Market Roundup
- China says it does not want U.S. trade frictions to escalate
- Trump sticks with hard line on trade as showdown looms at G7
- Japan investors sell most foreign bonds in 14 mths amid Italy turmoil
- Mexico election front-runner wants new blood for cenbank -adviser
- Australia Apr Trade Balance G&S (A$), 977 mln, f'cast 1,000 mln, last 1,527 mln, rvsd 1,731 mln
- Australia Apr Goods/Services Imports, 0.0%, last 1.0%
- Australia Apr Goods/Services Exports, -2.0%, last 1.0%
Economic Data Ahead
- (0245 ET/0645 GMT) France Apr Trade Balance, EUR, SA, f'cast -5.30 bln, last 5.26 bln
- (0330 ET/0730 GMT) Great Britian May Halifax House Prices MM, f'cast 1.0%, last -3.1%
- (0330 ET/0730 GMT) Great Britian May Halifax House Price 3M/YY, f'cast 1.9%, last 2.2%
- (0500 ET/0900 GMT) EZ Q1 GDP Revised YY, f'cast 2.5%, last 2.5%
- (0500 ET/0900 GMT) EZ Q1 GDP Revised QQ, f'cast 0.4%, last 0.4%
Key Events Ahead
- (0340 ET/0740 GMT) Jochnick's Kerstin introduces talks on SABO's Financial Day - Stockholm
- (0430 ET/0830 GMT) BoE's David Rule makes presentation on "Regulatory Landscape for the Insurance Sector 2018/19" - London
- (0530 ET/0930 GMT) ECB's Korbinian Ibe speaks at a conference - Dublin
- (1000 ET/1500 GMT) BoE's Dave Ramsden speaks at Barclays Inflation Conference - London
- (1015 ET/1515 GMT) BoC's Stephen Poloz and Carolyn Wilkins hold press conference - Ottawa
- (1400 ET/1800 GMT) Ex-Fed Chairman Ben Bernanke participates in an event at American Enterprise Institute - Washington
- N/A BoE's Dave Ramsden speaks – London
FX Beat
DXY: The dollar index slumped to an over 2-week low after White House economic adviser Larry Kudlow stated that U.S. President Donald Trump would not back down from the tough line he has taken on trade at the G7 summit this week. The greenback against a basket of currencies trades 0.2 percent down at 93.42, having touched a low of 93.41, its lowest since May 22.
EUR/USD: The euro rallied to an over 2-week peak on speculation that the European Central Bank may soon announce it will start winding down its massive bond purchase programme. On Wednesday, ECB's chief economist Peter Praet stated that the central bank would debate next week whether to end bond purchases later this year. The European currency traded 0.2 percent up at 1.1793, having touched a high of 1.1799 earlier, its highest since May 22. Investors’ attention will remain on Eurozone gross domestic product, ahead of U.S. unemployment benefit claims data. Immediate resistance is located at 1.1829 (May 22 High), a break above targets 1.1896 (May 5 High). On the downside, support is seen at 1.1707 (5-DMA), a break below could drag it till 1.1673 (10-DMA).
USD/JPY: The dollar declined below the 110.00 handle, as U.S. President Donald Trump seem set to clash with other Group of Seven leaders at their weekend summit in Canada, raising uncertainties over trade frictions. The pair was trading 0.3 percent down at 109.90, having hit a high of 110.26 on Wednesday, its highest since May 23. Investors’ will continue to track broad-based market sentiment, ahead of U.S. unemployment benefit claims data. Immediate resistance is located at 110.28, a break above targets 110.85 (May 17 Low). On the downside, support is seen at 109.61 (5-DMA), a break below could take it lower 108.95 (May 24 Low).
GBP/USD: Sterling rose, extending gains for the third straight session, amid revived expectations of a Bank of England interest rate rise this month. The major traded 0.2 percent up at 1.3434, having hit a high of 1.3443 the day before, it’s highest since May 22. Investors’ attention will remain on the BoE official Ramsden's speech, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.3483 (May 21 High), a break above could take it near 1.3527 (May 18 High). On the downside, support is seen at 1.3351 (5-DMA), a break below targets 1.3253 (Jun. 1 Low). Against the euro, the pound was trading 0.1 percent down at 87.82 pence, having hit a low of 88.09 pence on Friday, it’s highest since May 15.
