Market Roundup
- EUR/USD -0.03%, USD/JPY -0.04%, GBP/USD -0.02%, EUR/GBP 0.02%
- DXY 0.04%, DAX -1.37%, FTSE -1.33%, Brent -2.08%, Gold 0.29%
- China ready to hit back at U.S. with rare earths - newspapers
- No-deal Brexit tangled: UK House of Commons Speaker Bercow pledges to stay on
- ECB worries about high debt, weak banks, property bubble
- After Baoshang rescue, China central bank pours cash into banking system
- Germany May Unemployment Change SA, 60k, -8k f'cast, -12k prev
- Germany May Unemployment Rate SA, 5.0%, 4.9% f'cast, 4.9% prev
- France Q1 GDP Detailed QQ, 0.3%, 0.3% f'cast, 0.3% prev
- France Apr Consumer Spending MM, 0.8%, 0.4% f'cast, -0.1% prev, -0.3% r'vsd
- France May CPI (EU Norm) Prelim YY, 1.1%, 1.2% f'cast, 1.5% prev
- Italy May Consumer Confidence, 111.8, 110.0 f'cast, 110.5 prev, 110.6 r'vsd
- Russia to consider extending oil output cut with OPEC -deputy PM
- Oil prices drop as trade war worries outweigh supply disruptions
Economic Data Ahead
- (1000 ET/1400 GMT) Federal Reserve Bank of Richmond will publish its Manufacturing Index for May. The index posted a rise of 3 in the prior month.
- (1730 ET/2130 GMT) API reports its weekly crude oil stock.
Key Events Ahead
- (1000 ET/1400 GMT) Bank of Canada will meet to announce its benchmark interest rate, where it is expected to hold interest rates at 1.75 percent.
- (1700 ET/2100 GMT) Reserve Bank of New Zealand holds Financial Stability Report media conference in Wellington
FX Beat
DXY: The dollar index rallied to a 1-week peak, amid prospects of a prolonged standoff between the United States and China and the likelihood of Europe and Japan getting dragged in. The greenback against a basket of currencies traded 0.1 percent up at 98.03, having touched a high of 98.04 earlier, its highest since May 23. FxWirePro's Hourly Dollar Strength Index stood at 46.78 (Neutral) by 1000 GMT.
EUR/USD: The euro plunged to a 1-week low after data showed German unemployment rose unexpectedly in May for the first time in nearly two years, indicating a slowdown is spilling over to the labour market. The selling pressure around the major intensified after the European Central Bank highlighted the risks to financial stability, with the eurozone economy already stumbling this year. The European currency traded 0.1 percent down at 1.1155, having touched a low of 1.1149 earlier, its lowest since May 23. FxWirePro's Hourly Euro Strength Index stood at -9.73 (Neutral) by 1000 GMT. 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 1.1142 (May 21 Low), a break below could drag it below 1.1118 (April 25 Low).
USD/JPY: The dollar slumped to a 2-week low as concerns of a further escalation in the trade conflict between the United States and China sent investors seeking safety in safe-haven assets. Earlier in the day, Chinese newspapers warned Beijing was ready to use its supply of rare earths for leverage in its trade war with the United States. The major was trading 0.05 percent down at 109.32, having hit a low of 109.14, its lowest since May 14. FxWirePro's Hourly Yen Strength Index stood at 80.08 (Slightly Bullish) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the Richmond Fed manufacturing index. Immediate resistance is located at 109.74 (May 24 High), a break above targets 110.11 (May 11 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 declined, hovering towards a near 5-month low recorded last week, as investors remained cautious after Britain's Prime Minister Theresa May said she will step down on June 7, triggering a race to replace her. The major traded 0.1 percent down at 1.2643, having hit a low of 1.2650 earlier; it’s lowest since May 24. FxWirePro's Hourly Sterling Strength Index stood at -44.37 (Neutral) 1000 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 1.2605 (May 23 Low) a break below targets 1.2570 (Dec.17 Low). Against the euro, the pound was trading 0.05 perent lower at 88.23 pence, having hit a low of 88.50 on Friday, it’s lowest since Jan. 21.
