Market Roundup
- EUR/USD +0.12%, USD/JPY flat, GBP/USD -0.47%, EUR/GBP +0.63%
- DXY -0.02%, DAX +0.22%, FTSE +0.08%, Brent -1.6%, Gold +0.31%
- Bank of England's Carney says now not the time to raise rates
- Fed's Fischer says more to be done to prevent future crises
- Eurozone current account surplus dips in April
- EZ Apr Current account SA 22.0b vs the previous 34.1b
- Consumption, euro zone recovery lift German growth -Ifo
- Germany May Producer prices mm -0.2% vs previous 0.4%
- Germany May Producer prices yy 2.8% vs previous 3.4%
- Britain's CBI bumps up economic growth forecast for 2017
- Oil prices near seven-month lows on global oversupply
- Gold hovers near 5-week low; political tensions support
- Japan Reuters June Tankan Mfg index +26, non-Mfg +33, May +24/+30, Sep +29/+28 eyed
- Japan automakers reach for 40% of American market share – Nikkei
- BPCE marketing 5/7/10/15-year social samurais via Daiwa, MUFG et al – IFR
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Commerce Department is likely to report that current account deficit widened to $124.0 billion in the first quarter from $112.4 billion in the previous quarter.
- (0830 ET/1230 GMT) Statistics Canada will release its wholesale trade figures for the month of April. The indicator is likely to have increased by 0.6 percent after unexpectedly rising 0.9 percent in March.
- (0900 ET/1300 GMT) Mexico’s national statistics agency will release private spending and aggregate demand data for the first quarter of 2017.
- (1630 ET/2030 GMT) API reports its weekly crude oil stock.
- (1950 ET/2350 GMT) Bank of Japan publishes the minutes of its latest monetary policy meeting.
Key Events Ahead
- (0800 ET/1200 GMT) Federal Reserve Vice Chair Stanley Fischer's speech.
- (1145 ET/1545 GMT)FedTrade operation 30-year Ginnie Mae securities (max $950 mn)
- (1500 ET/1900 GMT) Federal Reserve Bank of Dallas President Robert Kaplan speaks on his views about monetary policy since the Fed's June rates decision in San Francisco.
- N/A The Federal Reserve Bank of Boston releases speech text of President Eric Rosengren as delivered before a closed meeting of the De Nederlandsche Bank & Sveriges Riksbank Macroprudential Conference Series in Amsterdam.
FX Beat
DXY: The dollar rebounded across the board as a key U.S. Federal Reserve official reaffirmed the central bank's hawkish stance on interest rate hikes. The greenback against a basket of currencies traded 0.1 percent up at 97.63, having touched a high of 97.67 earlier, it’s highest since May 30. FxWirePro's Hourly Dollar Strength Index stood at -14.23 (Neutral) by 1000 GMT.
EUR/USD: The euro trimmed gains as the greenback rose after a key Federal Reserve official reiterated the central bank's hawkish stance on interest rate hikes. The European currency traded 0.1 percent up at 1.1156, having touched a low of 1.1132 on Thursday, its lowest since May 30. FxWirePro's Hourly Euro Strength Index stood at -23.42 (Neutral) by 1000 GMT. On the higher side, major resistance is around 1.1300 and any break above will take it to next level till 1.1360/1.1435 in the short term. The near-term major support is around 1.1100 and any break above will take the pair down till 1.1050/1.1000.
USD/JPY: The dollar rose to a 3-week high against the Japanese yen after New York Fed President William Dudley said U.S. inflation would pick up as wages improved, bolstering bets on the Fed to raise interest rates. The major traded up at 111.60, having hit a high of 111.78 earlier, its highest since May 26. FxWirePro's Hourly Yen Strength Index stood at -82.56 (Slightly Bearish) by 1000 GMT. The pair is facing support at 108 and any break below will drag the pair down till 106.80. On the higher side, near term resistance is around 111.87 (100 -MA) will take it to next level till 112.12/113 likely.
GBP/USD: Sterling tumbled to a 1-week low against the dollar after Bank of England Governor Mark Carney said it was not the time to raise interest rates, receding some investors' expectations the central bank had shifted its stance. Sterling traded 0.5 percent down at 1.2666, having hit a low of 1.2635 earlier in the month, its weakest since Apr 18. FxWirePro's Hourly Sterling Strength Index stood at -45.96 (Neutral) by 1000 GMT. On the lower side, the major support is around 1.2614 and any break below will drag the pair till 1.2585/ (200- day MA)/1.2470 (61.8% retracement of 1.21088 and 1.30470) likely. The near-term minor resistance is around 1.2760 (200- HMA) and any break above will take it till 1.2793 (38.2% retracement of 1.30475 and 1.2635)/1..2820. Against the euro, the pound traded 0.6 percent down at 88.02 pence, having hit a 1-week high of 87.19 on Friday.
USD/CHF: The Swiss franc edged up as the greenback slightly eased after Chicago Fed President Charles Evans said the U.S. central bank may wait until year-end to decide whether to hike interest rates again. The major trades 0.2 percent down at 0.9734, having touched a high of 0.9770 on Thursday, its highest since May 30. FxWirePro's Hourly Swiss Franc Strength Index stood at 46.99 (Neutral) by 1000 GMT. Technically the pair has been facing strong resistance around 0.9808 (May 30 high) and any close above will take the pair till 0.9845/0.9900. On the lower side, major support is around 0.9615 and any break below will drag it down till 0.9580/0.9520 (161.8% retracement of 0.9614 and 0.97393).
