Market Roundup
- EUR/USD -0.18%, USD/JPY flat, GBP/USD -0.35%, EUR/GBP +0.17%
- DXY +0.15%, DAX -0.38%, FTSE +0.33, Gold flat
- Merkel says Euro is ‘too weak,' makes German products cheaper
- In Israel, Trump says there is "rare opportunity" for peace
- Germany, France: low inflation, imbalances make eurozone vulnerable
- Japan Apr trade surplus (Yen) 481.7 bln vs forecast 520.7 bln, last 614.7 bln
- Saudi energy minister due in Iraq to discuss extension to oil output cuts; Brent +0.75%
- China's favored trade deal in focus at Asian meeting
- Germany, France: low inflation, imbalances make eurozone vulnerable
- Germany's Schaeuble pushes back in Greece debt relief row
Economic Data Ahead
- (0830 ET/1230 GMT) The Federal Reserve Bank of Chicago will release its Chicago Fed National Activity Index (CFNAI) for the month of April. The index stood at 0.08 in the prior month.
- (0900 ET/1300 GMT) Mexico releases data on its gross domestic product (GDP) growth in the first quarter. The economy grew at a rate of 0.7 percent in the fourth quarter.
Key Events Ahead
- (1005 ET/1405 GMT) Federal Reserve Bank of Philadelphia President Patrick Harker speaks on "The Link Between Physical and Economic Wellbeing" before a Jefferson College of Health Professions and Jefferson College of Pharmacy Commencement Ceremony in Philadelphia.
- (1030 ET/1430 GMT) Minneapolis Fed chief Neel Kashkari will give brief welcome remarks before the first conference of the Opportunity and Inclusive Growth Institute in Minneapolis.
- (1145 ET/1545 GMT) FedTrade Operation 15-year Fannie Mae / Freddie Mac (max $525 mn)
- (1930 ET/2330 GMT) Federal Reserve Board Governor Lael Brainard speaks on "The Roles of Opportunity and Inclusion in Strengthening the U.S. Economy".
- (2110 ET/0110 GMT) Federal Reserve Bank of Chicago will release the text of President Charles Evans' prepared remarks to the "Symposium on OTC Derivatives" at the 58th Shanghai Clearing House Forum on Policy and Practice-Default Management in Shanghai, China.
FX Beat
DXY: The dollar tumbled to a multi-month trough versus the euro as improving economic prospects for Europe weakened dollar bulls’ sentiment. The greenback against a basket of currencies traded 0.1 percent down at 97.01, having hit a low of 96.94 earlier, it’s lowest since Nov. 9. FxWirePro's Hourly Dollar Strength Index stood at -127.58 (Highly Bearish) by 0500 GMT.
EUR/USD: The euro rallied to a fresh 6- 1/2 month high as the greenback tumbled to multi-week lows following the comments from the German Chancellor Merkel on the European currency. However, the upside appears limited as investors turn cautious ahead of Trump’s Welcome address in Israel. The major traded 0.2 percent up 1.1233, having touched a high of 1.1236 earlier, its highest since Nov. 9. FxWirePro's Hourly Euro Strength Index stood at 141.07 (Highly Bullish) by 1100 GMT. On the lower side, any break below will drag the pair down till 1.1020 (resistance turned into support)/1.1000/1.0950/ 1.0830 (200- day MA). The near term resistance is around 1.12990 high made on Nov 2019 and any breaking above the top formed will take it till 1.1360/1.1400.
USD/JPY: The dollar steadied above the 111.00 handle as investors’ awaited speeches from the FOMC member L. Brainard, Philly Fed P. Harker and Minneapolis Fed N.Kashkari for further clues on the Fed interest rate outlook. The major traded 0.1 percent up at 111.43, having touched a low of 110.23 on Thursday, its lowest since Apr 25. FxWirePro's Hourly Yen Strength Index stood at -79.22 (Slightly Bearish) by 1100 GMT. The major finds strong support at weekly 200-SMA at 110.56. On the upside, close above 50-DMA at 111.41 could see pullback up to 112.15.
GBP/USD: Sterling declined below the 1.3000 handle following the UK PM Theresa May's comments to walk away from the negotiations if the country faces such €100 billion massive separation bill as claimed by the EU officials. Moreover, renewed worries over the Brexit negotiations will continue to weigh on market sentiment. Sterling trades 0.3 percent down at 1.2989, having hit a high of 1.3047 on Thursday, its strongest since Sept. 29. FxWirePro's Hourly Sterling Strength Index stood at -88.11 (Slightly Bearish) by 1100 GMT. On the higher side, any close above 1.3050 confirms bullish continuation and a jump till 1.3088/13120 likely. The major support is around 1.2965 (resistance turned into support) and any break below will drag the pair down till 1.2900/1.2860. Against the euro, the pound traded 0.6 percent down at 86.47 pence, having hit a fresh 1-1/2 month low of 86.48 earlier.
