Market Roundup
- Sterling supported by Telegraph UK EU poll
- GBP/USD +0.6%, EUR/USD +0.05%, USD/JPY +0.45%
- DXY -0.02%, DAX +0.3%, Brent -0.22%, Iron +5.0%
- Switzerland Mar Prod. Prices -2.4% y/y vs -4.7% previous
- UK Apr CPI +0.3% y/y vs 0.5% previous, 0.5% exp
- UK Apr Core CPI +1.2% y/y vs 1.5% previous, 1.4% exp
- EZ Mar Trade Bal. E28.6 bln vs E19.0 bln previous, E22.5 bln exp
- UK TNS Poll 38% remain 41% leave, 21% undecided
- “Remain” 15 points ahead of “leave” in Brexit poll – Telegraph ORB poll
- Japan FinMin Aso – G7 to discuss ccyss, Japan attaching utmost importance
- Negative Japan GDP data seen factoring into tax hike delay – Nikkei
- Japan to struggle to overcome G7 rift on yen, fiscal policy
- RBA May 3 meeting minutes – Board considered keeping OCR on hold
- RBA concluded ease would help infl. return to tgt, lower AUD assisting econ
- Investors surge back into Aussie property mkt as election looms – Domain
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. consumer price index likely rose 0.3 percent in April, after edging up 0.1 percent in March. Excluding food and energy, the core CPI is expected to rise 0.2 percent after increasing 0.1 percent in March.
- (0830 ET/1230 GMT) The U.S. Department of Commerce is likely to report that housing starts gained to a seasonally adjusted annual pace of 1.127 million units in April, while building permits are likely to have increased to a 1.130 million units.
- (0830 ET/1230 GMT) The Statistics Canada is expected to report that manufacturing sales declined by 1.8 percent in March, adding to the previous month's decline.
- (0915 ET/1315 ET) The U.S. Industrial production is likely to rebound by 0.3 percent in April, after unexpectedly declining 0.6 percent in March.
- (1630 ET/2030 GMT) API reports its weekly crude oil stock.
- (1745 ET/2145 GMT) The Statistics New Zealand is expected to report that producer price index input and output rose by 0.3 percent and 0.4 percent respectively for the first quarter.
- (1800 ET/2200 GMT) Chile's central bank will announce its benchmark interest rate and the central bank is unlikely to move in the near future.
Key Events Ahead
- (1040 ET/1440 GMT) U.S. Treasury Secretary Jack Lew addresses the Jewish Theological Seminary Commencement Ceremony in New York.
- (1145 ET/1545 GMT) New York FedTrade 30-yr F.Mae/Fr.Mac max $2.3 bln.
- (1225 ET/1625 GMT) Federal Reserve Bank of San Francisco President John Williams and Federal Reserve Bank of Atlanta President Dennis Lockhart, give their latest views on the U.S. economic outlook.
- (1315 ET/1715 GMT) Federal Reserve Bank of Dallas President Robert Kaplan participates in a moderated question-and-answer session before a community forum hosted by the Federal Reserve Bank of Dallas in Midland, Texas.
FX Beat
USD: The dollar index, against a basket of currencies, trades falt at 94.546, within the sight of a 3-week high of 94.845 hit on Friday.
EUR/USD: The euro trades flat at 1.1320, however, away from its 2-week low of 1.1283 touched on Friday. The pair made a intra-day high of 1.1333, before declining to its current levels. The short term trend is slightly bullish as long as support 1.12500 holds. Any break below 1.1250 will drag the pair till 1.1200/1.11500. On the higher side minor resistance is around 1.13650 (21 day MA) and any break above targets 1.1400/1.1480/1.1530 level. Overall bearish invalidation is only above 1.16200.
USD/JPY: The Japanese yen trades 0.4 percent lower at 109.48 yen against the dollar as investors took a risk on stance. The greenback advanced to a high of 109.65, pulling away from a low of 108.46 touched on Monday. The minor weakness can be seen only below 108 levels. Any break below 108.40 will drag the pair down till 108/107.45 (Tenken-Sen)/106.99 (61.8% retracement of 105.54 and 109.36). On the higher side major resistance is around 109.50 and any indicative break above targets 110/110.75.
GBP/USD: Sterling advanced after a report showed that he "In" campaign held a 15-point lead over the "Out" campaign ahead of Britain's June 23 referendum on European Union membership. However, the gains were capped as the U.K. inflation readings missed forecast. The consumer prices rose 0.3 percent in April, but below forecast and compared with a year ago 0.5 percent. The British pound slipped to 1.4477 after the data was released from 1.4523 beforehand, but still up 0.5 percent on the day. Against the euro, the pound trades at 78.19 pence, having hit a 2-1/2 week high of 78.01 earlier in the session. The short term trend is bearish as long as resistance 1.4550 holds. Any indicative break above 1.4550 will take the pair to next level till 1.4600/1.4660.The minor resistance is at 1.4530, while on the lower side any break below 1.4450 will drag the pair it till 1.4400/1.43250 level.
