Market Roundup
- EUR/USD -0.09%, USD/JPY 0.14%, GBP/USD -0.28%, EUR/GBP 0.14%
- DXY 0.11%, DAX 0.4%, FTSE 0.65%, Brent 0.2%, Gold 0.08%
- Nationalists surge in EU Parliament vote, but pro-EU parties remain dominant
- Euro holds after pro-Europe parties retain majority in election
- Trump presses Japan over trade gap, expects 'good things' from North Korea
- UK's Nigel Farage demands a seat at Brexit talks
- China's industrial profits shrink in April, add to pressure on economy
- Gold rises to 1-week high as U.S.-China trade worries persist
Economic Data Ahead
- No major economic data releases
Key Events Ahead
- No significant event scheduled
FX Beat
DXY: The dollar index rebounded after falling 1-1/2 week low earlier in the session on downbeat U.S. economic data that stoked hopes for a rate cut from the Federal Reserve. The greenback against a basket of currencies traded 0.1 percent up at 97.73, having touched a high of 98.37 on Thursday, its highest since May 2017. FxWirePro's Hourly Dollar Strength Index stood at -66.83 (Bearish) by 1100 GMT.
EUR/USD: The euro plunged from an 11-day peak as investors focused on the European Parliament elections where a two-party coalition of the conservative European People's Party (EPP) and the Socialists (S&D) lost their combined majority as a result of a surge in support for liberals, the Greens and eurosceptic nationalists. The European currency traded 0.1 percent down at 1.1191, having touched a high of 1.1215 earlier, its highest since May 16. FxWirePro's Hourly Euro Strength Index stood at -10.60 (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 1.1166 (May 16 Low), a break below could drag it below 1.1118 (April 25 Low).
USD/JPY: The dollar rebounded from a 1-1/2 week low as risk sentiment slightly improved, after U.S. President Donald Trump tweeted on Sunday that much of the trade negotiation would wait until after Japan's election in July. The major was trading 0.2 percent up at 109.48, having hit a high of 110.67 on Tuesday, its highest since May 7. FxWirePro's Hourly Yen Strength Index stood at 57.26 (Bearish) by 1100 GMT. Investors’ will continue to track the broad-based market sentiment, as U.S. markets remain closed on account of Memorial Day. Immediate resistance is located at 110.11 (May 11 High), a break above targets 110.67 (May 21 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 eased below the 1.2700 handle on news that British Prime Minister Theresa May is likely to be succeeded by a Eurosceptic leader, potentially increasing the chances of a no-deal Brexit. The major traded 0.2 percent down at 1.2685, having hit a high of 1.2747 earlier; it’s highest since May 21. FxWirePro's Hourly Sterling Strength Index stood at -67.03 (Bearish) 1100 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 1.2647 (May 24 Low) a break below targets 1.2581 (Jan. 2 Low). Against the euro, the pound was trading 0.1 percent down at 88.20 pence, having hit a low of 88.50 on Friday, it’s lowest since Jan. 21.
USD/CHF: The Swiss franc eased after rising to a 6-week peak the prior session on escalating trade tensions between the United States and China. The major trades 0.4 percent up at 1.0051, having touched a low of 1.0008 on Friday; it’s lowest since Apr. 12. FxWirePro's Hourly Swiss Franc Strength Index stood at 67.03 (Bullish) by 1000 GMT. On the higher side, near-term resistance is around 1.0084 (Mar. 13 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 rallied following confirmation of merger talks between Fiat Chrysler and Renault, while investors assessed the results of the EU Parliament elections.
The pan-European STOXX 600 index surged 0.2 percent at 376.57 points, while the FTSEurofirst 300 index rallied 0.8 percent to 1,483.38 points.
Germany's DAX rose 0.5 percent at 12,069.57 points; France's CAC 40 trades 0.2 percent higher at 5,325.59 points.
Commodities Recap
Crude oil prices declined as concern over the U.S.-China trade dispute and global economic outlook offset support from Middle East tensions and supply cuts. International benchmark Brent crude was trading 0.6 percent lower at $68.88 per barrel by 1036 GMT, having hit a low of $66.99 on Thursday, its lowest since Mar, 28. U.S. West Texas Intermediate was trading 0.9 percent down at $58.52 a barrel, after falling as low as $57.32 on Thursday, its lowest since the Mar. 13.
Gold prices rallied to a 10-day peak as trade tensions between the United States and China weakened investors risk appetite. Spot gold rose 0.1 percent to $1,286.08 per ounce by 1040 GMT, having touched a high of $1,287.27 earlier, its highest since May 17. U.S. gold futures were 0.2 percent higher at $1,285.60 an ounce.
Treasuries Recap
The U.S and UK markets remain closed today on observance of Memorial Day and Spring Bank Holiday respectively.
The German bunds slightly gained during European trading session amid a muted session that witnessed data of little economic significance. Investors shall be looking forward to the country’s unemployment data for the month of May and short-term 5-year auction, both scheduled for May 29 by 07:55GMT for further direction in the debt market. The German 10-year bond yields, which move inversely to its price, slipped 1-1/2 basis points to -0.132 percent, the yield on 30-year note suffered nearly 2 basis points to 0.521 percent and the yield on short-term 2-year remained flat at -0.632 percent
The Japanese government bonds closed lower tracking a similar movement in the U.S. Treasuries at the close of last Friday amid improvement in risk sentiments as the country prepares for a trade talk with U.S. President Donald Trump post the Japan elections in July. At close, the yield on the benchmark 10-year JGB note, which moves inversely to its price, remained tad higher at -0.070 percent, the yield on the long-term 30-year edged 1/2 basis point higher to 0.505 percent and the yield on short-term 2-year hovered around -0.154 percent.
The Australian government bonds suffered during Asian session of the first trading day of the week tracking a rebound in risk sentiments after the United States President Donald Trump hinted at “great progress” over the trade talks with China and also that a trade deal with Japan could come after the latter’s July elections. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose nearly 1-1/2 basis points to 1.550 percent, the yield on the long-term 30-year bond jumped nearly 3 basis points to 2.221 percent and the yield on short-term 2-year also gained nearly 3 basis points to 1.142 percent.
