Market Roundup
EUR/USD 0.18%, USD/JPY -0.08%, GBP/USD 0.25%, EUR/GBP -0.06%
DXY -0.11%, DAX -0.31%, FTSE -0.01%, Brent -0.09%, Gold 0.26%
U.S., Chinese officials to meet Friday, discuss Liu visit-U.S. official
Oil near multi-year highs as Iran sanctions tighten supply outlook
Keeping UK rates on hold was straightforward -BoE's Broadbent
Japan economy seen shrinking for 1st time in 2 years in Q1
BOJ's Kuroda calls on government to step up structural reform
German firms positive about future despite higher risks -DIHK survey
China April new loans rise to 1.18 trln yuan
ES Apr CPI YY, 1.1%, 1.1% f'cast, 1.2% prev
ES Apr HICP YY, 1.1%, 1.1% f'cast, 1.1% prev
Economic Data Ahead
(0830 ET/1230 GMT) U.S. Apr Import Prices, 0.5% f'cast, 0.0% prev
(0830 ET/1230 GMT) U.S. Apr Export Prices, 0.3% f'cast, 0.3% prev
(1000 ET/1400 GMT) U.S. May U Mich Sentiment Prelim, 98.5 f'cast, 98.8 prev
(1000 ET/1400 GMT) U.S. May U Mich Conditions Prelim, 115.7 f'cast, 114.9 prev
(1000 ET/1400 GMT) U.S. May U Mich Expectations Prelim, 88.0 f'cast, 88.4 prev
(0830 ET/1230 GMT) CA Apr Employment Change, 17.4k f'cast, 32.3k prev
(0830 ET/1230 GMT) CA Apr Unemployment Rate, 5.8% f'cast, 5.8% prev
Key Events Ahead
(0830 ET/1230 GMT) FRB St. Louis's James Bullard gives presentation on U.S. economy - Springfield
(0900 ET/1300 GMT) BoC's Carolyn A. Wilkins participates at Women's Forum - Toronto
(0915 ET/1315 GMT) ECB's Draghi speaks at 8th edition of State of the Union – Florence
FX Beat
DXY: U.S. dollar index eases from 2018 highs at 93.42 and is currently trading at 92.47 levels, two consecutive daily declines. The index fades the spike to daily highs in the 92.85/90 band, remains capped at 5-DMA. Softer US inflation figures suggest that the Fed can wait after an imminent rate hike in June, weighing on the dollar.
EUR/USD: EURUSD is showing a major recovery of almost more than 125 pips after hitting new 2018 low of 1.8228. On the lower side, near term support stands at 1.1800 and any break below targets 1.17120 (38.2% fibo)/1.1600. The near term resistance is around 1.1950 and any break above will take the pair to next level till 1.1970/1.200. The pair should close above 1.2020 for further upside.
GBP/USD: GBP/USD has declined more than 160 pips sharply after more dovish BOE monetary policy. The pair hits low of 1.3460 and recovered sharply after weaker than expected US CPI data. On the higher side, 1.3620 will be acting major resistance and any convincing break above will take the pair slightly till 1.3640 (55- 4H EMA)/1.36659. Major trend reversal only above 1.4000. The near term support is around 1.3460 and any break below will drag the pair till 1.3400/1.3345.
USD/JPY: US dollar extended weakness overnight after weaker than expected US CPI data accelerated profit taking. USD/JPY struggles to hold gains above 110 handle, slips below 5-DMA support. Price action capped at 50% Fibos. Technical studies support further upside in the pair. Scope for test of 61.8% Fib at 110.87 on bullish momentum. That said, bearish divergence and 'Cypher Pattern' on daily charts keeps scope for downside. 20-DMA is strong support at 108.78 levels. Break below to see further weakness.
USD/CHF: USD/CHF eases from 12-month highs at 1.00563, slips below parity. The major is extending declines for 2nd straight session. Technical indicators are at overbought levels suggesting impending correction. We also evidence a bearish divergence which adds to the downside bias. The major has broken below 5-DMA and next bear target lies at 23.6% Fib at 0.9851. On the flipside, break above 1.0056 could see resumption of upside.
