Market Roundup
- China praises positive steps in U.S. trade row, says didn't give in
- U.S. underscores importance of concluding new NAFTA deal
- Trump to ask Justice Dept to look into campaign surveillance claims
- Japan Apr Trade Balance Total Yen, 626.0 bln, f'cast 405.6 bln, last 797.0 bln
- Japan Apr Exports YY, 7.8%, f'cast 8.1%, last 2.1%
- Japan Apr Imports YY, 5.9%, f'cast 9.6%, last -0.6%
- HKMA intervenes again as HK dollar weakens, buys HK$5.99 bln
- China to encourage equity financing to ease debt reliance - report
- UK households turn cheerier about their finances in May - IHS Markit
- New Zealand Q1 Retail Sales Volumes QQ, 0.10%, last 1.70%
- Speculators cut net short U.S. dollar bets; bitcoin shorts up -CFTC
Economic Data Ahead
- No major economic data releases
Key Events Ahead
- (1215 ET/1615 GMT) Fed's Bostic speaks on "Welfare Economics: Trade and a Review of Principles" before the Atlanta Economics Club
- (1415 ET/1815 GMT) Fed's Harker participates in conversation before the Chief Executives Organization's CEO Financial Seminar 2018
- (1830 ET/2230 GMT) Fed's Kashkari participates in a moderated question-and-answer session town hall forum hosted by Bay College, Michigan
FX Beat
DXY: The dollar index rose to a 5-month peak after U.S. Treasury Secretary Steven Mnuchin stated that the U.S. trade war with China is on hold after both the economies agreed to drop their tariff threats and set up a framework to address trade imbalances in the future. The greenback against a basket of currencies trades 0.2 percent up at 93.88, having touched a high of 93.89 earlier, its highest since Dec. 18. FxWirePro's Hourly Dollar Strength Index stood at 41.35 (Neutral) by 0500 GMT.
EUR/USD: The euro tumbled to a 5-month low as the dollar strengthened after the U.S. 10-year Treasury yields climbed above the 7-year high last week. Moreover, mounting concerns about the agreement between Italy's far-right League and 5-Star Movement on a governing accord that would cut taxes and increase welfare spending weighed on market sentiment. The European currency traded 0.2 percent down at 1.1751, having touched a low of 1.1744 earlier, its lowest since Dec. 18. FxWirePro's Hourly Euro Strength Index stood at -14.02 (Neutral) by 0400 GMT. Investors’ attention will remain on the European Union Financial Stability Review, ahead of the Fed officials' speeches. Immediate resistance is located at 1.1827 (5-DMA), a break above targets 1.1938 (May 15 High). On the downside, support is seen at 1.1736 (Dec. 18 Low), a break below could drag it till 1.1717 (Dec. 12 Low).
USD/JPY: The dollar rallied to a 5-month peak after U.S. Treasury Secretary Steven Mnuchin stated that the U.S. trade war with China is on hold, boosting hopes for an easing of trade tensions between both the economies. The major was trading 0.5 percent up at 111.22, having hit a high of 111.24 earlier, its highest since Jan. 18. FxWirePro's Hourly Yen Strength Index stood at -184.86 (Highly Bearish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the Chicago Fed National Activity Index and Fed officials' speeches. Immediate resistance is located at 111.48 (Jan. 18 High), a break above targets 111.87 (Jan. 11 High). On the downside, support is seen at 110.37 (5-DMA), a break below could take it lower 109.85 (10-DMA).
GBP/USD: Sterling slumped to a near 5-month trough on worries that the Bank of England will not raise interest rates this year, or at least less than it was initially expected. Additionally, expectations that the Federal Reserve Bank will hike at least three to four times in 2018 strengthened the U.S. dollar. The major traded 0.2 percent down at 1.3434, having hit a low of 1.3426 earlier, it’s lowest since Dec. 29. FxWirePro's Hourly Sterling Strength Index stood at -35.72 (Neutral) by 0400 GMT. Investors’ focus will remain on the U.S. fundamental drivers, amid a lack of economic data from the UK docket. Immediate resistance is located at 1.3522 (10-DMA), a break above could take it near 1.3608. On the downside, support is seen at 1.3395, a break below targets 1.3331. Against the euro, the pound was trading 0.1 percent down at 87.46 pence, having hit a high of 87.12 pence on Thursday, it’s highest since Apr. 27.