USD/CHF: The Swiss franc rose to a fresh 6-1/2month high as growing geopolitical tensions in the U.S. and the Eurozone strengthened demand for safe-haven assets. The major slumped 0.2 percent to 0.9705, having hit a fresh low of 0.9700 earlier, its weakest since Nov 9. FxWirePro's Hourly Swiss Franc Strength Index stood at 130.04 (Highly Bullish) by 1100 GMT. The near term major support is around 0.9705 (50% retracement of 0.90719 and 1.03436) /0.9640. On the higher side, near term resistance is around 0.9850 (89 W EMA) and any break above will take it till 0.9900/0.9960 (200- day MA).The pair is neutral phase for the long term and it should break above 1.03435 for further bullishness.
AUD/USD: The Australian dollar rose to a 2-week high as a rebound in oil and copper prices supported the bid tone around the major. The Aussie trades 0.3 percent up at 0.7469, having hit an early high of 0.7473, it’s strongest since May. 3. FxWirePro's Hourly Aussie Strength Index stood at 55.06 (Bullish) by 1100 GMT. On the lower side, near term support is around 0.7385 (61.8% retracement of 0.71599 and 0.77493) and any close below will drag the pair till 0.7325/0.7300. The near term resistance is around 0.7470 (daily Kijun-Sen) and any close above targets 0.7520 (89 day EMA).
Equities Recap
European shares tumbled in early trade as growing political uncertainty in Spain, Britain and Brussels weighed on investors sentiment.
The pan-European STOXX 600 index fell 0.1 percent to 390.91 points, while the FTSEurofirst 300 index lost 0.1 percent to 1,536.63 points.
Britain's FTSE 100 trades 0.4 percent up at 7,501.70 points, while mid-cap FTSE 250 rallied 0.4 percent to 19,891.80 points.
Germany's DAX declined 0.5 percent at 12,575.55 points; France's CAC 40 trades 0.05 percent lower at 5,321.83 points.
Commodities Recap
Crude oil prices rallied to a fresh 1-month high, strengthened by confidence that OPEC and other exporters will this week agree to extend supply curbs. International benchmark Brent crude was trading 0.5 percent up at $54.07 per barrel by 1044 GMT, having hit a high of $54.14 earlier, its strongest since Apr. 19. U.S. West Texas Intermediate gained 0.4 percent to $51.12 a barrel, after rising as high as $51.23, its highest since Apr. 19.
Gold prices gained as political turmoil surrounding U.S. President Donald Trump strengthened the metal's safe-haven appeal. Spot gold rose 0.1 percent $1,256.12 per ounce, as of 1048 GMT, having slumped from on a near 3-week high on Thursday. U.S. gold futures were up 0.1 percent at $1,254.70 an ounce.
Treasuries Recap
The U.S. Treasuries lost ground ahead of the Federal Open Market Committee (FOMC) member Harker and Kashkari’s scheduled speech later in the day. The yield on the benchmark 10-year Treasury, rose nearly 1 basis point to 2.5 percent, the super-long 30-year bond yields traded flat at 2.90 percent and the yield on short-term 2-year note plunged 1-1/2 basis points to 1.29 percent.
The UK gilts remained mixed as investors wait to watch the country’s Prime Minister Theresa May speak later in the day. The yield on the benchmark 10-year gilts, traded flat at 1.09 percent, the super-long 30-year bond yields climbed nearly 1/2 basis point to 1.72 percent while the yield on the short-term 2-year traded nearly 1 basis point lower at 0.11 percent.
The German bunds traded narrowly mixed ahead of a meeting of the Eurogroup ministers later in the day. The yield on the benchmark 10-year bond, hovered around 0.38 percent, the long-term 30-year bond yields rose 1 basis point to 1.21 percent while the yield on short-term 2-year bond traded nearly 1 basis point lower at -0.68 percent.
The Australian bonds traded range-bound as investors remain aloof from major trading activity amid signs of possible muted session as market lacks release of any influential data. The yield on the benchmark 10-year Treasury note, rose 1/2 basis point to 2.50 percent, the yield on 15-year note hovered around 2.91 percent and the yield on short-term 1-year crawled nearly 1/2 basis point higher at 1.63 percent.
