Market Roundup
- EUR/USD -0.65%, USD/JPY -0.52%, GBP/USD -0.39%, EUR/GBP -0.26%
- DXY 0.68%, DAX -1.41%, FTSE -1.32%, Brent 0.65%, Gold 0.4%
- Italy central bank says confidence at risk if debt not reined in
- Fed's Bullard: difficult for U.S. to raise rates far beyond other central banks
- EU Money-M3 Annual Growth, 3.9%, 3.9% forecast, 3.7% previous
- EU Loans to Households, 2.95, 3% previous
- France Consumer Confidence, 100, 101 forecast, 101 previous
- Italy MFG Business Confidence, 107.7, 107.2 forecast, 107.7 previous
- Italy Consumer Confidence, 113.7, 116.5 forecast, 117.1 previous
- Top N.Korean officials travel to U.S., Singapore in summit preparations: media
- German wages rise by 2.5 percent in first quarter
- Trump giving Japan's Abe a hard time on trade despite close ties
- Eurozone money markets slash 2019 ECB rate-hike bets
- Gold prices ease as strong dollar weighs on market
Economic Data Ahead
- (0900 ET/1300 GMT) The S&P/Case-Shiller is expected to report that U.S. home price index of 20 metropolitan areas eased at an annualized rate to 6.5 percent in March, after rising 6.8 in the previous month.
- (1030 ET/1430 GMT) The Dallas Fed releases its Manufacturing Business Index for the month of May. The index posted a rise of 23.3 percent in the previous month.
Key Events Ahead
- (1230 ET/1630 GMT) European Central Bank Executive Board member Sabine Lautenschläger speaks about monetary policy in Frankfurt.
FX Beat
DXY: The dollar index rallied to its highest since early November 2017, after St. Louis Fed President James Bullard said that the Fed had enough tools and policy options to respond if the U.S. economy falls into a recession. The greenback against a basket of currencies trades 0.5 percent up at 94.92, having touched a high of 95.03 earlier, its highest since early Nov. FxWirePro's Hourly Dollar Strength Index stood at 67.63 (Bullish) by 1000 GMT.
EUR/USD: The euro slumped to a fresh 10 month low, weighed down by growing concerns about political uncertainty in Italy, Eurozone’s third-largest economy. Moreover, fading prospects of any ECB monetary policy tightening intensified the selling pressure around the major. The European currency traded 0.6 percent down at 1.1558, having touched a low of 1.1510 earlier, its lowest since July 2017. FxWirePro's Hourly Euro Strength Index stood at -94.51 (Slightly Bearish) by 1000 GMT. Immediate resistance is located at 1.1746 (10-DMA), a break above targets 1.1829 (May 22 High). On the downside, support is seen at 1.1479 (Jul. 20 Low), a break below could drag it till 1.1434 (Jul. 17 Low).
USD/JPY: The dollar tumbled to an over 1-month low as ongoing political turmoil in Italy, coupled with sliding U.S. Treasury bond yields offset renewed optimism over the US-North Korea summit and underpinned the Japanese Yen's safe-haven demand. The major was trading 0.5 percent down at 108.87, having hit a low of 108.42 earlier, its lowest since Apr. 23. FxWirePro's Hourly Yen Strength Index stood at 41.29 (Neutral) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. home price index and Dallas Fed manufacturing business index. Immediate resistance is located at 109.79 (5-DMA), a break above targets 110.22. On the downside, support is seen at 108.28, a break below could take it lower 108.05.
GBP/USD: Sterling plunged to a 6-month low towards the 1.3200 handle as expectations of a Bank of England interest rate rise ebbed and the economy showed signs of weakness and worries about whether Britain can secure the Brexit deal. Moreover, concerns about the split within the British government about whether it wants to stay in a customs union with Europe after Brexit weighed heavily on investor sentiment. Sterling traded 0.5 percent down at 1.3246, having hit a low of 1.3206, it’s lowest since Nov. 20. FxWirePro's Hourly Sterling Strength Index stood at -0.76 (Neutral) by 1000 GMT. Immediate resistance is located at 1.3413 (10-DMA), a break above could take it near 1.3497 (21-DMA). On the downside, support is seen at 1.3169 (Nov. 17 Low), a break below targets 1.3135 (Nov. 16 Low). Against the euro, the pound was trading 0.2 percent up at 87.17 pence, having hit a high of 86.97 pence earlier, it’s highest since Apr. 27.
