Market Roundup
- High-level U.S.-North Korea nuclear talks get underway in New York
- China says reserves right to retaliate to U.S. actions against its investments
- China May NBS Manufacturing PMI, 51.9, f'cast 51.3, last 51.4
- China May NBS Non-Mfg PMI, 54.90, last 54.80
- China May Composite PMI, 54.6, last 54.1
- Japan Apr Industrial output prelim mm, 0.3%, f'cast 1.2%, last 1.4%
- New Zealand May NBNZ Business Outlook, -27.2%, last -23.4%
- New Zealand May NBNZ Own Activity, 13.6%, last 17.8%
- Australia Q1 Capital Expenditure, 0.4%, f'cast 0.7%, last -0.2%, rvsd 0.2%
- Australia Q1 Building Capex, -1.3%, f'cast -2.1%, last -1.1%
- Australia Apr Housing Credit, 0.4%, last 0.5%
- Italy's Cottarelli opens door to possible eurosceptic government
- Fed unveils rewrite of 'Volcker Rule' limits on bank trading
- Signs of confidence return to UK households, firms - surveys
- China shunned Australia's minister during recent visit - diplomat
Economic Data Ahead
- (0430 ET/0830 GMT) Great Britain Apr BOE Consumer Credit, f'cast 1.300 bln, last 0.254 bln
- (0430 ET/0830 GMT) Great Britain Apr Mortgage Lending, f'cast 3.800 bln, last 3.968 bln
- (0430 ET/0830 GMT) Great Britain Apr Mortgage Approvals, f'cast 63.000k, last 62.914k
- (0500 ET/0900 GMT) EZ May HICP Flash YY, f'cast 1.6%, last 1.2%
- (0500 ET/0900 GMT) EZ Apr Unemployment Rate, f'cast 8.4%, last 8.5%
Key Events Ahead
- N/A BoE and CEPR are holding a conference on Competition and Regulation in Financial Markets
- (0600 ET/1000 GMT) Fed's Bullard participates in Market News International Connect Roundtable, Tokyo
- (1300 ET/1700 GMT) Fed's Brainard speaks at the Forecaster's Club of New York luncheon
FX Beat
DXY: The dollar index declined, extending losses from prior session on news the United States will announce plans to impose tariffs on steel and aluminium imported from the European Union. The greenback against a basket of currencies trades 0.1 percent down at 93.97, having touched a high of 95.03 on Tuesday, its highest since Nov. 7. FxWirePro's Hourly Dollar Strength Index stood at -108.80 (Highly Bearish) by 0500 GMT.
EUR/USD: The euro steadied after rebounding from 10-month lows as Italian leaders moved to reduce political turbulence and avoid a potentially disruptive early election. The European currency traded 0.05 percent up at 1.1633, having touched a low of 1.1510 on Tuesday, its lowest since Jul. 20. FxWirePro's Hourly Euro Strength Index stood at -31.32 (Neutral) by 0500 GMT. Investors’ attention will remain on series of economic data from Eurozone economies and Eurozone unemployment rate and prelim consumer price index, ahead of U.S. unemployment benefit claims, pending home sales, personal consumption expenditures- price index and Fed officials' speeches. Immediate resistance is located at 1.1702 (10-DMA), 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 declined, reversing some of its previous session gains, as negotiations between the United States and China appear to be intensifying after China stated that it was ready to fight back if Washington was looking for a trade war. The pair was trading 0.2 percent down at 108.69, having hit a low of 108.11 on Tuesday, its lowest since May 8. FxWirePro's Hourly Yen Strength Index stood at 105.43 (Highly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. unemployment benefit claims, pending home sales, personal consumption expenditures- price index and Fed officials' speeches. Immediate resistance is located at 109.13 (5-DMA), 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 rose, extending gains for the second straight session after the GfK Group showed UK Consumer Confidence improved slightly to -7 in May from -9 in April. The major traded 0.2 percent up at 1.3315, having hit a low of 1.3204 on Tuesday, it’s lowest since Nov. 28. FxWirePro's Hourly Sterling Strength Index stood at -107.89 (Highly Bearish) by 0500 GMT. Investors’ attention will remain on the UK nationwide housing prices, mortgage approvals, M4 money supply, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.3368 (10-DMA), a break above could take it near 1.3457 (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 0.05 percent up at 87.73 pence, having hit a high of 86.97 pence on Tuesday, it’s highest since Apr. 27.
