Market Roundup
- EUR/USD +0.09%, USD/JPY +0.15%, GBP/USD +0.43%, EUR/GBP -0.33%
- DXY -0.08%, DAX +0.6%, FTSE +0.11%, Brent +0.33%, Gold -0.21%
- CAD up 0.4% vs USD after hawkish BoC rhetoric
- Under pressure to soften Brexit, PM May to meet Northern Irish 'kingmakers'
- Fed set to raise interest rates, give more detail on balance sheet winddown
- EU to tighten grip on euro clearing after Brexit -source
- British inflation jumps again in May, tightening squeeze on consumers
- Great Britain May Core CPI mm +0.3% vs previous 0.5%
- Great Britain May Core CPI yy +2.6% vs previous 2.4%
- Great Britain May CPI yy +2.9% vs previous 2.7%
- German economy continues upturn in Q2 - ministry
- Germany May Wholesale price index yy 3.1% vs previous 4.7%
- Germany Jun ZEW Econ sentiment 18.6 vs previous 20.6
- Oil rises on Saudi pledge to make real supply cuts
- Gold holds steady; market awaits cues from Fed meeting
- Slowdown in BOJ's bond buying a result of stable yields - official
- BoJ Amamiya: Less pressure from US rates allowing BoJ to slow JGB buys
- Japan aims to boost JPY status with direct ccy trading with Asia – Nikkei
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. producer price index is likely to have remained unchanged in May, while in the 12 months through the same period, it is expected to have advanced 2.3 percent. PPI excluding food and energy probably edged up 0.2 percent after posting a rise of 0.4 percent in April.
- (1630 ET/2030 GMT) API reports its weekly crude oil stock.
- (1845 ET/2245 GMT) Statistics New Zealand will release food price index for the month of May. The indicator posted a fall of 0.8 percent in the prior month.
- (1845 ET/2245 GMT) The Statistics New Zealand releases current account data for the first quarter. The economy is expected to post a surplus of $0.922 billion after printing a deficit $2.335 in the previous quarter.
Key Events Ahead
- (0945 ET/1345 GMT) FedTrade operation 30-year Ginnie Mae securities (max $950 mn)
- (1145 ET/1545 GMT) FedTrade operation 15-year Fannie Mae / Freddie Mac securities (max $550 mn)
- (1300 ET/1700 GMT) The Federal Open Market Committee will begin its two-day meeting on interest rate policy.
- N/A U.S. Attorney General Jeff Sessions will testify in a public hearing before the Senate Intelligence Committee.
FX Beat
DXY: The dollar eased versus its major peers as investors refrained from taking big positions ahead of a two-day policy meeting of the U.S. Federal Reserve. The greenback against a basket of currencies traded 0.1 percent down at 97.02, having touched a high of 97.50 on Friday, it’s highest since May 31. FxWirePro's Hourly Dollar Strength Index stood at 25.29 (Neutral) by 1100 GMT.
EUR/USD: The dollar steadied above the 1.1200 handle after ZEW survey showed Eurozone's economic sentiment strengthened to 37.7 in the month of June, beating estimates of 37.2 and previous reading of 35.1. The European currency traded up at 1.1206, having touched a low of 1.1166 last week, its lowest since May 31. FxWirePro's Hourly Euro Strength Index stood at 5.17 (Neutral) by 1100 GMT. The upside remains capped by 200- HMA at 1.1235 and any break above will take the pair till 1.12850/1.1300. On the lower side, near term support is around 1.11500-1.1160 (trend line support and 21- EMA) and any break below will drag it down till 1.1100 (May 30 low)/1.10750 (May 18 low).
USD/JPY: The dollar slightly gained against the Japanese yen on growing expectations that the Federal Reserve will hike interest rates during the policy meeting beginning Tuesday. However, investors’ attention will also remain on whether the central bank thinks the U.S. economy is robust enough to withstand further rate increases through 2017. The major traded 0.1 percent up at 110.08, having touched a high of 110.80 on Friday, its highest since Jun. 2. FxWirePro's Hourly Yen Strength Index stood at -75.65 (Highly Bearish) by 1100 GMT. The pair is facing support at 108 and any break below will drag the pair down till 106.80. On the higher side, near term resistance is around 110.94 (21- EMA) will take it to next level till 111.71 /112.12 likely.
GBP/USD: Sterling rebounded above the 1.2700 handle after UK inflation figures came in above forecast, recording its biggest annual increase since June 2013. The economy's consumer price inflation came in at 2.9 percent, well ahead of the 2.7 percent consensus and previous reading. Sterling traded 0.5 percent up at 1.2725, having hit a low of 1.2635 on Friday, its weakest since Apr 18. FxWirePro's Hourly Sterling Strength Index stood at -30.26 (Neutral) by 1100 GMT. On the lower side, the near term support is around 1.2614 and any break below will drag it till 1.2585/ (200- day MA)/1.2470 (61.8% retracement of 1.21088 and 1.30470). The near-term minor resistance is around 1.2780 (support turned into resistance) and any break above will take it till 1.2840 (50% retracement of 1.30476 and 1.26359)/1.2880 (21 EMA). Against the euro, the pound traded 0.4 percent up at 88.10 pence, retreating from a 7-month low of 88.66 hit on Monday.
USD/CHF: The Swiss franc slightly edged up, halting its 4-day losing streak, as the greenback eased ahead of Federal Reserve monetary policy decision due tomorrow. The major trades down at 0.9680, having touched a high of 0.9727 on Friday, its highest since May 31. FxWirePro's Hourly Swiss Franc Strength Index stood at -142.66 (Highly Bearish) by 1100 GMT. Any break above 0.9808 high made on May 30 will take the pair till 0.9835 (38.2% retracement of 1.00998 and 0.96220)/0.9900/0.9925 (50- day MA). The minor resistance is around 0.9700 (200- H MA)/0.97360 (61.8% retracement of 0.9808 and 0.96220). Any daily close below will 0.9617 will drag it down till 0.9580/0.95490 (Nov 9 low).
