Market Roundup
- Australia central bank cuts rates to 1.25%, as expected
- Australia Apr Retail Sales MM, -0.1%, 0.2% f'cast, 0.3% prev
- USTR, Treasury say China pursuing 'blame game' on trade talks breakdown
- Policymaker suggests U.S. trade war may test Fed's 'patience'
- U.S. moving toward major antitrust probe of tech giants
- Mexico draws red line on asylum as Trump tariff risk rises
- China expresses 'strong dissatisfaction' with U.S. statement on Tiananmen anniversary
- Trump's UK visit turns to Brexit and Huawei as protests planned in London
- UK shoppers slash spending in May - BRC
- Italian PM threatens to quit, tells coalition to end feud
- New Zealand Q1 Terms of Trade QQ, 1.0%, 1.0% f'cast, -3.0% prev
Economic Data Ahead
- (0430 ET/0830 GMT) Great Britain May Markit/CIPS Cons PMI, 50.5 f'cast, 50.5 prev
- (0500 ET/0900 GMT) EZ May HICP Flash YY, 1.3% f'cast, 1.7% prev
Key Events Ahead
- N/A The International Journal of Central Banking is organizing its 2019 annual conference, "Commodity Prices and Monetary Policy: New Theory and Evidence" (to June 5) in Oslo
- (0400 ET/0800 GMT) Riksbank executive board meeting in Stockholm
- (0800 ET/1200 GMT) Chicago Fed's Charles Evans is interviewed live on CNBC's "Squawk Box" in Chicago
- (0805 ET/1205 GMT) BoE's James Proudman speaks at FCA Conference on Governance in Banking in London
- (0830 ET/1230 GMT) New York Fed's John Williams gives opening remarks before "Building Cultural Capital in the Financial Services Industry: Emerging Practices, Risks and Opportunities" conference in New York
- (0945 ET/1345 GMT) Chicago Fed's Charles Evans gives welcome and introductory remarks before Fed Listens Conference on Monetary Policy Strategy, Tools, and Communication Practices, in Chicago
- (0955 ET/1355 GMT) Federal Reserve's Jerome Powell speaks on "Monetary Policy Strategy, Tools, and Communication Practices" in Chicago
- (1545 ET/1945 GMT) Federal Reserve Board's Lael Brainard moderates "What Does Full Employment Look Like for Your Community or Constituency?" panel in Chicago
- (1845 ET/2245 GMT) Dallas Fed's Robert Kaplan gives welcome remarks at dinner reception in Chicago
FX Beat
DXY: The dollar index plunged to a 3-week trough after data showed U.S. manufacturing growth slowed further in May to its weakest pace in more than two-and-a-half years, increasing expectations for even larger reductions in U.S. rates over the next year or so. The greenback against a basket of currencies traded 0.1 percent down at 97.12, having touched a low of 97.08, its lowest since May 13. FxWirePro's Hourly Dollar Strength Index stood at -96.22 (Slightly Bullish) by 0500 GMT.
EUR/USD: The euro steadied near a 3-week peak hit in the previous session, as the greenback eased following a decline in the benchmark 10-year Treasury yield to its lowest level since September 2017 overnight. The European currency traded 0.1 percent up at 1.1247, having touched a high of 1.1262 on Monday, its highest since May 13. FxWirePro's Hourly Euro Strength Index stood at 43.13 (Neutral) by 0500 GMT. Investors’ attention will remain on a series of data from the Eurozone economies and EZ consumer price index, ahead of the U.S. factory orders and Fed Chair Powell's speech. Immediate resistance is located at 1.1304 (Apr. 18 High), a break above targets 1.1344 (March 15 High). On the downside, support is seen at 1.1210 (Apr. 8 Low), a break below could drag it below 1.1183 (April 2 Low).
USD/JPY: The dollar plunged to a 5-month low, as investors raised expectations of a more accommodative Federal Reserve after St. Louis Fed President James Bullard stated a U.S. interest rate cut may be warranted soon as trade tensions and weak U.S. inflation posed risks to global growth. The major was trading 0.2 percent down at 107.88, having hit a low of 107.85, its lowest since Jan. 10. FxWirePro's Hourly Yen Strength Index stood at 57.51 (Bullish) by 0500 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. factory orders and Fed Chair Powell's speech. Immediate resistance is located at 108.64 (38.2% retracement of 109.92 and 107.85), a break above targets 109.13 (61.8% retracement). On the downside, support is seen at 107.77 (Jan. 10 Low), a break below could take it lower at 107.51 (Jan. 4 Low).
