Market Roundup
- Gold gains on U.S.-China trade friction
- Oil retreats on profit-taking after rally
Economic Data Ahead
- (0500 ET/0900 GMT) EZ ZEW Survey - Economic Sentiment(May)
- (0500 ET/0900 GMT) EZ Construction Output w.d.a (YoY)(Mar)
- (0500 ET/0900 GMT) EZ Construction Output s.a (MoM)(Mar)
- (0500 ET/0900 GMT) Germany ZEW Survey - Current Situation(May)
- (0500 ET/0900 GMT) Germany ZEW Survey - Economic Sentiment(May)
Key Events Ahead
- No Significant Events Scheduled
FX Beat
DXY: The dollar index plunged to a 1-week low after encouraging data from a COVID-19 vaccine trial by U.S. drugmaker Moderna added to the optimism as more governments scale back lockdown restrictions. The greenback against a basket of currencies traded 0.2 percent down at 99.38, having touched a high of 100.56 on Thursday, its highest since April 24.
EUR/USD: The euro surged to a 2-week peak after Germany and France issued a call for a 500 billion-euro recovery fund for Europe and proposed to allow the European Commission to borrow money on markets to finance the fund. The European currency traded 0.1 percent up at 1.0923, having touched a low of 1.0774 on Thursday, its lowest since May 7. Investors’ attention will remain on a series of data from Eurozone economies, EZ construction output and ZEW Survey - economic expectations, ahead of the U.S. building permits, housing starts and Fed Chair Powell's speech. Immediate resistance is located at 1.0952, a break above targets 1.0987. On the downside, support is seen at 1.0871, a break below could drag it below 1.0850.
USD/JPY: The dollar rose, extending previous session gains as encouraging results from the trial of a vaccine for COVID-19 improved sentiment. The major was trading 0.1 percent up at 107.38, having hit a high of 107.76 last week, its highest since Apr. 23. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. building permits, housing starts and Fed Chair Powell's speech. Immediate resistance is located at 107.50, a break above targets 107.76. On the downside, support is seen at 107.06 (21-DMA), a break below could take it near at 106.63.
GBP/USD: Sterling rebounded from a 7-1/2 week low as broad dollar weakness offset talk of negative interest rates from the Bank of England and a stalemate in Brexit negotiations. The major traded 0.5 percent up at 1.2250, having hit a low of 1.2075 on Monday, it’s lowest since Mar. 26. Investors’ attention will remain on the geopolitical developments ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2305, a break above could take it near 1.2354 (21-DMA). On the downside, support is seen at 1.2165, a break below targets 1.2126. Against the euro, the pound was trading 0.2 percent up at 89.30 pence, having hit a low of 89.60 on Monday, it’s lowest since March 31.
AUD/USD: The Australian dollar rallied to a 2-1/2 week peak after the release of minutes from the Reserve Bank of Australia's most recent monetary policy meeting offered no surprises. The minutes showed board members discussed a range of economic scenarios in their policy deliberations, with the baseline case for gross domestic product to fall by 10 percent in the first half and 6 percent for all of 2020. The Aussie trades 0.4 percent up at 0.6551, having hit a high of 0.6564 earlier, it’s lowest since April 30. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate resistance is located at 0.6584, a break above could take it near 0.6612. On the downside, support is seen at 0.6490, a break below targets 0.6464 (5-DMA).
Equities Recap
Asian shares rallied as more countries emerged from their economic lockdowns and a successful early-stage trial of a coronavirus vaccine boosted investor sentiment.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.8 percent.
Tokyo's Nikkei rallied 1.5 percent to 20,433.45 points, Australia's S&P/ASX 200 index gained 1.8 percent to 5,559.50 points. South Korea's KOSPI surged 2.3 percent to 1,980.61 points.
Shanghai composite index rose 0.8 percent to 2,898.58 points, while CSI 300 index traded 0.8 percent up at 3,956.25 points.
Hong Kong’s Hang Seng traded 2.1 percent higher at 24,434.64 points. Taiwan shares added 1.1 percent to 10,860.44 points.
Commodities Recap
Crude oil prices declined on profit-taking after rising to monthly peaks on signs that producers are cutting output as promised. International benchmark Brent crude was trading 1.4 percent lower at $34.98 per barrel by 0555 GMT, having hit a high of $35.74 earlier, its highest since April 9. U.S. West Texas Intermediate was trading 1.1 percent down at $31.84 a barrel, after rising as high as $33.06 on Monday, its highest since March 16.
Gold prices surged, underpinned by Sino-U.S. trade friction and global stimulus, however, promising early-stage data for a potential COVID-19 vaccine limited upside. Spot gold was trading 0.1 percent up at $1,736.60 per ounce by 0559 GMT, having touched a high of $1,765.25 on Monday, its highest since Oct. 12, 2012. U.S. gold futures gained 0.3 percent to $1,739.80.
Treasuries Recap
The government bond prices dipped across all maturities, with the benchmark 10-year JGB futures falling 0.21 point to 152.27. In the cash bond market, the 10-year JGB yield rose 1 basis point to minus 0.005 percent. The 20-year JGB yield rose 0.5 basis point to 0.345 percent. Also in the superlong maturities, the 30-year JGB yield and the 40-year JGB yield gained half a basis point each to 0.475 percent and 0.495 percent, respectively. At the short end of the market, the two-year JGB yield and the five-year yield both rose 1.5 basis points, to minus 0.165 percent and minus 0.125 percent.
