Market Roundup
- BOJ balance sheet tops Y500 tln, on cusp of overtaking Fed
- Japan May monetary base +19.4% y/y to Y456 tln, end-Apr Y462 tln
- Strong U.S. job growth expected in May; wage rise seen moderate
- U.S. May car sales y/y -9.8%, light truck sales +5.5% -Autodata
- U.S. May light vehicle sales y/y, 1.51 mln units, -0.9% -Autodata
- U.S.-based stock funds attract $9.2 bln after 4-wk drought -Lipper
- Foreign CB US debt holdings -$6.7 bln to $3.2 tln May 24 wk
- Treasuries -$5.3 bln to $2.9 tln, agencies -$1.1 bln to $262.6 bln
- Trump abandons global climate pact; allies voice dismay
Economic Data Ahead
- (0400 ET/0800 GMT) Norway May Reg'd Unemployment SA, 96.80k eyed; last 97.16k
- (0430 ET/0830 GMT) Great Britain May Markit/CIPS Cons PMI, 52.7 eyed; last 53.1
- (0500 ET/0900 GMT) Eurozone Apr Producer Prices, +0.3% m/m, +4.5% y/y eyed; last -0.3%, +3.9%
Key Events Ahead
- N/A Swiss Economic Forum conference (Final Day)
- N/A Riksbank's Ingves participates in a conference
- (0330 ET/0730 GMT) Chinese PM Li, European Commission's Juncker participate in a summit
- (0730 ET/1130 GMT) Irish finmin Noonan, European Commission's Servoz speak at an event
- (0800 ET/1200 GMT) Austrian National Bank's Nowotny speaks about pension system
FX Beat
DXY: The dollar advanced across the board as upbeat data on U.S. manufacturing and employment strengthened expectations the Fed will keep raising interest rates beyond June. The greenback against a basket of currencies traded up at 97.23, having touched a low of 96.86 on Wednesday, it’s lowest since May 23. FxWirePro's Hourly Dollar Strength Index stood at -46.24 (Neutral) by 0500 GMT.
EUR/USD: The euro steadied after declining in the previous session as the greenback gained following the release of upbeat ADP employment report and manufacturing activity according to the Markit PMI and the ISM. The U.S. private employers added 253,000 jobs in May, above expectations and up from April’s 174,000 (revised from 177,000). The European currency traded up at 1.1217, having touched a low of 1.1109 on Tuesday, its lowest since May 19. FxWirePro's Hourly Euro Strength Index stood at 73.32 (Bullish) by 0400 GMT. Investors’ attention will remain on Eurozone's producer price index figures, ahead of the U.S. employment report, Nonfarm payroll data and trade balance. Immediate resistance is located at 1.1268 (May 23 High), a break above targets 1.1300. On the downside, support is seen at 1.1182 (50.0% retracement of 1.1109 and 1.1256), a break below could drag it near 1.1143 (23.% retrace).
USD/JPY: The dollar rose to a 1-week high against the Japanese yen after data released showed an increase in the U.S. private sector jobs. Investors now expect the U.S. non-farm payrolls data to show the economy added 185,000 jobs in May versus 211, 000 job additions seen in April, which could boost the likelihood for the Fed to raise interest rates beyond June. The major traded 0.2 percent up at 111.61, having touched a high of 111.67 earlier, its highest since May 26. FxWirePro's Hourly Yen Strength Index stood at -53.09 (Bearish) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of the U.S. employment report, Nonfarm payroll data and trade balance figures. Immediate resistance is located at 111.73 (23.6% retracement of 112.12 and 110.49), a break above targets 112.19 (21-DMA)). On the downside, support is seen at 110.49 (May 31 Low), a break below could take it near 110.23 (May 18 Low).
