Market Roundup
- EUR/USD 012%, USD/JPY -0.26%, GBP/USD 0.06%, EUR/GBP 0.07%
- DXY -0.09%, DAX .74%, FTSE 0.64%, Brent 0.78%, Gold 0.44%
- ECB may give euro zone economy a small shot in the arm
- IMF sees euro as undervalued, ECB policy support necessary -document
- Trump threatens China with tariffs on further $300 billion of goods
- UK PM candidate Gove: rushed no-deal Brexit would give Labour's Corbyn power
- Rich economies must heed policy impact on emerging nations-Carney
- EZ Q1 GDP Revised YY, 1.2%, 1.2% f'cast, 1.2% prev
- EZ Q1 GDP Revised QQ, 0.4%, 0.4% f'cast, 0.4% prev
- EZ Q1 Employment Final YY, 1.3%, 1.3% f'cast, 1.3% prev
- Germany Apr Industrial Orders MM, 0.3%, 0.1% f'cast, 0.6% prev, 0.8% r'vsd
- BOJ's Kuroda warns of potential dangers from excessive credit growth
- China c.bank steps up liquidity support for more banks after Baoshang takeover
- Italy needs significant deficit correction in 2019, 2020-Dombrovskis
- Gold climbs towards 2019 highs on expectation of Fed rate cut
Economic Data Ahead
- (0830 ET/1230 GMT) The United States releases trade balance figures for the month of April. The economy's trade deficit is expected to have expanded to $50.7 billion from 50.0 billion in March.
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have increased to a seasonally adjusted 215,000 for the week ended May 31, while continuing claims for the week ended May 24 is expected to rise to 1.660 million from a previous reading of 1.657 million.
- (0830 ET/1230 GMT) The U.S. Labor Department will release labor costs report for the first quarter. The indicator is expected to decline 0.8 percent after posting a drop of 0.9 percent in the previous quarter.
- (0830 ET/1230 GMT) The U.S. Labor Department is likely to report that non-farm productivity edged higher 3.5 percent in the first quarter, after rising to 3.6 percent in the previous quarter.
- (0830 ET/1230 GMT) Statistics Canada is likely to report that international trade deficit narrowed to C$2.80 billion in April from C$3.21 billion in March.
- (1000 ET/1400 GMT) The Richard Ivey School of Business releases Canada's seasonally adjusted Ivey Purchasing Managers Index for the month of May. The index posted a reading of 55.9 in the prior month.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending May 31.
Key Events Ahead
- (0840 ET/1240 GMT) Federal Reserve Bank of Dallas President Robert Kaplan participates in moderated Q&A session before 14th Annual Carroll School of Management Finance Conference in Chestnut Hill
- (1300 ET/1700 GMT) Federal Reserve Bank of New York President John Williams speaks before C. Peter McColough Series on International Economics organized by Council on Foreign Relations in New York
FX Beat
DXY: The dollar index eased as benchmark U.S. yields declined sharply this week to 21-month lows amid growing expectations of a U.S. interest rate cut and worries over Washington's trade conflict with its partners. The greenback against a basket of currencies traded 0.1 percent down at 97.24, having touched a low of 96.75 on Wednesday, its lowest since Mar. 27. FxWirePro's Hourly Dollar Strength Index stood at -134.64 (Highly Bearish) by 1000 GMT.
EUR/USD: The euro surged, hovering back towards a 7-week peak recorded in the previous session as investors prepared to scrutinize a European Central Bank meeting. ECB President Mario Draghi is certain to maintain a dovish tone though, leaving open the possibility of more stimulus. The European currency traded 0.1 percent up at 1.1235, having touched a high of 1.1306 on Wednesday, its highest since Apr. 17. FxWirePro's Hourly Euro Strength Index stood at 91.55 (Slightly Bullish) by 1000 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 1.1201 (May 14 Low), a break below could drag it below 1.1183 (April 2 Low).
