Market Roundup
- Top N. Korea envoy to hold crucial talks in U.S. about summit
- Chinese state media slam U.S. trade announcement, say Beijing ready to fight
- U.S. to shorten length of visas for some Chinese citizens -White House
- Delays and 'poison pills': team Trump runs out of road in NAFTA talks
- Italy may return to polls in July, sources say, amid market rout
- New Zealand central bank sees risks from domestic debt, global markets
- New Zealand c.bank says no evidence to warrant banking inquiry
- New Zealand Apr Building Consents, -3.7%, f'cast 14.7%, last 13.0%
- Japan Apr Retail Sales YY, 1.6%, f'cast 1.0%, last 1.0%
- Australia's Apr Building Approvals, -5.0%, f'cast -3.0%, last 2.6%, rvsd 3.5%
- Australia's Apr Private House Approvals, 0.1%, last 1.1%, rvsd 1.6%
Economic Data Ahead
- (0400 ET/0800 GMT) Germany May Unemployment Chg SA, f'cast -10k, last -7k
- (0400 ET/0800 GMT) Germany May Unemployment Rate SA, f'cast 5.3%, last 5.3%
- (0500 ET/0900 GMT) EZ May Business Climate, f'cast 1.30, last 1.35
- (0500 ET/0900 GMT) EZ May Economic Sentiment, f'cast 112.1, last 112.7
- (0500 ET/0900 GMT) EZ May Industrial Sentiment, f'cast 6.7, last 7.1
- (0500 ET/0900 GMT) EZ May Services Sentiment, f'cast 14.5, last 14.9
- (0500 ET/0900 GMT) EZ May Consumer Confid. Final, f'cast 0.2, last 0.3
- (0800 ET/1200 GMT) Germany May CPI Prelim YY, f'cast 2.0%, last 1.6%
- (0800 ET/1200 GMT) Germany May HICP Prelim YY, f'cast 1.8%, last 1.4%
Key Events Ahead
- (1000 ET/1400 GMT) Bank of Canada key policy interest rate announcement and monetary policy report
- (1400 ET/1800 GMT) U.S. Federal Reserve issues its Beige Book on economic condition
FX Beat
DXY: The dollar index slightly eased from a 6-1/2 month peak hit in the previous session on news that the United States would continue pursuing actions on trade with China. The greenback against a basket of currencies trades 0.1 percent down at 94.72, having touched a high of 95.03 the day before, its highest since Nov. 7. FxWirePro's Hourly Dollar Strength Index stood at 55.45 (Bullish) by 0500 GMT.
EUR/USD: The euro consolidated near 6-1/2 month lows touched in the prior session, as Italy's political crisis deepened, raising the likelihood of an early election that might serve as a quasi-referendum on Italy's role in the European Union and Eurozone. The European currency traded 0.05 percent up at 1.1540, having touched a low of 1.1510 on Tuesday, its lowest since Jul. 20. FxWirePro's Hourly Euro Strength Index stood at -48.21 (Neutral) by 0400 GMT. Investors’ attention will remain on German retail sales, consumer price index, Eurozone economic sentiment indicator and developments surrounding the Italian political environment, ahead of U.S. gross domestic product price index, wholesale inventories, goods trade balance and personal consumption expenditure prices. Immediate resistance is located at 1.1645 (5-DMA), a break above targets 1.1716 (10-DMA). On the downside, support is seen at 1.1479 (Jul. 20 Low), a break below could drag it till 1.1434 (Jul. 17 Low).
USD/JPY: The dollar slumped, extending losses for the third straight session, as an escalation in trade frictions between the United States and China, and Italy's political crisis triggered risk-off sentiment across the board. the On Tuesday, the major tumbled to an over 1-month low after White House said that it still holds the threat of imposing tariffs on $50 billion of imports from China unless Beijing addresses the issue of theft of American intellectual property. The pair was trading 0.2 percent down at 108.56, having hit a low of 108.11 the day before, its lowest since May 8. FxWirePro's Hourly Yen Strength Index stood at 97.33 (Slightly Bullish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. gross domestic product price index, wholesale inventories, goods trade balance, and personal consumption expenditure prices. Immediate resistance is located at 109.36 (5-DMA), a break above targets 110.22. On the downside, support is seen at 108.11 (May 29 Low), a break below could take it lower 107.65 (Apr. 23 Low).
GBP/USD: Sterling hovered near a 6-month low against the dollar on renewed concerns about whether Britain can secure the Brexit deal and as expectations of a Bank of England interest rate rise receded. However, it rose to a 1-month peak versus the euro on worries about a deepening political crisis in Italy. Sterling traded 0.05 percent up at 1.3247, having hit a low of 1.3204 on Tuesday, it’s lowest since Nov. 28. FxWirePro's Hourly Sterling Strength Index stood at -0.13 (Neutral) by 0400 GMT. Investors’ attention will remain on the U.S. fundamental drivers, amid a lack of economic data from the UK docket. Immediate resistance is located at 1.3318 (5-DMA), a break above could take it near 1.3390 (10-DMA). On the downside, support is seen at 1.3169 (Nov. 17 Low), a break below targets 1.3135 (Nov. 16 Low). Against the euro, the pound was trading 0.1 percent down at 87.10 pence, having hit a high of 86.97 pence on Tuesday, it’s highest since Apr. 27.
