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Europe Roundup: Sterling extends gains as investors speculate PM May's victory, euro hits 1-1/2 week low on weak economic data, European shares decline - Tuesday, May 30th, 2017

Market Roundup

  • EUR/USD -0.04%, USD/JPY -0.22%, GBP/USD +0.15%, AUD/USD +0.13%
     
  • DXY +0.03%, DAX -0.09%, FTSE -0.41%, Gold -0.22%
     
  • Eurozone May business climate falls to 0.90 (Rtrs poll 1.11) from 1.10 in April
     
  • Eurozone May economic sentiment falls to 109.2 from 109.7 in April (Rtrs poll 110.0)
     
  • Eurozone May industrial climate rises to 2.8 from 2.6 in April
     
  • Eurozone May services sentiment drops to 13.0 from 14.2
     
  • Eurozone May consumer sentiment at -3.3 vs -3.6 in April
     
  • Eurozone May consumer inflation expectations drop to 12.8 from 13.9 in April
     
  • Eurozone May producer price expectations stable at 8.2
     
  • UK PM May says prepared to leave EU without a Brexit deal
     
  • UK Conservatives on 43 pct, Labour on 37 pct - Survation poll
     
  • Centre-left UK coalition might be positive for pound - JP Morgan
     
  • France May consumer confidence at 102 (forecast 101) vs 100 in April, near 10-yr high
     
  • Negotiated wages in Germany rose by 2.8 percent on average in the first quarter
     
  • German inflation slows more than expected in May, state data suggest
     
  • Spain inflation in line with ECB target for 1st time since December
     
  • Greece denies report it may opt out of receiving more bailout money
     
  • ECB's main issue is how quickly stimulus can be reduced: Hansson
     
  • Spain's PM says sees growth of at least 2.7 pct y/y in 2017
     
  • Swedish Q1 growth slower than expected, central bank seen unmoved

Economic Data Ahead

  • (0830 ET/1230 GMT)  The U.S. Commerce Department releases personal income figures for April, which is expected to rise 0.4 percent, having gained 0.2 percent in the previous month.
     
  • (0830 ET/1230 GMT) The U.S. Commerce Department releases the personal consumption expenditures (PCE) price index for the month of April. The index fell 0.2 percent5 in March, while core PCE is likely to have increased 0.1 percent in April after falling 0.1 percent in the previous month.
     
  • (0830 ET/1230 GMT) The U.S. Personal spending is likely to rise 0.4 percent in the month of April, after staying unchanged in the previous month.
     
  • (0830 ET/1230 GMT) The Statistics Canada releases its Raw Material Price Index for the month of April. The index posted a decline of 1.6 percent in March.
     
  • (0830 ET/1230 GMT) The Statistics Canada will report its industrial producer prices for the month of April. The indicator rose 0.8 percent in the prior month.
     
  • (0830 ET/1230 GMT) The Statistics Canada is likely to report that current account deficit expanded to C$12.00 billion in the first quarter, compared with a deficit of C$10.73 billion in the previous quarter.
     
  • (0900 ET/1300 GMT) The S&P/Case-Shiller is expected to report that U.S. home price index of 20 metropolitan areas rose at an annualized rate of 5.7 percent in March after increasing 5.9 percent in February.
     
  • (1000 ET/1400 GMT) The Conference Board is likely to report that U.S. consumer confidence index was little changed at a reading of 119.9 in May.
     
  • (1030 ET/1430 GMT) The Dallas Fed releases its Manufacturing Business Index for the month of May. The index posted a rise of 16.8 percent in the previous month.
     
  • (1700 ET/2100 GMT) The Reserve Bank of New Zealand will release its Financial Stability Report.
     
  • (1700 ET/2100 GMT) Mexico reports fiscal balance for the month of April.
     
  • (1901 ET/2301 GMT) The GfK Group will release Britain's consumer confidence index for the month of May. The index is expected to decline to 8 after slumping to 7 in April.
     
  • (1901 ET/2301 GMT) The British Retail Consortium (BRC) will report its Shop Price Index for the month of May. The index posted an annualized decline of 0.5 percent in the previous month.
     
