Market Roundup
- China's Caixin/Markit mfg PMI, 49.6 vs f'cast 50.1, last 50.3
- PBOC sets yuan midpoint at 6.8090/dlr, strongest since Nov 10
- BOJ's Harada: Optimistic inflation to rise, nothing decided on exit
- Japan Q1 CAPEX +4.5% y/y, firm profits +26.6%, sales +5.6%
- Japan May mfg PMI – final 53.1, better than 52.0 flash, Apr final 52.7
- Australia Apr retail sales SA m/m, +1.0% vs f'cast +0.3%, last -0.2%
- Australia building capex q/q, +0.7%, last -1.5%
- MoF flow data May 27 wk - Japanese buy more foreign bonds, Y732.1 bln
- MoF flow data - Foreigners buy some Japanese stocks, JGBs, sell bills
- Fed's Williams: Three rate hikes this year is his baseline view
- Trump to announce decision on global climate deal
Economic Data Ahead
- (0300 ET/0700 GMT) Norway May Mfg PMI SA, 54.5 forecast; last 54.7
- (0315 ET/0715 GMT) Spain May Mfg PMI, 54.7 forecast; last 54.5
- (0345 ET/0745 GMT) Italy May Markit/ADACI Mfg PMI, 56.0 forecast; last 56.2
- (0350 ET/0750 GMT) France May Markit Mfg PMI, 54 forecast; last 54
- (0355 ET/0755 GMT) Germany May Markit/BME Mfg PMI, 59.4 forecast; last 59.4
- (0400 ET/0800 GMT) Italy Q1 GDP Final, +0.2% q/q, +0.8% y/y forecast; last +0.2%, +0.8%
- (0400 ET/0800 GMT) Eurozone May Markit Mfg Final PMI, 57 forecast; last 57
- (0430 ET/0830 GMT) Great Britain May Markit/CIPS Mfg PMI, 56.5 forecast; last 57.3
Key Events Ahead
- N/A ECB's Lautenschlager speaks at a conference in Washington D.C.
- N/A ECB Bank Supervisor Pentti Hakkarainen speaks in Lisbon
- N/A Swiss Economic Forum conference (to June 02)
- (0430 ET/0830 GMT) Spain 13YI E1.000 bln auction
- (0430 ET/0830 GMT) Spain 3Y E3.000 bln auction
- (0430 ET/0830 GMT) Spain 49Y E1.000 bln auction
- (0850 ET/0850 GMT) France 10Y E5.000 bln auction
- (0850 ET/0850 GMT) France 15Y E1.500 bln auction
- (0850 ET/0850 GMT) France 22Y E2.000 bln auction
- (0530 ET/0930 GMT) UK 10Y 2.500 bln auction
- (1100 ET/1500 GMT) Austrian Natl Bank's Nowotny speaks at Business Univ Vienna
FX Beat
DXY: The dollar retreated from recent lows versus the Japanese yen as upbeat U.S. economic data supported the case of an imminent Federal Reserve interest rate hike. The greenback against a basket of currencies traded up at 97.03, having touched a low of 96.86 hit in the prior session, it’s lowest since May 23. FxWirePro's Hourly Dollar Strength Index stood at -30.29 (Neutral) by 0500 GMT.
EUR/USD: The euro edged up, extending gains for the third consecutive session, as the greenback languished near a recent 6-1/2 month low. The European currency flat at 1.1245, but within the sight of a high of 1.1268 touched last week, its highest since Nov 9. FxWirePro's Hourly Euro Strength Index stood at 91.81 (Slightly Bullish) by 0400 GMT. Investors’ attention will remain on Eurozone's Markit manufacturing PMI figures, ahead of the U.S. ADP employment change, unemployment benefit claims, construction spending data, and manufacturing PMI released by Markit and ISM. Immediate resistance is located at 1.1268 (May 23 High), a break above targets 1.1300. On the downside, support is seen at 1.1199 (61.8% retracement of 1.1109 and 1.1256), a break below could drag it near 1.1164 (Previous Session Low).
USD/JPY: The dollar rose above the 111.00 handle, rebounding from a 2-week low hit in the previous session as rising expectations the U.S. Federal Reserve will hike interest rates next month underpinned investor sentiment. The major traded 0.2 percent up at 111.01, having touched a low of 110.48 on Wednesday, its lowest since May 18. FxWirePro's Hourly Yen Strength Index stood at -46.93 (Neutral) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of the U.S. ADP employment change, unemployment benefit claims, and manufacturing PMI released by Markit and ISM. Immediate resistance is located at 111.32 (10-DMA), a break above targets 112.11 (May 24 High). On the downside, support is seen at 110.48 (Previous Session Low), a break below could take it near 110.23 (May 18 Low).
