Market Roundup
- Fed, China fears force investors to check out of Asia – Reuters.
- Japan FinMin Aso – Japan hasn’t given up on fiscal consolidation, to work to balance budget by ’20, sales tax hike delay meant to support consumption.
- LDP SecGen Tanigaki – PM Abe to make sales tax announcement tomorrow.
- Japan April industrial output +0.3% m/m, -1.5% eyed, Kyushu earthquake impact limited, May eyed at +2.2, previous forecast -2.3%, June eyed at +0.3%.
- Japan April household spending +0.2% m/m, -0.4% y/y, -0.6% and -1.4% eyed.
- Japan April unemployment 3.2%, as eyed, jobs-applicants ratio jumps to 1.34, highest since November ’91, March 1.30, 1.30 eyed.
- Australia Apr private-sector credit +0.5% m/m, housing +0.4%, business +0.8%.
- Australia Apr bldg approvals +3.0% m/m, -3.0% eyed, priv-sector houses -2.3%.
- Australia Q1 c/a deficit A$20.8 bln, A$19.5 bln eyed, net exports GDP impact +1.1%, +0.7% eyed, government consumption +0.9% q/q.
- New Zealand May ANZ business confidence +11.3%, own activity +30.4%, May +6.2%/+32.1%.
- New Zealand April dwelling consents +6.6% m/m, March -9.8%, April new houses +15%.
Economic Data Ahead
- (0300 ET/0700 GMT) Spain Mar current account balance; last E1.46 bln deficit.
- (0355 ET/0755 GMT) Germany May unemployment, 6.2% sa, -5k sa; last 6.2%, -16k.
- (0355 ET/0755 GMT) Germany May unemployment, 2.64 mln nsa eyed; last 2.70 mln nsa, 2.71 mln sa.
- (0400 ET/0800 GMT) Italy Apr unemployment, 11.4% eyed; last 11.4%.
- (0400 ET/0800 GMT) Norway Apr credit indicator, +4.8% y/y eyed; last +4.9%.
- (0400 ET/0800 GMT) Eurozone Apr money supply M3, +5.0% AR eyed; last +5.0%.
- (0400 ET/0800 GMT) Eurozone Apr loans to households, non-financials; last +1.6%, +1.1%.
- (0500 ET/0900 GMT) Eurozone Apr unemployment, 10.2% eyed; last 10.2%.
- (0500 ET/0900 GMT) Eurozone May HICP/ex-f/e – flash, -0.1%, +0.8% y/y eyed; last -0.2%, +0.7%.
- (0500 ET/0900 GMT) Italy May CPI - flash, +0.2% m/m, -0.3% y/y eyed; last -0.1%, -0.5%.
- (0500 ET/0900 GMT) Italy May HICP – flash, +0.3% m/m, -0.3% y/y eyed; last +0.2%, -0.4%.
- (0600 ET/1000 GMT) Italy Q1 GDP – final, +0.3% q/q, +1.0% y/y eyed; last +0.3%, +1.0%.
- (0830 ET/1230 GMT) United States Apr personal income/consumption, +0.4/+0.7% m/m eyed; last +0.4/+0.1%.
- (0830 ET/1230 GMT) United States Apr - core PCE price index, +0.2% m/m eyed; last +0.1% m/m, +1.6% y/y.
- (0830 ET/1230 GMT) Canada Q1 GDP, +2.9% AR eyed; last +0.8%.
- (0900 ET/1300 GMT) Belgium Q1 GDP – revised; prelim +0.2% q/q.
- (0900 ET/1300 GMT) United States Mar CaseShiller 20, +0.5% m/m nsa, +5.2% y/y eyed; last +0.2%, +5.4%.
- (0945 ET/1345 GMT) United States May Chicago PMI, 50.9 eyed; last 50.4.
- (1000 ET/1400 GMT) United States May consumer confidence index, 96.0 eyed; last 94.2.
- (1430 ET/1430 GMT) United States May Dallas Fed mfg business index; last -13.9.
- (1300 ET/1700 GMT) United States Apr Dallas Fed PCE; last +1.6%.
Key Events Ahead
- N/A OECD Forum ’16 in Paris, various attendees, speakers (till tomorrow).
- (0400 ET/0800 GMT) Norges Bank June currency operations, NOK900 mln sales eyed.
- (0430 ET/0830 GMT) BoI Gov Visco presents annual report.
- (0530 ET/0930 GMT) ECB zero% 7-day refi, E58 bln allotment eyed, E60.2 bln maturing.
- (0540 ET/0940 GMT) Belgium E1.6-2.0 bln 3 and 6-month treasury certificate auctions.
FX Beat
USD: The dollar index, against a basket of currencies trades at 95.72, having gone as high as 95.968 on Monday. It has gained 4.4 percent from its 15-1/2-month low hit earlier this month at 91.919.
EUR/USD: The euro was flat at 1.1127 but hovering near a 2-1/2 month low of 1.1097 hit in the previous session. The major rose to an intra-day high of 1.1154, however, could not sustain above the 1.1150 mark. The pair declined to a low of 1.1097, it’s lowest since mid-March on Monday, though it has managed to bounce back from that level. It was 2.7 percent down and on course to post its first monthly loss in four months. Markets now await series of data from the eurozone economies and eurozones consumer price index and unemployment report for further cues. Immediate resistance is seen at 1.1166 (May-25 High), break above targets 1.1172/1.1200. On the lower side, support is located at 1.1109 (May-27 Low).
