Market Roundup
- EUR/USD 0.28%, USD/JPY 0.16%, GBP/USD 0.29%, EUR/GBP 0.01%
- DXY -0.18%, DAX -0.16%, FTSE -0.06%, Brent -0.21%, Gold 0.19%
- Oil slips from multi-year highs as U.S. rig count rises
- Fed's Mester reiterates support for gradual U.S. rate increases
- NAFTA math may not add up to more U.S. auto jobs
- "The clock is ticking", EU tells Brexit Britain
- ECB could freshen guidance as end of bond buys approaches – Villeroy
- Italy's 5-Star, League near deal, await president's verdict
Economic Data Ahead
- No data release scheduled
Key Events Ahead
- (0745 ET/1145 GMT) ECB's Peter Praet participates at MNI Connect Roundtable - London
- (0940 ET/1340 GMT) FRB St. Louis's James Bullard presents at CoinDesk's Consensus 2018 - New York
- (1100 ET/1500 GMT) ECB's Sabine Lautenschlager speaks at Danmarks Nationalbank event - Copenhagen
- (1215 ET/1615 GMT) Closing remarks by ECB's Peter Praet at BoE, ECB event - London
- (1345 ET/1745 GMT) ECB's Benoit Coeure speaks at ICMB event - Geneva
- (1620 ET/2020 GMT) FRB New York's Kevin Stiroh participates at an event - Toronto
- N/A ECB's Francois Villeroy de Galhau opens conference on central banking – Paris
FX Beat
DXY: The dollar index extends softer-than-expected US inflation figures triggered a pullback. The DXY was down 0.1 percent at 92.515. Any convincing close below 92.50 will take the index till 91.95 (200 –day MA). Market eyes US retail sales data which is to be released tomorrow for further direction.
EUR/USD: Euro edged higher as Italy's anti-establishment parties looked likely to form the next government. The major jumped almost more than 50 pips to hit high of 1.19899 at the time of writing. With no major economic data release for the day market eyes Fed and ECB officials speech for further direction. Near term support stands at 1.1950 and any break below targets 1.1900/1.1800. The near term resistance is around 1.2018 (200- day MA) and any break above will take the pair to next level till 1.2070/1.2100.
GBP/USD: Cable sell-off paused around the 200-day moving average. The major has edged higher from near 2018 lows at 1.3460 and is currently trading at 1.3595, 0.42% higher on the day. Upside could be limited on account of weak consumer spending data which showed Brits tightening their purse strings in April. Markets also remain cautious ahead of monthly UK wages data. An upbeat reading would see short-term corrective rally. 200-DMA is strong support at 1.3549.
USD/JPY: USD/JPY extends range trade around 5-DMA. US 10-year treasury yield's failure to rise above the 3 percent mark in a convincing manner keeps the dollar subdued. Focus will be on Japan's GDP this week markets will be looking for confirmation that the BoJ is indeed on hold for a considerable period of time. Strong support is seen at 100-DMA at 108.48. On the flip side, 110.70 is major resistance (falling trendline).
USD/CHF: USDCHF has formed almost a double top at 1.00560 and started to consolidate within narrow range. Any convincing break below 1.000 confirms minor weakness and a dip till 0.9900 is possible. The pair’s further bullish continuation can be seen only above 1.0060 level. Any break above 1.0060 will take the pair to next level till 1.010/1.0170 level.
EUR/JPY: EUR/JPY is extending upside for the 4th straight session after holding above major support at 200W SMA. The pair bounced off 200W SMA with a hammer formation and has taken out 131 handle. Price action has broken stiff resistance at daily cloud base raising scope for further upside. The pair is currently testing resistance at 50-DMA at 131.33, breakout above to see further upside. On the downside, 200W SMA is major support at 129.16. Any further weakness only on break below.
Equities Recap
European shares slightly lower on Monday. The pan-European STOXX 600 index was down 0.17 percent at 391.74 points, while the FTSEurofirst 300 index slipped 0.22 percent to 1,535.47 points.
Britain's FTSE 100 trades 0.19 percent lower at 7,709.50 points, while mid-cap FTSE 250 was down 0.11 percent to 20,762.91 points.
Germany's DAX was down 0.22 percent at 12,972.27 points; France's CAC 40 was down 0.20% at 5,530.65 points.
Commodities Recap
Gold rises as US dollar extends weakness. Spot gold was up 0.2 percent at $1,320.80 per ounce as of 0643 GMT. U.S. gold futures for June delivery were little changed at $1,320.80 per ounce.
Silver was up 0.6 percent at $16.71 an ounce. Platinum rose 0.4 percent to $924.70 per ounce. Palladium was 0.4 percent lower at $992.05 per ounce.
Oil on the back foot, risks deeper pullback on evidence of rising US drilling activity. Brent crude was down 40 cents at $76.72 a barrel by 0800 GMT. U.S. light crude oil was down 35 cents at $70.35.
Treasuries Recap
U.S.: The U.S. Treasuries lost ground Monday ahead of the Federal Open Market Committee (FOMC) member Robert Kaplan's speech, scheduled for May 15 at 17:30GMT and the country's retail sales for the month of April, due on the same day by 18:00GMT amid a silent trading today which lacked data of major economic significance. The yield on the benchmark 10-year Treasuries rose nearly 1-1/2 basis points to 2.98 percent, the super-long 30-year bond yields gained 1 basis point to 3.12 percent and the yield on the short-term 2-year remained flat at 2.53 percent.
EUR: The German bunds slumped during European session Monday ahead of the country's gross domestic product (GDP) for the first quarter of this year, besides the ZEW economic sentiment index for the month of May, both scheduled to be released on May 15 by 11:30GMT and 14:30GMT respectively. The German 10-year bond yields, which move inversely to its price, jumped nearly 4 basis points to 0.59 percent, the yield on 30-year note surged 3 basis points to 1.28 percent and the yield on short-term 2-year traded nearly 2 basis points higher at -0.55 percent .
NZD: New Zealand government bonds slumped at the time of closing Monday as investors awaited the country’s GlobalDairyTrade (GDT) price auction in a muted trading week that is scheduled to witness data of least economic significance. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, fell 1 basis point to 2.73 percent, the yield on the long-term 20-year note also dipped 1 basis point to 3.23 percent and the yield on short-term 2-year closed 1 basis point lower at 1.82 percent.
JGBs: The Japanese government bonds slipped on the first trading day of the week Monday amid a muted trading session that witnessed data of little economic significance. Investors will now, remain focused on the country’s super-long 30-year auction and the quarter gross domestic product (GDP) for the first quarter of this year, scheduled for May 15 by 03:45GMT and 23:50GMT respectively. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, remained tad higher at 0.04 percent, the yield on the long-term 30-year note rose 1/2 basis point to 0.74 percent and the yield on short-term 2-year traded flat at -0.13 percent.
AUD: Australian government bonds gained on first trading day of the week Monday following a drop in U.S. Treasury yield. Markets also await the Reserve Bank of Australia (RBA) May meeting minutes scheduled for this week. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, fell 2 basis points to 2.772 percent, the yield on the long-term 30-year Note also dipped 4 basis points to 3.263 percent and the yield on short-term 2-year down 2 basis points to 2.007 percent.
