Market Roundup
• US Apr Factory Orders, -0.8%, -0.5% forecast, 1.6% previous.
• US Apr Durables, Ex-Def, R MM, -1.9%, -1.9% previous.
• US Apr Durable Goods, R MM, -1.6%, -1.7% previous.
• US Apr Durables Ex-Transport R MM, 0.9%, 0.9% previous.
• US Apr Nondef Cap Ex-Air R MM, 1.0%, 1.0% previous.
• US Apr Factory Ex- Transport MM, 0.4%, 0.3% previous.
• US May ISM-New York Index, 782.5, 779.3 previous.
• US May ISM NY Biz Conditions, !56.4, 64.3 previous.
• US May Employment Trends, 107.7, 108.1 previous.
• Trade war turns Canada's G7 summit into six-plus-Trump .
• China says in principle door is open to trade talks with U.S.
• EU says first steel safeguard measures could come in July.
• Canada vows to protect its steel, aluminum sectors from U.S. tariffs.
• UK business warns May post-Brexit frictionless trade more important than tariffs – source.
• Trump, North Korea's Kim due to meet 9 a.m. June 12 in Singapore -White House.
• Italy will no longer be "Europe's refugee camp", vows new government.
Looking Ahead - Economic Data (GMT)
• 4 Jun 23:30 Australia May AIG Services Index, 55.2 previous
• 4 Jun 23:30 Japan Apr All Housing Spding YY, 0.8% forecast, -0.7% previous
• 4 Jun 23:30 Japan Apr All Housing Spding MM, 0.7% forecast, -0.1% previous
• 5 Jun 00:30 Japan May Services PMI, 52.5 previous
• 5 Jun 01:30 Australia Q1 Current Account Balance, -9.95bln forecast, -14.00 bln previous
• 5 Jun 01:30 Australia Q1 Net Exports Contribution, 0.50% forecast, -0.50% previous
• 5 Jun 01:45 China May Caixin Services PMI, 52.9 previous
• 5 Jun 04:30 Australia Jun RBA Cash Rate, 1.50% forecast, 1.50% previous
• 5 Jun N/A New Zealand w/e Dairy Prices, 1.9% previous
• 5 Jun N/A New Zealand w/e Milk Auctions, 3,637 previous
Looking Ahead - Events, Other Releases (GMT)
• 07:30 BoE's Financial Policy Committee member Anil Kashyap gives remarks at the National Bank of Slovakia Conference on the Challenges for Central Banking in Bratislava, Slovakia
• 07:30 Czech Republic, Austrian and Switzerland Central Bank governors speak at a conference in Slovakia
• 11:00 BoE's Deputy Governor for Financial Stability Jon Cunliffe speaks at the Futures Industry Association International Derivatives Expo in London
• 11:20 The Head of Division at Bank of England, Martin Etheridge: Panellist at the Money 20/20 Europe conference in London
• 13:00 ECB's Draghi participates in Two Presidents' Talk with Jean-Claude Trichet organised by the ECB on the occasion of its 20th anniversary in Frankfurt, Germany
Currency Summaries
EUR/USD is likely to find support at 1.1615 levels and currently trading at 1.1695 levels. The pair has made session high at 1.1740 and hit lows at 1.2108 levels. The euro strengthened against US dollar on Monday as political tensions eased in Italy, supporting a rebound in risk appetite as worries about an escalating trade battle between the United States and other major economies took a back seat. Better-than-expected U.S. jobs data last week underlined the strength of the U.S. economy and the near-certainty of a Federal Reserve interest rate rise this month, as well as increasing expectations of a fourth hike this year, factors which have powered a recent revival in the dollar. Rallying stock markets helped investors to shrug off concerns that trade disputes among the world's largest economies will hit growth. German Chancellor Angela Merkel's weekend statement that Germany was in favour of moves toward a European Monetary Fund to resolve issues of euro zone sovereign debt sustainability also helped lift the mood. The prospect of a snap election in Italy shook investor risk sentiment last week as some feared the vote could effectively turn into a referendum on the country's euro membership. But the euro has drifted up since then as markets gained some composure after a deal was reached on a coalition government, averting potentially destabilizing snap elections. In late trading, the euro was up 0.3 percent at $1.1695, after rising as high as $1.1740, its highest level since May 24, pulling further away from 2018 lows of $1.151 last week.