USD/CHF: The Swiss franc trades 0.1 percent lower at 0.9785, hovering towards a low of 0.9789 and away from a peak of 0.9663. The short term trend is slightly bearish as long as resistance 0.9800 holds. On the higher side any break above 0.9800 will take the pair to next level till 0.9800/0.9850. The short term trend is reversal only above 0.9800. Any violation below 0.9720 will drag the pair down till 0.9680/0.9630.The minor support is around 0.9740.
AUD/USD: The Australian dollar gained as much as 1.2 percent against its U.S. counterpart, pulling away from a 2-1/2-month trough of 0.7244 touched on Monday. The Aussie trades 0.4 percent higher at 0.7316, reversing early session gains. The short term trend is slightly bearish as long as resistance 0.7370 (10 day EMA) holds. On the higher side major resistance is around 0.7370 and break above targets 0.7410/0.7480. The major support is around 0.7250 and break below will drag the pair till 0.7200/0.710.
NZD/USD: The New Zealand dollar trades 0.1 percent higher at 0.6795, having touched a high of 0.6840 earlier in the day, pulling away from a low of 0.6746 struck in the previous session. The kiwi was supported by ongoing rally in the oil prices. Markets now await U.S. CPI and industrial production data, ahead of Fonterra’s fortnightly dairy action result for further cues on the pair. Immediate resistance is located at 0.6847 (May-12 High), break above could take the pair to 0.6863. On the lower side, support is seen at 0.6778 (Session Low).
Equities Recap
World shares rose as technology leader Apple Inc's biggest gain in over 2-months and oil's price rally strengthened investor demand for riskier assets.
European stock markets rose around 1 percent in early trading, following similar gains in Asian market. MSCI's index of global shares rose 0.4 percent, putting it on course for its second consecutive rise.
The FTSEurofirst 300 index of leading European shares was up 1 percent at 1,329 points, with Germany's DAX 1.1 percent higher, France's CAC 40 up 1 percent and Britain's FTSE 100 gained 0.8 percent.
Tokyo's Nikkei gained 1.13 pct at 16,652.80, Australia's S&P/ASX 200 index rose 0.67 pct at 5,394.70 points, MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.8 percent, extending its recovery from a 2-month low set on Friday.
Shanghai composite index and CSI300 index both ended down 0.3 pct at 2,843.68 points and 3,086.02 points, respectively. HK’s Hang Seng index climbed 1.2 pct at 20,118.80 points.
Commodities Recap
Oil prices slightly edged down after touching a high of $49.44 a barrel, however, within sight of a 6-month high. Brent crude was trading at $48.71 by 1120 GMT, while U.S. crude was up 14 cents at $47.86, having earlier reached $48.42, the highest since October.
Gold edged down, as gains in global stock markets reduced the appeal of the safe-haven metal. Spot gold declined to $1,273.20 per ounce by 1122 GMT, while U.S. gold futures were down 0.2 percent at $1,272.00.
Treasuries Recap
The U.S. Treasuries traded flat as investors await a greater flow of economic data on Tuesday, highlighted by consumer price index, housing starts/building permits and industrial production/capacity utilization releases. Although a stronger than expected reading from CPI could put additional downward pressure on the Treasury complex, we continue to see the week’s main focus being the Wednesday release of minutes from the April FOMC meeting. The yield on the benchmark 10-year bonds hover around 1.75 pct mark.
The German bunds slumped as investors cooled on safe-haven assets amid gains in crude oil and equities. The yield on the benchmark 10-year bonds rose 2bps to 0.167 pct and the yield on the 2-year bonds climbed 1bp to -0.506 pct by 0850 GMT.
The Japanese government bonds traded nearly flat as investors await the first quarter Gross Domestic Product (GDP) data, which will provide cues on the possibility of further monetary easing by the Bank of Japan. Moreover, bond prices are likely to be ruled by the movements in the crude oil market. The yield on the benchmark 10-year bonds stood unchanged at -0.108 pct by 0635 GMT.
The U.K Gilts plunged as Brexit fear eased after ORB for The Telegraph newspaper revealed an increasing support among all respondents to remain in European Union. Also, rallying crude drove-out investors from safe-haven buying. The yield on the benchmark 10-year bonds rose 2bps to 1.415 pct by 1015 GMT.
The Australian government bonds slumped on tracking overnight rally in crude oil prices and equities market. Also, investors cooled on safe-haven buying after the Reserve Bank of Australia's (RBA) May policy meeting, at which policymakers reduced the cash rate by 25bps to a record low 1.75 pct, were less dovish than some had anticipated. The yield on the benchmark 10-year Treasury note rose 6bps to 2.299 pct by 0530 GMT.
