Market Roundup
- U.S. team in North Korea for talks on summit, Trump says
- U.S. warships sail near South China Sea islands claimed by Beijing
- Italy's president calls in former IMF official amid political turmoil
- End "hide and seek" Brexit approach, Barnier tells UK
- China April industrial profit growth rebounds to 6-month high
- Japan's PM defends its automakers against U.S. import probe
- Colombian peace deal critic to face fiery leftist in runoff
- Oil output could return to Oct'16 level, says Russia's Novak
Economic Data Ahead
- No major economic data releases
Key Events Ahead
- No significant events scheduled
FX Beat
DXY: The dollar index retreated from recent highs as the U.S. Treasury yields declined to 3-week lows, while investors awaited the upcoming U.S.-North Korea summit. The greenback against a basket of currencies trades 0.4 percent down at 93.91, having touched a high of 94.30 on Friday, its highest since Dec. 14. FxWirePro's Hourly Dollar Strength Index stood at -101.70 (Highly Bearish) by 0500 GMT.
EUR/USD: The euro rebounded from a 6-1/2 month low after Italy's President tried to allay investor worries about political unrest in the country. However, the prospect of a near-term election limited gains in the major. The European currency traded 0.6 percent up at 1.1715, having touched a low of 1.1645 on Friday, its lowest since Nov. 14. FxWirePro's Hourly Euro Strength Index stood at 2.45 (Neutral) by 0500 GMT. Investors’ attention will remain on series of data from the Eurozone economies and developments surrounding the Italian political environment as U.S. markets remain closed in observance of Memorial Day. Immediate resistance is located at 1.1771 (10-DMA), a break above targets 1.1874 (21-DMA). On the downside, support is seen at 1.1622 (Nov. 10 Low), a break below could drag it till 1.1606 (Nov. 1 Low).
USD/JPY: The dollar declined as the U.S. 10 year treasury yield fell from 2.99 percent to 2.92 percent, recording a 3-week low, while 2-year yields fell from 2.52 percent to 2.47 percent. However, news that a U.S. team had arrived in North Korea to prepare for a proposed summit between him and North Korean leader Kim Jong Un limited the downside. The major was trading 0.1 percent down at 109.45, having hit a low of 108.95 on Thursday, its lowest since May 8. FxWirePro's Hourly Yen Strength Index stood at 56.91 (Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, as U.S. markets remain closed in observance of Memorial Day. Immediate resistance is located at 110.12 (5-DMA), a break above targets 110.50. On the downside, support is seen at 108.99 (May 9 Low), a break below could take it lower 108.64.
GBP/USD: Sterling steadied after falling to a 5-month earlier in the day on worries over Brexit and signs of sustained weakness in Britain's economy. Moreover, scaled back expectations for when and how much the Bank of England will raise interest rates weighed on market sentiment. Sterling traded 0.3 percent up at 1.3336, having hit a low of 1.3302, it’s lowest since Nov. 28. FxWirePro's Hourly Sterling Strength Index stood at -23.16 (Neutral) by 0500 GMT. Investors’ will track overall market sentiment, as UK markets remain closed in observance of Spring Bank holiday. Immediate resistance is located at 1.3440 (10-DMA), a break above could take it near 1.3520 (21-DMA). On the downside, support is seen at 1.3278 (Nov. 24 Low), a break below targets 1.3245. Against the euro, the pound was trading 0.4 percent down at 87.91 pence, having hit a low of 87.96 pence on Wednesday, it’s lowest since May 15.
AUD/USD: The Australian dollar edged up on revived hopes a summit between U.S. President Donald Trump and North Korean leader Kim Jong Un will go ahead as scheduled. The Aussie trades 0.3 percent up at 0.7568, having hit a high of 0.7605 on Tuesday; it’s highest since Apr. 25. FxWirePro's Hourly Aussie Strength Index stood at 75.32 (Slightly Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, amid a lack of economic data from both the economies. Immediate support is seen at 0.7525 (21-DMA), a break below targets 0.7472 (May 1 Low). On the upside, resistance is located at 0.7605 (May 22 High), a break above could take it near 0.7682 (Apr. 23 High).
NZD/USD: The New Zealand dollar rose to a 6-day peak as upbeat China’s April industrial profits combined with the renewed optimism over the US - North Korea Summit boosted the sentiment around the Kiwi. The major trades 0.4 percent up at 0.6948, having touched a high of 0.6959 earlier, its highest level since May 22. FxWirePro's Hourly Kiwi Strength Index was at 131.95 (Highly Bullish) by 0500 GMT. Immediate resistance is located at 0.6974, a break above could take it near 0.7030. On the downside, support is seen at 0.6872, a break below could drag it below 0.6835.
Equities Recap
Asian shares rallied on signs the United States and North Korea were still working towards holding a summit, while crude oil prices slumped on expectations major producers may ease output curbs.
MSCI's broadest index of Asia-Pacific shares outside Japan edged surged 0.2 percent.
Tokyo's Nikkei rose 0.1 percent to 22,481.09 points, Australia's S&P/ASX 200 index eased 0.5 percent to 6,004.00 points and South Korea's KOSPI gained 0.9 percent to 2,482.35 points.
Shanghai composite index fell 0.4 percent to 3,130.31 points, while CSI300 index was trading 0.1 percent up at 3,825.12 points.
Hong Kong’s Hang Seng was trading 0.7 percent higher at 30,783.75 points. Taiwan shares added 0.4 percent to 10,987.77 points.
Commodities Recap
Crude oil prices declined by more than 1 percent, extending a steep fall in the previous session, as the market eyed a rise in output from Russia, the United States, and Saudi Arabia. International benchmark Brent crude was trading 1.6 percent down at $75.00 per barrel by 0437 GMT, having hit a low of $74.46 earlier, its lowest since May 8. U.S. West Texas Intermediate was trading 1.9 percent down at $66.17 a barrel, after falling as low as $65.83, its lowest since Apr. 17.
Gold prices slumped as a stronger dollar and revived hopes of a U.S.-North Korea summit weighed on safe-haven demand. Spot gold was 0.3 percent down at $1,297.94 per ounce at 0442 GMT, having hit a high of $1,307.65 on Friday, its highest price level since May 15. U.S. gold futures for June delivery fell 0.5 percent to $1,297.10 per ounce.
Treasuries Recap
The Japanese government bonds remained range-bound during late Asian session as investors wait to watch the country’s unemployment rate and retail sales data for the month of April, scheduled to be released today and on May 29 by 23:30GMT and 23:50GMT respectively. The yield on the benchmark 10-year JGB note, which moves inversely to its price, remained tad lower at 0.03 percent, the yield on the long-term 30-year note slipped 1/2 basis point to 0.73 percent and the yield on short-term 2-year hovered around -0.13 percent.
The Australian government bonds rallied on the start of the week following weekend news regarding U.S.-North Korea relations, which did not appear to have a big impact on most markets. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, fell 5 basis points to 2.745 percent, the yield on the long-term 30-year Note also dipped 2-1/2 basis points to 3.273 percent and the yield on short-term 2-year down 3-1/2 basis points to 1.979 percent.
