Market Roundup
- EUR/USD +0.24%, USD/JPY -0.39%, GBP/USD -0.28%, EUR/GBP +0.56%
- DXY -0.15%, DAX -1.01%, FTSE -0.29%, Brent +0.42%, Gold +0.31%
- Britain's May brings back three-day, aiming to unite party before Brexit
- Macron's likely landslide lifts markets, low turnout clouds celebration
- UK business confidence slumps after election - IoD survey
- Cutting sales tax would have little impact on German surplus-ministry
- Qatar can defend economy and currency, finance minister tells CNBC
- Bank of France maintains French Q2 GDP growth forecast at 0.5 pct
- Burst in investor confidence in oil pushes up prices
- Japan Apr core machinery orders -3.1% m/m, +2.7% y/y, -1.3% and +6.3% expected
- Japan May domestic corp goods prices unch m/m, +2.1% y/y, +0.1%, +2.2% expected
Economic Data Ahead
- (1400 ET/1800 GMT) The U.S. reports its monthly budget statement for the month of May. The government is likely to show a budget deficit of $86.5 billion after posting a surplus of $182.0 billion in the previous month.
Key Events Ahead
- N/A s Former Mexico central bank governor Guillermo Ortiz, economics Nobel laureate Joseph Stiglitz and other senior financiers and economist are scheduled to hold a conference at a London School of Economics-fronted event in Santa Fe.
- (1145 ET/1545 GMT) FedTrade operation 30-year Fannie Mae / Freddie Mac (max $1.625 bn)
- (1335 ET/1735 GMT) Bank of Canada Senior Deputy Governor Carolyn Wilkins will give a speech on the economy.
FX Beat
DXY: The dollar declined versus the Japanese yen as a fresh bout of risk aversion sent investors rushing towards the safe-haven assets. The greenback against a basket of traded 0.2 percent down at 97.07, having touched a high of 97.50 on Friday, it’s highest since May 31. FxWirePro's Hourly Dollar Strength Index stood at 59.52 (Bullish) by 1100 GMT.
EUR/USD: The euro rose, halting its 3-day losing streak after President Macron’s En Marche party won the first round of the legislative elections on Sunday, paving the way for a majority in the National Assembly. The European currency traded 0.2 percent up at 1.1215, having touched a high of 1.1285 earlier this month, its highest since Nov 9. FxWirePro's Hourly Euro Strength Index stood at -53.11 (Bearish) by 1100 GMT. The near term support is around 1.11600 and any violation below 1.1100 confirms bearish continuation. On the higher side, major resistance is around 1.1300 and further bullish continuation is only above 1.13660/1.1430.
USD/JPY: The dollar declined from a 1-week high touched in the previous session as weaker trading sentiment surrounding global equity markets supported the Japanese Yen's safe-haven appeal. The major traded 0.3 percent down at 109.93, having touched a high of 110.80 on Friday, its highest since Jun. 2. FxWirePro's Hourly Yen Strength Index stood at -20.18 (Neutral) 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 the pair to next level till 111.71 /112.12.
GBP/USD: Sterling tumbled below the 1.2700 handle after Brexit Minister Davis confirmed that Brexit negotiations will start next week. Moreover, the latest report from the rating agency Moody’s on the impact of the UK election outcome further undermined the sentiment around the major. Sterling traded 0.3 percent down at 1.2698, having hit a low of 1.2635 on Friday, its weakest since Apr 18. FxWirePro's Hourly Sterling Strength Index stood at -125.81 (Highly Bearish) by 1100 GMT. On the lower side, the near term support is around 1.2614 and any break below will drag the pair till 1.2585/ (200- day MA)/1.2470 (61.8% retracement of 1.21088 and 1.30470) is likely. 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 0.6 percent down at 88.38 pence, having hit a near 5-month low of 88.59 in the prior session.