  • (1950 ET/2350 GMT) Japan's Ministry of Economy, Trade, and Industry will release preliminary Industrial Production for the month of April. The indicator posted a final reading of -1.9 percent in the prior month.

Key Events Ahead

  • (1300 ET/1700 GMT) Federal Reserve Board Governor Lael Brainard speaks on the economy and monetary policy before the New York Association for Business Economics Luncheon Speaker Series in New York.
     
  • (1430 ET/1830 GMT) FedTrade operation 30-year Fannie Mae / Freddie Mac (max $1.45 bn)

FX Beat

DXY: The dollar eased versus the Japanese yen as a new round of political worries over Greece, Italy and Britain strengthened safe-haven assets. The greenback against a basket of currencies traded 0.2 percent down at 97.43, drifting towards a low of 96.80 hit last week, it’s lowest since Nov. 9. FxWirePro's Hourly Dollar Strength Index stood at 36.57 (Neutral) by 0500 GMT.

EUR/USD: The euro declined to a 1-1/2 week low earlier in the session after data showed Eurozone's economic sentiment indicator edged down to 109.2 in May, against estimates of 110.0. However, the major trimmed losses after the Greek government spokesman denied reports that Greece is considering rejecting the debt relief tranche offered by its creditors. The European currency traded 0.1 percent down at 1.1152, having touched a low of 1.1109 earlier, its lowest since May 19. FxWirePro's Hourly Euro Strength Index stood at -162.79 (Highly Bearish) by 1100 GMT. The pair is struggling to break above 1.12678 and any violation above will take it to next level till 1.1300 Nov high/1.13660. On the lower side, any break below 1.1100 (23.6% retracement of 1.105694 and 1.12678) will drag the pair down till 1.1050/1.1000.

USD/JPY: The dollar slumped to a near 2-week low against the Japanese yen, as a weaker opening in the European equity markets underpinned the traditional safe-haven assets. Moreover, strong labor demand in Japan and retail trade figures supported the bid tone around the yen.  The major traded 0.2 percent down at 110.96, having touched an early low of 110.77, its lowest since May 18. FxWirePro's Hourly Yen Strength Index stood at 139.16 (Highly Bullish) by 1100 GMT. The pair is facing support at 110 and any break below will drag the pair down till 108.13. On the higher side, close above 111.82 (89 EMA) will take it to next level till 113.40/114.36 likely.

GBP/USD: Sterling rose, extending previous session's recovery mode as with investors shrugged off opinion polls showing British Prime Minister Theresa May's lead over the Labour opposition narrowing down, ahead of the general election. Sterling trades 0.2 percent up at 1.2864, retreating from a low of 1.2775 hit on Friday, its weakest since Apr. 25. FxWirePro's Hourly Sterling Strength Index stood at -27.07 (Neutral) by 1100 GMT. On the higher side, minor resistance is around 1.2905 (5- day MA) and any break above will take the pair till 1.2950/1.3000. The major support is around 1.27750 (resistance turned into support) and any break below will drag it down till 1.2705/1.2600. Against the euro, the pound traded 0.3 percent up at 86.68 pence, rebounding from a 2-1/2 month low of 87.50 hit on Friday.

USD/CHF: The Swiss franc recovered after falling to a 1-1/2 week low against the dollar as renewed selling seen in oil and stock prices, triggered a fresh bout of risk-off sentiment. The major trades flat at 0.9770, having hit a high of 0.9807 earlier, its highest since May 18. FxWirePro's Hourly Swiss Franc Strength Index stood at -112.01 (Highly Bearish) by 1100 GMT. The pair is facing strong support at 0.9690 and any further bearish continuation can be seen only if it closes below that trend line. The near-term major support is around 0.96788 and a break below targets 0.96170. On the higher side, near term resistance is around 0.9847 and any break above will take it till 0.9900/0.9956 (89- EMA).

