Market Roundup
- Germany GDP Detailed QQ SA, 0.3%, 0.3% forecast, 0.3% previous
- Germany GDP Detailed YY NSA. 1.6%, 1.6% forecast, 1.6% previous
- Germany GDP Detailed YY SA, 2.3%, 2.3% forecast, 2.3% previous
- Germany GfK Consumer Sentiment, 10.7, 10.8 forecast, 10.8 previous
- France Business Climate Manufacturing, 109, 108 forecast, 109 previous
- Great Britain Retail Sales YY, 1.4%, 0.1% forecast, 1.1% previous
- U.S. launches auto import probe, China says will defend interests
- China, Germany bullish on investment as Merkel visits Beijing under shadow of Trump trade threats
- Fed and Bank of England tell markets to step up shift from Libor
- China plans to cut import tariffs on some consumer goods from July 1-Bloomberg
- POLL-ECB set to look through tepid inflation, end QE this year
- BOJ member warns against overly stimulating demand with easy policy
- Gold prices hold gains in wake of weaker dollar
- Oil pinned below $80 a barrel as chances rise of OPEC raising output
Economic Data Ahead
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have decreased by 2,000 to a seasonally adjusted 220,000 for the week ended May 18, while continuing claims for the week ended May 11 is expected to rise to 1.754 million from a previous reading of 1.707 million.
- (0900 ET/1300 GMT) The Federal Housing Finance Agency releases its housing price index for the month of March. The index gained 0.6 percent in February.
- (0930 ET/1330 GMT) Brazil's current account surplus is likely to widen to $1.100 billion in April from $798 million in the previous month.
- (1000 ET/1400 GMT) National Association of Realtors is likely to report that U.S. existing home sales declined 2.0 percent to an annual rate of 557,000 million units in April, compared to 5.60 million units in March.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending May 18.
- (1100 ET/1500 GMT) Federal Reserve Bank of Kansas City issues manufacturing activity index for the month of May. The indicator stood at 33 in the previous month.
Key Events Ahead
- (1035 ET/1435 GMT) Federal Reserve Bank of Atlanta President Raphael Bostic and Federal Reserve Bank of Dallas President Robert Kaplan will give opening remarks before the Federal Reserve Banks of Dallas and Atlanta "Technology-Enabled Disruption: Implications for Business, Labor Markets and Monetary Policy" conference, in Dallas.
- (1100 ET/1500 GMT) Britain Finance Minister Philip Hammond speaks at conference in Brussels
- (1100 ET/1500 GMT) Federal Reserve Bank of Dallas President Robert Kaplan will moderate "Session I: The Disruption Challenge Facing Business", in Dallas.
- (1300 ET/1700 GMT) Bank of England's Mark Carney speaks at the annual dinner of London's Society of Professional Economists in London
- (1400 ET/1800 GMT) Federal Reserve Bank of Philadelphia President Patrick Harker participates in "Session III: Broader Labor Market Implications of Technology-Enabled Disruption", in Dallas.
- (2000 ET/0000 GMT) Federal Reserve Bank of Richmond President Thomas Barkin will give introductory remarks, in Dallas.
FX Beat
DXY: The dollar index eased, hovering away from 5-month peaks hit the day before as the FOMC minutes of the May meeting suggested that the central bank sees another rate hike probably soon. The greenback against a basket of currencies trades 0.2 percent down at 93.79, having touched a high of 94.19 on Wednesday, its highest since Dec. 12. FxWirePro's Hourly Dollar Strength Index stood at 36.61 (Neutral) by 1000 GMT.
EUR/USD: The euro rose above the 1.1700 handle, pulling back from a 6-month low touched in the prior session after China's Premier Li Keqiang stated that China was a long-term and responsible investor in the euro and hoped the currency would strengthen. Moreover, the major also gained momentum following ECB’s Vasiliauskas comments, citing he does not disagree with forecasts of a rate hike by the ECB in six months. The European currency traded 0.3 percent up at 1.1726, having touched a low of 1.1675 on Wednesday, its lowest since Nov. 14. FxWirePro's Hourly Euro Strength Index stood at -132.80 (Highly Bearish) by 1000 GMT. Immediate resistance is located at 1.1765 (5-DMA), a break above targets 1.1938 (May 15 High). On the downside, support is seen at 1.1669 (Oct. 10 Low), a break below could drag it till 1.1622 (Nov. 10 Low).
USD/JPY: The dollar tumbled to an over 1-week low after President Donald Trump threatened to impose new tariffs on imported cars and on perceived dovish minutes of the Federal Reserve's last policy meeting. The major was trading 0.3 percent down at 109.71, having hit a high of 111.39 on Monday, its highest since Jan. 18. FxWirePro's Hourly Yen Strength Index stood at 118.70 (Highly Bullish) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. prelim Markit PMI's, existing home sales and Fed officials' speeches. Immediate resistance is located at 110.26 (10-DMA), a break above targets 110.69 (5-DMA). On the downside, support is seen at 108.99 (May 9 Low), a break below could take it lower 108.64.
