Market Roundup
- USD/JPY -0.04%, EUR/USD +0.11%, GBP/USD -0.14%, AUD/USD +0.9%
- DXY +0.02%, DAX -0.2%, Brent -0.4%, Iron -0.30%, Gold +0.5%
- Germany Apr Retail sales 2.3% y/y vs 0.6% revised previous, 1.9% exp
- Germany May S/adj jobless rate 6.1% vs 6.2% previous, 6.2% exp
- EZ Apr Money supply 4.6% vs 5.0% previous, 5.0% exp
- EZ flash May Infl. -0.1% y/y vs -0.2% previous, -0.1% exp
- EZ Apr Jobless rate 10.2% vs 10.2% previous, 10.2% exp
- Japan Lower Hse defeats no-confidence motion vs Abe’s cabinet
- Earthquake centered off N.East Taiwan measures 7.2 magnitude
- Fed, China fears force investors to check out of Asia
- Japan FinMin Aso – Japan hasn’t given up on fiscal consolidation
- LDP’s Tanigaki – PM Abe to make sales tax announcement Wed
- Australia's Q1 c/a def. A$20.8 bln, 19.5 bln exp, net exports GDP impact +1.1%
Economic Data Preview
- (0830 ET/1230 GMT) Personal income for April is expected to rise at a same rate as March's reading, when it gained 0.4 percent.
- (0830 ET/1230 GMT) The U.S. Commerce Department releases the personal consumption expenditures (PCE) price index for the month of April. The index stood at 0.1 percent in the prior month. The core PCE is likely to have increased 0.2 percent in April. It rose 1.6 percent in the 12 months through March, after advancing 1.7 percent in February.
- (0830 ET/1230 GMT) Personal spending is likely to rise 0.6 percent in the month of April, after edging up 0.1 percent in March.
- (0830 ET/1230 GMT) Canada's gross domestic product for the first quarter is expected to grow to a 2.9 percent annualized rate in a rebound from a weak fourth quarter.
- (0900 ET/1300 GMT) The S&P/Case Shiller composite index of 20 metropolitan areas is expected to have increased 5.1 percent in March compared to 5.4 percent rise in February.
- (1000 ET/1400 GMT) The Conference Board will release its U.S. consumer confidence index for the month of May. The index is expected to come in at 96.0 from a reading of 94.2 in April.
- (1630 ET/2030 GMT) API reports its weekly crude oil stock.
- (1930 ET/2330 GMT) Australian Industry Group releases its performance of manufacturing index for the month of May. The index stood at 53.4 in April.
Key Events Ahead
- (0745 ET/1145 GMT) FedTrade Ops 30-year Ginnie Mae max $1.400 bln.
FX Beat
USD: The dollar index, against a basket of currencies, stood at 95.56, within the range of 2-month high and on track for its best month since November.
EUR/USD: The euro gained 0.2 percent to 1.1162, recovering from a low of 1.1122 hit earlier in the session. The major strengthened after eurozone's preliminary consumer price index and unemployment rate stood in-line with market consensus. Eurozone's preliminary consumer price index for May came in at 0.8 percent in-line with consensus and surpassing previous 0.7 percent. The unemployment rate stayed unchanged at 10.2 percent. Markets now await U.S. personal consumption expenditure report for further momentum. The short term trend is slightly weak as long as 1.1180 (200 Day HMA) holds. Any break above 1.1180 will take the pair to next level at 1.12168/1.12427 (May 23 High). On the lower side major support is around 1.1100 and break below targets 1.1050/1.1000.
USD/JPY: The Japanese yen edged up to 111.02, having touched a high of 110.79 earlier in the session, however, still within the sight of 1-month low of 111.44 . The greenback was on track to post its best month in 1-1/2-years, having gained around 4.5 percent since the start of May. The major touched an early high of 111.35, before declining to its current levels. The resistance is around 111.50 and break above will take the pair till 112/112.80. On the lower side major support is around 110.40 and any break below will drag the pair till 110/109.65/109. The pair should close below 108 for further weakness.
GBP/USD: Sterling was weighed down by month-end selling and after a poll showed Britain's support to stay in European Union declining, adding to rising uncertainty about next month's referendum. An ORB poll for the Daily Telegraph showed support for the "In camp" was at 51 percent, five points ahead of the "leave camp", however, down from a 13-point lead a week ago. Sterling trades 0.2 percent lower at 1.4612, having declined to a low of 1.4568, from a high of 1.4723. Against the euro, the pound was trading 0.3 percent lower at 76.34 pence, pulling away from a high of 75.72 struck earlier in the session. Cable‘s upside momentum once again capped at 1.4723 and it has been struggling to break May month’s high 1.4769 and also 200 day MA. Any further bullishness only above 1.4770 level. Any indicative break above will take the pair till 1.48500/1.4900 in short term. The minor resistance is around 1.46650 and break above will target next level at 1.4700/1.4740 level. Any violation below 1.4600 will drag the pair down till 1.4550/1.4480 level.
USD/CHF: The Swiss franc extended gains against the dollar, trading 0.2 percent higher at 0.9901. The greenback continues to decline for the session consecutive session, hovering towards an early low of 0.9898, however, within the sight of 0.9955 high struck on Monday. On the lower side major support is around 0.9870 (10 DMA) and any break below will drag the pair till 0.9835 (200 day MA)0.9780/0.9760 (21 DMA). Immediate resistance is at 0.9960 and break above targets 0.9980/1.000.