GBP/USD: Sterling edged down, extending previous session losses, as investors looked through radically conflicting polls on Britain's election next week. Recent polls showed a slim lead for Prime Minister Theresa May's Conservative Party over opposition Labour Party, ahead of June 8 general elections. Sterling trades down at 1.2874, having hit a low of 1.2769 on Wednesday, its weakest since Apr. 21. FxWirePro's Hourly Sterling Strength Index stood at 5.90 (Neutral) by 0400 GMT. Investors’ will continue to track developments surrounding UK elections, ahead of the UK Markit construction PMI, which is expected to show construction sector activity slowed to 52.7 in May versus April’s 53.1. Immediate resistance is located at 1.2923 (21-DMA), a break above could take it over 1.2946 (May 26 High). On the downside, support is seen at 1.2850, a break below targets 1.2800. Against the euro, the pound traded 0.1 percent down at 87.13 pence, having touched a 2-1/2 month low of 87.54 on Thursday.
AUD/USD: The Australian dollar rebounded after falling to a fresh 2-week low earlier in the session on lingering concerns from an unexpected slump in China's manufacturing activity. The major attempted a minor recovery after data showed Australia's HIA new home sales rose 0.8 percent in March after declining 1.1 percent in February. The Aussie trades 0.2 percent up at 0.7386, having hit a low of 0.7371 earlier, it’s weakest since May 12. FxWirePro's Hourly Aussie Strength Index stood at -49.33 (Neutral) by 0500 GMT. Investors will continue to digest upbeat domestic data, ahead of U.S. economic releases. Immediate support is seen at 0.7371 (Session Low), a break below targets 0.7336 (May 11 Low). On the upside, resistance is located at 0.7402 (61.8% retrace of 0.7517 and 0.7371), a break above could take it near 0.7456 (10-DMA).
NZD/USD: The New Zealand dollar gained, halting its two-day losing streak, despite weaker crude oil prices and poor China’s manufacturing PMI report. However, the major was supported by improving market sentiment as investors’ cheered recent series of upbeat US fundamentals, which suggests a Fed rate hike this month remains imminent. The Kiwi trades 0.2 percent up at 0.7078, having touched a peak of 0.7122 on Wednesday, its strongest since Mar. 2. FxWirePro's Hourly Kiwi Strength Index was at 64.69 (Bullish) by 0500 GMT. Investors’ will continue to track overall market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7122 (May 31 High), a break above could take it near 0.7150 (Mar. 2 High). On the downside, support is seen at 0.7036 (10-DMA), a break below could drag it till 0.7005 (61.8% retracements of 0.6817 and 0.7122).
Equities Recap
Asian shares rose to their highest levels in more than two years as upbeat data on U.S. manufacturing and employment boosted investor sentiment.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.6 percent.
Tokyo's Nikkei gained 1.8 percent to 20,216.35 points, Australia's S&P/ASX 200 index advanced 0.9 percent to 5,789.00 points and South Korea's KOSPI rose 1.0 percent to 2,370.20 points.
Shanghai composite index fell 0.2 percent to 3,096.44 points, while CSI300 index was trading 0.5 percent up at 3,479.70 points.
Hong Kong’s Hang Seng was trading 0.4 percent higher at 25,923.87 points. Taiwan shares added 0.6 percent to 10,152.53 points.
Commodities Recap
Crude oil prices declined amid concerns that U.S. President Donald Trump's decision to abandon a global climate pact could trigger more crude drilling activity in the United States, fuelling a persistent glut in global supply. International benchmark Brent crude was trading flat at $50.35 per barrel by 0412 GMT, having hit a low of $50.16 earlier, its weakest since May 10. U.S. West Texas Intermediate traded flat at $48.04 a barrel, after falling as low as $47.71 on Wednesday, its lowest since May 12.
Gold prices declined after better than estimates U.S. jobs reports raised expectations for a Federal Reserve interest rate hike this month. Spot gold was trading down 0.3 percent at $1,261.37 an ounce by 0426 GMT, having touched a peak of $1,274.00 an ounce on Wednesday, its strongest since April 25. U.S. gold futures fell 0.7 percent to $1,263.30.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.218 percent higher by 0.001 bps, while 5-year yield was 0.006 bps higher at 1.771 percent.
The Australian government bond futures eased, with the three-year bond contract off 2 ticks at 98.300. The 10-year contract edged 1.5 ticks lower to 97.5600, while the 20-year contract also shed 1.5 ticks to 97.0100. Meanwhile, the spread between Australian and U.S. 2-year government bonds steadied at a 16-year low of 28 basis points.
The New Zealand government bonds eased, sending yields 5 basis points higher at the long end of the curve.