GBP/USD: Sterling rebounded from a 5-month low hit in the previous session after data showed British retail sales advanced by the most in 1-1/2 years in April. The economy's retail sales volumes rose by 1.6 percent from March, well above the forecast for a monthly 0.7 percent increase. The major traded 0.5 percent high at 1.3404, having hit a low of 1.3305 on Wednesday, it’s lowest since Dec. 12. FxWirePro's Hourly Sterling Strength Index stood at -100.72 (Highly Bearish) by 1000 GMT. Immediate resistance is located at 1.3476 (10-DMA), a break above could take it near 1.3574 (21-DMA). On the downside, support is seen at 1.3305 (Previous Session Low), a break below targets 1.3270. Against the euro, the pound was trading 0.1 percent down at 87.50 pence, having hit a low of 87.96 pence on Wednesday, it’s lowest since May 15.
USD/CHF: The Swiss franc rose, reversing most of its previous session losses, as concerns over political risks in Italy and U.S. - China trade talk continued to dampen investors’ sentiment. The major trades 0.5 percent down at 0.9907, having touched a low of 0.9894 on Wednesday, it’s lowest since Apr. 30. FxWirePro's Hourly Swiss Franc Strength Index stood at 165.52 (Highly Bullish) by 1000 GMT. On the higher side, near-term resistance is around 0.9990 (5-DMA) and any break above will take the pair to next level till 1.0018 (May 18 High). The near-term support is around 0.9871 and any close below that level will drag it till 0.9820.
Equities Recap
European shares advanced in early trade following a bounce across miners and oil stocks, while sterling strengthened on the back of better-than-expected British retail sales.
The pan-European STOXX 600 index gained 0.3 percent at 393.91 points, while the FTSEurofirst 300 index surged 0.3 percent to 1,543.40 points.
Britain's FTSE 100 trades 0.05 percent down at 7,786.13 points, while mid-cap FTSE 250 rallied 0.3 percent to 21,074.54 points.
Germany's DAX rose 0.2 percent at 13,000.45 points; France's CAC 40 trades 0.5 percent higher at 5,593.56 points.
Commodities Recap
Crude oil prices declined on expectations that OPEC members will step up production in the face of worries over supply from both Venezuela and Iran. International benchmark Brent crude was trading 0.8 percent down at $79.04 per barrel by 1008 GMT, having hit a high of $80.47 last week, its highest since Nov. 2014. U.S. West Texas Intermediate was trading 0.7 percent down at $71.33 a barrel, after rising as high as $72.28 last Thursday, its highest since Nov. 2014.
Gold prices rose, extending previous session gains, as the dollar extended losses after minutes of the latest U.S. Federal Reserve meeting hinted at a dovish approach to interest rate hikes in U.S. Spot gold gained 0.2 percent to $1,295.71 per ounce by 1010 GMT, having hit a low of $1,281.99 on Monday, its lowest price level since Dec. 27. U.S. gold futures for June delivery were up 0.3 percent at $1,293.30 per ounce.
Treasuries Recap
The U.S. Treasuries remained nearly flat in a muted trading session that witnessed data of little economic significance. However, the hawkish FOMC May meeting minutes kept yields under control, skewed to the downside. The yield on the benchmark 10-year Treasuries remained flat at 3.00 percent, the super-long 30-year bond yields slipped nearly 1 basis point to 3.16 percent and the yield on the short-term 2-year traded tad lower at 2.52 percent.
The UK gilts slumped after the country’s retail sales for the month of April beat market expectations as well as rebounding from the last release in March. The yield on the benchmark 10-year gilts, rose 1 basis point to 1.44 percent, the super-long 30-year bond yields traded tad higher at 1.87 percent and the yield on the short-term 2-year traded 1 basis point higher at 0.78 percent
The German bunds suffered during European session after the country’s gross domestic product (GDP) for the first quarter of this year, released early today, remained unchanged. The German 10-year bond yields, which move inversely to its price, jumped 1-1/2 basis points to 0.51 percent, the yield on 30-year note surged nearly 2 basis points to 1.24 percent and the yield on short-term 2-year traded nearly 1 basis point higher at -0.60 percent.
The New Zealand bonds jumped at the time of closing, tracking similar movement in the U.S. counterpart, as investors flocked into safe-haven instruments after the release of the Federal Reserve’s May monetary policy meeting minutes. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, slumped 4-1/2 basis points to 2.79 percent, the yield on the long-term 20-year note plunged 5-1/2 basis points to 3.31 percent and the yield on short-term 2-year closed flat at 1.87 percent.
The Japanese government bonds gained as we approach towards the end of the week, following a massive decline sparked off in the United States 10-year yields, post minutes of the FOMC’s May monetary policy meeting, released late yesterday. The yield on the benchmark 10-year JGB note, which moves inversely to its price, fell 1/2 basis point to 0.04 percent, the yield on the long-term 30-year note slumped 1-1/2 basis points to 0.74 percent and the yield on short-term 2-year remained flat at -0.14 percent
The Australian government bonds rallied tracking firmness in the U.S. Treasuries as investors risk sentiments weighed down by renewed geopolitical caution towards US negotiations with North Korea and China. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, fell 4-1/2 basis points to 2.801 percent, the yield on the long-term 30-year Note also dipped 4-1/2 basis points to 3.298 percent and the yield on short-term 2-year down 1 basis point to 2.025 percent.
