Market Roundup
- EUR/USD flat, USD/JPY -0.77%, GBP/USD -0.52%, EUR/GBP +0.61%
- DXY -0.17%, DAX flat, FTSE flat, Brent +0.68%, Copper -0.19
- "Challenging" talks expected as Trump, other G7 leaders meet
- Trump calls North Korea a "big problem", promises to resolve issue
- UK PM May's lead falls to new low of 5 points ahead of election-YouGov poll
- Major UK parties restart election push, under shadow of security threat
- Oil peaked 52.00 pre-OPEC, fell to 48.45 after output cut extended to 9mths
- Japan consumer prices rise in April; Core CPI up 0.3 pct vs forecast +0.4 pct
- China considers new method for yuan midpoint fixing
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Commerce Department is expected to report that preliminary gross domestic product increased at a 0.9 percent annual rate in the first quarter from a preliminary estimate of 0.7 percent.
- (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 2.4 percent, while core PCE is likely to increase 2.0 percent in line with previous estimates.
- (0830 ET/1230 GMT) The U.S. durable goods orders are expected to have decreased 1.2 percent in April after rising 1.7 percent in March, while orders excluding transportation are gained 0.8 percent the prior month.
- (0900 ET/1300 GMT) Mexico publishes its unemployment data for the month of April. The economy's unadjusted unemployment rate is likely to have increased to 3.32 percent, compared with a 3.2 percent rise in March. While seasonally adjusted unemployment rate stood at 3.5 percent in March.
- (1000 ET/1400 GMT) The University of Michigan is likely to report that U.S. consumer sentiment index rose to 97.5 in May, slightly slower than the preliminary reading of 97.7.
- (1030 ET/1430 GMT) Brazil's releases it primary budget data for the month of April.
- (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count.
Key Events Ahead
- (0945 ET/1345 GMT) FedTrade operation 30-year Ginnie Mae (max $1.2 bn)
FX Beat
DXY: The dollar tumbled versus the Japanese yen as a fresh bout of risk- averse sentiment boosted the demand for safe-haven assets. The greenback against a basket of currencies traded 0.1 percent down at 97.08, hovering towards a low of 96.80 hit on Tuesday, it’s lowest since Nov. 9. FxWirePro's Hourly Dollar Strength Index stood at -41.75 (Neutral) by 1000 GMT.
EUR/USD: The euro edged up, climbing towards a 6-1/2 month high hit this week as the greenback continued to decline after the Federal Reserve's minutes of the May policy meeting released on Wednesday dampened some of the more hawkish policy expectations in the market. The European currency traded flat at 1.1214, having touched a high of 1.1268 on Tuesday, its highest since Nov. 9. FxWirePro's Hourly Euro Strength Index stood at 18.55 (Neutral) by 0900 GMT. Investors’ attention will remain on the U.S. prelim Q1 GDP data, with markets expecting an upward revision to 0.9 percent y/y from 0.7 percent. Immediate resistance is located at 1.1268 (May 23 High), a break above targets 1.1300. On the downside, support is seen at 1.1175 (78.6% retracement of 1.0839 and 1.1267), a break below could drag it near 1.1103 (61.8% retrace).
USD/JPY: The dollar slumped to a 3-day low below the 111.00 handle as weaker European equity markets strengthened demand for traditional safe-haven assets. Moreover, investors continued to digest upbeat Japanese national CPI data, which matched consensus estimates and recorded gains for the fourth consecutive month. The major traded 0.8 percent down at 110.96, having touched a low of 110.89 earlier, its weakest since May 23. FxWirePro's Hourly Yen Strength Index stood at 134.04 (Highly Bullish) by 1000 GMT. Immediate resistance is located at 112.37 (21-DMA), a break above targets 113.00. On the downside, support is seen at 110.68 (23.6% retracement of 110.23 and 112.12), a break below could take it near 110.23 (May 18 Low).
GBP/USD: Sterling slumped to a fresh 2-week low after a poll showed British Prime Minister Theresa May's lead over her opposition narrowed ahead of elections next month. Markets attention will also remain on the U.S. macro updates for fresh impetus, while uncertainty surrounding the upcoming UK general elections continues to persist. The major trades 0.5 percent down at 1.2874, having hit a low of 1.2857 earlier, its lowest since May 12. FxWirePro's Hourly Sterling Strength Index stood at -119.83 (Highly Bearish) by 1000 GMT. Immediate resistance is located at 1.2897 (78.6% retracement of 1.3047 and 1.2857), a break above could take it near 1.2929 (61.8% retrace). On the downside, support is seen at 1.2844 (May 12 Low), a break below targets 1.2800. Against the euro, the pound traded 0.6 percent down at 87.20 pence, having hit a near 2- month low of 87.25 earlier.
