Market Roundup
- EUR/USD flat, USD/JPY +0.33%, GBP/USD -0.19%, EUR/GBP +0.22%
- DXY -0.13%, DAX +0.11%, FTSE +0.11%, Brent -0.56%
- OPEC extends oil output cut by nine months – delegate
- UK economy slows more than expected in Q1 as inflation hits
- Great Britain Q1 GDP 2nd release QQ +0.2% vs previous 0.3%
- Great Britain Q1 Business invest QQ +0.6% vs previous -0.9%
- Great Britain Q1 Business invest YY +0.8% vs previous -0.9%
- Great Britain Apr BBA Mortgage Approvals 40.750k vs revised 40.872k previous 41.061k
- London's gold benchmark hit by volatility after banks exit
- Japan panel urges government to impose delayed sales tax hike to balance budget
- BOJ's Sakurai rules out near-term hike in bond yield target
- Moody's downgrades Hong Kong after China ratings cut
Economic Data Ahead
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 6,000 to a seasonally adjusted 238,000 for the week ended May 12, while continuing claims for the week ended May 19 is expected to rise to 1.925 million from 1.898 million.
- (0830 ET/1230 GMT) The U.S. Census Bureau is likely to report that preliminary wholesale inventories rose 0.2 percent in April after posting a similar gain in the prior month.
- (0830 ET/1230 GMT) The United States releases goods trade balance data for the month of April. The economy recorded a trade deficit of $65.0 billion in the previous month.
- (0900 ET/1300 GMT) Mexico releases trade balance data for the month of April. The economy posted a $1,410 million trade deficit in March.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending May 19.
- (1100 ET/1500 GMT) Federal Reserve Bank of Kansas City issues manufacturing activity index for the month of May. The indicator stood at 12 in the previous month.
- (1930 ET/2330 GMT) Japan's Statistics Bureau will release its National Consumer Price Index for the month of April. The index rose at an annualized rate of 0.2 percent in March.
Key Events Ahead
- (1000 ET/1400 GMT) Federal Reserve Board Governor Lael Brainard is scheduled to speak on "Global Economic Issues" before a panel at the "Voices of Experience: A Conversation with Former Treasury Under Secretaries for International Affairs" hosted by the Center for Global Development in Washington.
- (1145 ET/1545 GMT) Bank of Canada Deputy Governor Sylvain Leduc will give a speech on financial technology at Payments Canada in Toronto.
- (2200 ET/0200 GMT) St. Louis Fed President James Bullard will give a presentation on the U.S. economy and monetary policy at Keio University, in Tokyo.
FX Beat
DXY: The dollar attempted a mild recovery across the board as investors digested less hawkish Federal Reserve's latest policy meeting minutes. The greenback against a basket of currencies trades flat 97.11, having hit a low of 96.80 on Tuesday, it’s lowest since Nov. 9. FxWirePro's Hourly Dollar Strength Index stood at 39.66 (Neutral) by 1000 GMT.
EUR/USD: The euro trimmed gains as the greenback attempted a minor recovery from recent lows after FOMC meeting minutes dampened market expectations for a more hawkish tone and indications of aggressive Fed rate-hike actions through 2017. The European currency traded flat at 1.1216, having touched a high of 1.1268 on Tuesday, its highest since Nov. 9. FxWirePro's Hourly Euro Strength Index stood at -2.49 (Neutral) by 1000 GMT. The near term resistance is around 1.12678 (May 23 High) and any violation above will take it to next level till 1.1300 Nov 2016 high/1.13660. On the lower side, any break below 1.1180 will test 1.110 (23.6% retracement of 1.105694 and 1.12678)/ 1.1050/ 1.1000.
USD/JPY: The dollar rebounded against the safe-haven Japanese yen as investors’ appetite for risky assets improved, despite weaker Treasury yields. The major traded 0.3 percent up at 111.88, having touched a high of 112.12 the prior day, its highest since May 17. FxWirePro's Hourly Yen Strength Index stood at -96.73 (Slightly Bearish) by 1000 GMT. The pair is facing support at 110 and any break below will drag it down till 108.13. On the higher side, close above 111.85 (89 EMA) will take it to next level till 113.40/114.36 likely.
GBP/USD: Sterling slumped after data showed Britain's economy slowed more than previously thought in the first quarter of this year. The country's gross domestic product grew 0.2 percent, missing earlier estimate of 0.3 percent. Sterling trades 0.1 percent down at 1.2959, hovering away from a high of 1.3047 hit last week, its strongest since Sept. 29. FxWirePro's Hourly Sterling Strength Index stood at -116.49 (Highly Bearish) by 1000 GMT. On the higher side, any close above 1.3050 confirms bullish continuation and a jump till 1.3088/13120 likely. The major support is around 1.2930-40 (10 day MA and 20- day MA) and any break below will drag the pair down till 1.2900/1.2830. Against the euro, the pound traded 0.1 percent down at 86.55 pence, having hit a 1-1/2 month low of 86.74 on Tuesday.
