Market Roundup
- Australian central bank to consider rate cut at June meeting - governor
- Easing Australia's mortgage rules complementary to a rate cut - c. bank governor
- Fed's Powell: U.S. inflation dynamics have shifted over the years
- BOJ's Kuroda issues fresh warning of broad fallout from trade war
- U.S. eases restrictions on Huawei; founder says U.S. underestimates Chinese firm
- Trump tells ex-White House counsel McGahn not to appear before Congress
- Singapore cuts 2019 GDP forecast as Q1 growth hits decade low
- UK's Hammond: Backing a 'no deal' Brexit means deliberately harming economy
Economic Data Ahead
- (0600 ET/1000 GMT) Great Britain May CBI Trends - Orders, -5 f'cast, -5 prev
- (1000 ET/1400 GMT) EZ May Consumer Confidence Flash, -7.7 f'cast, -7.9 prev
Key Events Ahead
- (0415 ET/0815 GMT) ECB's Pentti Hakkarainen speaks at conference in Frankfurt
- (0500 ET/0900 GMT) Riksbank's Martin Floden talks about development in payment market at Self-Service Banking Europe conference in London
- (0500 ET/0900 GMT) ECB's Luis de Guindos delivers keynote address at City Week "The International Financial Services Forum 2019" in London
- (0615 ET/1015 GMT) German Finance Minister Olaf Scholz attends discussion in the northern city of Bremen
- (0830 ET/1230 GMT) Philadelphia Fed issues Non-manufacturing Business Outlook Survey for May in Philadelphia
- (1000 ET/1400 GMT) Riksbank's Henry Ohlsson talks about development in payment market during conference "Navigating climate change and a new world order" in Copenhagen
- (1045 ET/1445 GMT) Chicago Fed's Charles Evans participates in "Policy Session 3: How Has the Housing Finance System Evolved since the Crisis and Where Is It Headed?" panel in Amelia Island
- (1200 ET/1600 GMT) Boston Fed's Eric Rosengren speaks before Economic Club of New York
FX Beat
DXY: The dollar index rallied to a 2-1/2 week peak, as U.S. Treasury yields rose after Federal Reserve Chairman Jerome Powell expressed confidence in the U.S. economy. The greenback against a basket of currencies traded 0.1 percent up at 98.04, having touched a high of 98.04 earlier, its highest since May 3. FxWirePro's Hourly Dollar Strength Index stood at 59.65 (Bullish) by 0400 GMT.
EUR/USD: The euro declined, hovering towards a 2-week trough recorded in the prior session, weighed down by Italy's rising debt and political uncertainty. Investors are likely to remain cautious ahead of the May 23-26 European parliamentary election. The European currency traded 0.05 percent down at 1.1160, having touched a low of 1.1150 on Monday, its lowest since May 3. FxWirePro's Hourly Euro Strength Index stood at -31.60 (Neutral) by 0400 GMT. Investors’ attention will remain on the Eurozone preliminary consumer confidence index, ahead of the U.S. existing home sales and speeches by Fed's Evan and Rosengren. Immediate resistance is located at 1.1218 (May 7 High), a break above targets 1.1262 (April 22 High). On the downside, support is seen at 1.1118 (April 25 Low), a break below could drag it below 1.1100.
USD/JPY: The dollar steadied near a 2-week peak, as risk sentiment improved after Washington temporarily eased trade restrictions imposed last week on China's Huawei. However, worries that the United States and China were going for a longer, costlier trade war weighed on financial markets. The major was trading 0.1 percent up at 110.17, having hit a high of 110.31 on Monday, its highest since May 7. FxWirePro's Hourly Yen Strength Index stood at -65.27 (Bearish) by 0400 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. existing home sales and speeches by Fed's Evan and Rosengren. Immediate resistance is located at 110.67 (61.8% retracement of 111.68 and 109.01), a break above targets 111.11 (78.6% retracement). On the downside, support is seen at 109.47 (May 10 Low), a break below could take it lower at 109.01 (May 14 Low).