USD/CHF: The Swiss franc rallied, hovering towards a 6-1/2 month high as risk-off sentiment drove investors towards safe-haven assets. The major trades 0.3 percent down at 0.9701, having hit a low of 0.9691 on Monday, its weakest since Nov 9. FxWirePro's Hourly Swiss Franc Strength Index stood at 3.43 (Neutral) by 1000 GMT. Immediate resistance is located at 0.9778 (78.6% retracement of 1.0099 and 0.9691), a break above targets 0.9850. On the downside, support is seen at 0.9691 (May 22 Low), a break below could take it near 0.9678 (Nov 4 Low).
AUD/USD: The Australian dollar retreated from a 1-week low as a rebound in oil prices and the ongoing slide in the U.S. Treasury bond yields, boosted the bid tone around the major. The Aussie trades flat at 0.7451, recovering from a low of 0.7422 hit earlier in the session, it’s lowest since May. 19. FxWirePro's Hourly Aussie Strength Index stood at -27.12 (Neutral) by 1000 GMT. Immediate support is seen at 0.7422 (50.0% retracement of 0.7328 and 0.7517), a break below targets 0.7400 (38.2% retrace). On the upside, resistance is located at 0.7473 (5-DMA), a break above could take it near 0.7500.
Equities Recap
European shares edged down in early trade, as sterling hit a two-week low on geopolitical tensions in Britain, while the overnight fall in crude prices hit energy shares.
The pan-European STOXX 600 index slumped 0.4 percent to 390.49 points, while the FTSEurofirst 300 index declined 0.4 percent to 1,533.90 points.
Britain's FTSE 100 trades 0.1 percent up at 7,528.77 points, while mid-cap FTSE 250 rallied 0.1 percent to 19,995.08 points.
Germany's DAX fell 0.3 percent at 12,580.51 points; France's CAC 40 trades 0.6 percent lower at 5,304.60 points.
Commodities Recap
Crude oil prices recovered after tumbling in the previous session when OPEC and other producers extended output cuts but disappointed investors betting on longer. International benchmark Brent crude was trading 1.0 percent up at $51.84 per barrel by 0924 GMT, having hit a low of $50.86 earlier, its weakest since May 16. U.S. West Texas Intermediate gained 1.1 percent to $49.24 a barrel, after falling as low as $48.23 earlier, its lowest since May 18.
Gold prices rallied to an over three-week high as the dollar declined and equity shares slipped with investors seeking safe-haven assets following a tumble in oil prices. Spot gold was trading 0.9 percent up at $1,265.50 per ounce by 0942 GMT after touching a high of $1,266.84 earlier in the session. U.S. gold futures gained 0.5 percent to $1,262.9 an ounce.
Treasuries Recap
The U.S. Treasuries gained ahead of the first-quarter gross domestic product, scheduled to be released later in the day. The yield on the benchmark 10-year Treasury, slumped 1-1/2 basis points to 2.24 percent, the super-long 30-year bond yields fell 1 basis point to 2.91 percent and the yield on short-term 2-year note also traded nearly 1 basis point lower at 1.29 percent.
The German bunds climbed at the close of the trading week as investors poured into safe-haven instruments amid a quiet trading session that witnessed data of less economic significance. The yield on the benchmark 10-year bond slumped nearly 2 basis points to 0.35 percent, the long-term 30-year bond yields also plunged nearly 2 basis points to 1.18 percent and the yield on the short-term 2-year bond traded nearly 1 basis point lower at -0.68 percent.
The Japanese government bonds traded flat on the last trading day of the week after reading the country’s slightly lower-than-expected core consumer price inflation for the month of April. The benchmark 10-year bond yield, hovered around 0.04 percent, while the long-term 30-year bond yields also traded flat at 0.79 percent and the yield on the short-term 2-year note too traded steady at -0.16 percent.
The Australian bonds rallied, tracking strength in the U.S. counterpart after reading the slightly higher initial jobless claims release later yesterday. The yield on the benchmark 10-year Treasury note, plunged a little over 3 basis points to 2.42 percent, the yield on 15-year note also slumped 3 basis points to 2.82 percent and the yield on short-term 2-year traded 1-1/2 basis points lower at 1.58 percent.