AUD/USD: The Australian dollar gained after minutes of the RBA’s June policy meeting reaffirmed the long-term outlook for steady interest rates. The Aussie trades 0.1 percent up at 0.7605, having hit a high of 0.7635 on Wednesday, it’s strongest since Apr 3. FxWirePro's Hourly Aussie Strength Index stood at 44.76 (Neutral) by 1000 GMT. On the lower side, near term support is around 0.7530 (200- day MA) and any break below will drag the pair till 0.7485 (21 – EMA)/0.7385 (61.8% retracement of 0.71599 and 0.77493) /0.7325/0.7300. The near term resistance is around 0.7650 and any break above targets 0.7700/0.7745.
Equities Recap
European shares gained, boosted by gains in tech and retail sector, while sterling hit a 1-week low after Bank of England Governor Mark Carney said it was not the time to hike interest rates.
The pan-European STOXX 600 index climbed 01percent to 391.99 points, while the FTSEurofirst 300 index gained 0.02 percent to 1,541.12 points.
Britain's FTSE 100 trades 0.2 percent up at 7,534.99 points, while mid-cap FTSE 250 rallied 0.3 percent to 19,924.10 points.
Germany's DAX rose 0.2 percent at 12,917.89 points; France's CAC 40 trades 0.3 percent higher at 5,326.17 points.
Commodities Recap
Crude oil prices declined to fresh seven-month lows on news of increases in supply, which undermined attempts by OPEC and other producers to support the market through reduced output. International benchmark Brent crude was trading 1.6 percent down at $46.09 per barrel by 1020 GMT, having hit a low of $45.84 earlier, its weakest since Nov. 18. U.S. West Texas Intermediate traded 1.7 percent down at $43.54 a barrel, after falling as low as $43.37, its lowest since Nov 14.
Gold prices rebounded from a five-week low hit earlier in the session as global political uncertainties including Brexit negotiations, concerns over U.S. President Donald Trump's ability to carry out financial reforms, election results in Europe and Middle East turmoil provided some support for safe-haven assets. Spot gold was up 0.3 percent at $1,246.72 per ounce by 1025 GMT, having hit its weakest since May 17 at $1,242.49. U.S. gold futures rose 0.1 percent to $1,247.8 per ounce.
Treasuries Recap
The U.S. Treasuries gained as investors remain geared up to witness a host of speeches by the Federal Open Market Committee (FOMC) members throughout this week. Member Rosengren’s speech, due later today will add further direction to the debt market. The yield on the benchmark 10-year Treasury, fell 1 basis point to 2.17 percent, the super-long 30-year bond yields slumped nearly 2 basis points to 2.77 percent and the yield on short-term 2-year note traded flat at 1.36 percent.
The UK gilts gained strength after the Bank of England (BoE) Governor Mark Carney remained uncertain in his speech delivered today, over the results of the Brexit talks. Also, the country’s 30-year auction, due on June 22, will provide detailed direction to the debt market. The yield on the benchmark 10-year gilts, slumped 2 basis points to 1.01 percent, the super-long 30-year bond yields traded nearly flat at 1.70 percent and the yield on the short-term 2-year traded 3-1/2 basis points lower at 0.14 percent.
The Eurozone periphery bonds gained as investors poured into safe-haven assets ahead of the benchmark German 30-year auction, scheduled to be held on June 21. Also, the country’s manufacturing PMI for the month of June, due for release on June 23 will provide further direction in the money market. The benchmark German 10-year bond yields, fell nearly 1-1/2 basis points to 0.26 percent, the French 10-year bond yields, slipped 1 basis point to 0.61 percent, Irish 10-year bond yield slumped 1-1/2 basis points to 0.66 percent, Italian equivalent plunged 2 basis points to 1.93 percent, Netherlands 10-year bonds yield traded 1-1/2 basis points lower at 0.47 percent, Portuguese equivalents also nose-dived hovered around 2.85 percent and the Spanish 10-year yields traded 2-1/2 basis points lower at 1.42 percent.
The Japanese government bonds traded modestly lower ahead of the Bank of Japan Governor Haruhiko Kuroda’s speech, scheduled to be held on June 21. The benchmark 10-year bond yield, hovered around 0.05 percent, the long-term 30-year bond yields traded flat at 0.80 percent and the yield on the short-term 2-year note also traded steady at -0.10 percent.
The New Zealand bonds remained downbeat at the time of closing as investors remain cautious to observe the GlobalDairyTrade (GDT) price auction, scheduled to be held later today. In addition, the Reserve Bank of New Zealand’s (RBNZ) monetary policy decision, due on late Wednesday will add further direction to the debt market. At the time of closing, the yield on the benchmark 10-year bond, jumped 3 basis points to 2.81 percent, the yield on 7-year note also surged 3 basis points to 2.72 percent and the yield on short-term 5-year note traded 3 basis points higher at 2.51 percent.
The Australian bonds plunged after the Reserve Bank of Australia (RBA) remained slightly positive over the economic outlook of the country, mentioning the developments till date. However, it did not completely shrug-off the risks that remain vital to the country in the short-to-medium term. The yield on the benchmark 10-year Treasury note, rose 1-1/2 basis points to 2.44 percent, the yield on the 15-year note climbed 1-1/2 basis points to 2.80 percent while the yield on short-term 2-year traded 1 basis point higher at 1.70 percent.
