Market Roundup
- RBA holds rates at 1.5% as widely expected
- Wage growth to remain slow, labour market indicators mixed -RBA
- High level of China debt a medium term risk -RBA
- Australia current a/c balance, -A$3.1 bln vs forecast A$0.0 bln
- Japan Apr real wages flat y/y, total cash earnings +0.5%
- PBOC pushes 498 bln yuan into the financial system via MLFs
- China to expand futures trading for foreign investors -regulator
- UK May BRC like-for-like retail sales -0.4% y/y, -0.5% eyed, Apr +5.6%
- UK May Barclaycard cons spending +2.8% y/y, Apr +5.5%
- UK REC reports fastest permanent hiring since Apr '15, temps since Mar '15
- New Zealand Q1 SA wholesale sales +2.1%, actual wholesale sales +5.3%
Economic Data Ahead
- (0430 ET/0830 GMT) Eurozone Jun Sentix Index, 27.5 eyed; last 27.4
- (0500 ET/0900 GMT) Eurozone Apr Retail Sales, 2.3% y/y, 0.2% m/m eyed; last 2.3%, 0.3%
Key Events Ahead
- N/A Bank of Spain's Linde speaks before the Senate Budget Comm
- N/A ESM bond issue possible
- (0600 ET/1000 GMT) Austria 6Y E0.660 bln auction
- (0600 ET/1000 GMT) Austria 10Y E0.660 bln auction
- (0630 ET/1030 GMT) Germany 9YI 0.500 bln auction
- (0630 ET/1030 GMT) UK 5Y 2.500 bln auction
FX Beat
DXY: The dollar declined across the board as caution began to mount ahead of former FBI Director James Comey's testimony before a Senate committee. The greenback against a basket of currencies traded 0.2 percent down at 96.58, having touched a low of 96.56 earlier, it’s lowest since Nov. 9. FxWirePro's Hourly Dollar Strength Index stood at -102.20 (Highly Bearish) by 0500 GMT.
EUR/USD: The euro pared overnight losses, edging back towards a seven-month high touched on Friday, as the greenback eased across the board on fading expectations of future interest rate increases by the Federal Reserve. The European currency traded 0.1 percent up at 1.1267, having touched a high of 1.1285 on Friday, its highest since Nov 9. FxWirePro's Hourly Euro Strength Index stood at -44.45 (Neutral) by 0400 GMT. Investors’ attention will remain on Eurozone's Sentix investor confidence and retail sales, ahead of the U.S. JOLTS Job opening and Economic optimism index. Immediate resistance is located at 1.1285 (June 2 High), a break above targets 1.1300. On the downside, support is seen at 1.1248 (78.6% retracement of 1.1109 and 1.1285), a break below could drag it near 1.1212 (10 DMA).
USD/JPY: The dollar tumbled to a 6-week low below the 110.00 handle as caution mounted ahead of Britain's election, a European Central Bank meeting, and former FBI Director James Comey's testimony to a Senate committee later in the week. Moreover, better-than-expected Japan’s labor cash earnings, which rose to a four-month high boosted the bid tone around the Japanese yen. The major traded 0.5 percent down at 109.88, having touched a low of 109.73 earlier, its lowest since Apr. 25. FxWirePro's Hourly Yen Strength Index stood at 143.41 (Highly Bullish) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of the U.S. JOLTS Job opening and Economic optimism index. Immediate resistance is located at 110.23 (78.6% retracement of 112.12 and 109.73), a break above targets 110.77 (5-DMA). On the downside, support is seen at 109.59 (Apr. 25 Low), a break below could take it near 109.00.
GBP/USD: Sterling rose, extending gains for the third consecutive session, as an opinion poll gave Britain's ruling Conservative Party a comfortable lead over Labour opposition ahead of Thursday's parliamentary elections. The major trades 0.1 percent up at 1.2922, hovering towards a high of 1.2940 hit in the previous session, its strongest since May 26. FxWirePro's Hourly Sterling Strength Index stood at 60.74 (BUllish) by 0400 GMT. Investors’ will continue to track developments surrounding UK elections, amid a lack of economic data from the UK docket. Immediate resistance is located at 1.2946 (May 26 High), a break above could take it near 1.3000. On the downside, support is seen at 1.2874 (61.85 retracement of 1.2769 and 1.2940), a break below targets 1.2800. Against the euro, the pound traded up at 87.18 pence, recovering from a near 3-month low of 87.67 hit the day before.