GBP/USD: Sterling consolidated near a 4-month low, after Britain's opposition Labour Party leader Jeremy Corbyn stated that he would not support Prime Minister Theresa May's new attempt to push through her Brexit bill if it was fundamentally the same as the bill that had been defeated three times before. The major traded flat at 1.2722, having hit a low of 1.2709 on Friday; it’s lowest since Jan. 15. FxWirePro's Hourly Sterling Strength Index stood at -70.79 (Bearish) 0400 GMT. Investors’ attention will remain on the UK Industrial trends survey, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2823 (23.6% retracement of 1.3176 and 1.2709), a break above could take it near 1.2890 (38.2% retracement). On the downside, support is seen at 1.2709 (Jan. 11 Low), a break below targets 1.2668 (Jan. 15 Low). Against the euro, the pound was trading 0.1 percent up at 87.70 pence, having hit a low of 87.84 on Monday, it’s lowest since Feb. 15.
AUD/USD: The Australian dollar slumped after Reserve Bank of Australia Governor Philip Lowe said that the central bank will consider the case for lower interest rates at its June policy meeting in order to support the economy and employment growth. On Monday, the major rebounded from a 4-1/2 month low on a surprise election win by the country's conservative government. The Aussie trades 0.4 percent down at 0.6876, having hit a low of 0.6864 on Friday, it’s lowest since Jan. 3. FxWirePro's Hourly Aussie Strength Index stood at 51.71 (Bullish) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6850, a break below targets 0.6815. On the upside, resistance is located at 0.6961 (Apr. 30 High), a break above could take it near 0.7002 (May 6 High).
NZD/USD: The New Zealand dollar plunged to a 7-month trough, as analysts feel an easing by the RBA would renew pressure for even lower rates, despite the Reserve Bank of New Zealand already cutting its rates earlier this month. The Kiwi trades 0.4 percent down at 0.6510, having touched a low of 0.6510 earlier, its lowest level Oct. 26. FxWirePro's Hourly Kiwi Strength Index was at -96.02 (Slightly Bearish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6565 (10-DMA), a break above could take it near 0.6591 (May 14 High). On the downside, support is seen at 0.6474 (Oct. 4 Low), a break below could drag it below 0.6442 (Oct. 10 Low).
Equities Recap
Asian shares surged after Washington temporarily eased trade restrictions imposed last week on China's Huawei, although fears of a further escalation in tensions dented investor risk sentiment.
MSCI's broadest index of Asia-Pacific shares outside Japan rallied 0.4 percent.
Tokyo's Nikkei eased 0.2 percent to 21,251.15 points, Australia's S&P/ASX 200 index gained 0.3 percent to 6,493.10 points and South Korea's KOSPI rallied 0.5 percent to 2,067.19 points.
Shanghai composite index rose 1.2 percent to 2,904.22 points, while CSI 300 index traded 1.3 percent up at 3,664.87 points.
Hong Kong’s Hang Seng traded 0.05 percent lower at 27,774.08 points. Taiwan shares added 0.6 percent to 10,464.50 points
Commodities Recap
Crude oil prices rose on escalating tensions between the United States and Iran and on signs that producer cartel OPEC will continue withholding supply this year. International benchmark Brent crude was trading 0.2 percent higher at $72.14 per barrel by 0430 GMT, having hit a high of $73.39 on Monday, its highest since Apr, 26. U.S. West Texas Intermediate was trading 0.4 percent up at $63.41 a barrel, after rising as high as $63.79 on Monday, its highest since the May 1.
Gold prices eased, extending losses for the sixth straight session, as strong dollar diminished bullion's safe-haven appeal, although heightening U.S.-China trade tensions limited downside. Spot gold declined 0.1 percent to $1,275.61 per ounce by 0435 GMT, having touched a low of $1,273.56 on Monday, its lowest since May 3. U.S. gold futures eased 0.1 percent to $1,276.10 an ounce.
Treasuries Recap
The 10-year Treasury note yield extended its overnight rebound and hit an eight-day high of 2.428 percent.
The Japanese government bond prices were flat, with the 2-year yield and the 10-year yield unchanged at minus 0.160 percent and minus 0.050 percent, respectively. The 30-year yield was also flat at 0.540 percent
The Australian three-year bond contract was up 2.5 ticks at 98.800 after jumping from an early 98.730 low. The 10-year contract firmed 2 ticks to 98.3350.
The yields on New Zealand two-year bonds were hovering just above all-time lows at 1.40 percent.
