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Asia Roundup: Aussie eases as crude oil declines, dollar falls against yen on risk-off market sentiment, investors await ECB President Draghi’s speech - Monday, May 29th, 2017

Market Roundup

  • N.Korea fires Scud-class ballistic missile, Japan protests

  • Japan PM Abe: Will take steps with US to deter N. Korea
     
  • Japan will discuss N.Korea with China state councilor - Suga
     
  • Japan Inc afraid to create ripples in its $1 trln cash pool -Nikkei
     
  • BOJ's Kuroda: More market analyses needed for unconventional policy -MNI
     
  • Credit Agricole begins marketing 5yr/10yr Samurai -IFR
     
  • Fed's Williams: Medium-term inflation trend "pretty favourable"
     
  • Williams: As Fed raises rates, aim is not to roil markets
     
  • S&P may follow regular rating review plan for China -exec
     
  • China dissatisfied with G7 statement on East, S. China Seas

  • China Apr ODI plummets 70.8 pct y/y to $5.83 bln
     
  • China's Apr industrial profits y/y +14% at 572.8 bln yuan

Economic Data Ahead

  • (0300 ET/0700 GMT) Spain Apr Retail Sales y/y, last 0.9%
     
  • (0315 ET/0715 GMT) Switzerland Q1 Non-Farm Payrolls, last 4.91 mln
     
  • (0400 ET/0800 GMT) Eurozone Apr Money-M3 Annual Growth, 5.2% eyed; last 5.3%
     
  • (0400 ET/0800 GMT) Eurozone Apr Loans to Households, last 2.4%

Key Events Ahead

  • N/A ECB's Mario Draghi speaks at the European Parliament

  • N/A Austrian National Bank's Nowotny speaks at a conference
     
  • N/A Bundesbank President Jens Weidmann speaks in Berlin

FX Beat

DXY: The dollar steadied versus its major peers, despite U.S. markets closed for the Memorial Day holiday. The greenback against a basket of currencies traded flat at 97.46, hovering towards a 1-week of 97.55 hit on Friday, it’s highest since May 19. FxWirePro's Hourly Dollar Strength Index stood at 35.10 (Neutral) by 0500 GMT.

EUR/USD: The euro declined, extending losses for the third consecutive session, as investors cautiously awaited the European Central Bank President Mario Draghi's speech at the European Parliament today. However, ECB President's will most likely reiterate the last week’s message on Eurozone recovery, hence, his address to the EU Parliament could turn out to be a non-event for the major. The European currency traded 0.1 percent down at 1.1164, having touched a low of 1.1160 on Friday, its lowest since May 19. FxWirePro'sHourly Euro Strength Index stood at 20.78 (Neutral) by 0400 GMT. Investors’ attention will remain on the European Central Bank President Mario Draghi's speech, as the U.S economic calendar remains absolutely data empty. Immediate resistance is located at 1.1205 (5-DMA), a break above targets 1.1250. On the downside, support is seen at 1.1155 (10-DMA), a break below could drag it near 1.1103 (61.8% retrace).

USD/JPY: The dollar opened with a bearish gap as continuing political turmoil in Washington kept investors cautious. The trading volumes are likely to remain thin on account of the Memorial Day holiday. The major traded down at 111.30, having touched a low of 110.87 on Friday, its lowest since May 23. FxWirePro's Hourly Yen Strength Index stood at 54.38 (Bullish) by 0400 GMT. Investors’ will continue to track broad based market sentiment, amid a lack of data from the U.S. docket. Immediate resistance is located at 111.81 (10-DMA), a break above targets 112.11 (May 24 HIgh). On the downside, support is seen at 110.95 (38.2% retracement of 110.23 and 111.48), a break below could take it near 110.68 (23.6% retrace).

GBP/USD: Sterling slightly recovery after tumbling to a three-week low below the 1.2800 in the prior session as latest weekend polls showed British Prime Minister Theresa May's lead over the opposition Labour Party had narrowed sharply, indicating the election could be much tighter than initially expected. The trading volumes are likely to be thin on account of the bank holiday in London. Sterling trades 0.2 percent up at 1.2827, having hit a low of 1.2775 on Friday, its weakest since Apr. 25. FxWirePro's Hourly Sterling Strength Index stood at -117.97 (Highly Bearish) by 0400 GMT. Investors’ will continue to track developments surrounding UK elections, amid a lack of data from the UK and U.S. docket. Immediate resistance is located at 1.2832 (78.6% retracement of 1.3046 and 1.2774), a break above could take it over 1.2900. On the downside, support is seen at 1.2775 (Previous Session Low), a break below targets 1.2750. Against the euro, the pound traded 0.3 percent up at 87.04 pence, having hit a fresh 2-1/2 month low of 87.50 on Friday.

