Market Roundup
- British PM May's Brexit plans set for defeat, teeing up Wednesday showdown.
- UK economy to grow at slowest pace since 2009 - BCC.
- Japan May Exports YY, 8.1%, forecast 7.5%, last 7.8%.
- Japan May Imports YY, 14.0%, forecast 8.2%, last 5.9%.
- Japan May Trade Balance Total Yen, -578.3 bln, forecast -235.0 bln, last 626.0 bln, revised 624.6 bln.
- South Korea, U.S. to announce suspension of major military drills this week.
- Democrats, activists rally against Trump's family separation policy.
- Speculators boost bearish bets on U.S. dollar – CFTC.
- U.S. April net capital inflow $138.7 bln.
Economic Data Ahead
- (0400 ET/0800 GMT) Italy April Trade Balance EU, last 0.698 bln.
- (0400 ET/0800 GMT) Italy April Global Trade Balance, last 4.531 bln.
Key Events Ahead
- (0700 ET/1100 GMT) Riksbank general council meeting – Stockholm.
- (0900 ET/1300 GMT) Fed's Dudley participates in "Panel One: Finance, Culture and Society" - New York City.
- (1245 ET/1645 GMT) BOC's Lynn Patterson speaks at an event – Toronto.
- (1300 ET/1700 GMT) Fed's Raphael Bostic speaks on economic outlook and monetary policy - Savannah, Georgia.
- (1500 ET/1900 GMT) ECB's Mario Draghi speaks at ECB Forum on Central Banking - Sintra, Portugal.
- (1600 ET/2000 GMT) Incoming Fed New York President John Williams’s closing remarks at event - New York City.
- N/A OMFIF convenes panel discussion to analyze role of ECB and future of euro area – London.
- N/A Discussion with ECB's Jurgen Stark and Jose Manuel Gonzalez-Paramo, former members – London.
- N/A John Williams begins tenure as president of Federal Reserve Bank of New York.
FX Recap
USD: The dollar index versus a basket of six major currencies crept up 0.1 percent to 94.862. The index was close to 95.131, a peak scaled on Friday, thanks to the dollar soaring more than 1 percent last week after the U.S. Federal Reserve gave a hawkish signal on interest rates while the European Central Bank struck a dovish tone.
EUR/USD: The euro fell 0.15 percent to $1.1592, extending losses after sliding 1.3 percent the previous week after the ECB signalled it will keep interest rates at record lows well into next year. A consistent close below $1.1539 will drag the parity down towards key supports around $1.1390 and $1.1185 levels respectively. Alternatively, reversal from key support will drag the parity higher towards key resistances around $1.1724, $1.1852, $1.1938 and $1.1996 marks respectively.
USD/JPY: The Japanese yen trades marginally higher in early Asia after Japan’s trade balance data. It made intraday high at 110.73 and low at 110.30 levels. A sustained close above 111.03 is required to take the parity higher towards key resistance around 112.96 marks. Alternatively, a daily close below 110.64 will drag the parity down towards key supports around 109.24, 108.72, 107.90, 106.71 and 105.32 marks respectively.
GBP/USD: The Sterling held near seven-month lows on Friday as strong U.S. data and a hawkish Federal Reserve prompted investors to buy the greenback, while the Bank of England is expected to strike a cautious note at a review next week after some weak data. The pound edged up to $1.3290, still near to seven-month lows of $1.3205 touched late last month. Against the euro, sterling dropped 0.2 percent to 87.43 pence but remained above the 88-pence range it had traded at before the euro's selloff on Thursday. Focus shifts to the Bank of England's meeting next week and Prime Minister Theresa May's ongoing efforts to convince her colleagues about her plans for Brexit. A sustained close below $1.3249 requires for dragging the parity down towards key support around $1.3024 mark. On the other side, key resistances are seen at $1.3387 and $1.3490 levels respectively.
AUD/USD: The Aussie falls gradually against U.S. dollar and hits fresh 1-month low at $0.7425 mark. Pair made intraday high at $0.7452 and low at $0.7425 mark. Intraday bias remains neutral till the time pair holds key resistance at $0.7460 marks. Immediate support was seen at $0.7372 mark.
NZD/USD: The New Zealand dollar trades marginally higher against U.S. dollar and currently trading around $0.6948 mark. Pair made intraday high at $0.6953 and low at $0.6920 levels. A sustained close above $0.6940 is required to take the parity higher towards $0.7050 mark. Alternatively current downside movement will take the parity down towards key supports around $0.6851 levels.
Equities Recap
Japan’s Nikkei was trading 0.90 pct lower at 22,645.77 points.
Australia’s S&P/ASX 200 was trading 0.17 pct higher at 6,104.22 points.
China and Taiwan banks will remain close in observance of Dragon Boat Festival.
Hong Kong banks will remain close in observance of Tuen Ng Day.
India’s NSE Nifty was trading around 0.10 percent lower at 10,807.80 points while BSE Sensex was trading 0.06 points lower at 35,595.88 points.
South Korea’s Kospi was trading 1.08 percent lower at 2,378.55 points.
Commodities Recap
U.S. oil prices slumped on Monday after China threatened duties on American crude imports in an escalating trade dispute with Washington. U.S. West Texas Intermediate (WTI) crude futures touched their lowest level since April, falling to $63.59 per barrel before edging back to $63.83 a barrel by 0426 GMT. That was still down $1.23, or 1.9 percent, from their last settlement.
Gold prices inched higher on Monday after falling to a 5-1/2-month low in the previous session, as a trade dispute between the world's two largest economies triggered safe-haven buying, but a strong dollar put a cap on the upside. Spot gold edged up 0.1 percent to $1,279.70 per ounce by 0255 GMT. The yellow metal touched its weakest since late December at $1,275.01 an ounce on Friday. U.S. gold futures for August delivery were up 0.3 percent at $1,282.10 per ounce.
Treasuries Recap
Australian government bonds rallied on first trading day of the week Monday after the threat of a US-China trade war intensified over the weekend. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, fell 3-1/2 basis points to 2.668 percent (nearly 3-week low), the yield on the long-term 30-year Note dipped 4 basis points to 3.185 percent and the yield on short-term 2-year down 4 basis points to 2.002 percent by 04:00 GMT.
10-year U.S. treasury yield was at 2.909 percent vs U.S. close of 2.924 percent on Friday.
The Japanese government bonds remained flat during late Asian session Monday even as exports hit a 4-month high during the month of May, with investors now eyeing the 30-year auction and the Bank of Japan’s (BoJ) April monetary policy meeting minutes, scheduled for June 19 and 20 respectively. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, hovered around 0.03 percent, the yield on the long-term 30-year note flattened at 0.71 percent and the yield on short-term 2-year too traded flat at -0.13 percent by 05:20GMT.
