Market Roundup
- Potential worst week in 9-months for the USD
- EUR/USD +0.56%, USD/JPY flat, GBP/USD +0.57%, EUR/GBP flat
- DXY -0.43%, DAX +0.34%, FTSE +0.51, Copper +0.65%
- Seeking a new narrative, Trump embarks on trip to the Middle East
- Long queues as Iranians start voting in presidential election
- Eurozone current account surplus eases from record high
- Eurozone Mar Current account NSA 44.8b vs revised 27.8b previous 27.9b
- Eurozone Mar Current account SA 34.1b vs revised 37.8b previous 37.9b
- OPEC panel looking at deepening, extending oil cuts - sources; Brent +1.12%
- Germany Apr Producer prices yy 3.4% vs previous 3.1%
- UK PM May's Conservatives set to outspend Labour in election battle
- TPP trade deal members seek to move ahead without the US
- Japan's April exports seen up for 5th straight month; +7.8 pct year/year vs +12.0 in March
- Gold on track for biggest weekly gain in five; Gold +0.49%
Economic Data Ahead
- (0830 ET/1230 GMT) Statistics Canada is expected to report that retail sales gained 0.4 percent in March after falling 0.6 percent the month before. While excluding autos, retail sales are likely to have risen 0.2 percent, after easing 0.1 percent in the previous month.
- (0830 ET/1230 GMT) The Statistics Canada is expected to report that annual inflation rate rose 1.7 percent in April, from 1.6 percent in March, bringing it closer to the Bank of Canada’s 2 percent target. While core consumer price index rose 0.3 percent in March.
- (1000 ET/1400 GMT) The European Commission releases Eurozone's preliminary Consumer Confidence reading for the month of May. The index is expected to slump 3.0 percent after posting a drop of 3.6 in the prior month.
- (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count.
Key Events Ahead
- (0915 ET/1315 GMT) St. Louis Fed chief James Bullard gives a presentation on the U.S. economy and monetary policy before the Association for Corporate Growth St. Louis Chapter.
- (1145 ET/1545 GMT) FedTrade Operation 30-year Ginne Mae (max $975 mn)
- (1340 ET/1740 GMT) Federal Reserve Bank of San Francisco President John Williams gives a lecture titled "View from a Policy Maker" before El Camino High School students in San Francisco.
FX Beat
DXY: The dollar declined across the board as ongoing political turmoil around U.S. President Donald Trump continued to support safe-haven assets. The greenback against a basket of currencies traded 0.4 percent down at 97.43, having hit a low of 97.33 on Wednesday, it’s lowest since Nov. 9. FxWirePro's Hourly Dollar Strength Index stood at -98.64 (Slightly Bearish) by 1000 GMT.
EUR/USD: The euro gained, reversing most of its previous session losses as better-than-expected Eurozone current account and German PPI data boosted the bid tone around the major. The European Monetary Union Current Account s.a came in at €34.1 billion in March, above forecasts of €32.3 billion. The European currency traded 0.5 percent up 1.1159, having touched a high of 1.1171 on Thursday, its highest since Nov. 9. FxWirePro's Hourly Euro Strength Index stood at 98.37 (Highly Bullish) by 1000 GMT. The pair is bullish as long as support 1.1067 to 1.10750 (Weekly cloud top and 21- W EMA) holds. On the lower side, any break below will drag the pair down till 1.1020 (resistance turned into support)/1.1000/1.0950/ 1.0830 (200- day MA). The near term resistance is around 1.11725 high made yesterday and any break above the top formed will take it till 1.1205/1.1250/1.1290 (61.8% retracement of 1.16163 and 1.0340).
USD/JPY: The dollar steadied after tumbling to 3-week lows in the previous on the back of political uncertainty in the United States. However, the recovery appears to be fragile as selling pressure surrounding the greenback continued to lend support to the safe haven Japanese yen. The major traded flat at 111.46, having touched a low of 110.23 on Thursday, its lowest since Apr 25. FxWirePro's Hourly Yen Strength Index stood at 19.58 (Neutral) by 1000 GMT. The pair is facing support at 110 and any break below will drag it down till 108.13. On the higher side, break above 111.97 will take it to next level till 113.40/114.36 likely.
GBP/USD: Sterling rose above the 1.300 handle after data showed British factory orders grew at the fastest since February 2015, and output rose by the most since 2013 in the past three months. The CBI's factory order book balance rose to 9 in May from 4 in April, while export order growth returned to the 4-year high recorded in March. Sterling trades 0.5 percent up at 1.3007, having hit a high of 1.3047 the prior day, its strongest since Sept. 29. FxWirePro's Hourly Sterling Strength Index stood at 32.32 (Neutral) by 1000 GMT. On the higher side, any close above 1.3000 confirms bullish continuation and a jump till 1.3050/1.3088/13120 likely. The major support is around 1.2950 and any break below will drag the pair down till 1.2900/1.2860. Against the euro, the pound traded 0.1 percent down at 85.85 pence, having hit a 1-1/2 month low of 86.14 on Wednesday.
