Market Roundup
- President readies Italy for snap polls to be fought on EU, euro
- S. Korea calls for more impromptu talks with N. Korea as U.S. seeks to revive summit
- Top aide to N. Korean leader lands in Singapore as summit preparations advance - NHK
- U.S. and China clash over "technology transfer" at WTO
- St. Louis Fed's Bullard calls for caution on further rate increases
- Japan Apr Jobs/Applicants Ratio, 1.59, f'cast 1.60, last 1.59
- Japan Apr Unemployment Rate, 2.5%, f'cast 2.5%, last 2.5%
- Manufacturers ask Britain to drop 'max fac' post-Brexit customs proposal
- African finance leaders to debate China's yuan as a reserve currency - Xinhua
Economic Data Ahead
- (0245 ET/0645 GMT) France May Consumer Confidence, f'cast 101, last 101
- (0400 ET/0800 GMT) Italy May MFG Business Confidence, f'cast 107.2, last 107.7
- (0400 ET/0800 GMT) Italy May Consumer Confidence, f'cast 116.5, last 117.1
- (0400 ET/0800 GMT) EZ Apr Money-M3 Annual Grwth, f'cast 3.9%, last 3.7%
Key Events Ahead
- (0400 ET/0800 GMT) ECB releases monthly data on lending and money supply
- (0530 ET/0930 GMT) ECB's Mersch speaks at Frankfurt Finance Summit 2018
- (1130 ET/1530 GMT) ECB's Lautenschlager speaks about monetary policy in Frankfurt
FX Beat
DXY: The dollar index edged down after rising to multi-month highs in the prior session, as the 10-year treasury yield eased more than four basis points to 2.89 percent, recording a 6-week low of 2.88 percent earlier. The greenback against a basket of currencies trades 0.1 percent down at 94.30, having touched a high of 94.50 the day before, its highest since Dec. 14. FxWirePro's Hourly Dollar Strength Index stood at 34.20 (Neutral) by 0500 GMT.
EUR/USD: The euro steadied after falling to a 6-1/2 month low in the previous session after Italian President Sergio Mattarella rejected a vocal critic of the Eurozone as economy minister. The European currency traded 0.05 percent up at 1.1628, having touched a low of 1.1607 on Monday, its lowest since Nov. 14. FxWirePro's Hourly Euro Strength Index stood at -111.61 (Highly Bearish) by 0500 GMT. Investors’ attention will remain on series of data from the Eurozone economies, developments surrounding the Italian political environment and ECB officials' speeches, ahead of Dallas Fed manufacturing business index. Immediate resistance is located at 1.1746 (10-DMA), a break above targets 1.1829 (May 22 High). On the downside, support is seen at 1.1606 (Nov. 1 Low), a break below could drag it till 1.1585 (Nov. 9 Low).
USD/JPY: The dollar fell to a 3-week low below the 109.00 handle as increasing eurozone political concerns weighed heavily on market sentiment. However, the downside was limited as U.S.-North Korea summit plans appeared to get back on track. The major was trading 0.3 percent down at 109.09, having hit a low of 108.91 earlier, its lowest since May 8. FxWirePro's Hourly Yen Strength Index stood at 179.64 (Slightly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of Dallas Fed manufacturing business index. Immediate resistance is located at 109.79 (5-DMA), a break above targets 110.22. On the downside, support is seen at 108.75 (May 7 Low), a break below could take it lower 108.54 (Apr. 24 Low).
GBP/USD: Sterling held firm above the 1.3300 handle as Bank of England rate hike expectations firmed, with investors pricing around 50 percent chance of a 25 bps hike in August. Sterling traded 0.1 percent up at 1.3318, having hit a low of 1.3293 on Friday, it’s lowest since Nov. 28. FxWirePro's Hourly Sterling Strength Index stood at -49.52 (Neutral) by 0500 GMT. Investors’ attention will remain on UK BRC shop price index, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.3413 (10-DMA), a break above could take it near 1.3497 (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 flat at 87.34 pence, having hit a low of 87.96 pence on Wednesday, it’s lowest since May 15.
AUD/USD: The Australian dollar slumped to a 1-week low as risk appetite weakened amid worries of snap polls in Italy after the anti-establishment 5-Star and League parties abandoned plans to form a government. The Aussie trades 0.1 percent down at 0.7534, having hit a low of 0.75150 earlier; it’s lowest since May 21. FxWirePro's Hourly Aussie Strength Index stood at -23.71 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7502 (May 21 Low), 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 eased as investors shifted their attention on U.S. inflation data due later in the week which could provide clues to future interest rate rises ahead of the Federal Reserve's policy meeting next month. The major trades 0.1 percent down at 0.6932, having touched a high of 0.6959 on Monday, its highest level since May 22. FxWirePro's Hourly Kiwi Strength Index was at 75.18 (Slightly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. 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 tumbled, while the euro consolidated near 6-1/2 month lows as investors remained concerned over the prospect of fresh elections in Italy.
MSCI's broadest index of Asia-Pacific shares outside Japan slumped 0.3 percent, after gaining for three consecutive sessions.
Tokyo's Nikkei declined 0.7 percent to 22,327.17 points, Australia's S&P/ASX 200 index rose 0.2 percent to 6,013.60 points and South Korea's KOSPI plunged 0.6 percent to 2,464.62 points.
Shanghai composite index fell 0.5 percent to 3,121.71 points, while CSI300 index was trading 0.6 percent down at 3,811.03 points.
Hong Kong’s Hang Seng was trading 0.6 percent lower at 30,591.58 points. Taiwan shares shed 0.2 percent to 10,964.12 points.
Commodities Recap
Crude oil prices rebounded after falling by more than 1 percent in the previous session on expectations that Saudi Arabia and Russia would pump more crude to ease a potential shortfall in supply. International benchmark Brent crude was trading 0.5 percent up at $75.61 per barrel by 0422 GMT, having hit a low of $74.46 on Monday, its lowest since May 8. U.S. West Texas Intermediate was trading 0.5 percent up at $66.80 a barrel, after falling as low as $65.83 on Monday, its lowest since Apr. 17.
Gold prices rose after declining for the two straight sessions, but remained under pressure on hopes a U.S.- North Korean summit, while U.S. dollar hovered near 6-1/2-month peaks. Spot gold was 0.2 percent higher at $1,398.31 per ounce at 0454 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 0.3 percent to $1,300 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.905 percent lower by 0.029 bps, while 5-year yield was 0.034 bps down at 2.733 percent.
The Japanese government bonds traded flat during late Asian session after the country’s unemployment rate for the month of April remained unchanged, with investors now focussing on Japan’s retail sales and industrial production data, scheduled to be released today and on May 30 by 23:50GMT respectively. The yield on the benchmark 10-year JGB note, which moves inversely to its price, hovered around 0.03 percent, the yield on the long-term 30-year note slumped 2 basis points to 0.71 percent and the yield on short-term 2-year traded flat at -0.14 percent.
The Australian government bonds continue to rally as a risk-off tone dominated across financial markets amid political uncertainty in Italy and falling oil prices. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, fell 3-1/2 basis points to 2.720 percent, the yield on the long-term 30-year Note also dipped 3 basis points to 3.253 percent and the yield on short-term 2-year down 1-1/2 basis points to 1.984 percent.
