Market Roundup
- EUR/USD +0.23%, USD/JPY 0.07%, GBP/USD 0.29%, EUR/GBP -0.08%
- DXY -0.21%, DAX -0.21%, FTSE +0.18%, Gold +0.3%
- U.S Dollar retreats on Friday data fallout and N. Korea tensions
- Russia/Saudi agreement boosts oil: Brent up 2.9% at $52.3
- Putin says correct to extend oil output cut deal for nine-months
- China's economy loses momentum as policymakers clamp down on debt risks
- Behind China's Silk Road vision: cheap funds, heavy debt, growing risk
- Italy Apr Consumer prices yy 1.9% vs revised 1.9% previous 1.8%
- Italy Apr CPI final yy 2.0% vs previous 2.0%
Economic Data Ahead
- (0830 ET/1230 GMT) The Federal Reserve Bank of New York reports its manufacturing activity in New York State for the month of May. The indicator grew 5.2 percent in April.
- (1000 ET/1400 GMT) The National Association of Home Builders (NAHB) is expected to report that U.S. Housing Market Index remained unchanged at 68 from the month before.
- Key Events Ahead
- (1145 ET/1545 GMT) FedTrade Operation 15-year Fannie Mae / Freddie Mac (max $525 mn)
- (1130 ET/1530 GMT) Treasury auctions $39 bn 13- and $33 bn 26-week bills
FX Beat
DXY: The dollar declined versus its major peers as disappointing U.S. consumer prices report released on Friday raised concerns over the retail sector and the broader economy. The greenback against a basket of currencies traded 0.3 percent down at 98.91, having hit a high of 99.89 last week, it’s highest since Apr. 21. FxWirePro's Hourly Dollar Strength Index stood at -149.94 (Highly Bearish) by 1000 GMT.
EUR/USD: The euro rose to a 1-week high amid renewed weakness seen around the greenback across the board, in the wake of Friday’s worse-than expected U.S. retail sales and CPI releases. The European currency traded 0.2 percent up at 1.0954, having touched a high of 1.0959 earlier, its highest since May. 8. FxWirePro's Hourly Euro Strength Index stood at 65.60 (Bullish) by 1000 GMT. The pair minor resistance is around 1.09500 and any break above will take the pair till 1.09800/1.1000. The high made on May 7 will be acting as major resistance and any break above will take it till 1.1060/1.11200 (61.8% retracement of 1.16163 and 1.03400). On the lower side, major support stands at 1.0837 (200 day MA) and any break below confirm major weakness a decline till 1.05694 likely.
USD/JPY: The dollar rebounded from a 1-week low touched earlier in the session following a modest recovery in the U.S. Treasury bond yields. However, renewed geopolitical tension around the Korean peninsula supported the Japanese Yen's safe-haven appeal. The pair traded 0.1 percent up at 113.47, having touched a low of 113.12 earlier, its lowest since May 8. FxWirePro's Hourly Yen Strength Index stood at -6.27 (Neutral) by 1000 GMT. The pair is facing support at 113.05 (daily Tenken-Sen) and any break below will drag it down till 112.10 (21 DMA)/ 111.73 (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 consolidated above the 1.2900 handle, as the greenback eased across the board following last week's disappointing U.S. retail sales data and inflation figures. Sterling trades 0.3 percent up at 1.2928, having hit a low of 1.2849 last week, its lowest since May 4. FxWirePro's Hourly Sterling Strength Index stood at -130.78 (Highly Bearish) by 1000 GMT. On the higher side, major resistance is around 1.3000 and any break above will take the pair till 1.3050/1.3088 in the short term. The near term support is around 1.2830 (May 4 low) and any break below will drag it down till 1.2780 (23.6% retracement of 1.2108 and 1.29875). Against the euro, the pound traded 0.1 up at 84.74 pence, retreating from a low of 84.88 touched in the prior session.