EUR/JPY: EUR/JPY is extending upside for the 3rd straight session after holding above major support at 200W SMA. Price action finds stiff resistance at daily cloud base at 130.61. We see further upside on break above. Break into cloud will take the pair higher to test next major resistance at 50-DMA at 131.33. On the downside, 200W SMA is major support at 129.19. Any further weakness only on break below.
Equities Recap
European shares rallied on Friday on improved investor appetite for risky assets. The pan-European STOXX 600 index was down 0.05 percent at 391.77 points, while the FTSEurofirst 300 index slipped 0.19 percent to 1,597.25 points.
Britain's FTSE 100 trades 0.02 percent up at 7,702.34 points, while mid-cap FTSE 250 was up 0.49 percent to 20,800.38 points.
Germany's DAX was up 0.24 percent at 12,991.45 points; France's CAC 40 was down 0.37% at 5,525.70 points.
Commodities Recap
Oil prices ease from multi-year highs. U.S. crude futures were down 0.1 percent at $71.3 a barrel. Brent crude futures fell 0.3 percent to $77.26 a barrel.
Gold eases slightly. Spot gold was down 0.1 percent at $1,319.61 per ounce as of 0656 GMT. U.S. gold futures for June delivery were nearly 0.2 percent lower at $1,320.20 per ounce.
Silver rose 0.1 percent to $16.70 an ounce. Platinum fell 0.5 percent at $919 per ounce. Palladium was 0.5 percent lower at $994 an ounce.
Treasuries Recap
U.S.: The U.S. Treasuries climbed Friday ahead of the Federal Open Market Committee (FOMC) member Bullard’s speech, scheduled for today at 12:30GMT. The yield on the benchmark 10-year Treasuries slumped nearly 2 basis points to 2.97 percent, the super-long 30-year bond yields plunged 2-1/2 basis points to 3.09 percent and the yield on the short-term 2-year traded tad lower at 2.53 percent.
EUR: The German bunds traded tad lower during European session Friday as investors wait to watch the European Central Bank’s (ECB) President Mario Draghi’s speech, scheduled to be delivered today by 13:15GMT. The German 10-year bond yields, which move inversely to its price, slipped 1/2 basis point to 0.55 percent, the yield on 30-year note also remained tad lower at 1.23 percent and the yield on short-term 2-year traded nearly flat at -0.57 percent.
NZD: New Zealand bonds rallied at the time of closing Friday, tracking cues from Reserve Bank of New Zealand (RBNZ) which decided to remain unchanged on its benchmark interest rate at its monetary policy meeting, held early yesterday, while maintaining a tone of dovishness in its policy statement that followed. Also, the central bank downgraded its forecasts for the country’s gross domestic product (GDP) and inflation for the upcoming period, which crowded investors into buying safe-haven bonds, thus weigh on yields. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, slipped 1 basis point to 2.74 percent, the yield on the long-term 20-year note also fell 1 basis point to 3.24 percent and the yield on short-term 2-year too closed 1 basis point lower at 1.87 percent.
JGBs: Japanese government bonds edged slightly higher on Friday despite Nikkei 225 hit highest since February. Markets await the first quarter gross domestic product (GDP) data scheduled to be released on Wednesday. The yield on the benchmark 10-year JGB note, which moves inversely to its price, traded 1/2 basis point lower at 0.046 percent, the yield on the long-term 30-year note remained steady at 0.740 percent and the yield on short-term 1-year moved 1/2 basis point down to -0.134 percent.
AUD: Australian government bonds slumped on the last trading day of the week Friday as investors cashed in profits, tracking weakness in the U.S. Treasuries. Now, markets await next week’s employment report which might set a tone for the Reserve Bank of Australia in its next month’s monetary policy meeting. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, rose 1-1/2 basis points to 2.796 percent, the yield on the long-term 30-year Note also climbed 1-1/2 basis points to 3.295 percent and the yield on short-term 2-year up 1 basis point to 2.033 percent.