AUD/USD: The Australian dollar tumbled to a 2-week low after data showed domestic housing activity slowed in April with approvals to build new homes down more than expected. The economy's building approvals declined 5 percent in April, against expectations for a fall of 3 percent, however, they were still up about 2 percent annually. The Aussie trades 0.05 percent down at 0.7499, having hit a low of 0.7479 earlier; it’s lowest since May 16. FxWirePro's Hourly Aussie Strength Index stood at -66.20 (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 0.7546 (5-DMA), a break above could take it near 0.7682(Apr. 23 High)/0.7605 (May 22 High).
NZD/USD: The New Zealand dollar rebounded from a near 2-week low hit earlier in the day after the Reserve Bank of New Zealand said in its twice-yearly financial stability report that the country's banking system could withstand a decline in home prices, as the real estate market begins to show signs of cooling after years of robust growth. The Kiwi trades 0.3 percent up at 0.6919, having touched a low of 0.6882, its lowest level since May 18. FxWirePro's Hourly Kiwi Strength Index was at 22.51 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6974, a break above could take it near 0.7030. On the downside, support is seen at 0.6872, a break below could drag it below 0.6835.
Equities Recap
Asian shares tumbled, while the euro plunged to a 10-month low as Italy's political crisis rippled across financial markets, sending investors rushing to safe-haven assets.
MSCI's broadest index of Asia-Pacific shares outside Japan slumped 1.5 percent.
Tokyo's Nikkei declined 1.5 percent to 22,018.52 points, Australia's S&P/ASX 200 index dropped 0.5 percent to 5,984.70 points and South Korea's KOSPI plunged 1.7 percent to 2,416.74 points.
Shanghai composite index fell 1.8 percent to 3,063.63 points, while CSI300 index was trading 1.3 percent down at 3,747.69 points.
Hong Kong’s Hang Seng was trading 1.4 percent higher at 30,050.52 points. Taiwan shares shed 1.3 percent to 10,821.17 points.
Commodities Recap
Crude oil prices declined amid concerns that Saudi Arabia and Russia will pump more crude in the second half of the year in response to counter potential supply shortfalls from Venezuela and Iran. International benchmark Brent crude was trading 0.3 percent up at $75.19 per barrel by 0506 GMT, having hit a low of $74.46 on Monday, its lowest since May 8. U.S. West Texas Intermediate was trading 0.2 percent up at $66.69 a barrel, after falling as low as $65.83 on Monday, its lowest since Apr. 17.
Gold prices rose as political turmoil in Italy and concerns over Sino-U.S. trade conflict boosted safe-haven appeal. Spot gold was 0.05 percent higher at $1,298.38 per ounce by 0508 GMT, having hit a high of $1,307.65 on Friday, its highest price level since May 15. U.S. gold futures for June delivery were nearly unchanged at $1,298.80 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.838 percent higher by 0.069 bps, while 5-year yield was 0.08 bps up at 2.656 percent.
The Japanese government bonds hovered around yesterday’s lows during late Asian session as demand for safe-haven instruments shot up globally, tracking deepening political fears over Italy and other geopolitical tensions. The yield on the benchmark 10-year JGB note, which moves inversely to its price, slipped 1 basis point to 0.02 percent, the yield on the long-term 30-year note slumped 2 basis points to 0.70 percent and the yield on short-term 2-year traded tad lower at -0.14 percent.
The Australian 10-year government bond yield worsened performance to near 2-month low as investors bumped into safe-haven assets on deepening fears over the global geopolitical situations as Italy faces an intense political crisis, evolving from the hung Parliament, a result of the March elections. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, plunged 8-1/2 basis points to 2.63 percent, the yield on the long-term 30-year Note also slumped 8-1/2 basis points to 3.18 percent and the yield on short-term 3-year traded nearly 5 basis points down at 2.08 percent.
The New Zealand bonds joined the global chorus for safe-haven demand at the time of closing, tracking a similar movement in the U.S. counterpart, as Italy’s political matter started getting worse and hence, investors shifted to risk-averse assets like debt papers. 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 slumped 2 basis points to 3.27 percent and the yield on short-term 2-year closed 2-1/2 basis points lower at 1.88 percent.
The Canadian government bond prices were higher across the yield curve in sympathy with U.S. Treasuries on a flight to quality. The two-year rose 17 Canadian cents to yield 1.848 percent and the 10-year climbed 103 Canadian cents to yield 2.188 percent. The 10-year yield touched its lowest intraday since April 11 at 2.165 percent.
