Market Roundup
- EUR/USD 0.59%, USD/JPY 0.05%, GBP/USD 0.31%, EUR/GBP 0.25%
- DXY -0.45%, DAX 0.26%, FTSE 0.74%, Brent -1.05%, Gold 0.1%
- EU Sentix Index, 9.3, 18.4 forecast, 19.2
- EU Producer Prices YY, 0%, 0.3% forecast, 0.1% previous
- Great Britain Markit/CIPS Cons PMI, 52.5, 52 forecast, 52.5 previous
- China says in principle door is open to talks with U.S. on trade
- With Trump tensions high, Merkel reaches out to Macron on Europe
- Singapore designates special zone for Trump-Kim summit
- Turkish inflation climbs in May, fuels rate hike expectations
- Gold firms as dollar wilts, but U.S. rate hike view curbs gains
- U.S. crude eases for 3rd day on expectations of higher supplies
Economic Data Ahead
- (0945 ET/1345 GMT) The NAPM-New York releases ISM-New York Index for the month of May. The index stood at 64.3 in the previous month.
- (1000 ET/1400 GMT) The United States is likely to report that factory orders decreased 0.5 percent in April, after posting a rise of 1.6 percent in the prior month.
Key Events Ahead
- (1300 ET/1700 GMT) Bank of England Monetary Policy Committee member Silvana Tenreyro's speech
FX Beat
DXY: The dollar index declined amid expectation of retaliatory measures over the latest U.S. steel and aluminium tariffs. The greenback against a basket of currencies trades 0.4 percent down at 93.80, having touched a high of 95.03 on Tuesday, its highest since Nov. 7. FxWirePro's Hourly Dollar Strength Index stood at -121.73 (Highly Bearish) by 0900 GMT.
EUR/USD: The euro rose to an over 1-week peak after political tensions eased in Italy, as a deal was reached on a coalition government, averting potentially destabilising snap elections. However, the upside in the major was limited as data showing investor morale in the euro zone deteriorating for the fifth month in a row in June to its lowest level since October 2016 weighed heavily on market sentiment. The European currency traded 0.6 percent up at 1.1730, having touched a high of 1.1733, its highest since May 24. FxWirePro's Hourly Euro Strength Index stood at 86.14 (Slightly Bearish) by 0900 GMT. Immediate resistance is located at 1.1780 (21-DMA), a break above targets 1.1829 (May 22 High). On the downside, support is seen at 1.1600, a break below could drag it till 1.1518 (May 30 Low).
USD/JPY: The dollar rallied to a 1-week peak as better-than-expected U.S. jobs data last week underlined the strength of the U.S. economy and the near-certainty of a Federal Reserve interest rate hike this month. Moreover, rallying equity markets and easing political tensions in Italy and Spain revived investor risk sentiment. The major was trading 0.1 percent up at 109.56, having hit a high of 109.76, its highest since May 28. FxWirePro's Hourly Yen Strength Index stood at -108.73 (Highly Bearish) by 0900 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. factory orders and ISM-New York Index. Immediate resistance is located at 110.01 (May 10 High), a break above targets 110.45 (May 15 High). On the downside, support is seen at 109.07 (5-DMA), a break below could take it lower 108.72 (Jun 1 Low).
GBP/USD: Sterling surged to an over 1-week peak near the 1.3400 handle after data released earlier indicated Britain's construction industry maintained its modest recovery in May and on signs that Britain's overall economy was picking up after a January-March slump, The economy's Construction Purchasing Managers' Index held firm at 52.5, unchanged from April's modest growth rate. Sterling traded 0.3 percent up at 1.3382, having hit a low of 1.3204 last week, it’s lowest since Nov. 28. FxWirePro's Hourly Sterling Strength Index stood at -5.82 (Neutral) by 0900 GMT. Immediate resistance is located at 1.3433 (21-DMA), a break above could take it near 1.3491 (May 22 High). On the downside, support is seen at 1.3296 (5-DMA), a break below targets 1.3204 (May 29 Low). Against the euro, the pound was trading 0.4 percent down at 87.63 pence, having hit a high of 86.97 pence on Tuesday, it’s highest since Apr. 27.