AUD/USD: The Australian dollar rose after falling for two straight sessions, supported by news that China and the United States had put a looming trade war on hold after agreeing to drop their tariff threats. However, expectations of faster U.S. interest rate hikes limited the upside. The Aussie trades 0.1 percent up at 0.7516, having hit a high of 0.7566 earlier in the month; it’s highest since Apr. 30. FxWirePro's Hourly Aussie Strength Index stood at 70.12 (Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7433 (May 8 Low), a break below targets 0.7412 (May 9 Low). On the upside, resistance is located at 0.7565 (May 16 High), a break above could take it near 0.7606 (Apr. 25 High).
NZD/USD: The New Zealand dollar slumped as slower-than-expected retail sales volumes in the first quarter, pointed to slower economic growth in the year ahead. The economy's retail sales volumes rose 3 percent on an annual basis, the weakest growth since the July-September 2012. The Kiwi trades 0.4 percent down at 0.6895, having touched a low of 0.6851 on Wednesday, its lowest level since Dec. 11. FxWirePro's Hourly Kiwi Strength Index was at 19.42 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6974, a break above could take it near 0.7030. On the downside, support is seen at 0.6835, a break below could drag it below 0.6805.
Equities Recap
Asian shares rallied, while the dollar surged to multi-month highs after U.S. Treasury Secretary Steven Mnuchin announced the U.S. trade war with China on hold following an agreement to drop their tariff threats.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.6 percent in early trade.
Tokyo's Nikkei rose 0.4 percent to 23,025.58 points, Australia's S&P/ASX 200 index eased 0.05 percent to 6,084.70 points and South Korea's KOSPI surged 0.3 percent to 2,468.68 points.
Shanghai composite index rose 0.7 percent to 3,217.93 points, while CSI300 index was trading 0.7 percent up at 3,930.86 points.
Hong Kong’s Hang Seng was trading 1.2 percent higher at 31,439.88 points. Taiwan shares added 1.2 percent to 10,964.06 points.
Commodities Recap
Crude oil prices rallied as markets reacted to news that China and the United States have put a looming trade war between the world's two biggest economies on hold. International benchmark Brent crude was trading 0.6 percent up at $79.08 per barrel by 0428 GMT, having hit a high of $80.47 on Thursday, its highest since Nov. 2014. U.S. West Texas Intermediate was trading 0.6 percent up at $71.79 a barrel, after rising as high as $72.28 on Thursday, its highest since Nov. 2014.
Gold prices declined as the dollar strengthened after U.S. Treasury Secretary Steven Mnuchin said a trade war between China and the United States was on hold. Spot gold was down 0.3 percent at $1,288.20 per ounce at 0430 GMT, having hit a low of $1,284.65 on Thursday, its lowest price level since Dec. 27. U.S. gold futures for June delivery were 0.2 percent lower at $1,288.20 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 3.076 percent higher by 0.009 bps, while 5-year yield was 0.016 bps up at 2.908 percent.
The Japanese government bonds gained during late Asian session as investors have shrugged-off the better-than-expected trade surplus for the month of April, leading to rise in bond prices. The yield on the benchmark 10-year JGB note, which moves inversely to its price, remained tad lower at 0.05 percent, the yield on the long-term 30-year note also slid slightly to 0.76 percent and the yield on short-term 2-year remained nearly 1 basis point lower at -0.13 percent.
The Australian government bonds gained on the first trading day of the week tracking firmness in the U.S. Treasuries. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, fell 4-1/2 basis points to 2.874 percent, the yield on the long-term 30-year Note dipped 5 basis points to 3.363 percent and the yield on short-term 2-year down 2 basis points to 2.042 percent.
