Market Roundup
- Bank of England's Carney says his message on rates isn't misunderstood
- Bank of England's Vlieghe says he sees more rate hikes than market did
- EU's Malmstrom says thinks U.S. considers EU trade proposal insufficient
- Euro zone underlying inflation needs time to rise: Liikanen
- German economy still booming but has lost some momentum - Bundesbank
- China slashes auto import tariffs in boost to BMW, Tesla
- Spain economy seen growing in Q2 at similar rate to Q1
- Kuroda says BOJ will signal exit plan if prices pick up, warns of risks
- Foreign media arrive in North Korea, suggesting nuclear shutdown on track
- German firms can't be totally shielded from U.S. Iran move -minister
Economic Data Ahead
- (0830 ET/1230 GMT) Statistics Canada will release its wholesale trade figures for the month of March. The indicator is likely to have increased by 0.6 percent, after unexpectedly declining by 0.8 percent the month before.
- (1000 ET/1400 GMT) Federal Reserve Bank of Richmond will publish it Manufacturing Index for May. The index posted a drop of 3 in the previous month.
- (1630 ET/2030 GMT) API reports its weekly crude oil stock.
Key Events Ahead
- No significant events scheduled
FX Beat
DXY: The dollar index eased, hovering away from a 5-month peak hit in the prior session as a fall in U.S. 10-year Treasury yields from recent highs prompted investors to take some profits on their bullish dollar bets. The greenback against a basket of currencies trades 0.2 percent down at 93.39, having touched a high of 94.06 the day before, its highest since Dec. 18. FxWirePro's Hourly Dollar Strength Index stood at -82.83 (Slightly Bearish) by 1000 GMT.
EUR/USD: The euro rose, extending previous day's rebound as Italy's anti-establishment coalition's government formation process stalled. However, the latest U.S.-China trade optimism and expectations of faster Fed monetary policy tightening cycle limited the upside in the major. The European currency traded 0.3 percent up at 1.1819, having touched a low of 1.1716 the day before, its lowest since Dec. 21. FxWirePro's Hourly Euro Strength Index stood at 72.07 (Bullish) by 1000 GMT. Immediate resistance is located at 1.1849 (10-DMA), a break above targets 1.1938 (May 15 High). On the downside, support is seen at 1.1717 (Dec. 12 Low), a break below could drag it till 1.1700.
USD/JPY: The dollar slightly eased against the Japanese yen after Bank of Japan Governor Haruhiko Kuroda stated that the central bank will inform markets how it plans to exit from ultra-easy policy when conditions for hitting its price target become robust. Moreover, news that Washington and Beijing both stepped back from the verge of a global trade war and agreed to hold further talks to strengthen U.S. exports to China capped downside. The major was trading 0.1 percent down at 110.94, having hit a high of 111.39 on Monday, its highest since Jan. 18. FxWirePro's Hourly Yen Strength Index stood at -89.60 (Slightly Bearish) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the Richmond Fed Manufacturing Index. Immediate resistance is located at 111.48 (Jan. 18 High), a break above targets 111.87 (Jan. 11 High). On the downside, support is seen at 110.65 (5-DMA), a break below could take it lower 110.05 (10-DMA).
GBP/USD: Sterling rebounded from recent lows after Bank of England policymaker Gertjan Vlieghe told the Treasury Committee in Britain's parliament that interest rates are set to rise 25 to 50 basis points every year over a 3-year forecast period. Moreover, comments from BoE Governor Mark Carney, denying that the central bank had confused investors and households by not hiking interest rates earlier this month supported the upside. The major traded 0.3 percent up at 1.3455, having hit a low of 1.3391 on Monday, it’s lowest since Dec. 27. FxWirePro's Hourly Sterling Strength Index stood at -57.75 (Bearish) by 1000 GMT. Immediate resistance is located at 1.3508 (10-DMA), a break above could take it near 1.3569. On the downside, support is seen at 1.3346, a break below targets 1.3301. Against the euro, the pound was trading flat at 87.77 pence, having hit a low of 87.88 pence earlier, it’s lowest since May 15.
