Market Roundup
- Divided pro-EU leaders open talks after tense election
- EU likely to start disciplinary steps vs Italy in June over debt
- Germany's SPD head proposes vote on floor leadership after election rout
- Japan says Trump's comment reflected hope for progress in trade talks by August
- Trump expects Japan's military to reinforce United States in Asia and beyond
- UK PM hopeful Gove offers free passport to EU nationals in Brexit UK
- Brexit helps New York take top finance spot from London - survey
- Canada takes a first step toward ratifying trade deal with U.S., Mexico
Economic Data Ahead
- (0400 ET/0800 GMT) EZ Apr Money-M3 Annual Growth, 4.4% f'cast, 4.5% prev
- (0500 ET/0900 GMT) EZ May Consumer Confidence Final, -6.5 f'cast, -6.5 prev
- (0500 ET/0900 GMT) EZ May Business Climate, 0.40 f'cast, 0.42 prev
- (0500 ET/0900 GMT) EZ May Economic Sentiment, 104.0 f'cast, 104.0 prev
- (0500 ET/0900 GMT) EZ May Industrial Sentiment, -4.3 f'cast, -4.1 prev
- (0500 ET/0900 GMT) EZ May Services Sentiment, 11.0 f'cast, 11.5 prev
Key Events Ahead
- N/A Roundtable with Bank of Japan's Yuko Kawai and Peoples Bank of China’s Jin Mei in London
FX Beat
DXY: The dollar index gained as Trump sought to pressure Japan to take measures to reduce its trade surplus with the United States. The greenback against a basket of currencies traded 0.05 percent up at 97.78, having touched a high of 98.37 on Thursday, its highest since May 2017. FxWirePro's Hourly Dollar Strength Index stood at -56.34 (Bearish) by 0500 GMT.
EUR/USD: The euro declined below the 1.1200 handle after the European Union parliamentary elections showed a polarisation of the 28-member block. Moreover, the selling pressure intensified after euro zone officials stated that the European Commission is likely to start disciplinary steps against Italy on June 5 over the country's rising debt and structural deficit levels. The European currency traded 0.1 percent down at 1.1182, having touched a high of 1.1215 on Monday, its highest since May 16. FxWirePro's Hourly Euro Strength Index stood at -17.92 (Neutral) by 0500 GMT. Investors’ attention will remain on the Eurozone economic sentiment, ahead of the U.S. consumer confidence. Immediate resistance is located at 1.1229 (Apr. 30 High), a break above targets 1.1262 (April 22 High). On the downside, support is seen at 1.1166 (May 16 Low), a break below could drag it below 1.1118 (April 25 Low).
USD/JPY: The dollar rose, extending previous session gains, as risk sentiment improved after Japan's Economy Minister Toshimitsu Motegi stated the U.S. President's comment probably reflected his hope for quick progress in negotiations. On Monday, Trump said that he expected the two countries to make announcements probably in August that could be beneficial for both countries on trade. The major was trading 0.05 percent up at 109.48, having hit a low of 109.27 on Friday, its lowest since May 15. FxWirePro's Hourly Yen Strength Index stood at 23.48 (Neutral) by 0500 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. consumer confidence. Immediate resistance is located at 110.11 (May 11 High), a break above targets 110.67 (May 21 High). On the downside, support is seen at 109.01 (May 13 Low), a break below could take it lower at 108.80 (Jan. 30 Low).
GBP/USD: Sterling consolidated within narrow ranges, as PM May's departure will deepen the Brexit crisis as a new leader is likely to want a more decisive split, raising the chances of a confrontation with the European Union. The major traded 0.05 percent up at 1.2685, having hit a high of 1.2747 on Monday; it’s highest since May 21. FxWirePro's Hourly Sterling Strength Index stood at -113.23 (Highly Bearish) 0500 GMT. Immediate resistance is located at 1.2774 (38.2% retracement of 1.3047 and 1.2605). a break above could take it near 1.2827 (50.0% retracement). On the downside, support is seen at 1.2647 (May 24 Low) a break below targets 1.2581 (Jan. 2 Low). Against the euro, the pound was trading 0.1 percent up at 88.20 pence, having hit a low of 88.50 on Friday, it’s lowest since Jan. 21.
AUD/USD: The Australian dollar steadied after easing from a 1-1/2 week peak in the previous session, as markets are almost fully priced for a rate cut from the Reserve Bank of Australia next week. The Aussie trades 0.1 percent up at 0.6926, having hit a high of 0.6938 on Monday, it’s highest since May 15. FxWirePro's Hourly Aussie Strength Index stood at 85.27 (Slightly Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6890 (May 20 Low), a break below targets 0.6864 (May 17 Low). On the upside, resistance is located at 0.6961 (Apr. 30 High), a break above could take it near 0.6997 (May 9 High).
Equities Recap
Asian shares surged, boosted by gains in Chinese stocks, however, broad uncertainties over trade and economic growth limited upside.
MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.3 percent
Tokyo's Nikkei surged 0.4 percent to 21,260.14 points, Australia's S&P/ASX 200 index rallied 0.5 percent to 6,484.80 points and South Korea's KOSPI gained 0.2 percent to 2,048.83 points.
Shanghai composite index rose 0.6 percent to 2,909.91 points, while CSI 300 index traded 0.9 percent up at 3,672.26 points.
Hong Kong’s Hang Seng traded 0.1 percent higher at 27,324.99 points. Taiwan shares shed 0.2 percent to 10,312.31 points
Commodities Recap
Crude oil prices rose to a 5-day peak as supply cuts led by producer cartel OPEC and U.S. sanctions on Iran's and Venezuela's fuel exports outweighed concerns about an economic slowdown. International benchmark Brent crude was trading 0.2 percent higher at $70.09 per barrel by 0452 GMT, having hit a low of $66.99 on Thursday, its lowest since Mar, 28. U.S. West Texas Intermediate was trading 0.1 percent down at $59.14 a barrel, after falling as low as $57.32 on Thursday, its lowest since the Mar. 13.
Gold prices declined after rising for three straight sessions, as the dollar rebounded from multi-week lows after the European Union parliamentary election results and amid simmering U.S.-China trade tensions. Spot gold was 0.1 percent down at $1,282.44 per ounce by 0458 GMT, having touched a high of $1,287.27 on Monday, its highest since May 17. U.S. gold futures were down 0.1 percent at $1,282.30 an ounce.
Treasuries Recap
The Japanese government bond prices edged higher, with the 20-year JGB yield easing 1 basis point to 0.320 percent, its lowest since August 2016. The 30-year yield declined 1.5 basis points to 0.490 percent.
The Australian 10-year paper now pays a record 77 basis points less than its U.S. counterpart, compared to 40 basis points less at the start of the year.
The yields on two-year New Zealand bonds touched an all-time low of 1.325 percent on Monday and 10-year paper trades at 54 basis points under Treasuries.
The Canadian government bond prices were higher across a flatter yield curve. The 10-year rose 19 Canadian cents to yield 1.594 percent, its lowest yield since March 29.
