Market Roundup
- EUR/USD 0.14%, USD/JPY 0.43%, GBP/USD 0.11%, EUR/GBP -0.02%
- DXY -0.04%, DAX 0.94%, FTSE 0.77%, Brent 0.03%, Gold 0.13%
- U.S. allies hit back at Washington's steel, aluminium tariffs
- U.S. job growth seen picking up, wage growth likely moderate
- Markets breathe easier as Italy government sworn in
- Spanish Socialist Sanchez succeeds Rajoy as prime minister
- EU Markit Manufacturing Final PMI, 55.5, 55.5 forecast, 55.5 previous
- Germany Markit/BME Manufacturing PMI, 56.9, 56.8 forecast, 56.8 previous
- France Markit Manufacturing PMI, 54.4, 55.1 forecast, 55.1 previous
- Italy Markit/ADACI Manufacturing PMI, 52.7, 52.9 forecast, 53.5 previous
- Italy GDP Final YY, 1.4%, 1.4% forecast, 1.4% previous
- Great Britain Markit/CIPS Manufacturing PMI, 54.4, 53.5 forecast, 53.9 previous
- China defends free trade ahead of Ross visit
- UK considering giving Northern Ireland joint UK, EU status - UK source
- Gold steadies below $1,300/oz ahead of U.S. payrolls data
- Oil prices steady amid U.S. supply growth, OPEC uncertainty
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Labor Department releases nonfarm payrolls report for the month of May. The report is likely to show 188,000 jobs were added compared with an increase of 164,000 in April.
- (0830 ET/1230 GMT) The U.S. Bureau of Labor Statistics will release labor force participation rate for the month of May. The rate stood at 62.8 percent in the previous month.
- (0830 ET/1230 GMT) The U.S. Labor Department is expected to report that unemployment rate stood at 3.9 percent in May, matching the near 18-year low hit in April.
- (0830 ET/1230 GMT) The United States' average hourly earnings are likely to rise 0.2 percent in May after climbing 0.1 percent in the month before.
- (0930 ET/1330 GMT) The Markit will release Canada's Manufacturing PMI for the Month of May. The indicator stood at 55.5 in the prior month.
- (0945 ET/1345 GMT) Financial firm Markit releases U.S. Manufacturing PMI for the month of May. The index is likely to show a final reading of 56.6 after posting similar gains in the previous month.
- (1000 ET/1400 GMT) The Institute for Supply Management (ISM) is expected to report that U.S. manufacturing Purchasing Managers' index rose to 58.1 in May from a 57.3 reading in April.
- (1000 ET/1400 GMT) The Commerce Department is likely to report that U.S. construction spending increased 0.8 percent in April after falling 1.7 percent in the previous month.
- (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count.
- (1530 ET/1930 GMT) Autodata Corp is expected to report that U.S. auto sales figures dropped to an annualized rate of 17.10 million units in May from 17.15 million units in April.
Key Events Ahead
- (0855 ET/1255 GMT) Federal Reserve Bank of Minneapolis President Neel Kashkari is expected to participate in a panel discussion on "collaborative strategies to build tomorrow's workforce" in Minneapolis.
- (0910 ET/1310 GMT) Bank of England chief economist Andy Haldane gives a lecture, Glasgow, Scotland
- N/A G7 finance ministers and central bank governors are scheduled to meet on the theme of "Investing in growth that works for everyone" in Whistler, British Columbia, Canada.
- (2030 ET/0030 GMT) Dallas Federal Reserve President Robert Kaplan speaks at the 61st Annual Southwestern Graduate School of Banking Keynote Banquet.
FX Beat
DXY: The dollar index consolidated within narrow ranges as investors awaited highly influential U.S. jobs report, which is expected to show almost 190,000 jobs added in May, keeping the Fed on track to hike rates later this month. The greenback against a basket of currencies trades 0.05 percent up at 93.96, having touched a high of 95.03 on Tuesday, its highest since Nov. 7. FxWirePro's Hourly Dollar Strength Index stood at -72.48 (Bearish) by 1000 GMT.
EUR/USD: The euro rose above the 1.1700 handle as a revived coalition deal between Italy's two anti-establishment parties reduced concerns of immediate elections. However, the rebound appeared fragile as data released earlier showed Euro zone factory growth slowed to a 15-month low in May, suggesting it will remain subdued in coming months. The European currency traded 0.2 percent up at 1.1710, having touched a low of 1.1510 on Tuesday, its lowest since Jul. 20. FxWirePro's Hourly Euro Strength Index stood at 162.82 (Highly Bullish) by 1000 GMT. Immediate resistance is located at 1.1733, a break above targets 1.1789 (May 23 High). On the downside, support is seen at 1.1600, a break below could drag it till 1.1518 (May 30 Low).
USD/JPY: The dollar rallied against the safe-haven Japanese yen on news that a coalition deal appeared to end three months of political deadlock in Italy. Moreover, yesterday's positive U.S. economic data and resurgent U.S. Treasury bond yields supported the upside. The major was trading 0.4 percent up at 109.24, having hit a low of 108.11 on Tuesday, its lowest since May 8. FxWirePro's Hourly Yen Strength Index stood at -160.72 (Highly Bearish) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. non-farm payrolls, unemployment rate and Manufacturing PMI from both ISM and Markit. Immediate resistance is located at 109.46, a break above targets 109.68 (21-DMA). On the downside, support is seen at 108.11 (May 29 Low), a break below could take it lower 107.65 (Apr. 23 Low).
