Market Roundup
- China Apr Industrial Output YY, 7.0%, f'cast 6.3%, last 6.0%
- China Apr Retail Sales YY, 9.4%, f'cast 10.0%, last 10.1%
- China Apr Urban investment (ytd)YY, 7.0%, f'cast 7.4%, last 7.5%
- U.S., China still 'very far apart' on trade - U.S. Ambassador to China Terry Branstad
- U.S., Japan to 'move rapidly' on trade deal - U.S. ambassador to Japan William Hagerty
- MSCI lists 234 Chinese stocks for index inclusion in boost to capital markets
- Australia's RBA sees scant reason for rate rise as inflation, wages stay low
- Australia jobless rate needs to go lower for wage pressures to emerge -RBA
- North, South Korea to hold high-level inter-Korea talks on May 16
- Israeli forces kill dozens in Gaza as U.S. Embassy opens in Jerusalem
- Turkey's Erdogan- Central Bank should take note of what president says and act accordingly- Bloomberg TV
Economic Data Ahead
- (0430 ET/0830 GMT) Great Britain Apr Claimant Count Unem Chng, f'cast 7.8k, last 11.6k
- (0430 ET/0830 GMT) Great Britain Mar ILO Unemployment Rate, f'cast 4.2%, last 4.2%
- (0500 ET/0900 GMT) Germany May ZEW Economic Sentiment, f'cast -8.2, last -8.2
- (0500 ET/0900 GMT) Germany May ZEW Current Conditions, f'cast 86.2, last 87.9
- (0500 ET/0900 GMT) Eurozone Q1 GDP Flash Estimate YY, f'cast 2.5%, last 2.5%
- (0500 ET/0900 GMT) Eurozone Mar Industrial Production YY, f'cast 3.7%, last 2.9%
Key Events Ahead
- (0600 ET/1000 GMT) French Finance Minister Bruno Le Maire and Foreign Minister Jean-Yves Le Drian meet with French companies in Paris
- (0800 ET/1200 GMT) Fed's Kaplan participates in moderated question-and-answer session hosted by the Council on Foreign Relations, NY
- (1310 ET/1710 GMT) Fed's Williams speaks before the Economic Club of Minnesota, Minneapolis
- N/A ESM 15-year EUR benchmark via Citi, CA, and DB
- N/A ADB 5-year global Euro via Citi, CA and GS
- N/A Germany SoFFin GBP500 mln 1% 2022 bond via BAML, RBC and TD
FX Beat
DXY: The dollar index rebounded from its lowest level in more than a week as hopes for an easing of global trade tensions boosted U.S. bond yields higher. The greenback against a basket of currencies trades 0.05 percent up at 92.72, having touched a low of 92.24 on Monday, its lowest since May 2. FxWirePro's Hourly Dollar Strength Index stood at 180.20 (Highly Bullish) by 0500 GMT.
EUR/USD: The euro consolidated near 2-week peak after European Central Bank policymaker Francois Villeroy de Galhau stated that the central bank could give fresh guidance on the timing of its first rate hike as the end of its exceptional bond purchases approaches. The European currency traded 0.1 percent down at 1.1917, having touched a high of 1.1996 the day before, its highest since May. 3. FxWirePro's Hourly Euro Strength Index stood at 35.88 (Neutral) by 0500 GMT. Investors’ attention will remain on series of economic data from the Eurozone economies and Eurozone preliminary gross domestic product, ahead of the U.S. retail sales and Fed officials' speeches. Immediate resistance is located at 1.2000, a break above targets 1.2084 (May 1 Low). On the downside, support is seen at 1.1843 (May 10 Low), a break below could drag it till 1.1800.
USD/JPY: The dollar rose against the Japanese yen as the benchmark 10-year U.S. Treasury yield edged up about 1 basis point to 3.001 percent, after rising 2 basis points on Monday. The major was trading 0.2 percent up at 109.88, having hit a high of 110.01 last week, its highest since May. 2. FxWirePro's Hourly Yen Strength Index stood at -109.24 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. retail sales and Fed officials' speeches. Immediate resistance is located at 110.03 (May 2 High), a break above targets 110.48 (Feb. 2 High). On the downside, support is seen at 109.42 (10-DMA), a break below could take it lower 108.78 (Apr. 25 Low).
