Market Roundup
- EUR/USD +0.1%, USD/JPY -0.2%, GBP/USD -0.2%, EUR/GBP +0.3%
- DXY flat, DAX +0.1%, FTSE +0.2%, Gold +0.3%, Brent -0.2%
- Dollar heads for strongest week this year on Fed hike bets
- EZ Mar Industrial production -0.1% m/m, 1.9% y/y vs previous -0.1%/+1.4% revised 0.3%/2.3% forecast
- Germany Apr CPI final 0.0% m/m, 2.0% y/y vs previous 0.0%/2.0%. 0.0%/2.0% forecast
- Germany Q1 GDP flash SA 0.6% q/q vs previous 0.4%. 0.6% forecast
- Germany says will tell U.S. at G7 that the world needs its leadership
- IMF, eurozone say need more time to reach Greek debt relief deal - Lagarde
- INTERVIEW-Risks to euro zone economy still not balanced -ECB's Lane
- Austrian Foreign Minister Kurz calls for snap election
- BOJ's Kuroda: protectionism is no solution for fixing global inequality
- BOJ board member Harada: QQE producing "excellent results"
- Riksbank's Jansson-still worried about fast and big strengthening in SEK
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Commerce Department is expected to report that retail sales rebounded 0.6 percent in April after declining 0.2 percent in March. While excluding autos, retail sales are likely to have gained 0.4 percent, after surging 0.6 percent in the previous month.
- (0830 ET/1230 GMT) The U.S. consumer price index likely increased 0.3 percent in April after falling to 0.3 percent in March. While excluding food and energy, the core CPI probably rose 0.2 percent, compared to a 0.1 percent decline in the previous month.
- (0900 ET/1300 GMT) Mexico will release its industrial output data for the month of March. The economy's industrial production is expected to rise 0.1 percent after posting a similar increase in February.
- (1000 ET/1400 GMT) The University of Michigan is likely to report that U.S. preliminary consumer sentiment index stood at 97.0 in May, unchanged from previous months reading.
- (1000 ET/1400 GMT) The U.S. Commerce Department is expected to report that business inventories rose 0.2 percent in March after rising 0.3 percent in February.
- (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count.
Key Events Ahead
- (0900 ET/1300 GMT) Federal Reserve Bank of Chicago President Charles Evans speaks on the economy in a moderated discussion before the 56th ACI-Financial Markets Association World Conference in Dublin, Ireland.
- (1230 ET/1630 GMT) Philadelphia Fed chief Patrick Harker speaks on the economic outlook before the Drexel University Annual Urban Economic Policy Conference in Philadelphia.
- (1245 ET/1645 GMT) FedTrade operation 30-year Fannie Mae/Freddie Mac (max $1.625 bn)
- N/A The Federal Reserve Board of Governors concludes a two-day conference on "Developments in Empirical Monetary Economics," in Washington.
FX Beat
DXY: The dollar consolidated near 3-week highs as upbeat labor market data boosted expectations that the Federal Reserve will hike U.S. interest rates in June. The greenback against a basket of currencies traded flat at 99.61, having hit a high of 99.89 on Thursday, it’s highest since Apr. 21. FxWirePro's Hourly Dollar Strength Index stood at 15.81 (Neutral) by 1000 GMT.
EUR/USD: The euro edged up, halting its 4-day losing streak as the greenback came under renewed selling pressure amid weakness in the U.S. treasury yields. The European currency traded 0.1 percent up at 1.0871, rebounding from a low of 1.0839 hit the day before, its lowest since Apr. 24. FxWirePro's Hourly Euro Strength Index stood at 6.98 (Neutral) by 1000 GMT. The minor upside is capped by 10- SMA and any break above 1.0911 will take the pair to next level till 1.09500/1.1000. On the lower side, major support stands at 1.08500-1.08370 (200 day MA) and any break below confirm major weakness a decline till 1.05694 likely.
USD/JPY: The dollar extended losses for the second consecutive day, as an ongoing slide in the U.S. Treasury bond yields supported the prevalent risk-off market sentiment. The pair traded 0.1 percent down at 113.72, drifting away from a peak of 114.36 touched on Thursday, its highest since Mar. 15. FxWirePro's Hourly Yen Strength Index stood at 42.07 (Neutral) by 1000 GMT. The pair is facing support at 113.05 (7 day MA) and any break below will drag it down till 112.75 (daily Tenkan-Sen)/111.65 (100- EMA)/110.50 (61.8% retracement of 108.13 and 114.36). On the higher side, any break above 114.35 will take it to next level till 115.50 likely.
GBP/USD: Sterling declined to a fresh 1-week low against the dollar as investors looked ahead to Britain's negotiations on leaving the European Union. Moreover, divergent monetary policy outlooks between the Fed and BoE weakened the bid tone around the major. Sterling trades 0.1 percent down at 1.2870, having hit a low of 1.2846 earlier, its lowest since May 4. FxWirePro's Hourly Sterling Strength Index stood at -19.23 (Neutral) by 1000 GMT. On the higher side, major resistance is around 1.3000 and any break above will take the pair till 1.3050/1.3088 in the short term. The near term support is around 1.2830 (May 4 low) and any break below will drag it down till 1.2780 (23.6% retracement of 1.2108 and 1.29875). Against the euro, the pound traded 0.3 percent down at 84.49 pence, having hit a low of 84.58 earlier.
