Market Roundup
• Australia Judo Bank Manufacturing PMI (May): 50.7, 50.2 forecast, 51.3 previous.
• Japan Capital Spending (YoY) (Q1): 0.0%, 4.1% forecast, 6.5% previous.
• Japan au Jibun Bank Manufacturing PMI (May): 54.5, 54.5 forecast, 55.1 previous.
• Australia MI Inflation Gauge (MoM) (May): -0.3%, 0.6% previous.
• Australia ANZ Job Advertisements (MoM) (May): 1.8%, -0.6% previous.
• China Caixin Manufacturing PMI (May): 51.8, 51.4 forecast, 52.2 previous.
Looking Ahead Economic Data (GMT)
• 09:40 UK S&P Global Manufacturing PMI (May) 53.7 forecast, 53.7 previous
•10:00 EU Unemployment Rate (Apr) 6.2% forecast, 6.2% forecast,
Looking Ahead Events And Other Releases (GMT)
• No Events Ahead
Currency Forecast
EUR/USD : The euro edged higher against the dollar on Monday as investors stayed wary of a potential U.S.–Iran deal to reopen the Strait of Hormuz, a development that could ease inflation pressures and reduce expectations for European Central Bank tightening.The U.S. said it struck Iranian military sites at the weekend and Iran's Revolutionary Guards said on Monday it had targeted a U.S. base in response, but President Donald Trump reiterated that Iran really wanted to make a deal.Germany’s 2-year yields , more sensitive to expectations for policy rates, rose 3 basis points (bps) to 2.56%. They reached 2.771% in late March, the highest since July 2024.Money markets are pricing the ECB deposit facility rate at 2.58% by December , up from the current 2% but slightly down from the 2.53% level seen last Friday. Immediate resistance can be seen at 1.1658(Daily high), an upside break can trigger rise towards 1.1693(SMA 20).On the downside, immediate support is seen at 1.1577(23.6%fib), a break below could take the pair towards 1.1561(Lower BB).
GBP/USD: Sterling dipped against the dollar on Monday as markets awaited progress of peace talks in the Middle East and signals on the timing of central bank moves.The U.S. said it conducted "self-defense strikes" on Iranian radar and drone control sites over the weekend, while Iran said on Monday its aerospace force had targeted an air base used in an attack. The hostilities came after U.S. President Donald Trump said on Friday he would soon decide on a proposed deal to extend the ceasefire with Iran.U.S. jobs data later in the week will be in focus as Federal Reserve officials signal that the U.S. central bank may need to raise rates if the war accelerates already-high inflation.Markets are betting the Fed's next move will be to raise its key rate compared with expectations for a cut before the start of the Iran war. Outgoing Fed Governor Jerome Powell warned in a speech on Sunday about politicisation of monetary policy. Immediate resistance can be seen at 1.3461(Daily high), an upside break can trigger rise towards 1.3489(50%fib).On the downside, immediate support is seen at 1.3353(38.2%fib), a break below could take the pair towards 1.3278(Lower BB).
AUD/USD: Australian steadied against dollar on Monday as markets looked ahead to Middle East peace talks, RBA remarks, and key domestic data releases.Trump said he would soon decide on a proposal to extend the ceasefire with Iran, but major disagreements between the two sides remain unresolved.Australia's Q1 GDP data is due Wednesday, with growth expected to slow to 0.5% q/q from 0.8% in Q4, reflecting the impact of the war and higher interest rates.RBA Governor Michele Bullock will testify before lawmakers on Thursday, while Deputy Governor Andrew Hauser speaks on Friday, with both likely to maintain a hawkish tone as inflation remains above target.Weak employment and inflation data have reduced the probability of a June rate hike to 5%, with markets also seeing a small chance that the RBA's tightening cycle has already ended. Immediate resistance can be seen at 0.7198(38.2%fib), an upside break can trigger rise towards 0.7203 (May 29th high).On the downside, immediate support is seen at 0.7104(Lower BB), a break below could take the pair towards 0.7088(50%fib).
USD/JPY: The U.S. dollar edged higher but as gains were capped by the ongoing threat of Japanese FX intervention.Meanwhile, wide short-end yield differentials between Japanese and U.S. bonds favored the dollar, though narrower long-end spreads limited upside momentum.On the policy front, investors remain divided over whether the Bank of Japan will deliver another interest rate hike this month, as policymakers weigh growing uncertainties linked to tensions in the Middle East.Former BoJ Deputy Governor Masazumi Wakatabe said it is important to assess whether Japan’s economy can withstand tighter monetary policy.The BoJ’s April Summary of Opinions showed most policymakers favored a near-term rate hike while highlighting inflation risks. Inflation erodes the value of the fixed payments from debt. Immediate resistance can be seen at 159.49(38.2%fib) an upside break can trigger rise towards 160.00(Psychological level) .On the downside, immediate support is seen at 158.67(50%fib) a break below could take the pair towards 158.27(April 16th low ).
Equities Recap
Asian shares extended gains on Monday as strong AI-driven demand outweighed concerns over fresh Gulf attacks, which raised doubts about a full reopening of the Strait of Hormuz and pushed oil prices higher.
Japan’s Nikkei 225 was up by 0.90% , South Korea’ KOSPI was up at 3.68%, Hang Sang was up at 0.87%
Commodities Recap
Gold prices fell on Monday, pressured by a stronger dollar and rising crude oil prices, as investors awaited U.S. President Donald Trump's decision on a proposed deal to extend the ceasefire with Iran.
Spot gold was down 0.7%at $4,505.87 per ounce, as of 0718 GMT, after hitting a two-week high in the previous session. U.S. gold futures GCcv1 for August delivery fell 1.2% to $4,535.90.
Oil prices rose more than 3% on Monday after Iran and the U.S. traded strikes and Israel ordered troops to move further into Lebanon in its battle with Tehran-backed Hezbollah.
U.S. crude futures rose $2.88 or 3.3% to $90.24 a barrel as of 0701 GMT. Brent futures rose $2.78 or 3.05% to $93.9 a barrel.
