Market Roundup
- EUR/USD 0.44%, USD/JPY 0.34%, GBP/USD 0.24%, EUR/GBP 0.16%
- DXY -0.28%, DAX 0.37%, FTSE 0.35%, Brent 0.57%, Gold -0.04%
- ECB to debate ending bond buys next week: Praet
- Plausible that ECB can end bond buys this year: Weidmann
- EU set to impose extra tariffs on U.S. imports from July
- EU lawmaker rules out "mutual recognition" for UK financial firms
- Pressuring May, UK's Labour tries to force new single market deal
- Iran's uranium enrichment plans are close to the "red line" - French minister
- Gold ticks up on soft dollar, investors cautious amid trade tensions
- Oil prices higher on Venezuela exports concerns
Economic Data Ahead
- (0830 ET/1230 GMT) The United States releases trade balance figures for the month of April. The economy's trade deficit is expected to remain same as March at $49.0 billion.
- (0830 ET/1230 GMT) The U.S. Labor Department will release labor costs report for the first quarter. The indicator is expected to nudge up 2.8 percent from a previous reading of 2.7 percent in the previous quarter.
- (0830 ET/1230 GMT) The U.S. Labor Department is likely to report that non-farm productivity edged lower to 0.6 percent in the first quarter from 0.7 percent in the previous quarter.
- (0830 ET/1230 GMT) The Statistics Canada is likely to report that building permits dropped 1.0 percent in April, after rising 3.1 percent in March.
- (0830 ET/1230 GMT) The Statistics Canada is likely to report that international trade deficit narrowed to C$3.40 billion in April from C$4.14 billion in March.
- (1000 ET/1400 GMT) The Richard Ivey School of Business releases Canada's seasonally adjusted Ivey Purchasing Managers Index for the month of May. The index posted a reading of 71.5 in the prior month.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending June 1.
Key Events Ahead
- (0930 ET/1330 GMT) ECB's Pentti Hakkarainen speaks on "The Digitalisation Of Banking - Supervision Implications" - Lisbon
- (1200 ET/1600 GMT) Bank of England Monetary Policy Committee member Ian McCafferty takes part in Q&A session on LBC radio – London
- (1210 ET/1610 GMT) Deutsche Bundesbank's Johannes Beermann speaks on "Our money - a journey through time" - Dresden
- (1310 ET/1710 GMT) ECB's Ignazio Angeloni participates in panel discussion on "Completing the Banking Union" - Brussels
FX Beat
DXY: The dollar index tumbled to a 2-week trough after a survey showed a shortage of affordable homes in the United States to continue over the coming year that could drive prices up faster than inflation and wage growth. The greenback against a basket of currencies trades 0.3 percent down at 93.60, having touched a low of 93.58 earlier, its lowest since May 23. FxWirePro's Hourly Dollar Strength Index stood at -79.84 (Slightly Bearish) by 1000 GMT.
EUR/USD: The euro rallied to a 2-week peak after European Central Bank chief economist Peter Praet stated that the central bank is highly confident that inflation is rising back to its target and will debate whether to gradually unwind bond purchases at its policy meeting next week. The European currency traded 0.4 percent up at 1.1768, having touched a high of 1.1775, its highest since May 23. FxWirePro's Hourly Euro Strength Index stood at 164.08 (Highly Bullish) by 1000 GMT. Immediate resistance is located at 1.1829 (May 22 High), a break above targets 1.1896 (May 9 High). On the downside, support is seen at 1.1641 (May 31 Low), a break below could drag it till 1.1518 (May 30 Low).
USD/JPY: The dollar surged to a 2-week peak above the 110.00 handle after the United States raised the possibility of turning negotiations over the North American Free Trade Agreement into bilateral talks. Moreover, an uptick in the U.S. Treasury yields and prevalent positive trading sentiment across equity markets undermined Japanese Yen’s safe-haven demand. The major was trading 0.4 percent up at 110.17, having hit a low of 108.11 last week, its lowest since May 8. FxWirePro's Hourly Yen Strength Index stood at -146.29 (Highly Bearish) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. trade balance and non-farm productivity data. Immediate resistance is located at 110.45, a break above targets 110.85 (May 17 Low). On the downside, support is seen at 109.35 (5-DMA), a break below could take it lower 108.95 (May 24 Low).
