Market Roundup
- EUR/USD +0.65%, USD/JPY -0.22%, GBP/USD -0.06%, EUR/GBP +0.76%
- DXY -0.36%, DAX -0.09%, FTSE +0.54%, Gold +0.35%, Copper -0.57%
- Euro hits six-month high, its highest level since Nov 9, 2016, in Europe at 1.1049
- Kuroda says "quite sure" BOJ can smoothly withdraw stimulus
- Japan PM: will continue to deploy fiscal monetary/structural steps for econ revival
- Oil rises on expectations of extended supply curbs; Brent +0.41%
- Eurozone expands trade surplus despite protectionist calls
- Eurozone Mar Eurostat Trade NSA 30.9b vs the previous 17.8b
- Eurozone Q1 GDP Flash estimate QQ 0.5% vs previous 0.5%
- Eurozone Q1 GDP Flash estimate YY 1.7% vs previous 1.7%
- German investor morale rises as economy "in good shape"
- Germany May ZEW Economic sentiment 20.6 vs previous 19.5
- Germany May ZEW Current conditions 83.9 vs previous 80.1
- UK inflation jumps more than expected in April to hit highest since 2013
- Great Britain Apr Core CPI yy +2.4% vs previous 1.8%
- Great Britain Apr CPI yy +2.7% vs previous 2.3%
- Great Britain Apr RPI yy +3.5% vs previous 3.1%
- Great Britain Apr PPI Core output yy NSA +2.8% vs previous 2.5%
- Norway Q1 mainland GDP 0.6% vs revised 0.4% previous, 0.5% expected
- Riksbank proposes switch to CPIF and +/- 1.0% around 2.0% inflation target
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Department of Commerce is expected to report that housing starts increased to 1.26 million units in April from 1.22 million units in March.
- (0830 ET/1230 GMT) The U.S. building permits are likely to have increased to a 1.27 million-unit pace in April from a 1.26 million-unit pace in the prior month.
- (0915 ET/1315 GMT) The Federal Reserve is likely to report that industrial production rose 0.3 percent in April after increasing 0.5 in the month before. Manufacturing output is expected to rise 0.3 percent after decreasing 0.4 percent in March.
- (0915 ET/1315 GMT) The Federal Reserve Board is expected to report that capacity utilization edged up to 76.3 percent in April from 76.1 percent in March.
- (1630 ET/2030 GMT) API reports its weekly crude oil stock.
- (1845 ET/2245 GMT) The Statistics New Zealand will report its producer price index input and output data for the first quarter. PPI input and output rose 0.1 percent and 1.5 percent, respectively in the previous quarter.
- (1950 ET/2350 GMT) Japan's machinery orders are likely to have increased 2.1 percent for the month of March after posting a rise of 1.5 percent in February.
Key Events Ahead
- (1430 ET/1830 GMT) FedTrade Operation 30-year Fannie Mae / Freddie Mac (max $1.625 bn)
FX Beat
DXY: The dollar tumbled versus its major peers on the back of political turbulence and doubts over Federal Reserve interest rate hikes. The greenback against a basket of currencies traded 0.4 percent down at 98.48, having hit a low of 98.46 earlier, it’s lowest since Nov. 10. FxWirePro's Hourly Dollar Strength Index stood at -47.19 (Neutral) by 1000 GMT.
EUR/USD: The euro rallied to a 6-week high above the 1.1000 handle as political turmoil in the U.S. and doubts over Fed interest rate hikes pressured the dollar. Moreover, better-than-expected Eurozone trade balance data, and in line preliminary gross domestic product figures underpinned the bid tone around the major. The European currency traded 0.6 percent up at 1.1046, having touched a high of 1.1049 earlier, its highest since May. 8. FxWirePro's Hourly Euro Strength Index stood at 112.02 (Highly Bullish) by 1000 GMT. Any break above 1.10200 high will confirm the decline from 1.1616 till 1.0340 will come to an end, a jump till 1.1080 zone /1.11345 (61.8% retracement of 1.1630 and 1.03400) is likely. The near term intraday support stands at 1.0950 and any violation below will confirm minor weakness, a decline till 1.0900/1.08500 is possible.
USD/JPY: The dollar trimmed some of its early losses, however, it continued to trade lower amid persistent greenback selling pressure. Meanwhile, the market seems to have largely ignored Bank of Japan Governor Kuroda comments, as attention remained on geopolitical developments in the U.S. and North Korea. The pair traded 0.1 percent down at 113.62, having touched a low of 113.12 on Monday, its lowest since May 8. FxWirePro's Hourly Yen Strength Index stood at 17.93 (Neutral) by 1000 GMT. The pair is facing support at 113.15 (daily Tenken-Sen) and any break below will drag it down till 112.29 (21 DMA)/ 111.77 (100- EMA)/110.50 (61.8% retracement of 108.13 and 114.36). On the higher side, any break above 114.35 will take it to next level till 115.50 likely.
