Market Roundup
- EUR/USD +0.14%, USD/JPY -0.10%, GBP/USD -0.16%, EUR/GBP +0.28%
- DXY -0.09%, DAX +0.39%, FTSE +0.16%, Gold +0.06%
- Suicide bomber kills at least 22 at Ariana Grande concert in Britain
- Trump plays up Middle East peace hopes after talks with Palestinian president
- Euro zone business kept up fast pace in May-PMI; 56.8 vs prev 56.8
- Oil prices fall on White House proposal to sell U.S. oil reserves; Brent -1.1%
- German Ifo business morale hits all-time-high; 114.6 vs prev 112.9
- IMF needs more realism in euro zone assumptions on Greece
- DE Q1 GDP detailed QQ 0.6% vs prev 0.6%
- DE Q1 GDP detailed yy 1.7% vs prev 1.7%
- DE May comp flash PMI 57.3 vs prev 56.7
- GB Apr PSNB mm 9.648b vs prev 4.365b
- GB CBI Retail sales balance May +2 vs +38 in April (reuters poll +10)
Economic Data Ahead
- (0830 ET/1230 GMT) Philly Fed Non-Manufacturing Survey (May) (prev 34.9 firm)
- (0855 ET/1255 GMT) Redbook Weekly Same-Store Sales Index (prev +2.4% y/y)
- (0945 ET/1345 GMT) Markit Manufacturing PMI (flash May) (mkt 53.0, prev 52.8)
- (0945 ET/1345 GMT) Markit Services PMI (flash May) (mkt 53.1, prev 53.1)
- (1000 ET/1400 GMT) New Home Sales (Apr) (mkt 610k SAAR, prev 621k SAAR)
- (1000 ET/1400 GMT) Richmond Fed Manufacturing Composite (May) (prev 20)
- (1000 ET/1400 GMT) Richmond Fed Services Revenue (May) (prev 22)
Key Events Ahead
- (0900 ET/1300 GMT) FRB Minneapolis's Kashkari Q&A at Opportunity and Incluse Growth conf
- (1145 ET/1545 GMT) FedTrade Operation 30-year Ginnie Mae (max $975 mn)
- (1515 ET/1915 GMT) FRB Minneapolis's Kashkari roundtable on homeownership
- (1700 ET/2100 GMT) FRB Philadelphia's on the economic outlook; New York
FX Beat
DXY: U.S dollar index trading extremely weak and hits fresh five month low at 96.80. Intraday trend is weak as long as resistance 97.45 holds. Downside capped by 61.8% fibo at 96.40 and bearish continuation can be seen below that level. The near term resistance is around 97.45 (89 W EMA) and any break above will take the index till 98.60.
EUR/USD: EUR/USD is continuing its winning streak from the past two weeks and hit fresh six months high at 1.12678. We have seen a "Bearish Bat Pattern" formed on the daily charts with Potential reversal zone at 1.13660. Short term bullishness can be seen only above that level. On the lower side, minor support is around 1.116 (23.6% retracement of 1.08290 and 1.12635) and break below will drag the pair till 1.10985 (23.6% retracement of 1.05674 and 1.12635)/1.1050. Immediate resistance is around 1.1299 and any break above will take the pair till 1.13660/1.150 level.
EUR/GBP: Pound sold-off overnight on reports of the Manchester terror attacks. EUR/GBP is extending gains after breakout above major resistance at 0.8595 (converged 200-DMA & trendline). Momentum indicators on weekly charts are biased higher. The pair has broken above weekly 50-SMA at 0.8534. Near-term reversal in trend likely on close below 200-DMA at 0.8595.
GBP/USD: Cable hit highs around 1.30475 and declined slightly from the level on account of renewed worries over Brexit negotiations. Minor profit booking seen after hitting 7- month high. The pair came down till 1.2950 and shown a minor recovery slightly from that level. On the higher side, any close above 1.30500 confirms bullish continuation and a jump till 1.3088/13120 likely. Major support is around 1.2950 (resistance turned into support) and any break below will drag the pair down till 1.2900/1.2860.
USD/CHF: USD/CHF broken the low of 0.97244 made in the previous week and declined till 0.96918 on Monday to hits fresh 8-week low. It is currently trading around 0.97. 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 below that trend line. On the higher side near term resistance is around 0.9760 and any break above will take the pair till 0.9820 (support turned into resistance)/0.9860.The pair is neutral phase for the long term and it should break above 1.03435 for further bullishness.
AUD/USD: AUD/USD has broken above major trendline resistance at 0.7465 and upside is currently consolidating at 0.75 levels. The pair is extending upside in continuation of the 'Bullish Bat Pattern' and breakout above 0.75 will see resumption of upside. We see scope for test of 200-DMA at 0.7540. Violation there could see further upside. Technical studies are still biased higher. RSI and Stochs point north while MACD shows a bullish crossover on signal line. Major support is seen at 0.7355 (trendline), while 0.7540 (200-DMA) is major resistance on the upside.
Equities Recap
Tokyo's Nikkei closed down 0.3 percent as Japanese manufacturing activity expanded at the slowest pace in six months in May. Hong Kong’s Hang Seng index closes up 0.1 pct at 25,403.15 points, while China's CSI300 index closes up 0.4 pct at 3,424.19 points and Shanghai Composite index closes down 0.4 pct at 3,061.95 points
European stocks edged up after a sluggish start on Tuesday. London FTSE, Frankfurt's DAX and the CAC in Paris pushed up 0.3 percent, 0.5 and 0.7 percent respectively in early trade.
Commodities Recap
Gold held steady on Tuesday, but Manchester terror attacks and U.S. political turmoil likely to keep the yellow metal in demand. Spot gold was nearly flat at $1,259.81 per ounce as of 0823 GMT. while U.S. gold futures dipped 0.1 percent to $1,259.70 an ounce.
Silver was down 0.2 percent at $17.08 an ounce. Platinum was down 0.1 percent at $945.05 an ounce but hovered near its highest in more than three weeks touched on Monday. Palladium dipped 0.4 percent to $767.20 per ounce.
Oil prices edged lower on Tuesday on White House proposal to sell U.S. oil reserves. Brent crude ended a run of four days of consecutive gains to trade 36 centslower at $53.51 per barrel at 0831 GMT. U.S. light crude was down 33 cents at $50.80.
Treasuries Recap
UST 10-year yields were flat to lower, keeping pressure on greenback. The spread between two-year Treasury notes and 10-year Treasury notes is at the lowest level since October.
New Zealand government bonds gained, sending yields 2.5 basis points lower along most of the curve. Australian government bond futures gained, with the three-year bond contract up 2 ticks at 98.250. The 10-year contract added 4 ticks to 97.52.
The yield premium British gilts offer over German Bunds edged downwards to its lowest since August 2016 on Tuesday, as markets digested the news of Manchester terror attack overnight. British government bond futures initially opened up around 30 ticks on the day, broadly in line with German Bund futures, before paring gains to stand 7 ticks on the day at 0748 GMT.
The spread between 10-year gilt and Bund yields narrowed by just over a basis point to 67.7 basis points, its lowest during main trading hours since late August 2016. Ten-year yields were 1 basis point down on the day at 1.077 percent.
