Market Roundup
- EUR/USD 0.07%, USD/JPY 0.07%, GBP/USD 0.13%, EUR/GBP -0.16%
- DXY -0.05%, DAX -0.07%, FTSE -0.31%, Brent 0.58%, Gold 0.77%
- EZ May Markit Mfg Final PMI, 47.7, 47.7 f'cast, 47.7 prev
- Germany May Markit/BME Mfg PMI, 44.3, 44.3 f'cast, 44.3 prev
- Great Britain May Markit/CIPS Mfg PMI, 49.4, 52.0 f'cast, 53.1 prev
- France May Markit Mfg PMI, 50.6, 50.6 f'cast, 50.6 prev
- Italy May Markit/IHS Mfg PMI, 49.7, 48.6 f'cast, 49.1 prev
- Deal or no deal, we leave EU on Oct. 31 - UK PM candidate Johnson
- U.S. Fed's Daly says patient on rates, eyeing trade talks
- Italy PM calls "important" news conference amid coalition squabbles, EU pressure
- Reeling from tariff threat, Mexico begins immigration talks in Washington
- Swiss franc at near 2-year highs vs euro as trade tensions rise
- Gold hits 2-month high as recession concerns burnish safe-haven appeal
Economic Data Ahead
- (0930 ET/1330 GMT) The Markit will release Canada's Manufacturing PMI for the Month of May. The indicator stood at 50.6 in the prior month.
- (0945 ET/1345 GMT) Financial firm Markit releases U.S. Manufacturing PMI for the month of May. The index is likely to show a final reading of 50.6 after posting similar gains in the previous month.
- (1000 ET/1400 GMT) The Institute for Supply Management (ISM) is expected to report that U.S. manufacturing Purchasing Managers' index rose to 53.3 in May from 52.8 in April.
- (1000 ET/1400 GMT) The Commerce Department is likely to report that U.S. construction spending increased 0.5 percent in April after falling 0.9 percent in the previous month.
Key Events Ahead
- (0800 ET/1200 GMT) French Finance Minister Bruno Le Maire and EU Competition Commissioner Margarthe Vestager speak at competition conference at OECD in Paris
- (0910 ET/1310 GMT) Federal Reserve Vice Chair for Supervision Randal Quarles on "The Next Stage in the LIBOR Transition" before the Alternative Reference Rates Committee (ARCC) Roundtable in New York
- (1130 ET/1530 GMT) ECB's Andrea Enria attends seminar in memory of Giorgio Lunghini in Milan
- (1240 ET/1640 GMT) Federal Reserve Bank of Richmond President Thomas Barkin speaks on "Challenges to Women's Labor Force Participation" before Charlotte Economics Club in Charlotte
- (1325 ET/1725 GMT) Federal Reserve Bank of St. Louis President James Bullard gives presentation on U.S. economy and monetary policy in Chicago
- N/A U.S. Secretary of State Mike Pompeo and Dutch Prime Minister Mark Rutte speak at a Dutch conference on entrepreneurship.
FX Beat
DXY: The dollar index steadied as U.S. President Donald Trump hardened his trade stance to countries beyond China. The greenback against a basket of currencies traded 0.05 percent up at 97.65, having touched a low of 98.58, its lowest since May 27. FxWirePro's Hourly Dollar Strength Index stood at -82.26 (Slightly Bearish) by 1000 GMT.
EUR/USD: The euro trimmed gains after rising to a near 6-day peak earlier in the day, as manufacturing activity in the euro zone contracted for a fourth month in May and at a faster pace, weighed down by the U.S.-China trade war, slumping automotive demand, Brexit and wider geopolitical uncertainty. The European currency traded 0.1 percent up at 1.1179, having touched a high of 1.1190 earlier, its highest since May 28. FxWirePro's Hourly Euro Strength Index stood at 54.43 (Bullish) by 1000 GMT. Immediate resistance is located at 1.1209 (May 6 High), a break above targets 1.1243 (May 14 High). On the downside, support is seen at 1.1106 (May 23 Low), a break below could drag it below 1.1075 (May 18, 2017, Low).
USD/JPY: The dollar slumped to a near 5-month low as Beijing added to existing tensions by warning the United States not to interfere in security disputes over Taiwan and the South China Sea. The major was trading 0.05 percent down at 108.25, having hit a low of 108.07, its lowest since Jan. 14. FxWirePro's Hourly Yen Strength Index stood at 58.44 (Bullish) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. construction spending, and manufacturing PMI from both Markit and ISM. Immediate resistance is located at 108.50 (23.6% retracement of 109.92 and 108.07), a break above targets 108.99 (50% retracement). On the downside, support is seen at 107.77 (Jan. 10 Low), a break below could take it lower at 107.51 (Jan. 4 Low).
