Market Roundup
- EUR/USD 0.27%, USD/JPY 0.15%, GBP/USD 0.13%, EUR/GBP 0.16%
- DXY -0.1%, DAX 0.54%, FTSE 0.45%, Brent 0.23%, Gold 0.96%
- EU Commission says disciplinary procedure over Italy debt is warranted
- Citing trade tensions, IMF cuts China 2019 GDP growth forecast to 6.2% from 6.3%
- Chinese importers to apply for tariff waivers on U.S. goods
- Trade war, weak growth to test G20 finance leaders' economic optimism
- EZ May Markit Serv Final PMI, 52.9, 52.5 f'cast, 52.5 prev
- EZ May Markit Comp Final PMI, 51.8, 51.6 f'cast, 51.6 prev
- Germany May Markit Services PMI, 55.4, 55.0 f'cast, 55.0 prev
- Germany May Markit Comp Final PMI, 52.6, 52.4 f'cast, 52.4 prev
- Great Britain May Markit/CIPS Serv PMI, 51.0, 50.6 f'cast, 50.4 prev
- France May Markit Serv PMI, 51.5, 51.7 f'cast, 51.7 prev
- France May Markit Comp PMI, 51.2, 51.3 f'cast, 51.3 prev
- EZ Apr Producer Prices YY, 2.6%, 3.2% f'cast, 2.9% prev
- EZ Apr Producer Prices MM, -0.3%, 0.3% f'cast, -0.1% prev
- EZ Apr Retail Sales YY, 1.5%, 1.5% f'cast, 1.9% prev, 2.0% r'vsd
- South African rand volatility gauge touches near 2-month high
Economic Data Ahead
- (0815 ET/1215 GMT) Payrolls processor ADP releases U.S. employment report for the month of May. The report is expected to show that 183,000 jobs were added as compared with 275,000 jobs in April.
- (0830 ET/1230 GMT) Statistics Canada is expected to report that labor productivity rate of Canadian businesses increased by 0.3 percent for the second first after falling 0.4 percent in the previous quarter.
- (0900 ET/1300 GMT) The Markit releases Brazil's services purchasing managers' index (PMI) and composite PMI for the month of May. The services PMI fell to 49.9 and the composite PMI activity fell to 50.6 in April.
- (0945 ET/1345 GMT) Financial firm Markit releases final U.S. composite PMI for the month of May. The index posted a final reading of 50.9 in the previous month.
- (0945 ET/1345 GMT) Markit Economics reports final U.S. services PMI for the month of May. The index posted a final reading of 50.9 in April.
- (1000 ET/1400 GMT) The Institute for Supply Management (ISM) is expected to report that U.S. non-manufacturing Purchasing Managers' index rose to a final reading of 55.5 in May, similar to its previous month reading.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending May 31.
- (1400 ET/1800 GMT) The Federal Reserve issues its Beige Book, a summary of anecdotes on the health of the economy.
- N/A Chile is likely to report that economic activity rose 2.1 percent in April, compared to a rise of 1.9 percent in the month before.
Key Events Ahead
- (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 Atlant
- (0945 ET/1345 GMT) Federal Reserve Vice Chairman Richard Clarida is likely to speak on "Monetary Policy Strategy, Tools, and Communication Practices" at the Fed Listens Conference.
- (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 is scheduled to moderate "Transmission of Monetary Policy to the Economy: Beyond the Headlines" morning panel at the conference.
FX Beat
DXY: The dollar index plunged to a 7-week peak, as investors expect the U.S. central bank to cut rates as soon as next month. The greenback against a basket of currencies traded 0.1 percent down at 97.07, having touched a low of 96.92, its lowest since Apr. 17. FxWirePro's Hourly Dollar Strength Index stood at -109.24 (Highly Bearish) by 1100 GMT.
EUR/USD: The euro trimmed gains after rising to a 7-week peak earlier in the session, as a newspaper reported that the European Commission will launch disciplinary procedures with a letter stating that Italy's fiscal policy lacks prudence and could expose the nation to a shock loss of market confidence. The European currency traded 0.1 percent up at 1.1258, having touched a high of 1.1288 earlier, its highest since Apr. 18. FxWirePro's Hourly Euro Strength Index stood at 79.26 (Slightly Bullish) by 1100 GMT. 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 steadied after falling to a 5-month low in the previous session on rising expectations of a U.S. central bank interest rate cut in response to trade conflict-related risks. The major was trading 0.1 percent up at 108.28, having hit a low of 107.84 on Tuesday, its lowest since Jan. 10. FxWirePro's Hourly Yen Strength Index stood at -114.71 (Highly Bearish) by 1100 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-week peak after data showed Britain's Markit/CIPS services Purchasing Managers' Index edged up to 51.0 in May from 50.4 in April, its strongest reading in three months. The major traded 0.2 percent up at 1.2712, having hit a low of 1.2558 on Friday; it’s lowest since Jan, 3. FxWirePro's Hourly Sterling Strength Index stood at -52.68 (Bearish) 1000 GMT. 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 88.59 pence, having hit a low of 89.02 on Tuesday, it’s lowest since Jan. 15.