USD/CHF: The Swiss franc slumped to a 6-day low as the greenback rallied to multi-month peaks ahead of the U.S. CB consumer confidence due later in the day. The major trades 0.3 percent up at 0.9962, having touched a high of 0.9972, it’s highest since May 23. FxWirePro's Hourly Swiss Franc Strength Index stood at -81.76 (Slightly Bearish) by 1000 GMT. On the higher side, near-term resistance is around 0.9979 (21-DMA) and any break above will take the pair to next level till 1.0018 (May 18 High). The near-term support is around 0.9907 and any close below that level will drag it till 0.9885.
Equities Recap
European shares tumbled, extending losses for a second straight session, on concerns that the elections, which could take place as soon as August, might serve as a quasi-referendum on Italy's role in the European Union and Eurozone.
The pan-European STOXX 600 index plunged 1.4 percent at 384.50 points, while the FTSEurofirst 300 index declined 1.4 percent to 1,504.57 points.
Britain's FTSE 100 trades 1.3 percent down at 7,628.65 points, while mid-cap FTSE 250 slumped 1.5 percent to 20,785.04 points.
Germany's DAX fell 1.5 percent at 12,676.50 points; France's CAC 40 trades 1.5 percent lower at 5,430.75 points.
Commodities Recap
Crude oil prices rose after falling to a 3-week low in the previous session on expectations that Saudi Arabia and Russia could pump more crude to compensate for a potential supply shortfall. International benchmark Brent crude was trading 0.8 percent up at $75.86 per barrel by 1021 GMT, having hit a low of $74.46 on Monday, its lowest since May 8. U.S. West Texas Intermediate was trading 0.8 percent up at $67.03 a barrel, after falling as low as $65.83 on Monday, its lowest since Apr. 17.
Gold prices rallied, reversing most of its previous session losses, boosted by rising political worries in Italy. Spot gold was 0.5 percent higher at $1,303.71 per ounce at 1024 GMT, having hit a high of $1,307.65 on Friday, its highest price level since May 15. U.S. gold futures for June delivery fell 0.6 percent to $1,296.40 per ounce.
Treasuries Recap
The U.S. Treasuries jumped massively, on a large-scale demand for safe-haven assets as investors are worried over the ongoing disturbed political situation in Italy and huge sell-off in the euro currency pairs. The yield on the benchmark 10-year Treasuries remained slumped nearly 9 basis points to 2.84 percent, the super-long 30-year bond yields plunged nearly 7 basis points to 3.02 percent and the yield on the short-term 2-year too traded 7 basis points lower at 2.41 percent.
The United Kingdom’s 10-year gilt yields found solace in this year’s lows, tracking risk-averse sentiments in the market as political fears in Italy keep on widening, leading to massive demand for safe-haven instruments; rather, a solid shift of debt preferences can be observed away from the Italian benchmark debt markets. The yield on the benchmark 10-year gilts, plunged 10 basis points to 1.22 percent, the super-long 30-year bond yields slumped 6 basis points to 1.70 percent and the yield on the short-term 2-year traded nearly 2-1/2 basis points lower at 0.67 percent.
The German 10-year bund yields slumped to lows seen since a year ago in April 2017, tracking the growing intensity of political uncertainties in the Italian economy, with the Italy-bund yield spread widening to highest since October 2013. The German 10-year bond yields, which move inversely to its price, plunged 9-1/2 basis points to 0.25 percent, the yield on 30-year note slumped nearly 8-1/2 basis points to 0.97 percent and the yield on short-term 2-year traded 7-1/2 years low to -0.80 percent.
The New Zealand bonds closed mixed, tracking similar movement in the United States Treasuries at the end of last week Friday, although markets remained closed at the start of this week in the U.S., on observance of Memorial Day. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, slipped 1 basis point to 2.76 percent, the yield on the long-term 20-year note jumped 3 basis points to 3.29 percent and the yield on short-term 2-year closed 1 basis point lower at 1.89 percent.
The Japanese government bonds traded flat during late Asian session after the country’s unemployment rate for the month of April remained unchanged, with investors now focussing on Japan’s retail sales and industrial production data, scheduled to be released today and on May 30 by 23:50GMT respectively. The yield on the benchmark 10-year JGB note, which moves inversely to its price, hovered around 0.03 percent, the yield on the long-term 30-year note slumped 2 basis points to 0.71 percent and the yield on short-term 2-year traded flat at -0.14 percent.
The Australian government bonds continue to rally as a risk-off tone dominated across financial markets amid political uncertainty in Italy and falling oil prices. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, fell 3-1/2 basis points to 2.720 percent, the yield on the long-term 30-year Note also dipped 3 basis points to 3.253 percent and the yield on short-term 2-year down 1-1/2 basis points to 1.984 percent.
