Market Roundup
- UK PM May could lose majority in UK parliament -YouGov
- China May mfg PMI 51.2 vs f'cast 51.0, Apr 51.2
- China May services PMI 54.5, Apr 54.0
- China May steel PMI 54.8, Apr 49.1
- Japan Apr Industrial output +4.0% m/m, +4.3% eyed, May -2.5% eyed, Jun +1.8%
- Output touch below forecast but at 6-year high, exports solid
- Japan fund managers trim equity exposure in May -poll
- UK May GfK cons confidence edges up to -5, -8 eyed, Apr -7
- May BRC UK shop prices -0.4% y/y, decline smallest since Nov, Apr -0.5%
- RBNZ says financial system faces less risk, house prices on its radar
- New Zealand May NBNZ business outlook, +14.9%, last +11.0%
Economic Data Ahead
- (0245 ET/0645 GMT) France May CPI (EU Norm) Prelim y/y, +1.1% eyed; last +1.4%
- (0400 ET/0800 GMT) Germany May Unemployment Rate SA, +5.8% eyed; last +5.8%
- (0400 ET/0800 GMT) Italy Apr Unemployment Rate, +11.6% eyed; last +11.7%
- (0430 ET/0830 GMT) Great Britain Apr BOE Consumer Credit (GB), 1.50 bln eyed; last 1.62 bln
- (0430 ET/0830 GMT) Great Britain Apr Mortgage Lending (GB), 2.95 bln eyed; last 3.11 bln
- (0430 ET/0830 GMT) Great Britain Apr Mortgage Approvals, 66.05k eyed; last 66.84k
- (0500 ET/0900 GMT) Italy May Cons Price Prelim, -0.2% m/m, +1.4% y/y eyed; last +0.4%, +1.9%
- (0500 ET/0900 GMT) Eurozone May Inflation Flash y/y, +1.5% eyed; last +1.9%
- (0500 ET/0900 GMT) Eurozone Apr Unemployment Rate, +9.4% eyed; last +9.5%
Key Events Ahead
- N/A Riksbank's Cecilia Skingsley participates in SEB Bankers Day
- (0420 ET/0820 GMT) ECB's Coeure speaks at a conference on Greece
- (0630 ET/1030 GMT) Austria finmin Schelling, Telekom Austria's CEO discuss digitalization plans
- (0930 ET/1330 GMT) ECB's Lautenschlager speaks at a conference in Berlin
- (1200 ET/1600 GMT) Austrian Natl Bank's Nowotny speaks at a Vienna stock exchange event
FX Beat
DXY: The dollar gained versus the Japanese yen as upbeat U.S. economic data releases and better-than-expected China's manufacturing figures boosted risk-on sentiment. The greenback against a basket of currencies traded up at 97.46, hovering towards a high of 97.78 hit in the prior session, it’s highest since May 19. FxWirePro's Hourly Dollar Strength Index stood at 14.78 (Neutral) by 0500 GMT.
EUR/USD: The euro edged down after recovering from a near 1-1/2 week low in the previous session, as investors turned cautious amid political worries in Europe as well as weaker commodity markets. The European currency traded 0.1 percent down at 1.1174, having touched a low of 1.1109 on Tuesday, its lowest since May 19. FxWirePro's Hourly Euro Strength Index stood at -21.97 (Neutral) by 0400 GMT. Investors’ attention will remain on Eurozone's unemployment rate and consumer price index, ahead of the U.S. pending homes sales data, Chicago Purchasing Manager's Index and Fed's Beige Book. Immediate resistance is located at 1.1207 (38.2% retracement of 1.1268 and 1.1109), a break above targets 1.1250 (May 25 High). On the downside, support is seen at 1.1150, a break below could drag it near 1.1109 (Previous Session Low).
USD/JPY: The dollar rebounded after falling to a near 2-week low in the prior session, as upbeat U.S. economic data released overnight strengthened the case of an imminent interest rate hike by the Federal Reserve. Moreover, improving risk sentiment after China factories saw steady growth dented the bid tone around the Japanese yen. The major traded 0.1 percent up at 110.97, having touched a low of 110.66 on Tuesday, its lowest since May 18. FxWirePro's Hourly Yen Strength Index stood at 88.27 (Slightly Bullish) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of the U.S. pending homes sales data, Chicago Purchasing Manager's Index and Fed's Beige Book. Immediate resistance is located at 111.33 (10-DMA), a break above targets 112.11 (May 24 High). On the downside, support is seen at 110.68 (23.6% retracement of 110.23 and 112.11), a break below could take it near 110.23 (May 18 Low).