USD/JPY: The dollar declined against the Japanese yen, weighed down by a lack of progress in U.S.-Mexico trade talks and heightened prospects of the Federal Reserve cutting interest rates. The major was trading 0.3 percent down at 108.19, having hit a low of 107.81 on Wednesday, its lowest since Jan. 10. FxWirePro's Hourly Yen Strength Index stood at -64.99 (Bearish) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. trade balance, unemployment benefit claims, nonfarm productivity, and speeches from Fed officials. Immediate resistance is located at 108.62 (38.2% retracement of 109.92 and 107.81), a break above targets 109.11 (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 consolidated below a 1-week peak after a Reuters survey showed the British pound would weaken considerably against both the dollar and euro if Britain left the European Union without a deal. The major traded 0.1 percent up at 1.2689, having hit a high of 1.2743 on Wednesday; it’s highest since May 27. FxWirePro's Hourly Sterling Strength Index stood at -22.37 (Neutral) 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 0.1 percent down at 88.51 pence, having hit a low of 89.02 on Tuesday, it’s lowest since Jan. 15.
USD/CHF: The Swiss franc eased as investor risk-appetite slightly improved following a rebound in the European equity markets. The major trades 0.1 percent up at 0.9953, having touched a low of 0.9853 on Wednesday; it’s lowest since Jan. 15. FxWirePro's Hourly Swiss Franc Strength Index stood at -61.00 (Bearish) by 1000 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 surged, boosted by gains in the bank stocks and expectations of stimulus from the European Central Bank.
The pan-European STOXX 600 index rallied 0.6 percent at 376.20 points, while the FTSEurofirst 300 gained 0.7 percent to 1,482.32 points.
Britain's FTSE 100 trades 0.6 percent up at 7,266.54 points, while mid-cap FTSE 250 surged 0.1 to 19,097.13 points.
Germany's DAX rose 0.7 percent at 12,063.63 points; France's CAC 40 trades 0.6 percent higher at 5,324.90 points
Commodities Recap
Crude oil prices surged after falling to near 5-month lows in the previous session, but sentiment remained weak due to rising U.S. supply and a stalling global economy. International benchmark Brent crude was trading 0.6 percent higher at $60.91 per barrel by 1028 GMT, having hit a low of $59.42 on Wednesday, its lowest since Jan. 28. U.S. West Texas Intermediate was trading 0.05 percent up at $51.68 a barrel, after falling as low as $50.59 on Wednesday, its lowest since the Feb. 12.
Gold prices rose, hovering towards a 15-week high hit in the previous session, supported by trade worries and a possible U.S. rate cut. Spot gold was 0.5 percent up at $1,336.26 per ounce by 1026 GMT, having touched a high of $1,344.01 on Wednesday, its highest since Feb. 20. U.S. gold futures rose 0.3 percent to $1,337.20 an ounce.
Treasuries Recap
The U.S. Treasuries rose during the afternoon session, ahead of the country’s weekly initial jobless claims, scheduled to be released today by 12:30GMT and Federal Open Market Committee (FOMC) members Kaplan and Williams’ speech, due later through the day by 12:40GMT and 17:00GMT respectively, which shall add further direction in the debt market. The yield on the benchmark 10-year Treasury yield slipped 1-1/2 basis points to 2.107 percent, the super-long 30-year bond yields suffered 2 basis points to 2.612 percent and the yield on the short-term 2-year traded nearly 1-1/2 basis points lower at 1.828 percent.
The German bunds gained during European session as investors keep a close eye on the European Central Bank’s (ECB) monetary policy decision, scheduled to be unveiled today at 11:45GMT. The German 10-year bond yields, which move inversely to its price, slipped 1-1/2 basis points to -0.235 percent, the yield on 30-year note surged nearly 2 basis points to 0.391 percent and the yield on short-term 2-year traded flat at -0.661 percent.
The Australian government bond held gains during early Asian session as global trade war tensions remained an ongoing theme. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slipped nearly 2 basis point to 1.474 percent, the yield on the long-term 30-year bond also dipped over 2 basis point to 2.132 percent and the yield on short-term 2-year traded plunged about 3 basis points to 1.063 percent.