USD/CHF: The Swiss franc edged up, drifting further away from a 1-month low hit in the previous session as risk off sentiment continued to support safe-haven assets. The major traded down at 1.0077, having touched a high of 1.0099 on Thursday, its strongest since Apr. 10. FxWirePro's Hourly Swiss Franc Strength Index stood at -4.07 (Neutral) by 1000 GMT. The decline from 1.0340 will come to end if the pair trades above 1.0170 and a further jump till 1.0255/1.03435 is possible. On the lower side, major support is around 1.00340 (23.6% retracement of 0.9855 and 1.00953) and any break below will drag the pair till 1.000/0.9950.
AUD/USD: The Australian dollar rose, extending gains for the third consecutive session as a minor recovery in copper prices and a subdued greenback price-action boosted the bid tone around the major. The Aussie trades 0.1 percent up at 0.7384, having hit a low of 0.7328 on Tuesday, it’s weakest since Jan. 1. FxWirePro's Hourly Aussie Strength Index stood at 92.71 (Slightly Bullish) by 1000 GMT. On the lower side, near term support is around 0.7300 and any close below will drag the pair till 0.7200/0.71599. The near term resistance is around 0.7440 (support turned into resistance) and any break above targets 0.7517 (21- EMA)/0.7552 (200 day MA).
Equities Recap
European shares rose, strengthened by gains among drugmakers and fresh dealmaking activity, while the greenback was poised for its best week of the year on expectations the Fed will raise interest rates in June.
The pan-European STOXX 600 index rallied 0.1 percent to 394.75 points, while the FTSEurofirst 300 index rose 0.1 percent to 1,551.36 points.
Britain's FTSE 100 trades 0.2 percent up at 7,401.23 points, while mid-cap FTSE 250 gained 0.1 percent to 19,811.30 points.
Germany's DAX added 0.1 percent at 12,727.64 points; France's CAC 40 trades 0.03 percent higher at 5,385.15 points.
Commodities Recap
Crude oil prices declined after rising to a 1-week high in the previous session, however, the downside was limited as expectations of an extended OPEC-led production cut supported prices. International benchmark Brent crude was trading 0.1 percent down at $50.67 per barrel by 0938 GMT, having hit a high of $51.13 on Thursday, its strongest since May. 3. U.S. West Texas Intermediate fell 0.1 percent at $47.74 a barrel, after rising as high as $48.19 the day before, its highest since May. 3.
Gold prices rose, extending gains for a second consecutive session as political uncertainty in the United States following the removal of FBI chief James Comey pressured the dollar. Spot gold advanced 0.4 percent to $1,229.10 per ounce at 0948 GMT, having hit an eight-week low of $1,214.13 an ounce on Tuesday. U.S. gold futures were 0.3 percent higher at $1,227.20 an ounce.
Treasuries Recap
The U.S. Treasuries rallied on expectations of a rise in the country’s retail sales for the month of April, scheduled to be held later in the day. The yield on the benchmark 10-year Treasury slumped nearly 3 basis points to 2.37 percent, the super-long 30-year bond yields also plunged nearly 3 basis points to 3.01 percent while the yield on short-term 2-year note traded nearly 2 basis points lower at 1.33 percent.
The UK gilts rebounded as investors covered previous short positions amid a silent session that witnessed data of little economic significance. The yield on the benchmark 10-year gilts, slumped 3 basis points to 1.13 percent, the super-long 30-year bond yields plunged nearly 2 basis points to 1.77 percent while the yield on the short-term 2-year traded 1/2 basis point lower at 0.12 percent.
The German bunds gained after investors largely shrugged off the country’s higher economic growth during the first quarter of this year, released today, that matched market expectations. The yield on the benchmark 10-year bond, which moves inversely to its price, slumped 1-1/2 basis points to 0.41 percent, the long-term 30-year bond yields plunged nearly 2-1/2 basis points to 1.20 percent and the yield on the short-term 2-year bond traded 1 basis point lower at -0.67 percent.
The New Zealand 10-year bond yields hit over 3-week low as investors poured into safe-haven assets amid ongoing political and global financial uncertainties. At the time of closing, the yield on the benchmark 10-year bond, slumped 6-1/2 basis points to 2.99 percent, the yield on 7-year note also plunged 6-1/2 basis points to 2.65 percent and the yield on the short-term 2-year note too traded 6 basis points lower at 1.98 percent.
The Australian government bonds jumped, tracking U.S. Treasuries, following a positive rebound in the latter’s producer prices, released yesterday. The yield on the benchmark 10-year Treasury note, plunged nearly 3 basis points to 2.64 percent, the yield on 15-year note also slumped 3 basis points to 3.04 percent and the yield on short-term 2-year also traded 2-1/2 basis points lower at 1.66 percent.
