Market Roundup
- EUR/USD 0.31%, USD/JPY -0.31%, GBP/USD 0.37%, EUR/GBP -0.05%
- DXY -0.44%, DAX -0.23%, FTSE -0.44%, Brent -0.36%, Gold 0.48%
- ECB gets ready to pull the plug on stimulus scheme
- Trump to meet advisers on China tariffs as Beijing urges talks
- China holds fire on rates, posts "shockingly weak" activity growth
- Germany CPI Final YY, 2.2%, 2.2% forecast, 2.2% previous
- Germany HICP Final YY, 2.2%, 2.2% forecast, 2.2% previous
- France CPI (EU Norm) Final YY, 2.3%, 2.3% forecast, 2.3% previous
- Great Britain RICS Housing Survey, -3, -5 forecast, -8 previous
- Great Britain Retail Sales YY, 3.9%, 2.4% forecast, 1.4% previous
- Pompeo says N.Korea sanctions to remain until complete denuclearisation
- Bankers to ask Theresa May why they should stay after Brexit
- Civilians flee bombardment as Arab states pound Yemen port
- Gold hits 2-week high on dollar weakness, trade worries
- Oil steadies but threat of higher supply curbs gains
Economic Data Preview
- (0745 ET/1145 GMT) The European Central Bank will announce its interest rate decision.
- (0830 ET/1230 GMT) The U.S. Commerce Department is expected to report that retail sales edged up 0.4 percent in May from a revised reading of 0.2 percent in April. While excluding autos, retail sales are likely to have gained 0.5 percent, after surging 0.3 percent in the previous month.
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 2,000 to a seasonally adjusted 224,000 for the week ended Jun. 8, while continuing claims for the week ended Jun. 1 is expected to decline to 1.737 million from previous reading of 1.741 million.
- (0830 ET/1230 GMT) The U.S. Labor Department publishes import and export prices index for the month of May. The import prices are likely to have gained 0.5 percent after rising 0.3 percent in April, while exports are expected to have edged up 0.3 percent after increasing 0.6 percent in the prior month.
- (0830 ET/1230 GMT) The Statistics Canada releases its New Housing Price Index (NHPI) for the month of April. The index remained unchanged in March.
- (1000 ET/1400 GMT) The U.S. Commerce Department is expected to report that business inventories rose 0.3 percent in April from an unchanged reading in March.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending June 8.
Key Events Ahead
- (0830 ET/1230 GMT) European Central Bank President releases the monetary policy statement and gives a press conference.
- N/A The Federal Reserve Board holds open meeting to discuss the final rule to establish single-counterparty credit limits for large U.S. bank holding companies and foreign banking organizations, in Washington.
FX Beat
DXY: The dollar index fell to a 1-week trough following a decline in the U.S. Treasury bond yields. The greenback against a basket of currencies trades 0.2 percent down at 93.33, having touched a high of 94.03 on Wednesday, its highest since June 5. FxWirePro's Hourly Dollar Strength Index stood at -61.22 (Bearish) by 1100 GMT.
EUR/USD: The euro rallied to a 1-week peak on speculation that the European Central Bank will point to an end to quantitative easing this year. The central bank is widely expected to stand pat and debate whether to end its huge asset purchases by year-end. The European currency traded 0.3 percent up at 1.1824, having touched a high of 1.1831, its highest since June 6. FxWirePro's Hourly Euro Strength Index stood at 112.55 (Highly Bullish) by 1100 GMT. Immediate resistance is located at 1.1839 (Jun. 7 High), a break above targets 1.1896 (May 5 High). On the downside, support is seen at 1.1742 (10-DMA), a break below could drag it till 1.1690 (May 24 Low)
USD/JPY: The dollar slumped to a 3-day low on renewed U.S.-China trade concerns after a senior Trump administration official stated that U.S. President Donald Trump will meet with his trade advisers to decide whether to impose tariffs on billions of dollars in Chinese goods. The major was trading 0.3 percent down at 109.99, having hit a high of 110.84 the day before, its highest since May 23. FxWirePro's Hourly Yen Strength Index stood at -78.07 (Slightly Bearish) by 1100 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. retail sales, unemployment benefit claims and export and import price index. Immediate resistance is located at 110.85 (May 17 Low), a break above targets 111.18 (May 22 High). On the downside, support is seen at 109.79 (10-DMA), a break below could take it lower 109.47 (June 7 Low).