GBP/USD is supported in the range of 1.3249 levels and currently trading at 1.3311 levels. It reached session high at 1.3393 and dropped to session low at 1.3294 levels. Sterling declined against the dollar on Monday as concerns about Brexit clouded the outlook for the currency after a brief rally encouraged by stronger-than-expected data on Britain's construction sector. Early in Monday's session, sterling hit a seven-day high of $1.3398, amid broad dollar weakness and a purchasing managers' index (PMI) for Britain's construction sector that showed activity at 52.5 for May, higher than 52 predicted by analysts. But the pound later relinquished all of its gains and fell 0.3 percent to $1.3311. It also slid half a percent against the euro to 87.85 pence as the single currency rallied on receding worries about a political crisis in Italy. Analysts said the pound's decline was partly due to a flurry of headlines about Brexit and Britain's future EU ties. With time running out for Britain to secure a deal before exiting the European Union next March, diplomats are hoping an EU summit on June 28-29 could break the deadlock. Investors are also studying economic data for signs of whether the Bank of England will raise interest rates to curb inflation this year.
USD/CAD is supported at 1.2815 levels and is trading at 1.2930 levels. It has made session high at 1.2943 and lows at 1.2898 levels. The Canadian dollar strengthened against its U.S. counterpart on Monday as the greenback broadly fell and risk appetite improved. The U.S. dollar slipped against a basket of major currencies as easing Italian political tensions boosted the euro and investors' appetite for risk. Stocks and some other risk-sensitive assets, like the commodity-linked Canadian dollar, rose despite lingering worries about an escalating trade battle between the United States and other major economies. Finance ministers of the closest U.S. allies vented their anger on Saturday over Washington's imposition of metal import tariffs, setting the tone for a heated G7 summit in Quebec. Canadian Prime Minister Justin Trudeau this week plays host to a summit of the Group of Seven leading industrialized nations with six of the seven members outraged at the United States over a slew of recent moves by President Trump. The Canadian dollar was last trading 0.2 percent higher at C$1.2931 to the greenback. The currency, which rose 0.2 percent last week, traded in a range of C$1.2898 to C$1.2959.
AUD/USD is supported around 0.7574 levels and currently trading at 0.7650 levels. It hit session high at 0.7666 and made session lows at 0.7636 levels. The Australian dollar rose to hit six-week high on Monday against its U.S. counterpart after surprisingly robust first-quarter data pointed to stronger than expected economic growth. Stronger-than-expected data released on Monday suggested first-quarter economic growth might be faster than current consensus forecasts. Separate data out on Monday showed retail sales bounced 0.4 percent in April, beating expectations for a 0.2 percent increase and a flat result in the previous month. The Australian dollar climbed to $0.7615, a level not seen since April 24. The Aussie faces stiff chart resistance around $0.7600. If it is able to sustain the move above current levels the next stop is seen at $0.7655. All eyes will be on the gross domestic product (GDP) report due on Wednesday is expected to show domestic output rose 0.8 percent in the first quarter, according to a poll of economists. That would take annual growth to 2.7 percent, still below government and central bank forecasts of a 3.0 percent increase.
Equities Recap
European shares extended a recovery on Monday as dealmaking took centre stage after a week of political tension in Italy and Spain as well as friction between the United States and its allies over trade policies.
The UK's benchmark FTSE 100 closed up by 0.49 percent, FTSEurofirst 300 ended the day up by 0.22 percent, Germany's Dax ended up by 0.44 percent, and France’s CAC finished the up by 0.19 percent.
Wall Street's three major indexes rose on Monday, with technology and consumer stocks providing the strongest boost as investors bet on a continuation of strong economic growth while falling oil prices weighed on the energy sector.
Dow Jones closed up by 0.72 percent, S&P 500 ended up 0.45 percent, Nasdaq finished the day up by 0.70 percent.
Treasuries Recap
U.S. Treasury yields rose on Monday with the 10-year yield hitting one-week highs as investors pared safe-haven holdings of lower-risk government debt due to fading fears about political turmoil in Italy and Spain.
Benchmark 10-year Treasury notes' yield was up 4.0 basis points at 2.935 percent after touching the highest in a week. Last Tuesday, it tumbled to a seven-week low at 2.759 percent on record volume in the futures market.
Two-year yield rose to 2.508 percent, up 4.0 basis points on renewed expectations the Fed may raise overnight borrowing costs three more times by year-end to a target range of 2.25-2.50 percent.
Commodities Recap
Oil prices fell about 2 percent on Monday, with U.S. crude touching its lowest level in nearly two months, breaking below technical support levels as investors kept selling amid growing U.S. production, possible global supply growth and nagging trade tensions.
Brent crude futures lost $1.50 a barrel, or 2 percent, to settle at $75.29 a barrel. U.S. crude ended $1.06, or 1.6 percent, lower at $64.75 a barrel, after earlier touching $64.57, its lowest since April 10.
Gold prices were barely changed on Monday, supported by a wilting dollar as Italian political risk receded, though the prospect of another rise in U.S. interest rates capped gains.
Spot gold was flat at $1,292.90 per ounce by 1:34 p.m. EDT (1734 GMT), while U.S. gold futures for August delivery settled down $2, or 0.2 percent, at $1,297.30.