GBP/USD: Sterling declined after rebounding from a 6-week low in the previous session as polls showed a slimmer lead for Prime Minister Theresa May's ruling party before next week's election. On Wednesday, the latest YouGov poll for the Times suggested that May's Conservative Party lead over opposition Labour Party was just 3 percentage points ahead of Britain's June 8 election. Sterling trades 0.1 percent down at 1.2871, having hit a low of 1.2769 on Wednesday, its weakest since Apr. 21. FxWirePro's Hourly Sterling Strength Index stood at -39.08 (Neutral) by 0400 GMT. Investors’ will continue to track developments surrounding UK elections, ahead of the UK Markit Manufacturing PMI report. Immediate resistance is located at 1.2922 (21-DMA), a break above could take it over 1.2946 (May 26 High). On the downside, support is seen at 1.2850, a break below targets 1.2800. Against the euro, the pound traded 0.2 percent down at 87.37 pence, hovering towards a 2-1/2 month low of 87.50 hit on Friday.
AUD/USD: The Australian initially rose following the release of better than expected domestic retail sales figures, however, it tumbled to a 2-week low after the China Caixin manufacturing PMI dipped into contraction zone. China's headline figure came in at 49.6 versus estimates of 50.1 for the month of May and was accompanied by slower increases in output and new orders. The Aussie trades 0.4 percent down at 0.7451, having hit a low of 0.7384 earlier, it’s weakest since May 15. FxWirePro's Hourly Aussie Strength Index stood at -30.91 (Neutral) by 0500 GMT. Investors will continue to digest downbeat Chinese data, ahead of U.S. economic releases. Immediate support is seen at 0.7368 (May 12 Low), a break below targets 0.7336 (May 11 Low). On the upside, resistance is located at 0.7454 (Session High), a break above could take it near 0.7466 (38.2% retrace of 0.7517 and 0.7384).
NZD/USD: The New Zealand dollar declined, extended previous session losses as a survey showed an unexpected slump in China's manufacturing activity. China's manufacturing activity contracted for the first time in nearly a year in May, which undermined investors risk sentiment. The Kiwi trades 0.1 percent down at 0.7075, having touched a peak of 0.7122 on Wednesday, its strongest since Mar. 2. FxWirePro's Hourly Kiwi Strength Index was at -1.36 (Neutral) by 0500 GMT. Investors’ will continue to track overall market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7122 (Previous Session High), a break above could take it near 0.7150 (Mar. 2 High). On the downside, support is seen at 0.7056 (78.6% retracements of 0.6817 and 0.7122), a break below could drag it till 0.7005 (61.8% retrace).
Equities Recap
Asian shares declined after data showed China Caixin manufacturing PMI dipped into contraction territory, fuelling investors’ worries about a slowdown in the world's second-economy.
MSCI's broadest index of Asia-Pacific shares outside Japan eased.
Tokyo's Nikkei gained 1.0 percent to 19,855.07 points, Australia's S&P/ASX 200 index advanced 0.15 percent to 5,733.10 points and South Korea's KOSPI declined 0.1 percent to 2,344.58 points.
Shanghai composite index fell 0.3 percent to 3,107.16 points, while CSI300 index was trading 0.1 percent up at 3,495.46 points.
Hong Kong’s Hang Seng was trading 0.4 percent higher at 25,782.17 points. Taiwan shares added 0.5 percent to 10,087.42 points.
Commodities Recap
Crude oil prices rose after declining to a three-week low in the previous session, supported by an industry report that showed U.S. crude stockpiles had fallen by 8.7 million barrels at 513.2 million in the week to May 26, beating expectations for a decrease of 2.5 million barrels. International benchmark Brent crude was trading 0.4 percent up at $51.14 per barrel by 0409 GMT, having hit a low of $50.21 on Wednesday, its weakest since May 10. U.S. West Texas Intermediate rose 0.2 percent to $49.71 a barrel, after falling as low as $47.71 the day before, its lowest since May 12.
Gold prices steadied after rising to a five-week high in the previous session on geopolitical tensions, however, expectations the U.S. Federal Reserve will hike interest rates next month limited upside. Spot gold was up 0.1 percent at $1,268.39 per ounce at 0414 GMT, having touched a high of $1,274.00 an ounce, its strongest since April 25 on Wednesday. U.S. gold futures fell 0.3 percent to $1,266.50.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.213 percent higher by 0.015 bps, while 5-year yield was 0.012 bps higher at 1.759 percent.
The Australian bonds jumped despite a rebound in the country’s retail sales for the month of April. However, the disappointment in CAPEX data in the first quarter of this year supported prices in the debt market. The yield on the benchmark 10-year Treasury note fell 1 basis point to 2.38 percent, the yield on 15-year note slumped 2 basis points to 2.76 percent while the yield on short-term 2-year hovered around 1.55 percent.
The New Zealand 10-year bond yields hit a 6-1/2 month low as the market witnessed a massive short-covering by the investors and after the Reserve Bank of New Zealand (RBNZ) released a balanced outlook on the Financial Stability Report (FSR) for the month of May. At the time of closing, the yield on the benchmark 10-year bond slumped 5-1/2 basis points to 2.75 percent, the yield on 7-year note plunged 4 basis points to 2.65 percent and the yield on short-term 2-year note ended 1-1/2 basis points lower at 1.93 percent.
The Canadian government bond prices were mixed across the yield curve, with the two-year up 1 Canadian cent to yield 0.695 percent and the 10-year falling 1 Canadian cent to yield 1.416 percent. The 10-year yield touched its lowest intraday since Nov. 10 at 1.398 percent.