GBP/USD: Sterling surged to a 1-week peak after data showed British retail sales jumped for the second month in a row in May, indicating that the economy was recovering from a sharp slowdown in early 2018. The economy's retail sales volumes rose by 1.3 percent in monthly terms following an upwardly revised 1.8 percent bounce-back in April. The major traded 0.4 percent up at 1.3428, having hit a low of 1.3308 on Wednesday, it’s lowest since June 8. FxWirePro's Hourly Sterling Strength Index stood at 68.17 (Bullish) by 1100 GMT. Immediate resistance is located at 1.3472 (June 6 High), a break above could take it near 1.3491 (May 22 High). On the downside, support is seen at 1.3302 (June 6 Low), a break below targets 1.3253 (June 1 Low). Against the euro, the pound was trading 0.1 percent up at 88.06 pence, having hit a low of 88.37 pence last week, it’s lowest since May 7.
USD/CHF: The Swiss franc rose, retreating from a 2-week low hit in the previous session as the greenback eased following a decline in the U.S. Treasury yields. The major trades 0.2 percent down at 0.9837, having touched a high of 0.9895 the day before, it’s highest since Jun. 1. FxWirePro's Hourly Swiss Franc Strength Index stood at 4.17 (Neutral) by 1100 GMT. On the higher side, near-term resistance is around 0.9900 and any break above will take the pair to next level till 0.9935 (May 30 High). The near-term support is around 0.9825 (Session Low) and any close below that level will drag it till 0.9782 (Apr. 25 Low).
Equities Recap
European shares slumped, weighed down by a decline in basic resources stocks, while the euro hit a 1-week peak ahead of an ECB meeting at which the central bank will debate the end of its huge asset purchases.
The pan-European STOXX 600 index plunged 0.4 percent at 386.40 points, while the FTSEurofirst 300 index eased 0.6 percent to 1,508.86 points.
Britain's FTSE 100 trades 0.5 percent down at 7,662.49 points, while mid-cap FTSE 250 fell 0.3 percent to 21,164.97 points.
Germany's DAX declined 0.3 percent at 12,856.58 points; France's CAC 40 trades 0.2 percent lower at 5,442.79 points.
Commodities Recap
Crude oil prices declined amid rising U.S. output and uncertainty over the outlook for supply before a key meeting of the world's largest exporters next week. International benchmark Brent crude was trading 0.1 percent down at $76.39 per barrel by 1037 GMT, having hit a high of $77.56 on Friday, its highest since June 1. U.S. West Texas Intermediate was trading 0.3 percent up at $66.77 a barrel, after rising as high as $66.86 on Wednesday, its highest since June 1.
Gold prices rallied to a 2-week high, bolstered by a weaker dollar and trade worries between Washington and Beijing. Spot gold gained 0.4 percent to $1,304.79 per ounce at 1040 GMT, having hit a high of $1,305.61 an ounce earlier, its highest since May 31. U.S. gold futures for August delivery rose 0.4 percent to $1,306 per ounce.
Treasuries Recap
The U.S. Treasuries surged ahead of the country’s retail sales for the month of May and weekly initial jobless claims, scheduled to be released today by 12:30GMT respectively. The yield on the benchmark 10-year Treasuries slumped 2 basis points to 2.94 percent, the super-long 30-year bond yields plunged 4 basis point to 3.06 percent and the yield on the short-term 2-year traded 2-1/2 basis points lower at 2.55 percent.
The United Kingdom’s gilts remained narrowly divided after the country’s retail sales for the month of May smashed market expectations, largely owing to the royal wedding and warm weather that buoyed shopping interests, leading to a rise in purchases. The yield on the benchmark 10-year gilts, rose 1/2 basis point to 1.37 percent, the super-long 30-year bond yields slipped 1 basis point to 1.80 percent and the yield on the short-term 3-year traded tad higher at 0.75 percent.
The German bunds slumped during European session after the country’s consumer price inflation for the month of May, remained unchanged at 0.5 percent m/m, meeting market expectations as well and now investors turn attention to the European Central Bank’s (ECB) monetary policy meeting, scheduled to be held later today for further direction to the debt market. The German 10-year bond yields, which move inversely to its price, jumped 2-1/2 basis points to 0.50 percent, the yield on 30-year note surged 1-1/2 basis points to 1.18 percent and the yield on short-term 2-year too traded 2-1/2 basis points higher at -0.60 percent.
The Japanese government bonds gained during late Asian session as the trade war fear between the United States and China soured investors’ risk sentiments. The yield on the benchmark 10-year JGB note, which moves inversely to its price, slipped 1 basis point to 0.03 percent, the yield on the long-term 30-year note remained tad lower at 0.72 percent and the yield on short-term 2-year traded 1/2 basis point lower at -0.13 percent.
The Australian government bonds gained following weaker-than-expected May employment change and Chinese economic data. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, fell 5 basis points to 2.736 percent, the yield on the long-term 30-year Note dipped 4 basis points to 3.241 percent and the yield on short-term 2-year down 3 basis points to 2.035 percent.