GBP/USD: Sterling surged to a 1-week peak, amid political developments surrounding trade and Brexit. Investors now await the UK construction PMI, which is expected to remain unchanged at 50.5 in May. The major traded 0.1 percent up at 1.2670, having hit a low of 1.2558 on Friday; it’s lowest since Jan, 3. FxWirePro's Hourly Sterling Strength Index stood at -72.19 (Bearish) 0500 GMT. Investors’ attention will remain on the UK construction purchasing manager index, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2702 (May 28 High),. a break above could take it near 1.2747 (May 27 High). On the downside, support is seen at 1.2570 (Dec. 17 Low), a break below targets 1.2529 (Dec. 18 Low). Against the euro, the pound was trading flat at 88.79 pence, having hit a low of 88.87 earlier, it’s lowest since Jan. 16.
AUD/USD: The Australian dollar advanced to a 3-week peak after the Reserve Bank of Australia cut its cash rate a quarter of a percentage point to a record low of 1.25 percent as widely expected, the first easing since mid-2016 as it tries to revive a stumbling economy. However, the upside remained limited as domestic data showed retail sales fell 0.1 percent in April from March, the first negative reading this year and below forecasts for a 0.2 percent gain. The Aussie trades 0.05 percent up at 0.6977, having hit a high of 0.6993 earlier, it’s highest since May 13. FxWirePro's Hourly Aussie Strength Index stood at 61.68 (Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6914 (May 15 Low), a break below targets 0.6881 (May 24 Low). On the upside, resistance is located at 0.7029 (May 2 High), a break above could take it near 0.7061 (May 1 High).
NZD/USD: The New Zealand dollar eased from a 3-1/2 week peak recorded in the prior session, as markets speculate that Reserve Bank of Australia's rate cut would put pressure on the Reserve Bank of New Zealand to ease again. The Kiwi trades 0.1 percent lower at 0.6590, having touched a high of 0.6604 on Monday, its highest level May 10. FxWirePro's Hourly Kiwi Strength Index was at -96.22 (Slightly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6653 (May 3 High), a break above could take it near 0.6685 (Apr. 30 High). On the downside, support is seen at 0.6550 (May 15 Low), a break below could drag it below 0.6474 (Oct. 4 Low).
Equities Recap
Asian shares gained as investors paused for breath after a volatile Wall Street session; however, concerns about global growth capped broader improvements in risk sentiment.
MSCI's broadest index of Asia-Pacific shares outside Japan traded rose0.1 percent.
Tokyo's Nikkei eased 0.05 percent to 20,408.54 points, Australia's S&P/ASX 200 index rose 0.2 percent to 6,332.40 points and South Korea's KOSPI gained 0.1 percent to 2,068.15 points.
Shanghai composite index declined 1.05 percent to 2,859.62 points, while CSI 300 index traded 1.1 percent down at 3,592.79 points.
Hong Kong’s Hang Seng traded 0.7 percent lower at 26,688.38 points. Taiwan shares shed 0.7 percent to 10,429.12 points
Commodities Recap
Crude oil prices steadied after falling to a 4-month low in the previous session, weighed down by an economic slowdown that has started to impact fuel consumption. International benchmark Brent crude was trading 0.4 percent higher at $60.99 per barrel by 0453 GMT, having hit a low of $60.61 on Monday, its lowest since Feb. 7. U.S. West Texas Intermediate was trading 0.5 percent up at $53.10 a barrel, after falling as low as $52.11 on Monday, its lowest since the Feb. 12.
Gold prices declined, after rising to a more than 3-month high in the previous session on worries over a global recession due to trade conflicts. Spot gold was 0.1 percent down at $1,322.85 per ounce by 0457 GMT, having touched a high of $1,327.87 on Monday, its highest since Feb. 27. U.S. gold futures rose 0.3 percent to $1,332.20 an ounce.
Treasuries Recap
The benchmark Japanese government bond yields touched a 3-year low, following a sharp decline in U.S. Treasury yields. The benchmark 10-year JGB yield was down half-a-basis point at minus 0.100 percent after easing to minus 0.105 percent, its lowest since August 2016. The 30-year yield fell 2 basis points to 0.440 percent, a low last recorded in September 2016.
The Australian 2-year Treasury yields held steady around 1.17 percent.
The Canadian government bond prices were higher across the yield curve. The two-year rose 11.5 Canadian cents to yield 1.368 percent and the 10-year gained 61 Canadian cents to yield 1.425 percent. The 10-year yield hit its lowest since June 2017 at 1.423 percent