AUD/USD: The Australian dollar trimmed early session gains as a modest rise in the U.S. Treasury bond yields underpinned the U.S. dollar demand. The Aussie trades flat at 0.7541, after nearing Wednesday's high of 0.7566 earlier, it’s strongest since Apr 25. FxWirePro's Hourly Aussie Strength Index stood at 18.93 (Neutral) by 1100 GMT. On the lower side, near term support is around 0.7507 (89 –4H EMA) and any break below will drag the pair till 0.7471 (21 – EMA)/0.7385 (61.8% retracement of 0.71599 and 0.77493) /0.7325/0.7300. The near term resistance is around 0.75880 (61.8% retracement of 0.77479 and 0.73285) and any close above targets 0.7650/0.7700.
Equities Recap
European shares advanced following a recovery in technology stocks and fresh optimism over Italy's banking sector, while sterling rebounded following better-than-expected UK CPI figures.
The pan-European STOXX 600 index climbed 0.6 percent to 388.85 points, while the FTSEurofirst 300 index surged 0.5 percent to 1,528.83 points.
Britain's FTSE 100 trades 0.1 percent up at 7,516.73 points, while mid-cap FTSE 250 gained 0.6 percent to 19,813.08 points.
Germany's DAX rose 0.5 percent at 12,790.75 points; France's CAC 40 trades 0.5 percent higher at 5,266.09 points.
Commodities Recap
Crude oil prices rose after Saudi Arabia said it would make significant export cuts in July, although increasing U.S. output continued to weigh on the market. International benchmark Brent crude was trading 0.5 percent up at $48.48 per barrel by 1043 GMT, having hit a low of $47.41 on Monday, its weakest since May 5. U.S. West Texas Intermediate traded 0.6 percent up at $46.24 a barrel, after falling as low as $45.19 on Thursday, its lowest since May 5.
Gold prices declined, extending losses for the fifth consecutive session as investors awaited a two-day U.S. Federal Reserve meeting that is likely to provide hints on the central bank's interest rate policy for the remainder of the year. Spot gold was down 0.2 percent at $1,261.71 per ounce at 1048 GMT, having hit a low of $1,262.55 an ounce earlier, its lowest since Jun. 2. U.S. gold futures for August delivery dropped 0.2 percent to $1,266.30.
Treasuries Recap
The U.S. Treasuries remained flat ahead of the Federal Reserve’s monetary policy decision, scheduled on June 14. Also, expectations for a rise in the country’s CPI for the month of May added slight sluggishness in the debt market. The yield on the benchmark 10-year Treasury, hovered around 2.22 percent, the super-long 30-year bond yields rose nearly 1 basis point to 2.87 percent and the yield on short-term 2-year note traded flat at 1.35 percent.
The UK gilts slumped after reading the country’s higher-than-expected consumer price inflation for the month of May. Also, the employment report for the month of April, due on June 14 will provide further direction to the debt market. The yield on the benchmark 10-year gilts, jumped 5 basis points to 1.02 percent, the super-long 30-year bond yields surged nearly 5-1/2 basis points to 1.72 percent and the yield on the short-term 2-year traded nearly 6 basis points higher at 0.14 percent by 10:10 GMT.
The Eurozone periphery bonds remained mixed ahead of the zone’s consumer price inflation index (CPI), scheduled to be released on June 16. Also, the benchmark German 10-year bund auction, due on June 14 will render further direction to the debt market. The benchmark German 10-year bond yields, rose nearly 1-1/2 basis points to 0.26 percent, the French 10-year bond yields, jumped nearly 2 basis points to 0.62 percent, Irish 10-year bond yield climbed 2-1/2 basis points to 0.69 percent; however, Italian equivalent slumped nearly 2 basis points to 1.99 percent, Netherlands 10-year bonds yield traded nearly 1 basis point higher at 0.48 percent, Portuguese equivalents plunged 2-1/2 basis points to 2.95 percent and the Spanish 10-year yields fell nearly 3 basis points to 1.42 percent.
The Japanese government bonds remained mixed as investors wait to watch the country’s industrial production for the month of April, scheduled for release on June 14 and the Bank of Japan’s (BoJ) 2-day monetary policy decision, due to be unveiled on June 16. The benchmark 10-year bond yield, rose 1/2 basis point to 0.06 percent, the long-term 30-year bond yields fell nearly 1 basis point to 0.82 percent while the yield on the short-term 2-year note traded flat at -0.10 percent.
The New Zealand bonds ended on a mixed tone in a silent trading session that witnessed no data of economic significance. Also, investors are eyeing the country’s first-quarter gross domestic product (GDP), scheduled to be released on June 15. At the time of closing, the yield on the benchmark 10-year bond, jumped 2 basis points to 2.80 percent, the yield on 7-year note slipped 1 basis point to 2.69 percent while the yield on short-term 2-year note ended 1 basis point higher at 1.96 percent.
The Australian bonds gained tracking firmness in the U.S. Treasuries and as investors wait to watch the country’s employment report for the month of May, scheduled to be released on June 15. Also, market participants are eyeing the Reserve Bank of Australia’s (RBA) Assistant Governor Debelle’s speech on the same day for further direction in the debt market. The yield on the benchmark 10-year Treasury note, fell 1 basis point to 2.40 percent, the yield on 15-year note slumped 1-1/2 basis points to 2.78 percent while the yield on short-term 2-year traded flat at 1.62 percent.