USD/CHF: The Swiss franc rallied to a fresh 6-1/2 month high against the U.S. dollar as the controversy around Trump-Russia-FBI continued to dent appetite for riskier assets. The major slumped 0.2 percent to 0.9776, having hit a fresh low of 0.9758 earlier, its weakest since Nov 9. FxWirePro's Hourly Swiss Franc Strength Index stood at 114.60 (Highly Bullish) by 1000 GMT. The break below 0.98120 confirms that jump from 0.95493 comes to an end at 1.03400 and a dip till 0.9617 (100% projection from 1.03420 to 0.9860 from 1.0099) is possible. The near-term major support is around 0.9750/0.9705 (50% retracement of 0.90719 and 1.03436) /0.9640. On the higher side, near term resistance is around 0.9860 and any break above will take the pair till 0.9900/0.9960 (200- day MA).
AUD/USD: The Australian dollar rose to a 2-week high as a rally in the crude oil prices underpinned the bid tone around the major. The Aussie trades 0.3 percent up at 0.7439, having hit a high of 0.7439 the day before, it’s strongest since May. 3. FxWirePro's Hourly Aussie Strength Index stood at -32.82 (Neutral) by 1000 GMT. On the lower side, near term support is around 0.7385 (61.8% retracement of 0.71599 and 0.77493) and any close below will drag the pair till 0.7325/0.7300. The near term resistance is around 0.7450 (21 EMA) and any close above targets 0.7520 (89 D-EMA).
Equities Recap
European shares gained in early trade, recovering from this week's losses after political turmoil fuelled worries over U.S. President Donald Trump's stimulus plans.
The pan-European STOXX 600 index climbed 0.6 percent to 391.64 points, while the FTSEurofirst 300 index advanced 0.6 percent to 1,539.41 points.
Britain's FTSE 100 trades 0.5 percent up at 7,473.63 points, while mid-cap FTSE 250 rallied 0.7 percent to 19,825.88 points.
Germany's DAX added 0.4 percent at 12,645.25 points; France's CAC 40 trades 0.8 percent higher at 5,330.46 points.
Commodities Recap
Crude oil prices rose to multi-week highs and were on track for a second week of gains on growing expectations that OPEC and other exporters will extend output cuts to reduce a persistent glut in inventories. International benchmark Brent crude was trading 1.3 percent up at $53.15 per barrel by 0937 GMT, having hit a high of $53.27 earlier, its strongest since Apr. 21. U.S. West Texas Intermediate gained 1.2 percent to $49.93 a barrel, after rising as high as $49.30, its highest since Apr. 26.
Gold prices regained some lost ground and were poised for their biggest weekly gain since mid-April as the dollar tumbled amid lingering political turbulence in the United States. Spot gold was up 0.5 percent at $1,252.25 per ounce, as of 0940 GMT, having advanced 1.9 percent for the week and set for its biggest weekly rise in five. U.S. gold futures slipped 0.1 percent to $1,251.10 an ounce.
Treasuries Recap
The U.S. Treasuries plunged ahead of the Federal Open Market Committee (FOMC) member Bullard’s scheduled speech later in the day. The yield on the benchmark 10-year Treasury, jumped 1-1/2 basis points to 2.24 percent, the super-long 30-year bond yields traded flat at 2.90 percent and the yield on short-term 2-year note plunged 2-1/2 basis points to 1.29 percent.
The UK gilts slumped on fall in demand for safe-haven assets amid a rise in riskier equities and oil. The yield on the benchmark 10-year gilts, jumped 3-1/2 basis points to 1.09 percent, the super-long 30-year bond yields climbed 2-1/2 basis points to 1.71 percent and the yield on the short-term 2-year traded 2-1/2 basis points higher at 0.13 percent.
The German bunds traded narrowly mixed as investors remained sidelined in a silent trading session that lacked data of economic significance. However, investors remain focused to watch the country’s first-quarter gross domestic product (GDP) data, scheduled to be released on May 23 for further direction in the debt market. The yield on the benchmark 10-year bond, fell nearly 1 basis point to 0.35 percent, the long-term 30-year bond yields remained flat at 1.18 percent and the yield on short-term 2-year bond also traded nearly 1 basis point lower at -0.69 percent.
The Japanese government bonds gained as investors await the country’s trade balance data for the month of April, scheduled to be released on May 22. The benchmark 10-year bond yield, which moves inversely to its price, fell nearly 1 basis point to 0.04 percent, while the long-term 30-year bond yields slumped a little over 1 basis point to 0.80 percent and the yield on the short-term 2-year note also traded nearly 1 basis point lower at -0.16 percent.
The Australian bonds rallied as investors covered previous short positions amid a silent trading session that witnessed data of least economic significance. The yield on the benchmark 10-year Treasury note, slipped 1 basis point to 2.48 percent, the yield on 15-year note also plunged almost 3-1/2 basis points to 2.90 percent and the yield on short-term 4-year traded 1/2 basis point lower at 1.99 percent.
