Market Roundup
- Next round of U.S. tariffs on China at least a month away -Mnuchin
- Fed's patience on interest rates to last 'for some time'
- Fed officials get a warning about a possible approach to fight the next recession
- Brexit crisis: Minister quits, piling pressure on Britain's May
- U.S. Navy sends two ships through strategic Taiwan Strait
- BOJ to heed market impact when adjusting interest rates - deputy governor
- India's Modi takes early lead as counting of 600 mln votes begins
- Japan May Nikkei Mfg PMI Flash, 49.6, 50.2 prev
- Australia May Manufacturing PMI, 51.1, 51.0 prev
- Australia May Composite PMI, 52.2, 50.6 prev
Economic Data Ahead
- (0245 ET/0645 GMT) France May Business Climate Mfg, 101 f'cast, 101 prev
- (0315 ET/0715 GMT) France May Markit Mfg Flash PMI, 50.0 f'cast, 50.0 prev
- (0330 ET/0730 GMT) Germany May Markit Mfg Flash PMI, 44.8 f'cast, 44.4 prev
- (0400 ET/0800 GMT) Germany May Ifo Business Climate New, 99.1 f'cast, 99.2 prev
- (0400 ET/0800 GMT) Germany May Ifo Current Conditions New, 103.5 f'cast, 103.3 prev
- (0400 ET/0800 GMT) Germany May Ifo Expectations New, 95.0 f'cast, 95.2 prev
- (0400 ET/0800 GMT) EZ May Markit Mfg Flash PMI, 48.1 f'cast, 47.9 prev
- (0400 ET/0800 GMT) EZ May Markit Comp Flash PMI, 51.7 f'cast, 51.5 prev
Key Events Ahead
- N/A ECB's Mario Draghi participates in 81st plenary meeting of the Group of Thirty in Madrid
- (0415 ET/0815 GMT) German Economy Minister Peter Altmaier speaks at MTU Rolls Royce plant in Friedrichshafen
- (0440 ET/0840 GMT) ECB's Luis de Guindos speaks on "Opportunities for European Banking and Capital Markets" organised by Association for Financial Markets in Europe in Frankfurt
- (0730 ET/1130 GMT) Irish Central Bank Governor Philip Lane speaks at launch of new Trinity College Dublin business school in Dublin
- (1300 ET/1700 GMT)Dallas Fed's Robert Kaplan, Richmond Fed's President Thomas Barkin, Atlanta Fed's Raphael Bostic and San Francisco Fed's Mary Daly participate in a panel on "Technology-Enabled Disruption: Implications for Business, Labor Markets and Monetary Policy" in Dallas
FX Beat
DXY: The dollar index rallied to a near 4-week peak after the minutes of the U.S. Federal Reserve meeting indicated that there was no hurry in cutting rates. The greenback against a basket of currencies traded 0.05 percent up at 98.14, having touched a high of 98.16 earlier, its highest since April 26. FxWirePro's Hourly Dollar Strength Index stood at 85.22 (Slightly Bullish) by 0500 GMT.
EUR/USD: The euro declined, extending losses for the third straight session, ahead of the May 23-26 European parliamentary election. Investors’ attention will also remain on the German and eurozone manufacturing purchasing managers' index releases later in the day that could provide further direction to the major. The European currency traded 0.05 percent down at 1.1145, having touched a low of 1.1142 on Tuesday, its lowest since May 3. FxWirePro's Hourly Euro Strength Index stood at 29.38 (Neutral) by 0500 GMT. Investors’ attention will remain on German IFO survey, Markit PMI's and ECB De Guindos' speech, ahead of the U.S. unemployment benefit claims, Markit prelim PMI's, home sales and speeches by Fed Kaplan, Daly, Bostic and Barkin. Immediate resistance is located at 1.1218 (May 7 High), a break above targets 1.1262 (April 22 High). On the downside, support is seen at 1.1118 (April 25 Low), a break below could drag it below 1.1100.
USD/JPY: The Japanese yen gained against the dollar, extending the rebound from a 2-week low as persistent U.S.-China trade fears and Brexit concerns supported risk aversion. The major was trading 0.05 percent down at 110.30, having hit a high of 110.67 on Tuesday, its highest since May 7. FxWirePro's Hourly Yen Strength Index stood at -92.07 (Slightly Bearish) by 0500 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. unemployment benefit claims, Markit prelim PMI's, home sales and speeches by Fed Kaplan, Daly, Bostic and Barkin. Immediate resistance is located at 110.68 (61.8% retracement of 111.68 and 109.01), a break above targets 111.11 (78.6% retracement). On the downside, support is seen at 109.90 (May 8 Low), a break below could take it lower at 109.47 (May 10 Low).