GBP/USD: Sterling rose to a near 1-week high after data showed inflation rose more than expected in April to its highest level since September 2013. Consumer prices increased at an annualized rate of 2.7 percent, beating expectation for a 2.6 percent rise, underlining a growing squeeze on households ahead of the June 8 national election. Sterling trades flat at 1.2895, having hit a high of 1.2957 earlier, its highest since May 10. FxWirePro's Hourly Sterling Strength Index stood at -145.21 (Highly Bearish) by 1000 GMT. The major support is around 1.2830 low and any break below will drag the pair down till 1.27800 (23.6% retracement of 1.2108 and 1.2987)/1.2720 (200- 4H MA). On the higher side, major resistance is around 1.3000 and any break above will take it till 1.3050/1.3088 in the short term. Against the euro, the pound traded 0.7 percent down at 85.73 pence, having hit an over 5-week low of 85.77 earlier in the session.
USD/CHF: The Swiss franc rallied to an over 1-week high as renewed geopolitical tensions in the U.S. and North Korea boosted the demand for safe-haven assets. The major slumped 0.6 percent to 0.9900, having hit a fresh low of 0.9897 earlier, its weakest since May 8. FxWirePro's Hourly Swiss Franc Strength Index stood at 23.83 (Neutral) by 1000 GMT. The jump from 0.9549 to 1.0340 will come to an end if it breaks below 0.98120 low formed on Mar 27. Any break below will drag the pair down till 0.9640. On the higher side, 0.9960 will be acting as major intraday resistance and any break above will take it till 1.000/1.0030/1.0070.
AUD/USD: The Australian dollar declined after rising for four consecutive sessions as minutes of the central bank's policy meeting reiterated views that interest rates will remain at record lows for near-term. The Aussie trades 0.1 percent down at 0.7401, having hit a high of 0.7445 on Monday, it’s strongest since May. 3. FxWirePro's Hourly Aussie Strength Index stood at 94.45 (Slightly Bearish) by 1000 GMT. On the lower side, near term support is around 0.7300 and any close below will drag the pair till 0.7200/0.71599. The near term resistance is around 0.7456 (21 EMA) and any break above targets 0.7530 (100 day MA).
Equities Recap
European shares declined in early deals as disappointing earnings updates weighed on banks and pharma stocks, while the euro hit a six-month peak on Eurozone’s upbeat trade data and a weaker dollar.
The pan-European STOXX 600 index lost 0.3 percent to 394.90 points, while the FTSEurofirst 300 index fell 0.2 percent to 1,553.70 points.
Britain's FTSE 100 trades 0.5 percent up at 7,495.13 points, while mid-cap FTSE 250 rose 0.1 percent to 19,773.01 points.
Germany's DAX shed 0.1 percent at 12,789.08 points; France's CAC 40 trades 0.3 percent lower at 5,398.01 points.
Commodities Recap
Crude oil prices extended gains for the fifth straight session after top producers Saudi Arabia, Russia and Kuwait supported prolonging supply cuts until the end of March 2018 in order to reduce a global glut. International benchmark Brent crude was trading 0.3 percent up at $51.93 per barrel by 0955 GMT, having hit a high of $52.58 the day before, its strongest since Apr. 21. U.S. West Texas Intermediate rallied 0.3 percent to $48.97 a barrel, after rising as high as $49.63 the prior session, its highest since Apr. 28.
Gold prices rose for a fourth day as the dollar declined on signs of slower economic activity in the United States that reduced expectations of an aggressive string of interest rate hikes by the U.S. Federal Reserve. Spot gold was up 0.4 percent at $1,234.64 per ounce at 1000 GMT, having touched its highest since May 4 at 1,237.20 on Monday. U.S. gold futures gained 0.4 percent to $1,234.90 an ounce.
Treasuries Recap
The U.S. Treasuries traded slightly lower as investors remained sidelined in the absence of major trading activity amid a mild session that witnessed data of little economic significance. The yield on the benchmark 10-year Treasury rose nearly 1 basis point to 2.34 percent, the super-long 30-year bond yields also gained almost 1 basis point to 3.01 percent and the yield on short-term 2-year note traded flat at 1.30 percent.
The UK gilts declined after reading the country’s higher-than-expected consumer price inflation (CPI), for the month of April. Further, the release of retail sales, due on May 18, will provide further direction to the debt market. The yield on the benchmark 10-year gilts, jumped 1-1/2 basis points to 1.15 percent, the super-long 30-year bond yields rose 1/2 basis point to 1.80 percent while the yield on the short-term 2-year traded 1-1/2 basis points higher at 0.14 percent.
The German bunds continued to fall after Eurozone’s first quarter gross domestic product (GDP), released today, matched consensus estimates. The yield on the benchmark 10-year bond, climbed 1-1/2 basis points to 0.44 percent, the long-term 30-year bond yields also jumped 1-1/2 basis points to 1.26 percent and the yield on the short-term 1-year bond traded 1 basis point higher at -0.66 percent.
The New Zealand bonds closed on the upside tracking firmness in the United States counterparts as investors wait to watch the GlobalDairyTrade (GDT) price auction, scheduled to be held later today for further direction in the debt market. At the time of closing, the yield on the benchmark 10-year bond, slumped 6-1/2 basis points to 2.99 percent, the yield on 7-year note also plunged 6-1/2 basis points to 2.65 percent and the yield on the short-term 2-year note too traded 6 basis points lower at 1.98 percent.
The Australian government bonds remained flat after the Reserve Bank of Australia (RBA) maintained a cautious tone in its May monetary policy meeting minutes, released earlier today. The yield on the benchmark 10-year Treasury note, hovered around 2.59 percent, the yield on 15-year note remained flat at 2.99 percent and the yield on short-term 2-year also remained steady at 1.66 percent.