USD/CHF: The Swiss franc edged up, extending previous session gains, as a sharp slide in the U.S. Treasury bond yields weighed on the greenback. The major trades down at 0.9725, having hit a low of 0.9691 on Monday, its weakest since Nov 9. FxWirePro's Hourly Swiss Franc Strength Index stood at -34.81 (Neutral) by 1000 GMT. The pair is facing strong trend line support at 0.9720 (trend line joining 0.90786 and 0.95493) and any further bearish continuation can be seen if it closes below that trend line. The near-term major support is around 0.96788 and a break below targets 0.96170. On the higher side, near term resistance is around 0.9805 and any break above will take it till 0.9860/0.9900.
AUD/USD: The Australian dollar came under selling pressure, reversing some of its previous session's FOMC minutes-led gains as the crude oil prices eased from recent highs after OPEC decided to extend cuts in oil output by nine months to March 2018. The Aussie trades 0.5 percent down at 0.7467, hovering away from a high of 0.7517 hit on Tuesday, it’s strongest since May. 3. FxWirePro's Hourly Aussie Strength Index stood at -3.05 (Neutral) by 1000 GMT. On the lower side, near term support is around 0.7385 (61.8% retracement of 0.71599 and 0.77493) and any close below will drag the pair till 0.7325/0.7300. The near term resistance is around 0.7520 (89- EMA) and any close above targets 0.7580/0.7650.
Equities Recap
European shares edged up in early trade, while the world stocks hit a record high as the dollar eased after the U.S. Federal Reserve signalled caution in raising interest rates.
The pan-European STOXX 600 index gained 0.1 percent to 392.60 points, while the FTSEurofirst 300 index rose 0.1 percent to 1,542.77 points.
Britain's FTSE 100 trades 0.2 percent up at 7,527.56 points, while mid-cap FTSE 250 rallied 0.1 percent to 19,963.37 points.
Germany's DAX gained 0.1 percent at 12,661.90 points; France's CAC 40 trades 0.3 percent higher at 5,358.47 points.
Commodities Recap
Crude oil prices declined after rising to a 1-month high as OPEC decided to extend cuts in oil output by nine months to March 2018. International benchmark Brent crude was trading 0.4 percent down at $53.59 per barrel by 0412 GMT, having hit an early high of $54.63, its strongest since Apr. 19. U.S. West Texas Intermediate slumped 0.9 percent to $50.80 a barrel, after rising as high as $51.97 earlier, its highest since Apr. 19.
Gold prices edged down as the dollar steadied after declining on minutes of the U.S. Federal Reserve's last policy meeting. Spot gold was trading 0.1 percent down at $1,256.62 per ounce by 1023 GMT, having gained about 0.6 percent in the previous session. U.S. gold futures were up 0.4 percent at $1,258 an ounce.
Treasuries Recap
The U.S. Treasuries gained on expectations of a rise in the country’s initial jobless claims, scheduled to be released later in the day. The yield on the benchmark 10-year Treasury slipped 1-1/2 basis points to 2.25 percent, the super-long 30-year bond yields fell nearly 1 basis point to 2.92 percent and the yield on short-term 2-year note traded 1-1/2 basis points lower at 1.29 percent.
The UK gilts rallied Thursday after reading a lower-than-expected second estimate of gross domestic product (GDP) for the first quarter of this year amid slack in energy prices ahead of OPEC’s agreement to extend the output cut by another nine months. The yield on the benchmark 10-year gilts, slumped 3-1/2 basis points to 1.04 percent, the super-long 30-year bond yields plunged 3 basis points to 1.66 percent and the yield on the short-term 2-year traded 2-1/2 basis points lower at 0.08 percent.
The New Zealand bonds closed on the upside, following a global debt market rout after the Federal Open Market Committee (FOMC), signalled in its meeting minutes that central bank remains on a gradual approach to raise interest rates and reduce its bond reinvestment. At the time of closing, the yield on the benchmark 10-year bond, remained flat at 2.88 percent, the yield on 7-year note fell 1 basis point to 2.53 percent and the yield on the short-term 2-year note too remained 1 basis point lower at 1.95 percent.
The Australian bonds sharply rebounded, tracking firmness in the U.S. counterpart after reading the Federal Open Market Committee (FOMC) meeting minutes, which met market expectations. The yield on the benchmark 10-year Treasury note, plunged 4-1/2 basis points to 2.44 percent, the yield on 15-year note slumped 5 basis points to 2.85 percent and the yield on short-term 2-year traded nearly 3-1/2 basis points lower at 1.59 percent.
