Market Roundup
- Japan PM Abe – Majority of G7 leaders agree on need for fiscal steps, some differences in opinion, appropriate steps for each country needed – Reuters.
- German FinMin Schaeuble – No request from Japan to boost fiscal stimulus.
- Canada off’l – Risks to world economy to be focus for G7 FinMins – Reuters.
- Japan April dom corp goods prices -0.3% m/m, -4.2% y/y, largest y/y drops in over six years, +0.2% and -3.7% eyed.
- Japan’s MUFG top lender to energy industry, Y10.4 trln credit lines – Nikkei.
- Massive yen headwind hits Japanese car makers as R&D needs grow – Reuters.
- PBOC – No change in policy after April loans miss expectations – Reuters.
- China April industrial output +0.47% m/m, +6.0% y/y, +6.5% y/y eyed.
- China April retail sales +0.8% m/m, +10.1% y/y, +10.5% y/y eyed.
- China April fixed-asset investment +10.5% y/y, +10.9% eyed.
- PBOC April net FX sales CNY54.4 bln, March net CNY1.4476 bln sold.
- SF Fed Williams – Every Fed meeting “live”, Fed in rate hike mode over next few years, 2-3 hikes this year still makes sense – Reuters.
- BoE Gov Carney – Didn’t overstep on Brexit, neg rates highly unlikely – BBC.
- New Zealand April PSI +2.6 points to 54.7, best growth this year.
- New Zealand Fonterra milk collection off, confirms early dividend - Reuters.
Economic Data Ahead
- (0830 ET/1230 GMT) United States May NY Fed Empire State manufacturing index, 6.5 eyed; last 9.56.
- (1000 ET/1400 GMT) United States May NAHB housing market index, 59.0 eyed; last 58.0.
Key Events Ahead
- (1030 ET/1430 GMT) BoC biannual bulletin.
- N/A Minny Fed Kashkari townhall meeting, ex-Fed Bernanke in Minneapolis.
- (1600 ET/2000 GMT) United States March Tsy int‘l capital flows data (TIC), last $33.5 bln net inflows.
FX Beat
USD: The dollar index, against a basket of major currencies trades at 94.625, having gained 0.5 percent on Friday,
EUR/USD: The euro trades lower at 1.1306, pulling closer to a low of 1.1282 touched in the previous session. The majors recovery remains fragile as the greenback was underpinned by upbeat U.S. retail sales data and consumer sentiment figures released on Friday. A rebound in the retail sales and core figures in April provided support to the U.S. economic recovery. The pair trades between a thin range of 1.1301 -1.1319, as most major European markets are closed today in observance of Whit Monday holiday. In absence of economic data from the Eurozone, markets attention will remain on U.S. NAHB housing market index for fresh cues. Traders will closely watch the CPI figures from both the continents and the FOMC meeting minutes scheduled later in the week. Immediate support is seen at 1.1282 (Previous Session Low), while resistance is located at 1.1357 (5-DMA).
USD/JPY: The Japanese yen trades 0.1 percent lower at 108.76 yen, against the dollar, after touching an early high of 108.46. The greenback is set to recover from Friday’s sell-off, after retreating from 2-week highs of 109.57 set in the previous session. The pair made a high of 108.98, hovering closer to the 109 mark. Looking ahead, markets now await Japan's GDP and core machinery orders figures, while from U.S. calendar Fed minutes, CPI and industrial production data, scheduled later in the week. Immediate resistance is seen at 109.54 (Previous Session High), while on the lower side, support is located at 108.22 (May 12 Low).
GBP/USD: Sterling steadied around 1.4361 after declining to a 3-week low of 1.4340 from a high 1.4454 in the previous session. The major continues to trade lower after the International Monetary Fund joined the Bank of England in warning of risks if Britain leaves the European Union. It made an-intra day high 1.4370, before dropping to its current levels. Immediate resistance is located at 1.4409 (5-DMA), while support is seen at 1.4340 (Previous Session Low). Against the euro, the pound trades at 78.76 pence.
AUD/USD: The Australian dollar recovered to 0.7290, after declining to a 2 and a half months low of 0.7244. The Aussie was weighed down by downbeat Chinese investment, factory output and retail sales and sliding prices for iron ore, which plumbed its lowest in 2-months on Friday. The pair has slumped 4 percent so far this month, largely after the Reserve Bank of Australia cut rates to a record low. Markets will closely watch RBA meeting minutes for further momentum, scheduled to release on Tuesday. The pair faces resistance at 0.7322 (5-DMA), while support is located at 0.7244 (Session Low).
NZD/USD: The New Zealand dollar trades 0.1 percent up at 0.6773, after declining to a low of 0.6746 as global risk aversion lent strength to the US dollar. New Zealand's services sector grew in April, recording its strongest monthly expansion in 2016, however, it had little effect on the New Zealand dollar. Markets attention will remain on RBNZ inflation expectations and PPI data, scheduled later in the week. Immediate resistance is located at 0.6784 (5-DMA), while support is seen at 0.6746 (Session Low), break below could drag the pair to 0.6734.
Equities Recap
Asia shares posted modest gains, buoyant by Japanese stocks which offset some of the gloom from soft Chinese data.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3 percent. Hong Kong's Hang Seng added 0.8 percent.
Shanghai Composite was 0.3 percent higher at 2,836.82 points. Taiwan stocks closed up 0.2 pct at 8,067.60 points.
Australia's S&P/ASX 200 index gained 0.57 pct at 5,359.40 points, Tokyo's Nikkei rose 0.33 pct at 16,466.40, Seoul shares closed up 0.03 pct.
Commodities Recap
Oil prices gained over 1 percent after Goldman Sachs stated that the market had ended almost two years of oversupply following global oil disruptions and flipped to a deficit. International Brent crude futures were trading at $48.43 per barrel at 0645 GMT, up 1.2 percent, from their last settlement. U.S. West Texas Intermediate crude futures were up 68 cents, or 1.5 percent, at $46.89 a barrel.
Gold prices rose about 0.7 percent at 1,281.92 an ounce at 0657, while U.S. gold for June delivery was up 0.1 percent at $1,272.70 an ounce.
Treasuries Recap
The 10-year U.S. treasury yield stood at 1.7121 percent up by 0.007 bps.
Australian government bond futures scaled record highs, with the 3-year bond contract up 2 ticks at 98.470. The 10-year contract added 4 ticks to 97.7700 in a bullish flattening of the curve. The 20-year contract edged up half a tick to 97.1400
New Zealand government bonds gained, sending yields 2 basis points lower at the short end of the curve and 4 basis points lower at the long end of the curve.
Canadian government bond prices were higher across a flatter maturity curve, the benchmark 10-year climbed 38 Canadian cents to yield 1.279 percent, while the 2-year rose 2.5 Canadian cents to yield 0.554 percent. The 10-year yield touched its lowest since April 18 of 1.265 percent.
