Market Roundup
- EUR/USD flat, USD/JPY flat, GBP/USD +0.08%, AUD/USD flat
- DXY flat, DAX -0.13%, FTSE +0.25%, Gold +0.08%
- Moody's downgrades China, warns of fading financial strength
- OPEC, non-OPEC hold informal talks to nail new oil cuts; Brent +0.33%
- Euro zone stability risk contained but rising -ECB
- Germany consumer morale reaches highest since Oct. 2001 -GfK; 10.4 vs previous 10.2
- Pope asks Trump to be peacemaker, gives him environmental letter
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. releases its building permits data for the month of April. The indicator stood at 1.229 million in the previous month.
- (0900 ET/1300 GMT) The Federal Housing Finance Agency releases its housing price index for the month of March. The index gained 0.8 percent in February.
- (1000 ET/1400 GMT) National Association of Realtors is likely to report that U.S. existing home sales declined 1.0 percent to 568,000 million units in April from 571,000 million units in March.
- (1000 ET/1400 GMT) Bank of Canada will meet to announce its benchmark interest rate decision and is widely expected to hold interest rates at 0.50 percent.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending May 19.
Key Events Ahead
- (0845 ET/1245 GMT) European Central Bank (ECB) President Mario Draghi's Speech.
- (1145 ET/1545 GMT) FedTrade Operation 30-year Fannie Mae / Freddie Mac (max $1.625 bn)
- (1400 ET/1800 GMT) The Federal Open Market Committee will release its May policy meeting minutes.
- (1800 ET/2200 GMT) Federal Reserve Bank of Dallas President Robert Kaplan participates in a moderated Q&A session before the C.D. Howe Institute Annual Directors' Dinner, in Toronto, Ontario, Canada.
- (1830 ET/2230 GMT) Minneapolis Fed chief Neel Kashkari will participate in a Town Hall forum at Ashland, Wisconsin.
FX Beat
DXY: The dollar steadied versus its major peers as investors awaited the Federal Reserve's latest policy meeting minutes. The greenback against a basket of currencies consolidated around 97.36, having hit a low of 96.80 the prior day, it’s lowest since Nov. 9. FxWirePro's Hourly Dollar Strength Index stood at 31.93 (Neutral) by 1000 GMT.
EUR/USD: The euro steadied after declining from a 6-1/2 month high in the previous session as the greenback rebounded ahead of the minutes of the Federal Reserve's latest meeting. The European currency traded flat 1.1184, having touched a high of 1.1267 on Tuesday, its highest since Nov. 9. FxWirePro's Hourly Euro Strength Index stood at -65.98 (Bearish) by 1000 GMT. On the lower side, any break below 1.11600 will drag the pair down till 1.110 (23.6% retracement of 1.105694 and 1.12678) /1.1050/ 1.1000. But upside will be limited as market firmed up their expectations for a June Fed hike.
USD/JPY: The dollar consolidated near a 1-week high as investors await the Federal Reserve's monetary policy minutes due later in the day for clues on the outlook for U.S. interest rates. The major trades flat at 111.79, having touched a high of 112.50 earlier, its highest since May 17. FxWirePro's Hourly Yen Strength Index stood at -72.53 (Bearish) by 1000 GMT. On the lower side, support is seen at 111 (May 19 low), 110.61 (23.6% Fib of 118.662 to 108.130 fall), break below will test 109.75 (200-DMA & trendline). On the upside, resistance is located at 112, 112.15 (38.2% Fib), break above targets 112.42 (20-DMA).
GBP/USD: Sterling steadied below the 1.300 handle after falling from recent highs as markets attention shifted on the U.S. Federal Reserve minutes later in the day for fresh direction, with campaigning for June elections suspended. Sterling was little changed at 1.2961, having hit a high of 1.3047 last week, its strongest since Sept. 29. FxWirePro's Hourly Sterling Strength Index stood at -38.39 (Neutral) by 1000 GMT. On the higher side, any close above 1.30500 confirms bullish continuation and a jump till 1.3088/13120 likely. The major support is around 1.2930-40 (10 day MA and 20- day MA) and any break below will drag till 1.2900/1.2830. Against the euro, the pound traded 0.08 percent down at 86.30 pence, having hit a 1-1/2 month low of 86.74 the day before.
