a low of $74.46 on Monday, its lowest since May 8. U.S. West Texas Intermediate was trading 0.3 percent down at $66.86 a barrel, after falling as low as $65.83 on Monday, its lowest since Apr. 17.
Gold prices edged higher as worries over a global trade war increased after the United States imposed tariffs on steel and aluminum imports from Canada, Mexico, and the European Union. Spot gold was up 0.05 percent at $1,298.45 per ounce by 0458 GMT, having hit a high of $1,307.65 last week, its highest price level since May 15. U.S. gold futures for June delivery were down 0.1 percent at $1,298.60 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2869 percent higher by 0.046 bps, while 5-year yield was 0.04 bps up at 2704 percent.
The Japanese government bonds slipped during late Asian session after the Bank of Japan cut is debt purchases maturing in 5-10 years amid an ease in Italy’s political tension, which weighed on bond prices. The yield on the benchmark 10-year JGB note, which moves inversely to its price, rose nearly 1 basis point to 0.03 percent, the yield on the long-term 30-year note tad higher at 0.72 percent and the yield on short-term 1-year traded 1/2 basis point at -0.13 percent.
The Australian government bonds slumped during Asian session as investors wait to watch the Reserve Bank of Australia’s (RBA) monetary policy decision, scheduled to be held by early next week. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, jumped nearly 3 basis points to 2.69 percent, the yield on the long-term 30-year Note rose nearly 1 basis point to 3.21 percent and the yield on short-term 2-year traded 3 basis points up at 2.01 percent.
The Canadian government bond prices were higher across the yield curve. The 10-year rose 33 Canadian cents to yield 2.228 percent.