GBP/USD: Sterling slumped; hovering towards a 4-month trough recorded in the previous session as markets anticipated a rising chance of Britain leaving the European Union without a transition deal to smooth economic disruption. The major traded 0.2 percent down at 1.2638, having hit a low of 1.2624 on Wednesday; it’s lowest since Jan. 4. FxWirePro's Hourly Sterling Strength Index stood at -89.43 (Slightly Bearish) 0500 GMT. Investors’ attention will remain on the U.S. fundamental drivers, amid a lack of data from the UK docket. Immediate resistance is located at 1.2726 (23.6% retracement of 1.3047 and 1.2624). a break above could take it near 1.2788 (38.2% retracement). On the downside, support is seen at 1.2615 (Dec. 27 Low), a break below targets 1.2570 (Dec. 17 Low). Against the euro, the pound was trading 0.2 percent down at 88.19 pence, having hit a low of 88.39 on Wednesday, it’s lowest since Feb. 14.
AUD/USD: The Australian dollar plunged after a Reuters poll showed RBA's first interest rate cut in almost three years on June 4, with a follow-up move likely in August, as the central bank looks to revive growth and inflation. The Aussie trades 0.1 percent down at 0.6874, having hit a low of 0.6864 on Friday, it’s lowest since Jan. 3. FxWirePro's Hourly Aussie Strength Index stood at -18.11 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6846, a break below targets 0.6811. On the upside, resistance is located at 0.6933 (May 16 High), a break above could take it near 0.6961 (Apr. 30 High).
NZD/USD: The New Zealand dollar tumbled to a fresh 7-month low as reports that the United States could impose restrictions on Chinese technology company Hikvision renewed market concerns about trade. The Kiwi trades 0.05 percent down at 0.6492, having touched a low of 0.6483 earlier, its lowest level Oct. 26. FxWirePro's Hourly Kiwi Strength Index was at -70.43 (Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6547 (10-DMA), a break above could take it near 0.6591 (May 14 High). On the downside, support is seen at 0.6474 (Oct. 4 Low), a break below could drag it below 0.6442 (Oct. 10 Low).
Equities Recap
Asian shares plunged to a 4-month low, amid risk aversion in the broader markets due to persistent U.S.-China trade fears and Brexit concerns.
MSCI's broadest index of Asia-Pacific shares outside Japan traded 0.7 percent down.
Tokyo's Nikkei fell 0.7 percent to 21,124.80 points, Australia's S&P/ASX 200 index declined 0.3 percent to 6,491.80 points and South Korea's KOSPI slumped 0.2 percent to 2,061.69 points.
Shanghai composite index eased 1.2 percent to 2,857.26 points, while CSI 300 index traded 1.6 percent down at 3,592.08 points.
Hong Kong’s Hang Seng traded 1.6 percent lower at 27,265.39 points. Taiwan shares shed 1.4 percent to 10,308.37 points
Commodities Recap
Crude oil prices declined to an over 1-week low amid surging U.S. crude inventories and weak demand from refineries. International benchmark Brent crude was trading 0.5 percent lower at $70.45 per barrel by 0450 GMT, having hit a high of $73.39 on Monday, its highest since Apr, 26. U.S. West Texas Intermediate was trading 0.5 percent down at $61.05 a barrel, after rising as high as $63.79 on Monday, its highest since the May 1.
Gold prices eased, extending losses for the eighth straight session, as simmering U.S.-China trade tensions underpinned the dollar. Spot gold was trading 0.05 percent down at $1,270.85 per ounce by 0453 GMT, having touched a low of $1,269.41 on Tuesday, its lowest since May 3. U.S. gold futures edged down 0.1 percent to $1,272.80.
Treasuries Recap
The yields on the U.S. 2-year Treasuries of 2.237 percent are well below the current effective funds rate at 2.39 percent.
The Japanese government bond prices edged higher, with the five-year and 10-year JGB yields each declining 0.5 basis point to minus 0.170 percent and minus 0.060 percent, respectively. The 30-year yield also fell half a basis point to 0.515 percent.
The Canadian government bond prices were higher across a flatter yield curve. The two-year rose 3.5 Canadian cents to yield 1.666 percent and the 10-year was up 39 Canadian cents to yield 1.720 percent .On Tuesday, the 10-year yield touched its highest intraday since May 3 at 1.764 percent.