USD/CHF: The Swiss franc retreated from a 6-1/2month high as the greenback gained ahead of the Federal Reserve's monetary policy minutes release. The major rose 0.1 percent to 0.9771, having hit a low of 0.9691 on Friday, its weakest since Nov 9. FxWirePro's Hourly Swiss Franc Strength Index stood at -166.79 (Highly Bearish) by 1000 GMT. The pair is facing strong trend line support at 0.9720 (trend line joining 0.90786 and 0.95493) and any further bearish continuation can be seen only if it closes below that trend line. The near term major support is around 0.96788 and break below targets 0.96170. On the higher side, near term resistance is around 0.9765 and any break above will test 0.9820 (support turned into resistance)/0.9860
AUD/USD: The Australian dollar recovered after declining earlier in the session on news that Moody's downgraded China's sovereign rating citing eroding financial strength and slowing growth. The Aussie trades 0.01 percent up at 0.7477, having hit a high of 0.7517 the day before, it’s strongest since May. 3. FxWirePro's Hourly Aussie Strength Index stood at 108.90 (Highly Bullish) by 1000 GMT. On the downside, support is seen at 0.7432 (20-DMA), 0.7428 (23.6% Fibo 0.7749 to 0.7329 fall), break below targets 0.7355 (trendline). On the upside, resistance is located at 0.7454 (5-DMA), 0.75 (psychological level) and 0.7540 (200-DMA), 0.7588 (61.8% Fib).
Equities Recap
European shares advanced in early trade, underpinned by a rise in oil & gas stocks, while investors awaited minutes of the Federal Reserve's latest meeting for clues on the outlook for U.S. interest rates.
The pan-European STOXX 600 index gained 0.1 percent to 392.65 points, while the FTSEurofirst 300 index rose 0.1 percent to 1,542.95 points.
Britain's FTSE 100 trades 0.2 percent up at 7,500.85 points, while mid-cap FTSE 250 rallied 0.2 percent to 19,954.73 points.
Germany's DAX declined 0.1 percent at 12,642.08 points; France's CAC 40 trades 0.05 percent lower at 5,345.75 points.
Commodities Recap
Crude oil prices rose to a fresh 1-month high earlier in the session, supported by growing expectations that OPEC and other producers would agree to keep output restricted until the first quarter of next year. International benchmark Brent crude was trading 0.3 percent up at $54.29 per barrel by 0955 GMT, having hit an early high of $54.59, its strongest since Apr. 19. U.S. West Texas Intermediate gained 0.1 percent to $51.54 a barrel, after rising as high as $51.85, its highest since Apr. 19.
Gold prices edged up after declining in the previous session, as investors awaited the minutes of Federal Reserve's latest policy meeting due later in the day for cues on the interest rate hike stance. Spot gold was 0.1 percent up at $1,251.68 per ounce by 1000 GMT, having hit a near 3-week high last week. U.S. gold futures shed up to 0.4 percent to $1,250.20 an ounce.
Treasuries Recap
The U.S. Treasuries gained as investors await to read the Federal Reserve’s minutes of the last policy meeting, scheduled to be released later in the day. The yield on the benchmark 10-year Treasury, slipped nearly 1 basis point to 2.27 percent, the super-long 30-year bond yields fell 1 basis point to 2.93 percent and the yield on short-term 2-year note traded 1/2 basis point lower at 1.32 percent.
The UK gilts gained as investors poured into safe-haven instruments after Prime Minister Theresa May, commented, post the terrorist attack in Manchester, that the level of threat has become 'critical'. The yield on the benchmark 10-year gilts, slumped 1-1/2 basis points to 1.06 percent, the super-long 30-year bond yields plunged nearly 2 basis points to 1.68 percent and the yield on the short-term 2-year traded 2 basis points lower at 0.09 percent.
The German bunds gained as investors wait to watch the European Central Bank (ECB) President Mario Draghi’s speech, scheduled to be held later in the day. The yield on the benchmark 10-year bond, fell nearly 1 basis point to 0.39 percent, the long-term 30-year bond yields slipped 1 basis point to 1.22 percent and the yield on short-term 2-year bond also traded nearly 1 basis point lower at -0.65 percent.
The New Zealand bonds closed weaker after reading the better-than-expected trade surplus data for the month of April, released earlier today. At the time of closing, the yield on the benchmark 10-year bond, rose 1-1/2 basis points to 2.87 percent, the yield on 7-year note also climbed 1-1/2 basis points to 2.55 percent and the yield on short-term 2-year note too traded 1 basis point lower at 1.96 percent
The Australian bonds plunged tracking weakness in the United States counterpart after a solid supply at the 2-year debt auction held late yesterday. The yield on the benchmark 10-year Treasury note, jumped nearly 4 basis points to 2.49 percent, the yield on 15-year note climbed 3-1/2 basis points to 2.91 percent and the yield on short-term 2-year traded nearly 1 basis point higher at 1.62 percent.