GBP/USD: Sterling held gains above the 1.3300 handle as growth among British manufacturers gained momentum in May for the first time in six months. The Markit/CIPS UK Manufacturing Purchasing Managers' Index rose to 54.4, above forecast of 53.5, and partly recovering from a plunge of nearly a full point to 53.9 in April. Sterling traded 0.2 percent up at 1.3317, having hit a low of 1.3204 on Tuesday, it’s lowest since Nov. 28. FxWirePro's Hourly Sterling Strength Index stood at -11.50 (Neutral) by 1000 GMT. Immediate resistance is located at 1.3387 (May 25 High), a break above could take it near 1.3444 (21-DMA). On the downside, support is seen at 1.3204 (May 29 Low), a break below targets 1.3169 (Nov. 17 Low). Against the euro, the pound was trading flat at 87.92 pence, having hit a low of 88.09 pence earlier, it’s lowest since May 15.
USD/CHF: The Swiss franc consolidated near 1-month peak as risk appetite weakened after the Donald Trump administration imposed tariffs on steel and aluminium imports from the EU, Mexico and Canada. The major trades flat at 0.9855, having touched a low of 0.9826 the day before, it’s lowest since Apr. 26. FxWirePro's Hourly Swiss Franc Strength Index stood at 112.81 (Highly Bullish) by 1000 GMT. On the higher side, near-term resistance is around 0.9924 (10-DMA) and any break above will take the pair to next level till 1.0018 (May 18 High). The near-term support is around 0.9816 (Apr. 26 Low) and any close below that level will drag it till 0.9782 (Apr. 25 Low).
Equities Recap
European shares rebounded, while the euro extended gains after a coalition deal appeared to end three months of political deadlock in Italy.
The pan-European STOXX 600 index gained 0.9 percent at 386.82 points, while the FTSEurofirst 300 index surged 0.9 percent to 1,512.43 points.
Britain's FTSE 100 trades 0.1 percent up at 7,726.46 points, while mid-cap FTSE 250 rallied 0.8 percent to 21,020.60 points.
Germany's DAX rose 0.9 percent at 12,725.02 points; France's CAC 40 trades 0.1 percent higher at 5,465.59 points.
Commodities Recap
Crude prices regained some lost ground despite record U.S. production and expectations of OPEC increasing output. International benchmark Brent crude was trading 0.05 percent up at $77.77 per barrel by 0941 GMT, having hit a low of $74.46 on Monday, its lowest since May 8. U.S. West Texas Intermediate was trading 0.1 percent up at $67.19 a barrel, after falling as low as $65.83 on Monday, its lowest since Apr. 17.
Gold prices rose on renewed fears of a global trade war, while a firm dollar and positive U.S. economic data limited the upside. Spot gold gained 0.1 percent at $1,299.47 per ounce by 0954 GMT, having hit a high of $1,307.65 last week, its highest price level since May 15. U.S. gold futures for June delivery were down 0.2 percent at $1,298 per ounce.
Treasuries Recap
The U.S. Treasuries slumped, as investors wait to watch the country’s non-farm payrolls and the unemployment rate for the month of May, scheduled to be released today by 12:30GMT respectively. The yield on the benchmark 10-year Treasuries jumped 6-1/2 basis points to 2.88 percent, the super-long 30-year bond yields surged 6 basis points to 3.04 percent and the yield on the short-term 2-year traded nearly 3 basis points higher at 2.44 percent.
The United Kingdom’s gilts continued to plunge after the country’s manufacturing PMI for the month of May cheered market participants. The yield on the benchmark 10-year gilts, jumped 4 basis points to 1.27 percent, the super-long 30-year bond yields surged 3-1/2 basis points to 1.72 percent and the yield on the short-term 2-year traded 2-1/2 basis points higher at 0.63 percent
The German bunds plunged during European session on the last trading day of the week after the country’s manufacturing PMI for the month of May beat market expectations, thus weighing on the debt market. The German 10-year bond yields, which move inversely to its price, jumped nearly 4 basis points to 0.38 percent, the yield on 30-year note surged 3-1/2 basis points to 1.07 percent and the yield on short-term 2-year traded 3 basis points higher at -0.65 percent.
The New Zealand bonds slumped at the time of closing after global political conditions start to improve, with the United States’ President Donald Trump continuing to surprise market participants. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, jumped 2-1/2 basis points to 2.77 percent, the yield on the long-term 20-year note also surged 2-1/2 basis points to 3.29 percent and the yield on short-term 2-year too closed 2-1/2 basis points higher at 1.88 percent.
The Japanese government bonds slipped during late Asian session after the Bank of Japan cut its debt purchases maturing in 5-10 years amid an ease in Italy’s political tension, which weighed on bond prices. The yield on the benchmark 10-year JGB note, which moves inversely to its price, rose nearly 1 basis point to 0.03 percent, the yield on the long-term 30-year note tad higher at 0.72 percent and the yield on short-term 1-year traded 1/2 basis point at -0.13 percent.
The Australian government bonds slumped during Asian session as investors wait to watch the Reserve Bank of Australia’s (RBA) monetary policy decision, scheduled to be held by early next week. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, jumped nearly 3 basis points to 2.69 percent, the yield on the long-term 30-year Note rose nearly 1 basis point to 3.21 percent and the yield on short-term 2-year traded 3 basis points up at 2.01 percent.