USD/CHF: The Swiss franc steadied after rising to a 2-1/2 month peak, supported by concerns about Italy's budget, fears over slowing growth and the risk of recession. The major trades 0.05 percent down at 0.9919, having touched a low of 0.9902 earlier; it’s lowest since Mar. 20. FxWirePro's Hourly Swiss Franc Strength Index stood at 19.38 (Neutral) by 1100 GMT. On the higher side, near-term resistance is around 0.9978 (38.2% retracement of 1.0098 and 0.9902) and any break above will take the pair to next level till 1.0121 (May 17 High). The near-term support is around 0.9894 (Mar. 20 Low), and any close below that level will drag it till 0.9820 (Dec. 20 Low).
Equities Recap
European shares gained, boosted by hopes of an interest rate cut from the Federal Reserve to prop up a slowing global economy.
The pan-European STOXX 600 index rallied 0.5 percent at 374.34 points, while the FTSEurofirst 300 gained 0.4 percent to 1,473.01 points.
Britain's FTSE 100 trades 0.5 percent up at 7,248.40 points, while mid-cap FTSE 250 surged 0.9 to 19,179.29 points.
Germany's DAX rose 0.5 percent at 12,031.54 points; France's CAC 40 trades 0.6 percent higher at 5,298.25 points
Commodities Recap
Crude oil prices rallied by more than 1 percent, boosted by a recovery in global equities on hopes of a U.S. Fed rate cut. International benchmark Brent crude was trading 1.2 percent higher at $62.21 per barrel by 1040 GMT, having hit a low of $60.19 on Tuesday, its lowest since Jan. 28. U.S. West Texas Intermediate was trading 0.6 percent up at $53.20 a barrel, after falling as low as $52.11 on Monday, its lowest since the Feb. 12.
Gold prices surged by more than 1 percent to an over 3-month high after latest comments from U.S. Fed officials lifted expectations of a cut in interest rate. Spot gold rose 1.01 percent to $1,338.27 per ounce by 1046 GMT, having touched a high of $1,338.63 earlier, its highest since Feb. 21. U.S. gold futures climbed 0.8 percent to $1,339.60 an ounce.
Treasuries Recap
The U.S. Treasuries remained narrowly mixed during the afternoon session, ahead of the country’s ADP non-farm employment data for the month of May, the ISM non-manufacturing PMI for the similar period, both scheduled to be released today by 12:15GMT and 14:00GMT respectively. The yield on the benchmark 10-year Treasury yield hovered around 2.124 percent, the super-long 30-year bond yields surged nearly 2 basis points to 2.622 percent and the yield on the short-term 2-year slipped nearly 1 basis point to 1.865 percent.
The United Kingdom’s gilts gained during European session despite a better-than-expected result in the country’s services PMI for the month of May, released, early today. The yield on the benchmark 10-year gilts, suffered 2 basis points to 0.882 percent, the super-long 30-year bond yields slumped 2-1/2 basis points to 1.468 percent and the yield on the short-term 2-year traded nearly 1-1/2 basis points lower at 0.593 percent.
The German bunds remained flat during European session after the country’s services PMI for the month of May exceeded market expectations, while investors will keep a close eye on the European Central Bank’s (ECB) monetary policy decision, scheduled to be unveiled on June 6 at 11:45GMT for further detailed direction in the debt market. The German 10-year bond yields, which move inversely to its price, hovered around -0.205 percent, the yield on 30-year note traded flat at 0.407 percent and the yield on short-term 2-year too traded nearly steady at -0.652 percent.
The Australian government bond gained during early Asian session after first-quarter gross domestic product (GDP) growth came weaker than expected, confirming the dovish stance taken by RBA Governor Phil Lowe. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slipped nearly 1/5 basis point to 1.500 percent, the yield on the long-term 30-year bond also dipped 1 basis point to 2.165 percent and the yield on short-term 2-year traded plunged 2-1/2 basis points to 1.105 percent.