AUD/USD: The Australian dollar rose from 3-month lows on upbeat building permits and current account balance data. The Aussie trades 1.1 percent higher at 0.7265, pulling away from a low of 0.7145 touched last week. However, the major is likely to post a 5 percent drop this month, recording its biggest decline in nearly a year. Markets attention will now shift towards U.S. personal consumption expenditure data, ahead of Australia's gross domestic product report. On the higher side any break above major resistance will take the pair till 0.7300/0.7336. The major support is around 0.7180 and break below will drag the pair till 0.7150/0.710.
NZD/USD: The New Zealand dollar rose 0.8 percent to 0.6751, drifting away from a low of 0.6675, struck in the previous session. The kiwi strengthened after a survey by ANZ showed that New Zealand consumer confidence had risen moderately. The major continues to rise, hovering towards sessions high of 0.6756. Immediate resistance is located at 0.6766 (May-26 High), break above could take the pair to 0.6773/0.6781. On the lower side, support is seen at 0.6687 (Session Low).
Equities Recap
European shares traded in the negative territory, however, the region's stock markets were set for their best monthly performance since late 2015.
The pan-European STOXX 600 and FTSEurofirst 300 indexes were both down by 0.4 percent, although both also remained on track for their third consecutive month of gains and their best month since last November. Germany's DAX and France's CAC 40 both lost 0.3 pct, while Britain's FTSE 100 edged down 0.1 pct.
Tokyo's Nikkei gained 0.98 pct at 17,234.98, Australia's S&P/ASX 200 index lost 0.48 pct at 5,381.90 points and MSCI's broadest index of Asia-Pacific shares outside Japan was flat and set to end the month down 1.9 percent.
Shanghai composite index rose 3.3 pct at 2,916.62 points, while CSI300 index gained 3.4 pct at 3,169.56 points. HK’S Hang Seng index added 0.9 pct at 20,815.09 points.
Commodities Recap
Brent crude prices rose despite rising output from the Middle East and ahead of an OPEC meeting later this week, while U.S. crude edged higher as the summer driving season began. Brent crude oil futures were at $50.07 a barrel by 1052 GMT, while U.S. West Texas Intermediate crude oil futures traded 10 cents higher at $49.43 a barrel.
Gold edged up after declining to a 3-1/2 month low in the previous session; however, it remained on track for its biggest monthly decline since November. Spot gold was up 0.5 percent at $1,211.30 per ounce as of 1054 GMT.
Treasuries Recap
The U.S. Treasuries slumped as investors cooled on safe-haven instruments after U.S. Federal Reserve Chairwoman Janet Yellen signalled an interest-rate rise was likely coming soon. The yield on the benchmark 10-year Treasury note rose more than 4 basis points to 1.877 percent and the yield on the short-term 2-year bonds also jumped 4 basis points to 0.923 percent by 10:50 GMT. Markets now look ahead to a considerably greater flow of data in the holiday-shortened week ahead, highlighted by the May employment report on Friday. From a labor market standpoint, the bar is not particularly high in terms of what is needed in order to keep the Fed on track for a possible summer rate hike. However, should an upside surprise be seen in non-farm payrolls, we anticipate it could go a long way in further locking in market expectations for such a move. Tuesday's focus will be on the PCE report and Chicago PMI.
The European bonds plunged after May consumer inflation data showed that euro-area deflation eased in May. Also, investors shifted from safe-haven buying after Federal Reserve Chair Yellen said on Friday that tighter monetary policy in the U.S. is warranted if economic data continue to improve. The benchmark German 10-year bonds yield, which moves inversely to its price rose 2 basis points to 0.186 percent, French 10-year bunds yield climbed 2 basis points to 0.523 percent, Irish 10-year bonds yield moved up 3 basis points to 0.819 percent, Italian equivalents inched up 2 basis points to 1.385 percent, Netherlands 10-year bonds yield jumped 2 basis points to 0.397 percent, Portuguese 10-year bonds yield up 2 basis points to 3.089 percent, Spanish 10 year bonds yield ticked higher 1 basis point to 1.500 percent and British 10-year bonds yield rose 5basis points to 1.487 percent by 10:15 GMT. The markets will now focus on European Central Bank (ECB) June interest rate decision on Thursday.
The Japanese government bonds traded nearly flat, despite Prime Minister Shinzo Abe's decision to delay a planned sales tax hike until October 2019, raised questions over how the central bank's massive debt purchase program is affecting the country's fiscal discipline. The yield on the benchmark 10-year bonds, which moves inversely to its price, hovered at -0.0111 marks and the yield on short-term 2-year bonds dipped ½ basis points to -0.235 percent by 06:15 GMT.
The UK gilts plunged as investors appear to have concluded that the UK will vote to stay in the European Union in June. Also, investors drove-out from safe haven after Federal Reserve Chief Janet Yellen suggested that an interest rate hike could be around the corner. The yield on the benchmark 10-year bonds, which moves inversely to its price, moved higher 4 basis points to 1.477 percent and the yield on the short-term 2-year bonds also climbed 3 basis points to 0.491 pct by 08:55 GMT.
The Australian bonds slumped following encouraging economic data. Also, fixed income securities were less lucrative in the wake of better expectations of Q1 GDP, which further weighed on possibilities for a June rate cut. The yield on the benchmark 10-year Treasury note which moves inversely to its price rose more than 3 basis points to 2.317 percent and short-term 2-year bonds yield climbed more than 4 basis points to 1.704 percent by 05:20 GMT.