USD/CHF: The Swiss franc rallied to a near 3-week high as reviving safe-haven prompted some follow-through long-unwinding trade. The major trades 0.1 percent down at 0.9958, having touched a low of 0.9944 earlier, it’s lowest since May 2. FxWirePro's Hourly Swiss Franc Strength Index stood at 50.51 (Bullish) by 1000 GMT. On the higher side, near-term resistance is around 1.0056 (May 10 High) and any break above will take the pair to next level till 1.0099 (May 2017 High). The near-term support is around 0.9936 and any close below that level will drag it till 0.9899.
Equities Recap
European shares rallied to their highest levels since early February, boosted by autos and bank stocks, while the euro retreated from recent lows amid easing Italian political concerns.
The pan-European STOXX 600 index gained 0.05 percent at 395.80 points, while the FTSEurofirst 300 index surged 0.2 percent to 1,604.11 points.
Britain's FTSE 100 trades 0.1 percent up at 7,867.42 points, while mid-cap FTSE 250 rallied 0.3 percent to 21,193.02 points.
Germany's DAX rose 0.05 percent at 13,082.45 points; France's CAC 40 trades 0.1 percent lower at 5,631.87 points.
Commodities Recap
Crude oil prices rose, boosted by concern that declining Venezuelan crude output and a potential fall in Iranian exports could further tighten global supply. International benchmark Brent crude was trading 0.1 percent up at $79.57 per barrel by 0956 GMT, having hit a high of $80.47 on Thursday, its highest since Nov. 2014. U.S. West Texas Intermediate was trading 0.05 percent up at $72.56 a barrel, after rising as high as $72.28 on Thursday, its highest since Nov. 2014.
Gold prices rose to a 6-day peak, hovering away from a 2018 low touched in the previous session as the dollar steadied near 5-month highs and optimism in global markets curbed appetite for the safe-haven assets. Spot gold was down 0.2 percent at $1,294.88 per ounce by 0959 GMT, having hit a low of $1,282.00 on Monday, its lowest price level since Dec. 27. U.S. gold futures for June delivery slipped 0.1 percent to $1289.8 per ounce.
Treasuries Recap
The U.S. Treasuries slumped ahead of the country’s manufacturing PMI for the month of May, scheduled to be released on May 23 by 13:45GMT. Also, the 5-year Note auction, due on the same day and of utmost importance, the Federal Open Market Committee’s (FOMC) meeting minutes for the month of April, due at 18:00GMT will be watched for any further direction in the debt market. The yield on the benchmark 10-year Treasuries rose 1-1/2 basis points to 3.08 percent, the super-long 30-year bond yields climbed 1 basis point to 3.21 percent and the yield on the short-term 2-year traded nearly 1-1/2 basis points higher at 2.58 percent.
The German bunds slumped during European session as investors wait to watch the country’s manufacturing PMI for the month of May, scheduled to be released on May 23 by 07:30GMT and the gross domestic product (GDP) for the first quarter of this year, due on May 24 by 06:00GMT will add further direction to the debt market. The German 10-year bond yields, which moves inversely to its price, jumped 4 basis points to 0.56 percent, the yield on 30-year note surged nearly 4-1/2 basis points to 1.26 percent and the yield on short-term 2-year traded nearly 1 basis point higher at -0.59 percent.
The New Zealand bonds ended Tuesday’s session on a higher note as investors hope to see a worse deterioration in the country’s trade balance data, scheduled to be released on May 23 by 22:45GMT amid an otherwise, silent trading week. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, slid 1/2 basis point to 2.84 percent, the yield on the long-term 20-year note also fell 1/2 basis point to 3.38 percent and the yield on short-term 2-year closed 1 basis point lower at 1.86 percent.
The Australian government bonds rallied as investors do not expect any hint on interest rate hike from the Reserve Bank of Australia (RBA) Governor Philip Lowe in his May 23 speech. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, fell 2-1/2 basis points to 2.868 percent, the yield on the long-term 30-year Note dipped 3 basis points to 3.355 percent and the yield on short-term 2-year down 1/2 basis point to 2.037 percent.
