Market Roundup
- EUR/USD 0.08%, USD/JPY 0.06%, GBP/USD 0.01%, EUR/GBP 0.09%
- DXY -0.04%, DAX 0.57%, FTSE 0.43%, Brent -0.22%, Gold -0.21%
- Taking aim at U.S., China says provoking trade disputes is 'naked economic terrorism'
- Kill off spectre of no-deal Brexit, UK's Hammond warns next PM
- BOJ policymaker warns against 'reckless' easing to reach price goal
- Bank of England's Ramsden sees slower growth than BoE forecast
- China's slower monetary growth can meet needs of economy - PBOC official
- Brexit nerves sets pound on track for biggest monthly drop in a year
- Dollar set for 4th consecutive monthly rise on trade tensions
- Gold falls as dollar, bonds emerge as preferred safe haven bets
- Turkish lira jumps after Trump-Erdogan call raises hopes of a thaw
Economic Data Ahead
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 4,000 to a seasonally adjusted 215,000 for the week ended May 24, while continuing claims for the week ended May 17 is expected to decline to 1.662 million from a previous reading of 1.676 million.
- (0830 ET/1230 GMT) The U.S. Commerce Department is expected to report that preliminary gross domestic product increased at a 3.1 percent annual rate in the fourth quarter, compared to previous estimation of 3.2 percent.
- (0830 ET/1230 GMT) The U.S. Census Bureau is likely to report that preliminary wholesale inventories rose 0.2 percent in March after posting a fall of 0.1 percent in February.
- (0830 ET/1230 GMT) The United States releases goods trade balance data for the month of March. The economy recorded a trade deficit of $71.33 billion in the previous month.
- (0830 ET/1230 GMT) The U.S. Commerce Department releases the preliminary personal consumption expenditures (PCE) price index for the first quarter. The index is expected to rise 0.6 percent, while core PCE is likely to increase 1.3 percent after posting similar gains in the previous quarter.
- (0830 ET/1230 GMT) Statistics Canada is likely to report that current account deficit widened to C$18.00 billion in the first quarter from C$15.48 billion in the previous quarter.
- (1000 ET/1400 GMT) The National Association of Realtors is likely to report that U.S. pending home sales increased 0.9 percent in April after rising 3.8 percent in March.
- (1000 ET/1400 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending May 24.
- (1000 ET/1400 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending May 24.
- N/A Bank of Mexico publishes the minutes of its latest monetary policy meeting.
Key Events Ahead
- (1200 ET/1600 GMT) Federal Reserve Vice Chairman Richard Clarida speaks on "Sustaining Maximum Employment and Price Stability" before the Economic Club of New York, in New York.
- (1430 ET/1830 GMT) Bank of Canada Senior Deputy Governor Carolyn Wilkins speaks at Calgary Chamber of Commerce
- N/A U.S. Vice President Mike Pence will travel to Ottawa to meet with Prime Minister Justin Trudeau.
FX Beat
DXY: The dollar index surged, hovering towards a 2-year peak hit last week, as investors awaited the U.S. second estimate of first-quarter gross domestic product growth figures and U.S. weekly jobless claims for further clues on the strength of the economy. The greenback against a basket of currencies traded flat at 98.16, having touched a high of 98.24, its highest since May 23. FxWirePro's Hourly Dollar Strength Index stood at 64.52 (Bullish) by 1000 GMT.
EUR/USD: The euro rebounded after falling to a 1-week low earlier in the session on worries about a clash between Italy and the European Union over Rome's fiscal stance. Moreover, data showing Spain's consumer prices rose at their lowest rate in 16 months in May further dented the bid tone around the major. The European currency traded 0.05 percent up at 1.1136, having touched a high of 1.1215 on Monday, its highest since May 16. FxWirePro's Hourly Euro Strength Index stood at -57.42 (Bearish) by 1000 GMT. Immediate resistance is located at 1.1174 (5-DMA), a break above targets 1.1229 (Apr. 30 High). On the downside, support is seen at 1.1118 (April 25 Low), a break below could drag it below 1.1100.
