Market Roundup
•German May Business Expectations 90.4,90.5 forecast, 89.9 previous
•German May Ifo Business Climate Index 89.3,90.4 forecast,89.4 previous
•German May Current Assessment 88.3,89.9 forecast,88.9 previous
Looking Ahead Economic Data(GMT)
•12:30 Canada Apr Wholesale Sales (MoM) -1.1% previous
•13:00 French 3-Month BTF Auction 3.746% previous
•13:00 Belgium May NBB Business Climate -10.8 forecast,-11.9 previous
•13:00 French 6-Months BTF Auction 3.657% previous
•13:00 French 12-Month BTF Auction 3.467% previous
Looking Ahead Events And Other Releases(GMT)
•13:30 German Buba Mauderer Speaks
•17:45 US FOMC Member Williams Speaks
Currency Forecast
EUR/USD: The euro strengthened on Monday despite data showing German business confidence worsened in May. German business morale stagnated in May, a survey showed on Monday, falling short of a forecast improvement and suggesting the recovery of Germany's economy this year will be slow progress.The Ifo institute said its business climate index remained constant in May at 89.3, compared with a reading of 90.4 forecast by analysts. German inflation data on Wednesday and euro zone readings on Friday will be watched for confirmation of a European rate cut that traders have pencilled in for next week. Meanwhile, ECB chief economist Philip Lane told the Financial Times the monetary policy must continue to be restrictive this year as wage growth will not normalise until 2026. Immediate resistance can be seen at 1.0879(23.6%fib), an upside break can trigger rise towards 1.0917(Higher BB).On the downside, immediate support is seen at 1.0800 (38.2% fib), a break below could take the pair towards 1.0738(50% fib).
GBP/USD: The sterling strengthened on Monday as greenback dipped ahead of key US and Euro zone inflation data Investors are awaiting May consumer prices data for the euro zone later this week to gauge the European Central Bank's (ECB) path for interest rates ahead of a policy meeting next week.The central bank looks set to start easing interest rates in the upcoming meeting with a 90% probability and softer inflation data could help seal the June rate cut. U.S. inflation data, also due on Friday, could help traders assess the timing and numbers of possible rate cuts by the Federal Reserve this year. The dollar index, which measures the performance of the U.S. currency against six others, was last down modestly at 104.71. It is on track for a drop of 1.5% in May, the most in one month since December. Immediate resistance can be seen at 1.2755(23.6%fib), an upside break can trigger rise towards 1.2787(Higher BB).On the downside, immediate support is seen at 1.2686(38.2% fib), a break below could take the pair towards 1.2623(50% fib).
USD/CHF: The dollar strengthened against the Swiss franc on Monday as investors were focused on U.S, European and Japanese inflation data to guide the global interest rate outlook.Foreign exchange trade has been dominated by the hunt for "carry" in recent months, punishing low-yield currencies and supporting the dollar, while U.S. data has blown hot and cold and dented policymakers' confidence on the rates outlook.Several major pairs have hugged tight ranges. The euro, which gained 0.9% on the dollar last week, was in the middle of a range it has held for more than a year at $1.085. While the rates uncertainty persists, investors have been chasing income and selling low yield currencies such as the yen, yuan and Swiss franc against the euro and the dollar. Immediate resistance can be seen at 0.9150 (23.6% fib), an upside break can trigger rise towards 0.9199 (Higher BB).On the downside, immediate support is seen at 0.9131(Daily low), a break below could take the pair towards 0.9093(50% fib).
USD/JPY: The U.S. dollar eased against yen on Monday as investors assessed diminishing bets of U.S. interest rate cuts ahead of a key inflation report due later in the week.The yen may seal its first monthly gain of the year this month thanks to suspected intervention from Japanese authorities towards the end of April and at the start of May, but it has been slipping back since then.It was steady at 156.88 to the dollar on Monday but has won little support from rising Japanese government bond yields at the 10-year tenor, for example, they remain nearly 350 basis points below U.S. yields.Tokyo CPI data, due on Friday, is a reliable guide to the national trend and will be closely watched. Finance ministry data on Friday will also reveal the size of Japan's intervention. Strong resistance can be seen at 157.08(23.6%fib), an upside break can trigger rise towards 158.06(Higher BB).On the downside, immediate support is seen at 156.04(38.2% fib), a break below could take the pair towards 154.66(50% fib).
Equities Recap
European stocks were subdued on Monday, with several major markets closed and investors taking a cautious stance ahead of key inflation data from the United States and Europe later this week.
UK's benchmark FTSE 100 was last down by 0.26 percent, Germany's Dax was last up by 0.27 percent, France’s CAC was last up by 0.23 percent.
Commodities Recap
Gold prices rose on Monday, as investors assessed diminishing bets of U.S. interest rate cuts ahead of a key inflation report due later in the week.
Spot gold was up 0.5% to $2,344.88 per ounce as of 1158 GMT, having touched its lowest since May 9 at $2,325.19 on Friday. U.S. gold futures also climbed 0.5% to $2,345.80.
Oil prices were little changed on Monday, making marginal advances in muted trade owing to public holidays in Britain and United States after a downbeat week characterised by the outlook for U.S. interest rates in the face of sticky inflation.
The Brent crude July contract was up 21 cents at $82.33 a barrel by 0926 GMT. The more active August contract rose 26 cents to $82.10. U.S. West Texas Intermediate (WTI) crude futures were up 23 cents at $77.95.
