Market Roundup
- Trump trade war may push Fed closer to rate cut it resisted
- Trump defies own party to push ahead with Mexican tariff threat
- U.S.'s Mnuchin to meet with Chinese central banker at G20 gathering
- Ex-Trump aide Hicks agrees to hand over campaign documents to Congress
- U.S. shared nuclear power info with Saudi Arabia after Khashoggi killed
- China May Caixin Services PMI, 52.7, 54.5 prev
- Australia May AIG Services Index, 52.5, 46.5 prev
- Australia Q1 Real GDP YY SA, 1.8%, 1.8% f'cast, 2.3% prev
- RBNZ official sees rates at current levels in foreseeable future
- Japan May Services PMI, 51.7, 51.8 prev
Economic Data Ahead
- (0350 ET/0750 GMT) France May Markit Serv PMI, 51.7 f'cast, 51.7 prev
- (0350 ET/0750 GMT) France May Markit Comp PMI, 51.3 f'cast, 51.3 prev
- (0400 ET/0800 GMT) EZ May Markit Serv Final PMI, 52.5 f'cast, 52.5 prev
- (0400 ET/0800 GMT) EZ May Markit Comp Final PMI, 51.6 f'cast, 51.6 prev
- (0430 ET/0830 GMT) Great Britain May Markit/CIPS Serv PMI, 50.6 f'cast, 50.4 prev
- (0430 ET/0830 GMT) Great Britain May Reserve Assets Total (USD), 171,971.37 mln
- (0500 ET/0900 GMT) EZ Apr Producer Prices YY, 3.2% f'cast, 2.9% prev
- (0500 ET/0900 GMT) EZ Apr Retail Sales YY, 1.5% f'cast, 1.9% prev
Key Events Ahead
- (0400 ET/0800 GMT) Dave Ramden, Bank of England Deputy Governor, speaks in London
- (0445 ET/0845 GMT) Bank of England hosts "Last orders for Libor" event in London
- (0500 ET/0900 GMT) Lyndon Nelson, Bank of England Deputy CEO, speaks in London
- (0545 ET/0945 GMT) Former ECB's chief economist Peter Praet speaks in Brussels
- (0830 ET/1230 GMT) Federal Reserve Bank of Chicago President Charles Evans speaks in Chicago
- (0945 ET/1345 GMT) Federal Reserve Bank of Atlanta President Raphael Bostic speaks in Atlanta
- (1000 ET/1400 GMT) Senate Committee holds hearing on the renomination of Michelle Bowman to a full term on the Federal Reserve Board of Governors
- (1115 ET/1515 GMT) Federal Reserve Bank of Boston President Eric Rosengren speaks in Chicago
- (1400 ET/1800 GMT) Federal Reserve to issue Beige Book of economic condition
FX Beat
DXY: The dollar index slumped to a near 7-week trough after Federal Reserve Chairman Jerome Powell hinted at the possibility of an interest rate cut to counter the risks posed by a global trade war and other developments. The greenback against a basket of currencies traded 0.1 percent down at 97.05, having touched a low of 97.00 on Tuesday, its lowest since Apr. 18. FxWirePro's Hourly Dollar Strength Index stood at -95.16 (Slightly Bullish) by 0400 GMT.
EUR/USD: The euro rallied, hovering towards a near 7-week peak hit in the previous session, as investors await the European Central Bank policy decision on Thursday, where it is expected to provide banks with new longer-term refinancing operations, loans at super low, probably negative interest rates. The European currency traded 0.1 percent up at 1.1259, having touched a high of 1.1277 on Tuesday, its highest since Apr. 18. FxWirePro's Hourly Euro Strength Index stood at 8.49 (Neutral) by 0400 GMT. Investors’ attention will remain on a series of data from the Eurozone economies, EZ producer price index and retail sales, ahead of the U.S. ADP employment change, service PMI from both Markit and ISM and Fed Clarida's speech. Immediate resistance is located at 1.1304 (Apr. 18 High), a break above targets 1.1344 (March 15 High). On the downside, support is seen at 1.1210 (Apr. 8 Low), a break below could drag it below 1.1183 (April 2 Low).