AUD/USD: The Australian dollar retreated after falling to an early 11-day low as data released overnight showed Australian Building Approvals rose sharper-than-expected in April. The Aussie trades 0.2 percent up at 0.7451, having hit a low of 0.7416 earlier, it’s weakest since May. 19. FxWirePro's Hourly Aussie Strength Index stood at -43.81 (Neutral) by 1100 GMT. On the lower side, near term support is around 0.7385 (61.8% retracement of 0.71599 and 0.77493) and any close below will drag the pair till 0.7325/ 0.7300. The near term resistance is around 0.7520 (89- EMA) and any close above targets 0.7580/ 0.7650.

Equities Recap

European shares declined in early deals, as growing concerns over political uncertainty in the Eurozone weighed on banking stocks.

The pan-European STOXX 600 index slumped 0.2 percent to 390.29 points, while the FTSEurofirst 300 index declined 0.2 percent to 1,532.94 points.

Britain's FTSE 100 trades 0.4 percent down at 7,515.94 points, while mid-cap FTSE 250 eased 0.2 percent to 19,979.97 points.

Germany's DAX fell 0.1 percent at 12,617.22 points; France's CAC 40 trades 0.62 percent lower at 5,299.36 points.

Commodities Recap

Crude oil prices declined, extending prices for the second straight session as concerns that production cuts by the OPEC and other exporters may not be enough to drain a global glut. International benchmark Brent crude was trading 0.8 percent down at $51.80 per barrel by 1030 GMT, having hit a low of $50.70 on Friday, its weakest since May 12. U.S. West Texas Intermediate fell 0.8 percent to $49.55 a barrel, after falling as low as $48.16 on Friday, its lowest since May 18.

Gold edged down after rising to a one-month high earlier in the session on the back of rising geopolitical tensions across the globe. Spot gold eased 0.2 percent to $1,263.74 per ounce by 1036 GMT, after rising to a high of $1,270.35, its strongest since May 1. U.S. gold futures dipped 0.1 percent to $1,266.90 an ounce.

Treasuries Recap

The U.S. Treasuries gained ahead of the Federal Open Market Committee (FOMC) member Brainard’s speech, due to be held later today and Kaplan’s speech, scheduled for May 31. The yield on the benchmark 10-year Treasury, slipped 1 basis point to 2.24 percent, the super-long 30-year bond yields also fell 1 basis point to 2.90 percent and the yield on short-term 2-year note traded tad 1/2 basis point lower at 1.29 percent.

The UK gilts traded slightly lower as investors await the country’s 10-year auction, scheduled to be held on June 1, besides, the manufacturing PMI, due on the same day. The yield on the benchmark 10-year gilts, slumped 3-1/2 basis points to 1.04 percent, the super-long 30-year bond yields plunged 3 basis points to 1.66 percent and the yield on the short-term 2-year traded 2-1/2 basis points lower at 0.08 percent.

The German bunds traded tad higher as investors wait to watch the Eurozone’s consumer price inflation for the month of May, scheduled to be released on May 31. Also, the release of the country’s manufacturing PMI, due on June 1 will provide further direction to the debt market. The yield on the benchmark 10-year bond, rose nearly 1 basis point to 0.30 percent, the long-term 30-year bond yields jumped 1-1/2 basis points to 1.14 percent and the yield on short-term 2-year bond also traded nearly 1-1/2 basis points higher at -0.70 percent.

The New Zealand bonds gained as investors wait to watch the Reserve Bank of New Zealand (RBNZ) Governor Graeme Wheeler’s speech, scheduled to be held on May 31 amid a muted trading session. At the time of closing, the yield on the benchmark 10-year bond, fell 1 basis point to 2.84 percent, the yield on 7-year note also slipped 1 basis point to 2.72 percent and the yield on the short-term 2-year note too ended 1 basis point lower at 1.96 percent.

The Australian bonds rebounded as investors covered previous short positions after a long rally, following a silent trading session that witnessed data of less economic significance. The yield on the benchmark 10-year Treasury note, slumped 2 basis points to 2.40 percent, the yield on 15-year note plunged 2-1/2 basis points to 2.79 percent and the yield on short-term 2-year also traded 2 basis points lower at 1.57 percent.

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