GBP/USD: Sterling advanced above the 1.3400 handle to hit a 2-week peak as a weaker dollar and better-than-expected data earlier in the week supported the British pound. However, fading expectations of a Bank of England interest rate hike and uncertainty over the economy and Brexit talks limited upside. Sterling traded 0.2 percent up at 1.3419, having hit a high of 1.3438 earlier, it’s highest since May 23. FxWirePro's Hourly Sterling Strength Index stood at 81.02 (Slightly Bullish) by 1000 GMT. Immediate resistance is located at 1.3483 (May 21 High), a break above could take it near 1.3527 (May 18 High). On the downside, support is seen at 1.3320 (10-DMA), a break below targets 1.3204 (May 29 Low). Against the euro, the pound was trading 0.3 percent down at 87.13 pence, having hit a low of 88.09 pence on Friday, it’s highest since May 15.
USD/CHF: The Swiss franc eased, reversing almost all of its previous session gains amid prevalent risk-on trading sentiment across equity markets. The major trades 0.3 percent up at 0.9875, having touched a low of 0.9826 on Thursday, it’s lowest since Apr. 26. FxWirePro's Hourly Swiss Franc Strength Index stood at -167.75 (Highly Bearish) by 1000 GMT. On the higher side, near-term resistance is around 0.9935 (May 30 High) 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 surged in early deals, underpinned by gains in tech and commodity-related stocks, while euro rallied to a 2-week peak after ECB chief economist Peter Praet said that the central bank will debate whether to gradually unwind bond purchases at its policy meeting next week.
The pan-European STOXX 600 index gained 0.05 percent at 386.96 points, while the FTSEurofirst 300 index surged 0.05 percent to 1,512.30 points.
Britain's FTSE 100 trades 0.4 percent up at 7,720.09 points, while mid-cap FTSE 250 rallied 0.5 percent to 21,159.51 points.
Germany's DAX rose 0.4 percent at 12,834.96 points; France's CAC 40 trades 0.05 percent higher at 5,462.59 points.
Commodities Recap
Crude oil prices rallied after Venezuela raised the prospect of a halt to some crude exports, however, reports that the U.S. government had asked Saudi Arabia and some other producers to increase output limited upside. International benchmark Brent crude was trading 0.6 percent up at $75.52 per barrel by 1044 GMT, having hit a low of $73.80 on Tuesday, its lowest since May 8. U.S. West Texas Intermediate was trading 0.4 percent down at $65.22 a barrel, after falling as low as $64.26 on Tuesday, its lowest since Apr. 10.
Gold prices declined, as expectations of a U.S. rate rise next week weighed heavily on the metal's safe-haven appeal. Spot gold was 0.1 percent down at $1,294.71 per ounce at 1047 GMT, having hit a high of $1,307.65 last month, its highest price level since May 15. U.S. gold futures for August delivery dipped 0.1 percent to $1,300.90 per ounce.
Treasuries Recap
The U.S. Treasuries slumped, as investors wait to watch the country’s trade balance data for the month of April, scheduled to be released today by 12:30GMT. The yield on the benchmark 10-year Treasuries jumped nearly 3-1/2 basis points to 2.95 percent, the super-long 30-year bond yields surged nearly 3 basis points to 3.10 percent and the yield on the short-term 2-year traded 1-1/2 basis points higher at 2.50 percent.
The German bunds jumped during European session as investors wait to watch the country’s trade balance for the month of April and eurozone’s gross domestic product (GDP) for the first quarter of this year, scheduled on June 8 and June 7 by 06:00GMT and 09:00GMT respectively. The German 10-year bond yields, which move inversely to its price, jumped 7 basis points to 0.43 percent, the yield on 30-year note surged nearly 4 basis points to 1.12 percent and the yield on short-term 2-year traded 2-1/2 basis points higher at -0.64 percent.
The New Zealand bonds declined at the time of closing after dairy prices improved at the latest GlobalDairyTrade (GDT) price auction, albeit still remaining on the downside amid an otherwise, silent market session that witnessed data of little economic significance. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, rose 1 basis point to 2.77 percent, the yield on the long-term remained flat at 3.34 percent and the yield on short-term 2-year too closed 1 basis point higher at 1.90 percent.
The Japanese government bonds remained flat during late Asian session as investors remained side-lined in a muted trading week ahead of the country’s first quarter 2018 gross domestic product (GDP) data, scheduled to be released on June 7 by 23:50GMT which shall add further direction to the debt market. The yield on the benchmark 10-year JGB note, which moves inversely to its price, traded tad higher at 0.05 percent, the yield on the long-term 30-year note hovered around 0.73 percent and the yield on short-term 2-year remained flat at -0.12 percent.
The Australian government bonds slumped following better-than-expected Q1 economic growth data, which registered the fastest annual expansion in almost 2-years as it entered its 27th year of growth without a recession. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, rose 2 basis points to 2.756 percent, the yield on the long-term 30-year Note jumped 1-1/2 basis points to 3.263 percent and the yield on short-term 2-year up 2-1/2 basis points to 2.073 percent.