GBP/USD: Sterling consolidated above the 1.2600 handle, amid growing uncertainty among investors on the outlook for the British economy. The major traded 0.2 percent up at 1.2660, having hit a low of 1.2558 on Friday; it’s lowest since Jan, 3. FxWirePro's Hourly Sterling Strength Index stood at -92.03 (Slightly Bearish) 1000 GMT. Immediate resistance is located at 1.2702 (May 28 High), a break above could take it near 1.2747 (May 27 High). On the downside, support is seen at 1.2570 (Dec. 17 Low), a break below targets 1.2529 (Dec. 18 Low). Against the euro, the pound was trading flat at 88.42 pence, having hit a low of 88.74 on Friday, it’s lowest since Jan. 16
USD/CHF: The Swiss franc rallied to a 2-month peak, as trade tensions intensified after Trump increased tariffs on Chinese imports, threatened to raise tariffs on Mexican imports and removed preferential trade treatment for India. The major trades 0.2 percent down at 0.9988, having touched a low of 0.9954 earlier; it’s lowest since April 3. FxWirePro's Hourly Swiss Franc Strength Index stood at 49.94 (Neutral) by 1000 GMT. On the higher side, near-term resistance is around 1.0121 (May 17 High) and any break above will take the pair to next level till 1.0158 (May 10 High). The near-term support is around 0.9937 (Mar. 28 Low), and any close below that level will drag it till 0.9905 (Mar. 27 Low).
Equities Recap
European shares tumbled as deepening U.S. trade wars fanned fears of a global economic slowdown.
The pan-European STOXX 600 index slumped 0.1 percent at 368.60 points, while the FTSEurofirst 300 index plunged 0.1 percent to 1,450.89 points.
Britain's FTSE 100 trades 0.3 percent down at 7,140.09 points, while mid-cap FTSE 250 declined 0.7 to 18,839.99 points.
Germany's DAX fell 0.1 percent at 11,718.46 points; France's CAC 40 trades 0.05 percent lower at 5,205.38 points
Commodities Recap
Crude oil prices steadied after falling to multi-month lows earlier in the session, as oil exporter Saudi Arabia sought to calm market. International benchmark Brent crude was trading 1.3 percent higher at $62.47 per barrel by 1027 GMT, having hit a low of $60.73, its lowest since Feb. 7. U.S. West Texas Intermediate was trading 1.3 percent up at $54.02 a barrel, after falling as low as $52.11 earlier, its lowest since the Feb. 12.
Gold prices rallied to their highest level in more than two months as heightened U.S.-China trade tensions and Washington's threat of tariffs on Mexico stoked worries of a global recession. Spot gold was 0.9 percent up at $1,316.86 per ounce at 1029 GMT, having touched a high of $1,317.18 earlier, its highest since March 27. U.S. gold futures rose 0.6 percent to $1,319.40 an ounce.
Treasuries Recap
The U.S. 10-year Treasury yields plunged during the afternoon session, ahead of the country’s ISM manufacturing PMI for the month of May, scheduled to be released today by 14:00GMT, coupled with speeches from members of the Federal Open Market Committee (FOMC) – Quarles, Barkin and Bullard, all scheduled for later in the day. The yield on the benchmark 10-year Treasury yield plunged nearly 4 basis points to 2.104 percent, the super-long 30-year bond yields slumped nearly 3-1/2 basis points to 2.551 percent and the yield on the short-term 2-year plummeted nearly 6 basis points to 1.886 percent.
The United Kingdom’s gilts jumped during European session following a contraction in the country’s manufacturing PMI for the month of May, released, early today. The yield on the benchmark 10-year gilts, slumped nearly 3 basis points to 0.860 percent, the super-long 30-year bond yields plunged 4 basis points to 1.450 percent and the yield on the short-term 2-year traded 2 basis points lower at 0.582 percent.
The German bunds during European session of the first trading day of the week after the country’s manufacturing PMI for the month of May remained stable, while investors remain focussed on the eurozone’s consumer price inflation (CPI) data for the similar period, scheduled to be released on June 4 by 09:00GMT for further direction in the debt market. The German 10-year bond yields, which move inversely to its price, slipped nearly 1-1/2 basis points to -0.215 percent, the yield on 30-year note suffered 3 basis points to 0.399 percent and the yield on short-term 2-year traded nearly flat at -0.665 percent.
The Australian government bonds traded mixed during early Asian session ahead of the Reserve Bank of Australia monetary policy decision scheduled on June 4, where market is pricing a 25 basis points rate cut. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose over 2-1/2 basis points to 1.496 percent, the yield on the long-term 30-year bond climbed over 2 basis points to 2.159 percent and the yield on short-term 2-year down 1/2 basis point to 1.117 percent.
