Market Roundup
• Fed’s Kashkari: possible Fed hike in June, if data surprises to upside markets will have to adjust, supports Yellen.
• Fed’s Kashkari: USD is important factor in Fed analysis, sees froth in commercial real estate.
• Bank of Japan plans to divest over next 10 years entire lot of equities it bought from commercial banks- Nikkei.
• Senior IMF official: A bit more optimistic regarding our growth forecast for German economy, officials need to be prepared for volatility surrounding Brexit.
• ICM poll: Brexit 46%, Bremain 44% vs Brexit 45, Bremain 44% previous.
• Folha: Acting speaker of Brazil lower house annuls Rousseff impeachment, BRL weak off worst of day.
• BCB survey: Brazil’s YE ’16 inflation 7% vs 6.94 last week, YE Selic rate 13% from 13.25 last week.
Looking Ahead - Economic Data (GMT)
• --:-- China FDI (YTD)* April 4.5%- previous
• --:-- China M2 Money Supply YY* April forecast 13.5%, 13.4%-previous
• --:-- China New Yuan Loans* April forecast 900.0b, 1370.0b- previous
• --:-- China Outstanding Loan Growth* April forecast 14.8%, 14.7%- previous
• 1:30 China PPI YY* April forecast -3.8%, -4.3%- previous
• 1:30 China CPI YY* April forecast 2.4%, 2.3%- previous
• 1:30 China CPI MM* April forecast -0.2%, -0.4%- previous
Looking Ahead - Events, Other Releases (GMT)
• 23:50 Japan- Bank of Japan to publish the minutes of its March policy meeting
EUR/USD is likely to find support at 1.1310 levels and currently trading at 1.1381 levels. The pair has made session high at 1.1442 and hit lows at 1.1374 levels. Euro initially inched against the greenback in the European session. But later, the euro gave up gains against the US dollar, as sellers stepped in as investors lowered expectations that the Federal Reserve will not raise interest rates in June, after a weaker than expected jobs report for April on Friday. Also helping the dollar's slight rebound was New York Fed President William Dudley, who said on Friday two U.S. rate hikes this year remained are reasonable expectation. The dollar index hit an 11-day high of 94.056 , having shown a fairly muted reaction to Friday's U.S. jobs report. That left it well clear of a 16-month trough of 91.919 hit last week.
GBP/USD is supported in the range of 1.4345 and currently trading at 1.4412 levels. It reached session high at 1.4431 and hit low at 1.4380 levels. Sterling slipped to hit two-week low against the dollar on Monday as the pair was weighted down by opinion polls showing that the outcome of a race between those wanting to stay in the European Union and those wanting to leave was on a knife edge. A YouGov opinion poll for ITV television showed the "In" campaign leading by 42 percent to 40 percent for the "Out" camp. An ICM poll released in the afternoon showed 46 percent of Britons wanted to leave, while 44 percent wanted to stay in. Sterling fell to $1.4380, down 0.4 percent on the day and well below a four-month high of $1.4770 last Tuesday. It was last trading at $1.4407, down 0.3 percent on the day.
USD/CAD is supported at 1.2897 levels and is trading at 1.2947 levels. It has made session high at 1.3014 and lows at 1.2935 levels. The Canadian dollar weakened to a three-week low against its U.S. counterpart on Monday as crude oil prices slumped by 3 percent and stronger dollar weighted on the Canadian dollar. The loonie has fallen 4 percent from a 10-month high last week of C$1.2461 after weaker-than-expected domestic trade data and wildfire-driven oil production cuts in Alberta's oil sands region hurt Canada's economic outlook. Adding to Monday's bearish sentiment was market intelligence firm Genscape's report of an inventory build of 1.4 million barrels at the Cushing, Oklahoma delivery hub for WTI futures. On the data front, Canadian seasonally adjusted housing starts were 191,512 in April, compared with a revised 202,375 units in March.
USD/JPY is supported around 107.70 levels and currently trading at 108.34 levels. It has made session high at 108.58 and low at 108.14 levels. The pair edged higher on Monday after Japan's finance minister said Tokyo was ready to intervene in the currency market if needed and stronger demand for risker assets limited demand for safe haven Japanese yen. The yen had reached an 18-month high against the dollar last week having gained around 15 percent in the past six months in part because of waning investor expectations for a steady increase in U.S. interest rates. That has prompted a ramping-up of intervention talk from Japan, with Finance Minister Taro Aso's comments on Monday following remarks last week from Prime Minister Shinzo Abe, who said it was watching the yen's movements and would act if necessary. Nonetheless, the greenback gained almost 1 percent versus the Japanese currency on Monday, hitting 108.58, its strongest in 10 days and well clear of last week's low of 105.50 yen.
Equities Recap
European shares rose on Monday, bouncing back after two weeks of losses and supported by gains in Germany and Greece, with the Athens market advancing on expectations of progress in tackling Greece's debt burden.
Britain's blue-chip FTSE 100 index closed down by 0.2 percent, France's benchmark CAC-40 index closed up by 0.5 percent, Germany's DAX ended up 1.1 percent, meanwhile the pan-European Eurofirst 300 index was up 1.1 percent.
Wall Street was mixed on Monday, with declines in energy and materials stocks offset by a bounce in Allergan Plc and other healthcare companies.
Dow Jones closed down by 0.20 percent, S&P 500 ended up by 0.08 percent, Nasdaq finished the day up by 0.30 percent.
Treasuries Recap
Treasury yields fell on Monday as investors lowered expectations that the Federal Reserve will raise interest rates in June, after a weaker-than-expected jobs report for April on Friday.
Benchmark 10-year notes rose 6/32 in price to yield 1.76 percent, down from 1.78 percent late on Friday. The yields briefly fell to 1.71 percent on Friday after the employment report, the lowest since April 11.
Commodities Recap
Gold fell 2 percent in its biggest one-day drop in nearly seven weeks on Monday as the strengthening dollar and a sharper appetite for assets seen as higher risk sparked selling across commodities.
Spot gold was down 1.9 percent at $1,263.93 an ounce at 2:37 p.m. EDT (1837 GMT), erasing the 0.8 percent gain made on Friday after weak non-farm payrolls data. U.S. gold futures for June settled down 2.1 percent at $1,266.60
Oil prices fell more than 3 percent on Monday after traders took in their stride the impact of wildfires on Canada's oil output and after another inventory build at the U.S. delivery hub for crude futures.
WTI's front-month contract, June, fell by $1.22, or 2.8 percent, to $43.44 a barrel by 12:08 p.m. EDT (1608 GMT). It had rallied as much as $1.28 in Asian trading.
Brent's front-month, July, tumbled by $1.60, or 3.5 percent, to $43.77, after rising to $46.48 earlier.
