Market Roundup
- EUR/USD 0.07%, USD/JPY -0.05%, GBP/USD 0.06%, EUR/GBP 0.02%
- DXY 0.04%, DAX 1.04%, FTSE 0.3%, Brent -1.21%, Gold 0.06%
- Powell to open Chicago conference as rate cut talk intensifies
- China warns its companies on U.S. travel, rebuffs trade criticism
- Trump promises Britain a substantial post-Brexit trade deal
- Australia central bank chief says rates could go even lower
- Japan's policy guidelines call for more stimulus next year - draft
- EZ May HICP Flash YY, 1.2%, 1.3% f'cast, 1.7% prev
- EZ May HICP-X F&E Flash YY, 1.0%, 1.1% f'cast,1.4% prev
- EZ Apr Unemployment Rate, 7.6%, 7.7% f'casdt, 7.7% prev
- Great Britain May Markit/CIPS Cons PMI, 48.6, 50.5 f'cast, 50.5 prev
- Italian coalition leaders keep sniping even after PM ultimatum
- Bank mergers desirable, but up to them to decide on tie-ups - ECB's Villeroy
Economic Data Ahead
- (0945 ET/1345 GMT) The NAPM-New York releases ISM-NY business conditions Index for the month of May. The index stood at 77.3 in the previous month
- (1000 ET/1400 GMT) The United States is likely to report that factory orders declined 0.9 percent in April, after posting a rise of 1.9 percent in the prior month.
- (0900 ET/1300 GMT) Mexico will release its consumer confidence index for the month of May. The index rose to 110.9 in April.
- (1730 ET/2130 GMT) API reports its weekly crude oil stock.
Key Events Ahead
- (0800 ET/1200 GMT) Chicago Fed's Charles Evans is interviewed live on CNBC's "Squawk Box" in Chicago
- (0805 ET/1205 GMT) BoE's James Proudman speaks at FCA Conference on Governance in Banking in London
- (0830 ET/1230 GMT) New York Fed's John Williams gives opening remarks before "Building Cultural Capital in the Financial Services Industry: Emerging Practices, Risks and Opportunities" conference in New York
- (0945 ET/1345 GMT) Federal Reserve Bank of Chicago President Charles Evans gives welcome and introductory remarks before Fed Listens Conference on Monetary Policy Strategy, Tools, and Communication Practices, in Chicago
- (0955 ET/1355 GMT) Federal Reserve Chairman Jerome Powell speaks on "Monetary Policy Strategy, Tools, and Communication Practices" in Chicago
- (1545 ET/1945 GMT) Federal Reserve Board Governor Lael Brainard moderates "What Does Full Employment Look Like for Your Community or Constituency?" panel in Chicago
- (1845 ET/2245 GMT) Federal Reserve Bank of Dallas President Robert Kaplan gives welcome remarks at dinner reception in Chicago
FX Beat
DXY: The dollar index plunged to a 6-1/2 week low after Fed policymaker James Bullard said lowering U.S. rates may be warranted soon. The greenback against a basket of currencies traded 0.1 percent down at 97.11, having touched a low of 97.00, its lowest since May 27. FxWirePro's Hourly Dollar Strength Index stood at -59.16 (Bearish) by 1000 GMT.
EUR/USD: The euro rallied to a 6-1/2 week peak after data showed the Eurozone recorded its lowest unemployment rate in 10 years, which fell to 7.6 percent of the workforce in April from 7.7 percent in March, a rate last seen in August 2008. However, separate data showing Eurozone inflation slowing by more than expected in May capped the upside. The European currency traded 0.1 percent up at 1.1251, having touched a high of 1.1277, its highest since Apr. 18. FxWirePro's Hourly Euro Strength Index stood at 6.03 (Neutral) by 1000 GMT. Immediate resistance is located at 1.1304 (Apr. 18 High), a break above targets 1.1344 (March 15 High). On the downside, support is seen at 1.1210 (Apr. 8 Low), a break below could drag it below 1.1183 (April 2 Low).
USD/JPY: The dollar slumped to a 5-month low, weighed down by broader concerns about global growth and rising expectation of an interest rate cut by the Federal Reserve. The major was trading 0.1 percent down at 107.95, having hit a low of 107.84, its lowest since Jan. 10. FxWirePro's Hourly Yen Strength Index stood at -4.37 (Neutral) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. factory orders and Fed Chair Powell's speech. Immediate resistance is located at 108.64 (38.2% retracement of 109.92 and 107.85), a break above targets 109.13 (61.8% retracement). On the downside, support is seen at 107.77 (Jan. 10 Low), a break below could take it lower at 107.51 (Jan. 4 Low).