USD/CHF: The Swiss franc rose to a near 1-week high as a weekend missile test by North Korea underpinned the safe-haven assets. The major traded 0.3 percent down at 0.9977, drifting away from a high of 1.0099 hit on Thursday, its strongest since Apr. 10. FxWirePro's Hourly Swiss Franc Strength Index stood at 88.46 (Slightly Bullish) by 1000 GMT. The pair is trading near 200- HMA and any close below will drag the pair down till 0.9945 (61.8% retracement of 0.98533 and 1.00998)/0.9900. On the higher side, 1.0036 will be acting as major intraday resistance and any break above will take it till 1.0070/1.0107. Any violation above 1.0107 will take it till 1.0175
AUD/USD: The Australian dollar touched a 12-day high as a subdued greenback price action combined with positive tone surrounding commodity space, especially copper and crude oil boosted the major. The Aussie trades 0.7 percent up at 0.7436, having hit a fresh high of 0.7440 earlier, it’s strongest since May. 3. FxWirePro's Hourly Aussie Strength Index stood at 162.02 (Highly Bullish) 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 eased as concerns over a successful missile test by North Korea and a cyber-attack weighed on markets sentiment, however, a bounce in oil and other commodities linked stocks capped the downside.
The pan-European STOXX 600 index lost 0.2 percent to 394.95 points, while the FTSEurofirst 300 index fell 0.15 percent to 1,553.06 points.
Britain's FTSE 100 trades 0.1 percent up at 7,446.20 points, while mid-cap FTSE 250 declined 0.01 percent to 19,761.59 points.
Germany's DAX shed 0.2 percent at 12,737.51 points; France's CAC 40 trades 0.3 percent lower at 5,386.21 points.
Commodities Recap
Crude oil prices rallied 2.5 percent after Saudi Arabia and Russia, the world's two biggest energy producers jointly stated that a crude production cut would be extended from the middle of this year until March 2018. International benchmark Brent crude was trading 2.5 percent up at $52.07 per barrel by 0921 GMT, having hit a high of $52.23 earlier, its strongest since Apr. 28. U.S. West Texas Intermediate gained 2.5 percent to $49.03 a barrel, after rising as high as $49.18, its highest since May. 2.
Gold prices rose to a 1-week high as weaker-than-expected U.S. economic data and a missile test by North Korea over the weekend weighed on the dollar. Spot gold was up 0.2 percent at $1,230.90 per ounce at 0923 GMT, having hit a high of $1232.69 an ounce earlier, its highest since May 8. U.S. gold futures were up 0.4 percent at $1,232.20 an ounce.
Treasuries Recap
The U.S. Treasuries remained flat 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 hovered around 2.33 percent, the super-long 30-year bond yields traded flat at 2.99 percent and the yield on the short-term 2-year note too remained steady at 1.29 percent.
The UK gilts traded weaker on expectations of a rise in the country’s consumer price inflation (CPI), scheduled to be released on May 16. The yield on the benchmark 10-year gilts, jumped 2 basis points to 1.11 percent, the super-long 30-year bond yields climbed nearly 2-1/2 basis points to 1.75 percent while the yield on the short-term 2-year traded 1/2 basis point higher at 0.11 percent.
The German bunds fell as investors wait to watch the Eurozone’s first quarter gross domestic product (GDP) and April consumer price inflation (CPI), scheduled to be released on May 16 and 17 respectively. The yield on the benchmark 10-year bond, climbed 1-1/2 basis points to 0.41 percent, the long-term 30-year bond yields jumped 2-1/2 basis points to 1.22 percent and the yield on the short-term 1-year bond traded 1-1/2 basis points higher at -0.68 percent.
The New Zealand bonds closed higher despite a rise in the country’s retail sales for the first quarter of this year. 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 hopped, tracking strength in its United States’ counterpart, after reading a set of weaker-than-expected economic data for the month of April, released late Friday. The yield on the benchmark 10-year Treasury note, plunged 5 basis points to 2.59 percent, the yield on 15-year note slumped 5-1/2 basis points to 2.99 percent and the yield on short-term 2-year traded 2 basis points lower at 1.66 percent.