GBP/USD: Sterling slumped below the 1.2800 handle after a poll showed that British Prime Minister Theresa May's Conservative Party risks falling short of an overall majority in next month's national election. The details of the poll published by the Times suggested that Conservative Party might lose 20 of the 330 seats it holds while the opposition Labour Party could gain nearly 30 seats. Sterling trades 0.3 percent down at 1.2813, having hit a low of 1.2774 on Friday, its weakest since Apr. 25. FxWirePro's Hourly Sterling Strength Index stood at -150.63 (Highly Bearish) by 0400 GMT. Investors’ will continue to track developments surrounding UK elections, ahead of the UK consumer credit and M4 money supply data. Immediate resistance is located at 1.2832 (78.6% retracement of 1.3046 and 1.2774), a break above could take it over 1.2888 (Previous Session High). On the downside, support is seen at 1.2775 (May 26 Low), a break below targets 1.2750. Against the euro, the pound traded 0.2 percent down at 87.21 pence, hovering towards a 2-1/2 month low of 87.50 hit on Friday.
AUD/USD: The Australian dollar rose to a 1-week high on the back of better-than-expected manufacturing data from China. However, weakness in the commodity prices, especially crude oil, undermined the bid tone around the major. The Aussie trades 0.2 percent down at 0.7451, having hit a high of 0.7475 earlier, it’s strongest since May. 25. FxWirePro's Hourly Aussie Strength Index stood at 68.56 (Bullish) by 0500 GMT. Investors will continue to track sentiments around the commodity bloc, ahead of U.S. economic releases. Immediate support is seen at 0.7444 (61.8% retracement of 0.7328 and 0.7516), a break below targets 0.7422 (50.0% retrace). On the upside, resistance is located at 0.7475 (Session High), a break above could take it near 0.7500.
NZD/USD: The New Zealand rallied to a fresh 3-month peak as The Reserve Bank of New Zealand's six-monthly report on the economy's financial stability had almost no impact on the currency. Moreover, improved New Zealand business outlook and upbeat Chinese PMI reports also supported the major's upside. However, renewed oil price weakness dented the sentiments of the NZD bulls. The Kiwi trades 0.1 percent down at 0.7088, having touched a peak of 0.7118 earlier, its strongest since Mar. 2. FxWirePro's Hourly Kiwi Strength Index was at 85.12 (Slightly Bullish) by 0500 GMT. Investors’ will continue to track overall market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7118 (Session High, a break above could take it near 0.7150 (Mar. 2 High). On the downside, support is seen at 0.7053 (78.6% retracements of 0.6817 and 0.7118), a break below could drag it till 0.7003 (61.8% retrace).
Equities Recap
Asian shares advanced after data showed China's factory activity grew at a steady pace in May, easing investors’ worries about a slowdown in the world's second-biggest economy.
MSCI's broadest index of Asia-Pacific shares outside Japan traded flat.
Tokyo's Nikkei fell 0.3 percent to 19,621.54 points, Australia's S&P/ASX 200 index advanced 0.06 percent to 5,721.30 points and South Korea's KOSPI gained 0.05 percent to 2,344.79 points.
Shanghai composite index gained 0.2 percent to 3,116.40 points, while CSI300 index was trading 0.1 percent up at 3,483.96 points.
Hong Kong’s Hang Seng was trading 0.02 percent lower at 25,695.40 points. Taiwan shares shed 0.6 percent to 10,040.72 points.
Commodities Recap
Crude oil prices declined as rising output from Libya added to concerns about increasing U.S. production that undermined OPEC-led production cuts. International benchmark Brent crude was trading 0.4 percent down at $51.92 per barrel by 0418 GMT, having hit a low of $50.70 on Friday, its weakest since May 12. U.S. West Texas Intermediate fell 0.6 percent to $49.32 a barrel, after falling as low as $48.16 on Friday, its lowest since May 18.
Gold edged lower, drifting away from a one-month peak hit in the previous session as U.S. economic data strengthened the case of an imminent interest rate hike by the Federal Reserve. Spot gold was down 0.2 percent to $1,259.75 per ounce at 0423 GMT, having touched a high of $1,270.40 on Tuesday, its highest since May 1. U.S. gold futures dipped 0.2 percent to $1,260.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.220 percent higher by 0.005 bps, while 5-year yield was 0.005 bps higher at 1.764 percent.
The Australian bonds traded tad higher as investors cashed in profits ahead of the country’s retail sales, scheduled to be released on June 1. The yield on the benchmark 10-year Treasury note fell 1/2 basis point to 2.40 percent, the yield on 15-year note hovered around 2.78 percent while the yield on short-term 2-year slumped nearly 2 basis points to 1.55 percent.
The New Zealand bonds closed mixed after the Reserve Bank of New Zealand (RBNZ) released a balanced outlook on the Financial Stability Report (FSR) for the month of May, released early today. At the time of closing, the yield on the benchmark 10-year bond slumped 4-1/2 basis points to 2.80 percent, the yield on 7-year note hovered around 2.69 percent and the yield on the short-term 2-year note too ended 2 basis points lower at 1.95 percent.
The Canadian government bond prices were mixed across a slightly steeper yield curve, with the two-year up 1 Canadian cent to yield 0.703 percent and the 10-year falling 5 Canadian cents to yield 1.415 percent. On Monday, the 10-year yield had hit its lowest intraday level in six months at 1.399 percent.