USD/JPY: The Japanese yen trades lower at 111.28 yen, hovering towards a 1-month high of 111.44 struck on Monday. The yen rose to an early high of 110.79, after data released earlier in the session showed Japanese industrial output surprisingly rose 0.3 percent in April, suggesting production is holding up despite weak exports and the impact from a series of earthquakes that struck southern Japan during that month. Japan's housing starts also increased 9.0 percent in April against market consensus 3.5 percent and previous 8.4 percent. Markets attention will remain on the May U.S. private-sector ISM manufacturing data, due Wednesday, and non-farm payrolls report on Friday. Upbeat readings could further heighten expectations that the Federal Reserve might increase interest rate at next policy meeting on June 14-15. Immediate resistance is located at 111.35 (Session High), break above could take the pair to 111.48 (1-month High). On the downside, support is seen at 110.47 (5-DMA).
GBP/USD: Sterling gained 0.2 percent to 1.4668, pulling away from a low of 1.4587 touched on Monday. It rose to an intra-day high of 1.4723, edging near a 3-week high of 1.4739 hit last week. Sterling has been supported in recent weeks by polls showed that Britons will vote to stay in the European Union at next month's referendum. Immediate resistance is located at 1.4723 (Session High), break above will take the pair to 1.4739/1.4750. On the lower side, support is seen at 1.4610 (10-DMA). Against the euro, the pound rose 0.2 percent to 75.90, having touched an early high of 75.72 and drifting away from a low of 76.32 touched on Monday.
AUD/USD: The Australian dollar rebounded from 3-month lows on unexpected strong building approvals and net exports readings. The Aussie advanced 0.8 percent to 0.7242, pulling away from a low of 0.7148 touched in the previous session. Australia's building permits for the month of April came at 3.0 percent, against market forecast 2.8 decline and previous 2.9 percent, while current account balance for the first quarter was at -20.8 billion versus previous -22.6 billion. The major continues to rise, hovering towards sessions high of 0.7250, however, it is still expected to post a 5 percent drop this month, the biggest in nearly a year. Markets will closely watch U.S. personal consumption expenditure data, ahead of Australia's gross domestic product data for further momentum on the pair. Immediate resistance is located at 0.7259 (May-23 High), break above targets 0.7282. On the lower side, support is seen at 0.7160 (May 26 Low).
NZD/USD: The New Zealand dollar was trading 0.5 percent higher at 0.6728, drifting away from a low of 0.6675 touched on Monday. The kiwi was strengthened a private survey by ANZ showed that New Zealand consumer confidence had increased moderately in the month of April. The indicator rose to 11.3 from previous 6.2 in March. Markets will focus on U.S. personal consumption expenditure data for further cues on the major. Immediate resistance is located at0.6755 (Mar-14 High), break above targets 0.6758. On the downside, support is seen at 0.6682 (Mar-23 Low).
Equities Recap
Asian shares recovered from a volatile start, but remained on track for a monthly loss.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.4 percent, set to end the month down 1.9 percent.
The Shanghai Composite advanced 1.9 percent and the CSI 300 gained 2.1 percent, on track for monthly losses of 2.1 percent and 0.7 percent respectively.
Hong Kong's Hang Seng index gained 0.9 percent, however, heading for a decline of 1.2 percent in May. Taiwan stocks ended flat at 8,535.59 points
Tokyo's Nikkei rose 0.98 pct at 17,234.98, Australia's S&P/ASX 200 index slumped 0.48 pct at 5,381.90 points and Seoul shares gained 0.84 pct.
Commodities Recap
U.S. oil prices rose by the start of the peak demand summer driving season, however, international fuel markets were dragged down by increasing output in the Middle East, which mostly serves Asian customers. Brent crude oil futures were trading at $50.31 a barrel at 0636 GMT. U.S. West Texas Intermediate crude oil futures were trading at $49.50 per barrel, up 17 cents from their last settlement.
Gold edged up after declining to a 3-1/2 month low in the previous session; however, it was on course for its biggest monthly drop since November. Spot gold was up 0.6 percent to 1212.58 per ounce by 0637 GMT, but was headed for a slide of 6.2 percent for the month. It had slumped as much as 1 percent to $1,199.60 an ounce, its lowest since Feb. 17 on Monday. U.S. gold was down 0.2 percent at 1211.20.
Treasuries Recap
The 10-year U.S. treasury yield stood at 1.8632 percent up b 0.028 bps.
Australian government bond futures retreated, with the 3-year bond contract off 4 ticks at 98.350. The 10-year contract shed 2.5 ticks to 97.7000, while the 20-year contract was 1.5 tick lower at 97.1050.
New Zealand government bonds gained, sending yields 1.5 basis points lower at the short end of the curve and 0.5 basis points lower at the long end of the curve.
Canadian government bond prices were mixed across a slightly flatter maturity curve, with the 2-year price down 0.5 Canadian cent to yield 0.652 percent and the benchmark 10-year rising 5 Canadian cents to yield 1.353 percent.