GBP/USD: Sterling rallied to a 1-week high, as the greenback weakened on growing expectations of a possible Fed rate cut by the end of this year. However, the upside remains limited as persisting UK political and Brexit uncertainties weigh on British pound bull's sentiment. The major traded 0.2 percent up at 1.2687, having hit a low of 1.2558 on Friday; it’s lowest since Jan, 3. FxWirePro's Hourly Sterling Strength Index stood at -60.53 (Bearish) 1000 GMT. Immediate resistance is located at 1.2702 (May 28 High),. a break above could take it near 1.2747 (May 27 High). On the downside, support is seen at 1.2570 (Dec. 17 Low), a break below targets 1.2529 (Dec. 18 Low). Against the euro, the pound was trading flat at 88.70 pence, having hit a low of 89.02 earlier, it’s lowest since Jan. 16.
USD/CHF: The Swiss franc surged to a 2-1/2 month peak, as weak economic numbers worldwide pointed to slowing growth and the risk of recession ahead as a trade war between the United States and China escalates. The major trades 0.05 percent down at 0.9925, having touched a low of 0.9902 earlier; it’s lowest since Mar. 20. FxWirePro's Hourly Swiss Franc Strength Index stood at 91.44 (Slightly Bullish) by 1000 GMT. On the higher side, near-term resistance is around 0.9978 (38.2% retracement of 1.0098 and 0.9902) and any break above will take the pair to next level till 1.0121 (May 17 High). The near-term support is around 0.9894 (Mar. 20 Low), and any close below that level will drag it till 0.9820 (Dec. 20 Low).
Equities Recap
European shares rebounded, despite a falls in tech stocks, while euro rallied to a 6-1/2 week peak ahead of the European Central Bank's policy meeting on Thursday.
The pan-European STOXX 600 index rallied 0.4 percent at 371.84 points, while the FTSEurofirst 300 gained 0.4 percent to 1,464.51 points.
Britain's FTSE 100 trades 0.2 percent up at 7,202.93 points, while mid-cap FTSE 250 surged 0.05 to 18,886.19 points.
Germany's DAX rose 1.1 percent at 11,917.00 points; France's CAC 40 trades 0.3 percent higher at 5,255.50 points
Commodities Recap
Crude oil prices declined to a 4-month low as an economic slowdown started to dent energy demand, however, the downside was limited after Saudi Arabia said a consensus was emerging with other producers about extending supply cuts. International benchmark Brent crude was trading 0.3 percent lower at $60.60 per barrel by 1007 GMT, having hit a low of $60.20 earlier, its lowest since Jan. 29. U.S. West Texas Intermediate was trading 0.2 percent down at $52.74 a barrel, after falling as low as $52.11 on Monday, its lowest since the Feb. 12
Gold prices rallied to a fresh 3-month high as global slowdown worries driven by trade conflicts sent investors seeking safety in the safe-haven assets. Spot gold was up 0.05 percent up at $1,325.25 per ounce by 1011 GMT, having touched a high of $1,328.95, its highest since Feb. 27. U.S. gold futures were up 0.3 percent at $1,331.30 an ounce.
Treasuries Recap
The U.S. Treasuries snapped gains during the afternoon session, ahead of the Federal Open Market Committee (FOMC) Chair Jerome Powell’s speech, scheduled to be held today by 13:45GMT, besides a host of additional speeches by members Williams and Brainard, due at 12:30GMT and 19:45GMT respectively. The yield on the benchmark 10-year Treasury yield jumped 2 basis points to 2.102 percent, the super-long 30-year bond yields also surged nearly 2 basis points to 2.566 percent and the yield on the short-term 2-year gained 4 basis points to 1.881 percent.
The United Kingdom’s gilts remained flat during European session despite a contraction in the country’s construction PMI for the month of May, released, early today. Investors remain keen to watch the services PMI for the similar period and Bank of England (BoE) Governor Mark Carney’s speech, due on June 5 and 6 by 08:30GMT and 09:00GMT respectively for some additional direction in the debt market. The yield on the benchmark 10-year gilts, remained tad higher at 0.869 percent, the super-long 30-year bond yields hovered around 1.454 percent and the yield on the short-term 2-year traded 1 basis point higher at 0.581 percent.
The German bunds gained during European session of the second trading day of the week after eurozone’s consumer price inflation (CPI) data for the month of May betrayed market expectations, while unemployment rate for April, rose, thus weighing on bond yields. The German 10-year bond yields, which move inversely to its price, slipped nearly 1-1/2 basis points to -0.212 percent, the yield on 30-year note also suffered 1-1/2 basis points to 0.402 percent and the yield on short-term 2-year traded nearly 1 basis point lower at -0.650 percent.
The Australian government bond yields slid during early Asian session after the Reserve Bank of Australia (RBA) cut its benchmark interest rate to its historic low by 25 basis points to 1.25 percent, with an aim to assist faster progress in reducing unemployment and achieve more assured progress towards the inflation target. Investors will now be eyeing the country’s gross domestic product (GDP) for the first quarter of this year, scheduled to be released on June 5 by 01:30GMT for further direction in the debt market. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slipped nearly 1 basis point to 1.497 percent, the yield on the long-term 30-year bond also edged 1 basis point to 2.163 percent and the yield on short-term 2-year traded tad down at 1.124 percent.