USD/JPY: The dollar consolidated near a 5-month low recorded in the previous session after U.S. President Donald Trump said that he would likely go ahead with new tariffs on imports from Mexico to pressure it to curb on rising numbers of migrants entering the United States. The major was trading flat at 108.08, having hit a low of 107.84, its lowest since Jan. 10. FxWirePro's Hourly Yen Strength Index stood at -9.39 (Neutral) by 0400 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. ADP employment change, service PMI from both Markit and ISM and Fed Clarida's speech. Immediate resistance is located at 108.64 (38.2% retracement of 109.92 and 107.85), a break above targets 109.13 (61.8% retracement). On the downside, support is seen at 107.77 (Jan. 10 Low), a break below could take it lower at 107.51 (Jan. 4 Low).
GBP/USD: Sterling surged to a 1-1/2 week peak but concerns about a disorderly departure from the European Union on Oct. 31 limited the upside. The major traded 0.1 percent up at 1.2707, having hit a low of 1.2558 on Friday; it’s lowest since Jan, 3. FxWirePro's Hourly Sterling Strength Index stood at -78.98 (Slightly Bearish) 0400 GMT. Investors’ attention will remain on the UK service purchasing manager index and BoE Ramsden's speech, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2747 (May 27 High), a break above could take it near 1.2798 (May 17 High). On the downside, support is seen at 1.2647 (May 24 Low), a break below targets 1.2580 (May 30 Low). Against the euro, the pound was trading flat at 88.62 pence, having hit a low of 89.02 earlier, it’s lowest since Jan. 15.
AUD/USD: The Australian dollar rallied to a 3-1/2 week peak after domestic gross domestic product figures showed the economy grew 0.4 percent in the three months ended March, double the 0.2 percent recorded in the fourth quarter. The Aussie trades 0.1 percent up at 0.6996, having hit a high of 0.7004 earlier, it’s highest since May 10. FxWirePro's Hourly Aussie Strength Index stood at 50.51 (Bearish) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6935 (May 14 Low), a break below targets 0.6881 (May 24 Low). On the upside, resistance is located at 0.7029 (May 2 High), a break above could take it near 0.7061 (May 1 High).
NZD/USD: The New Zealand dollar advanced to a 1-month high after Reserve Bank of New Zealand Assistant Governor Christian Hawkes stated that the RBNZ's central view is that interest rates would remain broadly around current levels in the short term. The Kiwi trades 0.4 percent higher at 0.6632, having touched a high of 0.6636 earlier, its highest level May 3. FxWirePro's Hourly Kiwi Strength Index was at 119.21 (Highly Bullish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6653 (May 3 High), a break above could take it near 0.6685 (Apr. 30 High). On the downside, support is seen at 0.6550 (May 15 Low), a break below could drag it below 0.6474 (Oct. 4 Low).
Equities Recap
Asian shares surged, while the greenback eased after U.S. central bank comments pointed to increasing prospects of an interest rate cut.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.5 percent.
Tokyo's Nikkei rallied 1.8 percent to 20,776.39 points, Australia's S&P/ASX 200 index surged 0.5 percent to 6,361.00 points and South Korea's KOSPI gained 0.1 percent to 2,068.71 points.
Shanghai composite index rose 0.8 percent to 2,886.46 points, while CSI 300 index traded 0.9 percent up at 3,630.31 points.
Hong Kong’s Hang Seng traded 0.7 percent higher at 26,955.54 points. Taiwan shares added 0.4 percent to 10,465.46 points
Commodities Recap
Crude oil prices steadied after declining to a 4-month low in the previous session on a surprise gain in U.S. inventories. International benchmark Brent crude was trading 0.3 percent higher at $61.65 per barrel by 0410 GMT, having hit a low of $60.19 on Tuesday, its lowest since Jan. 28. U.S. West Texas Intermediate was trading 0.4 percent up at $53.12 a barrel, after falling as low as $52.11 on Monday, its lowest since the Feb. 12.
Gold prices rose, hovering towards a 3-month peak touched in the previous session, as the greenback weakened by increasing expectations the U.S. Federal Reserve will cut interest rates to counter risks from trade wars. Spot gold was 0.1 percent up at $1,326.49 per ounce by 0417 GMT, having touched a high of $1,328.95 on Tuesday, its highest since Feb. 27. U.S. gold futures were 0.2 percent higher at $1331.01 an ounce.
Treasuries Recap
The Australian three-year bond futures were 1 tick higher at 98.890, while the 10-year contract held steady at 98.4850.
The Canadian government bond prices were lower across a steeper yield curve, with the two-year down 5 Canadian cents to yield 1.386 percent and the 10-year falling 53 Canadian cents to yield 1.474 percent. On Monday, the 10-year yield hit its lowest since June 2017 at 1.419 percent.