AUD/USD: The Australian dollar eased from recent peaks after data showed Australia's trade surplus slipped to A$977 million in April from an upwardly revised A$1.73 billion the previous month, and below forecasts of A$1 billion. The Aussie trades 0.1 percent down at 0.7658, having hit a high of 0.7676 on Wednesday; it’s highest since Apr. 23. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7612 (5-DMA), a break below targets 0.7552 (May 31 Low). On the upside, resistance is located at 0.7682 (Apr 23 High), a break above could take it near 0.7711 (Apr. 9 High).
NZD/USD: The New Zealand dollar steadied near 1-month peaks as the U.S. dollar weakened ahead of G7 and U.S. - N. Korea summit meetings. The Kiwi trades 0.2 percent up at 0.7048, having touched a high of 0.7060 the day before, its highest level since Apr. 30. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7089, a break above could take it near 0.7120. On the downside, support is seen at 0.7014 (5-DMA), a break below could drag it below 0.6962.
Equities Recap
Asian shares rallied to a fresh 2-1/2-month high, while the euro surged to an over 2-week peak on expectations the European Central Bank could start to wind down its stimulus.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4 percent.
Tokyo's Nikkei gained 0.9 percent to 22,841.53 points, Australia's S&P/ASX 200 index rallied 0.6 percent to 6,058.30 points, and South Korea's KOSPI advanced 0.7 percent to 2,470.22 points.
Shanghai composite index fell 0.1 percent to 3,111.76 points, while CSI300 index was trading 0.05 percent down at 3,835.61 points.
Hong Kong’s Hang Seng was trading 0.6 percent higher at 31,436.35 points. Taiwan shares added 0.5 percent to 11,251.75 points.
Commodities Recap
Crude oil prices rose, extending previous session gains, supported by plunging exports by OPEC-member Venezuela. International benchmark Brent crude was trading 0.05 percent up at $75.72 per barrel by 0444 GMT, having hit a low of $73.80 on Tuesday, its lowest since May 8. U.S. West Texas Intermediate was trading 0.05 percent up at $65.01 a barrel, after falling as low as $64.26 on Tuesday, its lowest since Apr. 10.
Gold prices consolidated within narrow ranges, amid ongoing concerns about a trade war between the United States and its counterparts. Spot gold was trading flat at $1,296.15 per ounce by 0447 GMT, having hit a high of $1,307.65 last month, its highest price level since May 15. U.S. gold futures for August delivery were nearly unchanged at $1,301.30 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2940 percent higher by 0.022 bps, while 5-year yield was 0.022 bps up at 2782 percent.
The Japanese government bonds remained range-bound as investors remained sidelined in a muted trading week ahead of the country’s first quarter 2018 gross domestic product (GDP) data, scheduled to be released today by 23:50GMT which shall add further direction to the debt market. The yield on the benchmark 10-year JGB note, which moves inversely to its price, hovered around 0.05 percent, the yield on the long-term 30-year note slid 1/2 basis point to 0.72 percent and the yield on short-term 2-year remained flat at -0.12 percent.
The Australian government bonds plunged as U.S. Treasury yields climbed toward 3 percent level as eurozone bonds sell off. The U.S Treasuries pushed lower across the curve, finding initial momentum from overnight activity and solidified following ECB signals of a possible end to QE at next week's policy meeting. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, rose 7-1/2 basis points to 2.838 percent, the yield on the long-term 30-year Note jumped 7 basis points to 3.355 percent and the yield on short-term 2-year up 2-1/2 basis points to 2.106 percent.
The Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries and German Bunds. The two-year fell 5 Canadian cents to yield 1.944 percent and the 10-year declined 52 Canadian cents to yield 2.312 percent.