USD/CHF: The Swiss franc edged up after falling to a 1-week low in the previous session as renewed selling seen in stock prices triggered a fresh bout of risk-off sentiment. The major trades 0.1 percent down at 0.9674, having touched a high of 0.9727 on Friday, its highest since May 31. FxWirePro's Hourly Swiss Franc Strength Index stood at -49.69 (Neutral) 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 gained against the backdrop of increasing expectations for an eventual Fed rate hike action on Wednesday. The Aussie trades 0.2 percent up at 0.7543, having hit a high of 0.7566 on Wednesday, it’s strongest since Apr 25. FxWirePro's Hourly Aussie Strength Index stood at 76.91 (Slightly Bullish) 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 eased as technology shares declined by more than 4 percent following heavy losses in U.S. and Asian peers.
The pan-European STOXX 600 index declined 0.9 percent to 387.04 points, while the FTSEurofirst 300 index slumped 0.8 percent to 1,522.25 points.
Britain's FTSE 100 trades 0.1 percent down at 7,521.82 points, while mid-cap FTSE 250 fell 0.3 percent to 19,713.23 points.
Germany's DAX fell 0.9 percent at 12,697.75 points; France's CAC 40 trades 1.01 percent lower at 5,246.06 points.
Commodities Recap
Crude oil prices rallied by more than 1 percent after futures traders increased their bets on a renewed price upswing, although physical markets remain bloated. International benchmark Brent crude was trading 1.1 percent up at $48.78 per barrel by 1047 GMT, having hit a low of $47.41 the day before, its weakest since May 5. U.S. West Texas Intermediate traded 1.09 percent up at $46.38 a barrel, after falling as low as $45.19 on Thursday, its lowest since May 5.
Gold inched up, halting is three day losing streak as equity markets fell and the dollar eased ahead of a U.S. Federal Reserve policy meeting that could give clues on the pace of interest rate hikes over the rest of the year. Spot gold was up at $1,267.65 an ounce as of 1049 GMT, having hit a peak of $1,295.89 an ounce last week, its strongest since Nov. 9. U.S. gold futures for August delivery fell 0.2 percent to $1,269 an ounce.
Treasuries Recap
The U.S. Treasuries tad lower ahead of the 10-year and 30-year auctions, scheduled for later today and tomorrow respectively. Also, expectations for a rise in the country’s CPI for the month of May added to the downside in debt market. The yield on the benchmark 10-year Treasury, rose tad 1/2 basis point to 2.20 percent, the super-long 30-year bond yields hovered around 2.85 percent and the yield on short-term 2-year note traded nearly 1 basis point higher at 1.34 percent.
The UK gilts jumped as investors wait to watch the country’s consumer price inflation (CPI) for the month of May, scheduled to be released on June 13. 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, plunged 3 basis points to 0.97 percent, the super-long 30-year bond yields slipped nearly 1 basis point to 1.67 percent and the yield on the short-term 2-year traded nearly 2 basis points lower at 0.07 percent.
The Eurozone periphery bonds rallied as investors poured into safe-haven instruments 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 will render further direction to the debt market. The benchmark German 10-year bond yields, fell 1 basis point to 0.24 percent, the French 10-year bond yields, slumped 4 basis points to 0.60 percent, Irish 10-year bond yield plunged 2 basis points to 0.66 percent, Italian equivalent nose-dived 7 basis points to 2.01 percent, Netherlands 10-year bonds yield slipped nearly 1-1/2 basis points to 0.46 percent, Portuguese equivalents fell 4 basis points to 2.97 percent and the Spanish 10-year yields slipped 3 basis points to 1.41 percent.
The Japanese government bonds remained flat, as investors wait to watch the Bank of Japan’s (BoJ) 2-day monetary policy decision, scheduled to be unveiled on June 16. The benchmark 10-year bond yield, hovered around 0.06 percent, the long-term 30-year bond yields struggled tad higher by nearly 1 basis point at 0.84 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.