USD/CHF: The Swiss franc surged as investors flocked to perceived safe havens assets amid growing fears about trade and global growth. The major trades 0.1 percent down at 1.0063, having touched a low of 1.0008 on Friday; it’s lowest since Apr. 12. FxWirePro's Hourly Swiss Franc Strength Index stood at 51.77 (Bullish) by 1000 GMT. On the higher side, near-term resistance is around 1.0098 (May 23 High) and any break above will take the pair to next level till 1.0124 (May 7 High). The near-term support is around 0.9997 (April 12 Low), and any close below that level will drag it till 0.9977 (Apr. 8 Low).
Equities Recap
European shares tumbled to 10-week lows as Chinese newspapers warned Beijing was ready to use its supply of rare earths in the trade dispute with the United States.
The pan-European STOXX 600 index plunged 1.3 percent at 371.01 points, while the FTSEurofirst 300 index slumped 1.2 percent to 1,461.52 points.
Britain's FTSE 100 trades 1.3 percent down at 7,175.13 points, while mid-cap FTSE 250 eased 1.0 to 19,014.73 points.
Germany's DAX fell 1.3 percent at 11,876.91 points; France's CAC 40 trades 1.7 percent lower at 5,223.91 points.
Commodities Recap
Crude oil prices slumped by more than 2 percent as China signalled it would use the rare earths card in its trade war with the United States, triggering fears that an ongoing dispute could dent crude demand. International benchmark Brent crude was trading 2.05 percent lower at $68.70 per barrel by 1019 GMT, having hit a high of $70.57 on Tuesday, its highest since May 23. U.S. West Texas Intermediate was trading 2.04 percent down at $57.85 a barrel, after falling as low as $57.32 on Thursday, its lowest since the Mar. 13.
Gold prices rose as signs of an escalating trade war made investors risk-averse, however, a strong dollar limited upside. Spot gold was trading 0.3 percent at $1,283.15 per ounce by 1022 GMT, having touched a high of $1,287.27 on Monday, its highest since May 17. U.S. gold futures were up 0.3 percent at $1,280.80 an ounce.
Treasuries Recap
The U.S. Treasury yields continued to slump during the afternoon session, following the negative tone around the trade war, fueled by reports that China will use its dominance of rare earths as a response to higher tariffs imposed by the former amid burgeoning concerns over a slowing global economy. The yield on the benchmark 10-year Treasury yield slumped nearly 3-1/2 basis points to 2.236 percent, the super-long 30-year bond yields also suffered 3-1/2 basis points to 2.673 percent and the yield on the short-term 2-year too traded nearly 3-1/2 basis points lower at 2.085 percent.
The German bunds gained during European trading session after investors turned gloomy following a disappointing jobless report for the month of May, while eyes still remain on the upcoming retail sales data for the month of April, due to be released on May 31 by 06:00GMT for further direction in the debt market. The German 10-year bond yields, which move inversely to its price, slipped nearly 1-1/2 basis points to -0.165 percent, the yield on 30-year note also edged 1-1/2 basis points lower to 0.479 percent and the yield on short-term 2-year traded flat at -0.645 percent.
The Japanese government bond yields plunged at close, tracking a similar movement in the United States counterpart amid a fresh round of trade tensions worldwide. The yield on the benchmark 10-year JGB note, which moves inversely to its price, plummeted 9-1/2 basis points to close at a fresh low of -0.095 percent, the yield on the long-term 30-year edged 1-1/2 basis points lower to 0.479 percent and the yield on short-term 2-year plunged 17 basis points to -0.173 percent.
The Australian government bonds gained during Asian session as risk sentiment continued to be fragile after U.S. President Donald Trump said that he wasn’t ready to make a deal with China, which pushed the benchmark 10-year yield to a new low of 1.492 percent. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slipped 5-1/2 basis points to 1.492 percent (a fresh low), the yield on the long-term 30-year bond suffered over 6 basis points to 2.156 percent and the yield on short-term 2-year dipped 2-1/2 basis points to 1.116 percent.
