Market Roundup
- Trump says 'dangerous' Huawei could be included in U.S.-China trade deal
- U.S. considers duties on countries that undervalue currency -Commerce Department
- China says more efforts should be made to stabilise and improve trade
- Trump orders intelligence community to cooperate with review on Russia probe origins
- UK's May hangs on after Brexit gambit backfires
- In upset, Dutch Labour party trumps populists in European vote
- Japan Apr CPI, Core Nationwide YY, 0.9%, 0.9% f'cast, 0.8% prev
- New Zealand Apr Trade Balance (NZD), 433.0 mln, 922.0 mln prev, 824.0 mln rvsd
- US-based equity funds attract $2.7 bln in inflows week-ended Wednesday, money market funds attract $28 bln-Lipper
- Foreign CB US debt holdings -$537 mln to $3.468 tln May 22 week
- Treasuries -$2.367 bln to $3.060 tln, agencies +$854 mln to $333.672 bln
Economic Data Ahead
- (0430 ET/0830 GMT) Great Britain Apr Retail Sales MM, -0.3% f'cast, 1.1% prev
- (0430 ET/0830 GMT) Great Britain Apr Retail Sales YY, 4.6% f'cast, 6.7% prev
- (0600 ET/1000 GMT) Great Britain May CBI Distributive Trades, 8 f'cast, 13 prev
Key Events Ahead
- N/A Eurogroup head Mario Centeno speaks at Economic Outlook Forum in Lisbon
- (0415 ET/0915 GMT) BoE's Sam Woods delivers keynote speech at Building Society Association Annual Conference in London
- (0430 ET/0930 GMT) German Finance Minister Olaf Scholz speaks at annual conference of finance ministers of the federal states in Berlin
- (0600 ET/1000 GMT) Riksbank Deputy Governor Cecilia Skingsley holds lunch lecture on Nordea's economic situation and current monetary policy in Stockholm
FX Beat
DXY: The dollar index plunged to a 1-week low, weighed down by rising expectations for an interest rate cut by the U.S. Federal Reserve later this year. The greenback against a basket of currencies traded 0.2 percent down at 97.71, having touched a high of 98.37 on Thursday, its highest since May 2017. FxWirePro's Hourly Dollar Strength Index stood at -5.69 (Neutral) by 0500 GMT.
EUR/USD: The euro steadied after rebounding from a 2-year low in the previous session, as the greenback plunged after downbeat U.S. data reignited hopes of a rate cut by the Federal Reserve this year. On Thursday, the major came under pressure after a survey showed activity in Germany's services and manufacturing sectors fell in May, stoking fears about the effect of unresolved trade disputes on the economy. The European currency traded flat at 1.1182, having touched a low of 1.1107 on Thursday, its lowest since May 2017. FxWirePro's Hourly Euro Strength Index stood at 43.3 (Neutral) by 0500 GMT. Investors’ attention will remain on the U.S. durable goods orders, amid a lack of data from the Eurozone docket. 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 dollar eased, extending losses for the third straight session, amid fears that a trade war with China will dent the U.S. economy more than previously expected. The major was trading 0.05 percent down at 109.57, having hit a high of 110.67 on Tuesday, its highest since May 7. FxWirePro's Hourly Yen Strength Index stood at 119.84 (Highly Bearish) by 0500 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. durable goods orders. Immediate resistance is located at 110.11 (May 11 High), a break above targets 110.67 (May 21 High). On the downside, support is seen at 109.01 (May 13 Low), a break below could take it lower at 108.80 (Jan. 30 Low).
GBP/USD: Sterling consolidated near a 4-1/2 month low amid deepening political uncertainty in Britain as Prime Minister Theresa May held on to power after her final attempt to secure a Brexit deal failed to win over lawmakers. The major traded 0.2 percent up at 1.2680, having hit a low of 1.2605 on Thursday; it’s lowest since Jan. 3. FxWirePro's Hourly Sterling Strength Index stood at -79.61 (Slightly Bearish) 0500 GMT. Investors’ attention will remain on the UK retail sales, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2710 (23.6% retracement of 1.3047 and 1.2605). a break above could take it near 1.2774 (38.2% retracement). On the downside, support is seen at 1.2570 (Dec. 17 Low) a break below targets 1.2529 (Dec. 14 Low). Against the euro, the pound was trading flat at 88.32 pence, having hit a low of 88.39 on Wednesday, it’s lowest since Feb. 14.
AUD/USD: The Australian dollar eased after Westpac predicted RBA will cut interest rate three times this year, more than the market's view for two easings. The Aussie trades 0.05 percent down at 0.6896, having hit a low of 0.6864 on Thursday, it’s lowest since Jan. 3. FxWirePro's Hourly Aussie Strength Index stood at -71.62 (Bearish) 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 extended previous session's rebound as the greenback eased following a drop in the U.S. Treasury yields. On Thursday, the major plunged to a 7-month low as markets speculated that RBA rate cuts would put pressure on the Reserve Bank of New Zealand to ease again. The Kiwi trades 0.2 percent up at 0.6529, having touched a low of 0.6481 the day before, its lowest level Oct. 26. FxWirePro's Hourly Kiwi Strength Index was at 18.78 (Neutral) 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 (May 17 High), 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 slumped to a 4-month low amid growing worries the U.S.-China trade war was developing into a more entrenched strategic dispute.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.2 percent.
Tokyo's Nikkei fell 0.2 percent to 21,117.22 points, Australia's S&P/ASX 200 index declined 0.6 percent to 6,456.00 points and South Korea's KOSPI slumped 0.7 percent to 2,045.42 points.
Shanghai composite index rose 0.1 percent to 2,855.84 points, while CSI 300 index traded 0.4 percent up at 3,598.63 points.
Hong Kong’s Hang Seng traded 0.5 percent higher at 27,394.45 points. Taiwan shares added 0.2 percent to 10,328.28 points
Commodities Recap
Crude oil prices rallied by more than 1 percent after falling to multi-week lows in the previous session, amid OPEC supply cuts and Middle East tensions. International benchmark Brent crude was trading 1.05 percent higher at $68.60 per barrel by 0424 GMT, having hit a low of $66.99 on Thursday, its lowest since Mar, 28. U.S. West Texas Intermediate was trading 0.9 percent up at $58.68 a barrel, after falling as low as $57.32 on Thursday, its lowest since the Mar. 13.
Gold prices steadied near a 1-week peak hit in the previous session as weak U.S. data pushed the dollar off 2-year highs and reignited hopes of a rate cut by the Federal Reserve this year. Spot gold was trading at $1,283.38 per ounce by 0432 GMT, having touched a high of $1,287.23 on Thursday, its highest since May 17 and has risen 0.5 percent so far this week. U.S. gold futures for June were down 0.2 percent at 1,282.40.
Treasuries Recap
The Japanese government bond prices rose, with the benchmark 10-year JGB yield easing half a basis point to minus 0.070 percent. The 20-year yield and the 30-year yield each shed one basis point, to 0.325 percent and 0.500 percent, respectively. The 40-year yield dropped 1 basis point, to 0.530 percent. The 10-year JGB futures edged up 0.08 point at 152.86.
The Australian yields on three-year bonds eased to 1.091 percent while those on the 10-year paper fell to 1.519 percent.
The New Zealand government bonds were slightly higher, with yields down about 2-3 basis points across the curve.
The Canadian government bond prices rallied across the yield curve, with the two-year price up 16 Canadian cents to yield 1.578 percent and the 10-year rising 86 Canadian cents to yield 1.624 percent.