AUD/USD: The Australian dollar eased, extending losses for the third straight session, as the crude oil prices declined to multi-week lows on increasing U.S. drilling activity. The Aussie trades 0.1 percent down at 0.7437, having hit a low of 0.7422 on Friday, it’s weakest since May. 19. FxWirePro's Hourly Aussie Strength Index stood at -72.87 (Bearish) by 0500 GMT. Investors will continue to track sentiments around the commodity bloc, ahead of Australia's building permits data due on Tuesday. Immediate support is seen at 0.7422 (50.0% retracement of 0.7328 and 0.7516), a break below targets 0.7400 (38.2% retrace). On the upside, resistance is located at 0.7470 (5-DMA), a break above could take it near 0.7500.

NZD/USD: The New Zealand dollar steadied after rising to a two-month high on Friday as Global dairy prices rose five times in a row in the past two months. Investors now wait for Wednesday's central bank financial stability report which is likely to show ongoing risks in the housing sector, however, an improved outlook for dairy. The Kiwi trades flat at 0.7062, having touched a peak of 0.7076 the prior session, its strongest since Mar. 21. FxWirePro's Hourly Kiwi Strength Index was at 71.59 (Bullish) by 0500 GMT. Investors’ will continue to track overall market sentiment, with the U.S. markets closed in wake of the Memorial Day holiday. Immediate resistance is located at 0.7089 (Mar. 21 High), a break above could take it over 0.7100. On the downside, support is seen at 0.7020 (78.6% retracements of 0.6817 and 0.7076), a break below could drag it till 0.6977 (61.8% retrace).

Equities Recap

Asian shares reversed some of their earlier gains and drifted lower amid risk-off sentiment, with U.S, Britain and Chinese markets closed for holidays.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.2 percent.

Tokyo's Nikkei rose 0.1 percent to 19,712.76 points, Australia's S&P/ASX 200 index declined 0.7 percent to 5,709.40 points.

South Korea's KOSPI added 0.01 percent to 2,355.60 points. Hong Kong’s Hang Seng was trading 0.1 percent higher at 25,677.70 points.

Chinese and Taiwan markets will be closed in observance of the Dragon Boat Festival.

Commodities Recap

Crude oil prices declined, hovering towards multi-week lows as continues rise in U.S. drilling undermined an OPEC’s efforts to tighten supply. International benchmark Brent crude was trading 0.4 percent up at $51.98 per barrel by 0402 GMT, having hit a low of $50.70 the previous session, its weakest since May 12. U.S. West Texas Intermediate fell 0.4 percent to $49.64 a barrel, after falling as low as $48.16 on Friday, its lowest since May 18.

Gold prices steadied near its highest in four weeks after rising almost 1 percent in the prior session, as geopolitical tensions supported its safe-haven demand. Spot gold was trading flat at $1,266.10 per ounce at 0413 GMT, having rallied 0.9 percent to hit its strongest since May 1 at $1,269.35 on Friday. U.S. gold futures slipped 0.1 percent to $1,266.4 an ounce.

Treasuries Recap

The 10-year U.S Treasury yield stood at 2.25 percent, while 5-year yield was at 1.791 percent.

The Australian bonds sunk on the first trading day of the week as investors cashed in profits, following a silent trading session that witnessed data of less economic significance. The yield on the benchmark 10-year Treasury note jumped 2 basis points to 2.44 percent, the yield on the 15-year note climbed nearly 1-1/2 basis points to 2.83 percent and the yield on short-term 2-year traded nearly 2 basis points higher at 1.60 percent.

The New Zealand bonds plunged as investors wait to watch the Reserve Bank of New Zealand Governor Graeme Wheeler’s speech, alter this week amid a muted trading session. At the time of closing, the yield on the benchmark 10-year bond jumped 3-1/2 basis points to 2.86 percent, the yield on 7-year note also climbed 3-1/2 basis points to 2.74 percent while the yield on short-term 2-year note traded 1 basis point lower at 1.96 percent.

 

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