Market Roundup
•French 6-Month BTF Auction 3.666%, 3.710% previous
•French 3-Month BTF Auction 3.803% ,3.800% previous
•French 12-Month BTF Auction 3.460%, 3.488% previous
•US Apr CB Employment Trends Index 111.25 ,112.84 previous
•US 3-Month Bill Auctio 5.250%, 5.250% previous
•US 6-Month Bill Auction 5.155%, 5.165% previous
Looking Ahead Economic Data(GMT)
• 01:30 Australia Retail Sales (QoQ) (Q1) 0.3% previous
• 01:30 Australia Retail Sales (MoM) -0.2% forecast, 0.3% previous
• 01:30 Australia RBA Interest Rate Decision 4.35% forecast, 4.35% previous
Looking Ahead Events And Other Releases(GMT)
• 05:30 Australia RBA Monetary Policy Statement
• 05:30 Australia RBA Rate Statement
Currency Forecast
EUR/USD: The euro strengthened against dollar on Monday as investors grew hopeful about potential interest rate cuts from major central banks. The case for a European Central Bank interest rate cut in June is getting stronger as services inflation is finally starting to ease, ECB Chief Economist Philip Lane told Spanish newspaper El Confidencial on Monday Both the April flash estimate for euro area inflation and the first quarter GDP number that came out improve my confidence that inflation should return to target in a timely manner," Lane told the newspaper in an interview. The ECB has all but promised a rate cut on June 6, provided incoming data strengthen policymakers' belief that inflation will head back to its 2% target by the middle of next year. Immediate resistance can be seen at 1.0810(38.2% fib), an upside break can trigger rise towards 1.0888(23.650% fib).On the downside, immediate support is seen at 1.0751 (50% fib), a break below could take the pair towards 1.0723(April 2nd low).
GBP/USD: The British pound strengthened against the dollar on Monday as investors awaited Bank of England policy announcement on Thursday. The Bank of England must decide next week whether to will update its message about when it might cut interest rates for the first time in four years, a move which could yet prove risky despite a sharp drop in inflation.Britain's labour market is still generating inflationary heat, the economy looks like it has emerged from a recession and the U.S. Federal Reserve- which sets the tone for financial markets globally - is pushing back on when it might cut rates.Financial markets are now only fully pricing in a first BoE rate cut in September and the chances of a second move by the end of the year are seen as little more than 50-50. Immediate resistance can be seen at 1.2582 (38.2%fib), an upside break can trigger rise towards 1.2655(23.6 % fib).On the downside, immediate support is seen at 1.2531 (50% fib), a break below could take the pair towards 1.2480 ( 61.8% fib).
USD/CAD: The Canadian dollar edged higher on Monday against its U.S. counterpart as weaker dollar and higher oil prices boosted Canadian dollar. Softer-than-expected U.S. labor market report on Friday led traders to revive bets that the Federal Reserve would ease monetary policy as early as September.The data raised expectations that the Fed would cut rates twice in 2024 with markets currently pricing in about 45 basis points of rate cuts. New York Fed President John Williams on Monday said that at some undefined point the U.S. central bank will lower its rate target, but for now monetary policy is in a "very good place," while Richmond Fed President Thomas Barkin said the battle against inflation will likely require a hit to demand.Immediate resistance can be seen at 1.3692 (38.2% fib), an upside break can trigger rise towards 1.3755 (23.6% fib).On the downside, immediate support is seen at 1.3642(50% fib), a break below could take the pair towards 1.3589(61.8% fib).
USD/JPY: The U.S. dollar strengthened on Monday as yen weakened after a strong surge last week from Tokyo's suspected currency intervention. The yen last week clocked its strongest weekly gain since early December 2022 following two bouts of suspected intervention from Tokyo to pull the currency away from a 34-year low of 160.245 per dollar. It gained 3.5% in the week. The yen has been under pressure as U.S. interest rates have climbed and Japan's have stayed near zero, driving cash out of yen and into higher-yielding assets. The more than 9 trillion yen that the Bank of Japan is estimated to have spent to prop up the frail yen last week has only bought it some time, analysts say, as the market still views the currency as a sell. Strong resistance can be seen at 153.74 (Daily high), an upside break can trigger rise towards 154.00(Psychological level).On the downside, immediate support is seen at 152.62(38.2% fib), a break below could take the pair towards 151.26(Lower BB).
Equities Recap
European shares plummeted on Friday amid widespread fears of the coronavirus hampering business activity, with oil and gas stocks bearing the brunt of losses after steep declines in crude prices..
UK's benchmark FTSE 100 closed up by 0.51 percent, Germany's Dax ended up by 0.95 percent, France’s CAC finished the day up by 0.49 percent.
U.S. stocks bounced back from recent losses on Monday, as the focus turned to assurances of central bank stimulus to counter the economic fallout from the coronavirus outbreak.
Dow Jones closed up by 0.46% percent, S&P 500 closed up by 1.03% percent, Nasdaq settled up by 1.19% percent.
Treasuries Recap
Treasury yields ticked lower as investors assessed last week's subdued job creation, which reinforced view that the U.S. economy was not overheating enough to derail a rate cut.
The yield on benchmark U.S. 10-year notes fell 1.3 basis points to 4.487%, from 4.5% late on Friday.
Commodities Recap
Oil prices rose after Saudi Arabia hiked June crude prices for most regions and as the prospect of a quick agreement for a Gaza ceasefire deal appeared slim, reviving fears that combat between Hamas and Israeli forces will resume soon.
U.S. crude settled up 37 cents at $78.48 a barrel and Brent rose 37 cents to settle at $83.33 per barrel.
Gold prices climbed as the dollar weakened. U.S. gold futures for June delivery settled 0.9% higher at $2,331.20 per ounce.