AUD/USD: The Australian dollar slumped after domestic data on business investment came in below expectations as manufacturers cut back on spending. The Aussie trades 0.1 percent down at 0.7567, having hit a low of 0.7479 earlier; it’s lowest since May 16. FxWirePro's Hourly Aussie Strength Index stood at -18.42 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7547 (May 1 Low), a break below targets 0.7412 (May 9 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 steadied after rising to a 3-week high in the previous session as global risk appetite improved amid signs of easing political turmoil in Italy. The Kiwi trades 0.05 percent down at 0.6981, having touched a high of 0.6998, its highest level since May 9. FxWirePro's Hourly Kiwi Strength Index was at 6.42 (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 0.6926 (21-DMA), a break below could drag it below 0.6872.
Equities Recap
Asian shares bounced back from 2-month troughs, while the euro rebounded from 10-month lows as political turmoil in Italy that had shaken global financial markets showed signs of easing.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.6 percent.
Tokyo's Nikkei rallied 0.8 percent to 22,201.82 points, Australia's S&P/ASX 200 index surged 0.5 percent to 6,011.90 points and South Korea's KOSPI advanced 0.6 percent to 2,423.49 points.
Shanghai composite index rose 1.8 percent to 3,094.27 points, while CSI300 index was trading 2.02 percent up at 3,797.86 points.
Hong Kong’s Hang Seng was trading 0.9 percent higher at 30,347.89 points. Taiwan shares added 0.5 percent to 10,874.96 points.
Commodities Recap
Crude oil prices rose, despite a surprise rise in U.S. crude inventories and expectations that OPEC and other producers could increase output at a meeting in June. International benchmark Brent crude was trading 0.1 percent up at $77.44 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 0.1 percent down at $68.11 a barrel, after falling as low as $65.83 on Monday, its lowest since Apr. 17.
Gold prices edged higher as the dollar declined from 6-1/2-month highs hit earlier this week, while concerns over U.S.-China trade talks supported safe-haven demand. Spot gold was up 0.1 percent at $1,303.20 per ounce by 0459 GMT, having hit a high of $1,307.65 on Friday, its highest price level since May 15. But was set for a monthly decline of about 1 percent, its biggest since February. U.S. gold futures for June delivery were 0.1 percent higher at $1,303.20 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.858 percent higher by 0.015 bps, while 5-year yield was 0.016 bps up at 2.689 percent.
The 10-year Japanese government bond yields continued to recover during late Asian session as global risk appetite started to improve with the political situation in Italy cooling down, coupled with a lower-than-expected industrial production for the month of April, which further 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 climbed 1-1/2 basis points to 0.71 percent and the yield on short-term 2-year traded tad higher at -0.14 percent.
The Australian government bonds sunk during Asian session, tracking a similar movement in the United States counterpart and other global peers after the political situation in Italy started to improve, with attempts being made to form a coalition government after days of indecisiveness. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, jumped 2 basis points to 2.65 percent, the yield on the long-term 30-year Note hovered around 3.18 percent and the yield on short-term 3-year traded 1 basis point up at 1.98 percent.
The New Zealand bonds jumped at the time of closing despite a slight improvement in Italy’s political situation after attempts were seen to form a coalition government so that a snap election can be avoided. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, fell 1-1/2 basis points to 2.74 percent, the yield on the long-term 20-year note slid 1/2 basis point to 3.26 percent and the yield on short-term 2-year closed 2 basis points lower at 1.86 percent.
The Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasury debt. The 10-year declined 55 Canadian cents to yield 2.253 percent. On Tuesday, the 10-year yield touched its lowest since April 11 at 2.165 percent.