USD/JPY: The dollar rallied to a 1-week peak as the yield on the benchmark 10-year Treasury yield jumped 2-1/2 basis points to 2.262 percent from a 20-month low of 2.210 percent recorded on Wednesday. The major was trading 0.1 percent up at 109.69, having hit a low of 109.14 on Wednesday, its lowest since May 14. FxWirePro's Hourly Yen Strength Index stood at 49.94 (Neutral) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. unemployment benefit claims, preliminary gross domestic product, wholesale inventories, good trade balance, flash personal consumption expenditures, pending home sales and Fed Clarida's speech. Immediate resistance is located at 109.96 (May 16 High), a break above targets 110.36 (May 23 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 tumbled to a 1-week low after Bank of England Deputy Governor Dave Ramsden stated that Britain's economy is likely to grow less than the BoE forecast earlier this month as Brexit uncertainty dampened investment and productivity. The major traded 0.05 percent down at 1.2625, having hit a low of 1.2611 earlier; it’s lowest since May 23. FxWirePro's Hourly Sterling Strength Index stood at -17.12 (Neutral) 1000 GMT. Investors’ attention will remain on the U.S. fundamental drivers, ahead of UK GfK Consumer Confidence. Immediate resistance is located at 1.2691 (10-DMA), a break above could take it near 1.2747 (May 27 High). On the downside, support is seen at 1.2581 (Jan. 2 Low), a break below targets 1.2529 (Dec. 18 Low). Against the euro, the pound was trading flat at 88.17 pence, having hit a low of 88.50 on Friday, it’s lowest since Jan. 21.
USD/CHF: The Swiss franc slumped to a 1-week low, as investor risk-appetite slightly improved following a rebound in the European equity markets. The major trades 0.1 percent up at 1.0093, having touched a low of 1.0008 on Friday; it’s lowest since Apr. 12. FxWirePro's Hourly Swiss Franc Strength Index stood at -124.79 (HIghly Bearish) by 1000 GMT. On the higher side, near-term resistance is around 1.0121 (May 17 High) and any break above will take the pair to next level till 1.0158 (May 10 High). The near-term support is around 1.0050 (May 14 Low), and any close below that level will drag it till 0.9997 (April 12 Low).
Equities Recap
European shares rebounded from a 3-month low, boosted by gains in media index, while the euro eased on uncertainty surrounding the euro zone economy and the bloc's political future.
The pan-European STOXX 600 index surged 0.4 percent at 372.10 points, while the FTSEurofirst 300 index rallied 0.4 percent to 1,465.44 points.
Britain's FTSE 100 trades 0.5 percent up at 7,224.45 points, while mid-cap FTSE 250 gained 0.8 to 19,096.02 points.
Germany's DAX rose 0.6 percent at 11,906.78 points; France's CAC 40 trades 0.4 percent higher at 5,244.58 points
Commodities Recap
Crude oil prices plunged over 1 percent amid growing concerns that the U.S.-China trade war will trigger an economic downturn. International benchmark Brent crude was trading 1.2 percent lower at $68.81 per barrel by 1029 GMT, having hit a high of $70.57 on Tuesday, its highest since May 23. U.S. West Texas Intermediate was trading 0.1 percent down at $58.99 a barrel, after falling as low as $56.87 on Wednesday, its lowest since the Mar. 12.
Gold prices slumped to a 1-week low as the greenback hovered near a 2-year high, amid escalating U.S.-China trade tensions that rekindled doubts about global economic growth. Spot gold was trading 0.3 percent down at $1,275.92 per ounce by 1031 GMT, having touched a high of $1,287.27 on Monday, its highest since May 17. U.S. gold futures edged 0.5 percent lower to $1,274.70 an ounce.
Treasuries Recap
The U.S. Treasury yields jumped during the afternoon session, ahead of the country’s gross domestic product (GDP) for the first quarter of this year, scheduled to be released today by 12:30GMT, besides, the initial jobless claims and FOMC member Clarida’s speech, also due later in the day. The yield on the benchmark 10-year Treasury yield jumped 2-1/2 basis points to 2.262 percent, the super-long 30-year bond yields gained nearly 1-1/2 basis points to 2.685 percent and the yield on the short-term 2-year surged 2-1/2 basis points to 2.105 percent.
The United Kingdom’s gilts gained during European session amid a muted trading session that witnessed data of little economic significance ahead of the departure of Prime Minister Theresa May on June 7. The yield on the benchmark 10-year gilts, surged nearly 2 basis points to 0.911 percent, the super-long 30-year bond yields rose nearly 1-1/2 basis points to 1.503 percent and the yield on the short-term 2-year jumped nearly 3-1/2 basis points to 0.628 percent.
The German bunds slipped during European trading session tracking a slight rebound in the United States Treasury yields and a comeback in global stock indices, amid an otherwise muted trading session that witnessed data of little economic significance. The German 10-year bond yields, which move inversely to its price, edged nearly 1 basis point higher to -0.167 percent, the yield on 30-year note rose 1-1/2 basis points to 0.481 percent and the yield on short-term 2-year traded flat at -0.645 percent.
The Australian government bond yields rebounded during Asian session after falling below the Reserve Bank of Australia’s (RBA) cash rate of 1.5 percent. However the rise in yields will be limited as markets is pricing a 25 basis points rate cut in the central bank’s June monetary policy meeting. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 4-1/2 basis points to 1.536 percent, the yield on the long-term 30-year bond gained over 4 basis points to 2.197 percent and the yield on short-term 2-year up 3-1/2 basis points to 1.149 percent.