GBP/USD: Sterling continued to consolidate within narrow ranges ahead of UK unemployment and wages data, which could help the currency recover. Last week, the Bank of England kept rates on hold and cut the central bank's economic growth and inflation projections for this year and next sending the major even further lower. Sterling traded 0.1 percent down at 1.3542, having hit a low of 1.3460 on Thursday, it’s lowest since Jan. 11. FxWirePro's Hourly Sterling Strength Index stood at -11.11 (Neutral) by 0500 GMT. Investors’ focus will remain on the UK unemployment data and Inflation Report Hearing, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3665, a break above could take it near 1.3730. On the downside, support is seen at 1.3460 (May 10 Low), a break below targets 1.3428. Against the euro, the pound was trading flat at 87.98 pence, having hit a low of 88.36 pence on Thursday, it’s lowest since May 7.
AUD/USD: The Australian dollar eased after the Reserve Bank of Australia's minutes of its May policy meeting signalled it would keep rates steady for some time as inflation and wage growth remained subdued. The Aussie trades 0.2 percent down at 0.7512, having hit a low of 0.7566 on Friday; it’s lowest since Apr. 30. FxWirePro's Hourly Aussie Strength Index stood at -56.97 (Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7472 (May 1 Low), a break below targets 0.7412 (May 9 Low). On the upside, resistance is located at 0.7582 (21-DMA), a break above could take it near 0.7620 (Apr. 24 High).
NZD/USD: The New Zealand dollar slumped to a 5-month low as prospects of an ease in U.S.-China trade tensions supported the U.S. dollar after President Donald Trump pledged to help Chinese Telecom Company. The Kiwi trades 0.2 percent down at 0.6900, having touched a low of 0.6892 earlier, its lowest level since Dec. 11. FxWirePro's Hourly Kiwi Strength Index was at -140.09 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6958 (5-DMA), a break above could take it near 0.7052. On the downside, support is seen at 0.6876, a break below could drag it below 0.6835.
Equities Recap
Asian shares tumbled as investors remained cautious about key economic and political risks, while crude oil prices held firm near 3-1/2-year highs on supply concerns.
MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.7 percent.
Tokyo's Nikkei eased 0.2 percent to 22,818.02 points, Australia's S&P/ASX 200 index fell 0.6 percent to 6,097.80 points and South Korea's KOSPI declined 0.6 percent to 2,461.42 points.
Shanghai composite index rose 0.4 percent to 3,185.77 points, while CSI300 index was trading 0.2 percent up at 3,916.31 points.
Hong Kong’s Hang Seng was trading 0.9 percent lower at 31,238.12 points. Taiwan shares shed 0.7 percent to 10,874.73 points.
Commodities Recap
Crude oil prices steadied near recent peaks as ongoing production cuts by OPEC and looming U.S. sanctions against Iran tightened the market amid strong demand. International benchmark Brent crude was trading 0.2 percent down at $78.25 per barrel by 0507 GMT, having hit a high of $78.50 on Monday, its highest since Nov. 2014. U.S. West Texas Intermediate was trading 0.2 percent down at $70.94 a barrel, after rising as high as $71.34 last week, its highest since Nov. 2014.
Gold prices declined, extending previous session losses on a firm dollar and outlook for further interest rate hikes in the United States. Spot gold eased 0.1 percent to $1,311.84 per ounce at 0533 GMT, having hit a high of $1,325.83 on Friday, their highest level since Apr. 26. U.S. gold futures for June delivery were, however, down 0.4 percent at $1,313.40 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 3.024 percent higher by 0.03 bps, while 5-year yield was 0.027 bps up at 2.879 percent.
The Japanese government bonds edged slightly lower even as investors expect to see a downward shift in the country’s first-quarter gross domestic product (GDP) data scheduled to be released later today. The yield on the benchmark 10-year JGB note, which moves inversely to its price, rose 1 basis point to 0.05 percent, the yield on the long-term 30-year note remained tad higher at 0.75 percent and the yield on short-term 1-year remained nearly flat at -0.12 percent.
The Australian government bonds slumped across the board after the Reserve Bank of Australia (RBA) in its May meeting minutes said that the next move from the central bank will be a hike, instead of an interest rate cut. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, rose 4-1/2 basis points to 2.823 percent, the yield on the long-term 30-year Note jumped 3 basis points to 3.313 percent and the yield on short-term 2-year up 2 basis points to 2.027 percent.
The New Zealand bonds closed Tuesday’s session on a mixed note as investors remain keen to watch the country’s GlobaldairyTrade (GDT) price auction and the producer price index (PPI) data for the first quarter of this year, scheduled for release today and on May 16 respectively. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, slipped 1 basis point to 2.76 percent, the yield on the long-term 20-year note jumped 2 basis points to 3.26 percent and the yield on short-term 2-year closed 1 basis point lower at 1.86 percent.