USD/CHF: The Swiss franc rose, reversing most of its previous session losses, as global trade war fears kept a lid on any further up-move in the U.S. dollar. The major trades 0.3 percent down at 0.9845, having touched a low of 0.9826 on Thursday, it’s lowest since Apr. 26. FxWirePro's Hourly Swiss Franc Strength Index stood at 5.4 (Neutral) by 0900 GMT. On the higher side, near-term resistance is around 0.9935 (May 30 High) and any break above will take the pair to next level till 1.0018 (May 18 High). The near-term support is around 0.9816 (Apr. 26 Low) and any close below that level will drag it till 0.9782 (Apr. 25 Low).
Equities Recap
European shares rose, boosted by a rally in banking stocks, while the euro gained on signs of less uncertainty in Italy as it forms a new government.
The pan-European STOXX 600 index gained 0.4 percent at 388.72 points, while the FTSEurofirst 300 index surged 0.5 percent to 1,522.21 points.
Britain's FTSE 100 trades 0.7 percent up at 7,756.80 points, while mid-cap FTSE 250 rallied 0.4 percent to 21,075.07 points.
Germany's DAX rose 0.2 percent at 12,753.47 points; France's CAC 40 trades 0.4 percent higher at 5,487.07 points.
Commodities Recap
Crude oil prices declined, extending previous session losses as U.S. production hit a record-high and OPEC members considered boosting supply to balance rising global demand. International benchmark Brent crude was trading 0.2 percent up at $76.44 per barrel by 0909 GMT, having hit a high of $79.16 on Thursday, its highest since May 24. U.S. West Texas Intermediate was trading 0.1 percent down at $65.67 a barrel, after falling as low as $65.83 on Monday, its lowest since Apr. 17.
Gold prices consolidated within a narrow range as lingering concerns about trade wars between the United States and the rest of the world offset prospects of a U.S. interest rate hike this month. Spot gold was trading flat at $1,293.71 per ounce by 0913 GMT, having hit a low of $1,289.29 in the previous session, its lowest since May 23. U.S. gold futures for August delivery slipped 0.2 percent to $1,297.20 per ounce.
Treasuries Recap
The U.S. Treasuries slumped Monday, as investors wait to watch the country’s ISM non-manufacturing PMI data for the month of May and JOLTs job openings for April, scheduled to be released on June 5 by 14:00GMT respectively. The yield on the benchmark 10-year Treasuries jumped 1-1/2 basis points to 2.90 percent, the super-long 30-year bond yields surged nearly 1 basis point to 3.05 percent and the yield on the short-term 2-year traded 2 basis points higher at 2.48 percent.
The United Kingdom’s gilts suffered after the country’s construction PMI data for the month of May topped market expectations, albeit remaining unchanged from the previous reading in April. The yield on the benchmark 10-year gilts, rose nearly 1-1/2 basis points to 1.29 percent, the super-long 30-year bond yields remained tad higher at 1.75 percent and the yield on the short-term 2-year also traded nearly 1-1/2 basis points higher at 0.64 percent.
The German bunds slumped during European session as investors wait to watch the country’s services PMI for the month of May and European Central Bank (ECB) President Mario Draghi’s speech, scheduled on June 5 by 07:55GMT and 13:00GMT respectively. The German 10-year bond yields, which move inversely to its price, jumped nearly 2-1/2 basis points to 0.40 percent, the yield on 30-year note surged 2 basis points to 1.08 percent and the yield on short-term 2-year traded 1/2 basis point higher at -0.64 percent.
The Japanese government bonds remained tad lower on the first trading day of the week as investors remained side-lined in a muted trading week ahead of the country’s first quarter 2018 gross domestic product (GDP) data, scheduled to be released by end of this week which shall add further direction to the debt market. The yield on the benchmark 10-year JGB note, which moves inversely to its price, traded tad higher at 0.04 percent, the yield on the long-term 30-year note rose nearly 1 basis point to 0.72 percent and the yield on short-term 2-year remained 1/2 basis point higher at -0.13 percent.
The Australian government bonds slumped across the curve following better-than-expected April retail sales data, pushing the 10-year yield to 1-week high. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, rose 4-1/2 basis points to 2.731 percent, the yield on the long-term 30-year Note jumped 2 basis points to 3.240 percent and the yield on short-term 2-year up 5-1/2 basis points to 2.054 percent.