AUD/USD: The Australian dollar edged up, extending previous session gains after Reserve Bank of Australia left its cash rate at a record low of 1.5 percent, a widely expected decision. The major initially tumbled to session's low of 0.7457 after data showed a larger-than-expected current account deficit. The Aussie trades 0.1 percent up at 0.7493, having hit a high of 0.7498 on Monday, it’s strongest since May 25. FxWirePro's Hourly Aussie Strength Index stood at 141.35 (Highly Bullish) by 0500 GMT. Investors will continue to digest RBA decision, ahead of U.S. economic releases. Immediate support is seen at 0.7457 (Session Low), a break below targets 0.7439 (5-DMA). On the upside, resistance is located at 0.7507 (May 24 High), a break above could take it near 0.7540 (May 1 High).
NZD/USD: The New Zealand dollar rallied to a fresh 3-month high as an upbeat assessment of the economy by the NZ Treasury and ongoing broad U.S. dollar weakness, boosted the Kiwi bulls sentiment. The Kiwi trades 0.3 percent up at 0.7161, having touched a peak of 0.7168 earlier, its strongest level since Mar. 1. FxWirePro's Hourly Kiwi Strength Index was at 136.79 (Highly Bullish) by 0500 GMT. Investors’ will continue to track overall market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7168 (Session High), a break above could take it near 0.7200. On the downside, support is seen at 0.7105 (5-DMA), a break below could drag it till 0.7077 (50.0% retracements of 0.7058 and 0.7168).
Equities Recap
Asian shares tumbled, as escalating tensions in the Middle East, former FBI director Comey's testimony, upcoming British elections and a European Central Bank meeting this week triggered a fresh bout of risk aversion across markets.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.2 percent, retreating from a two-year high hit on Monday.
Tokyo's Nikkei declined 0.9 percent to 19,979.60 points, Australia's S&P/ASX 200 index tumbled 1.3 percent to 5,676.60 points and South Korea's KOSPI eased 0.1 percent to 2,368.62 points.
Shanghai composite index fell 0.1 percent to 3,088.37 points, while CSI300 index was trading 0.1 percent up at 3,473.70 points.
Hong Kong’s Hang Seng was trading 0.4 percent higher at 25,960.98 points. Taiwan shares shed 0.2 percent to 10,206.18 points.
Commodities Recap
Crude oil prices declined to a near 1-month low, weighed lower by concerns that a political rift between Qatar and several Arab states undermined an OPEC-led push to tighten the market. International benchmark Brent crude was trading 0.4 percent down at $49.26 per barrel by 0424 GMT, having hit a low of $48.98 earlier in the session, its weakest since May 10. U.S. West Texas Intermediate traded 0.4 percent up at $47.18 a barrel, after falling as low as $46.77on Friday, its lowest since May 10.
Gold prices rallied to a more than six-week high earlier in the session on the back of weaker Asian stocks and diminishing expectations for aggressive U.S. rate hikes this year. Spot gold rose 0.4 percent to $1,284.50 per ounce at 0437 GMT, having touched a peak of $1,284.90 an ounce, its strongest since April 21. U.S. gold futures for August delivery rose 0.1 percent to $1,283.6 an ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.162 percent lower by 0.018 bps, while 5-year yield was 0.018 bps down at 1.722 percent.
The Australian bonds rallied following expectations of a softer gross domestic product (GDP) of the country in the first quarter of this year. The yield on the benchmark 10-year Treasury note slumped 2 basis points to 2.38 percent, the yield on 15-year note plunged 2-1/2 basis points to 2.77 percent while the yield on short-term 2-year traded 2 basis points lower at 1.57 percent.
The New Zealand 10-year bond yields hit a little over 7-month low on as investors wait to watch the country’s GlobalDairyTrade (GDT) price auction, scheduled to be held on June 6. At the time of closing, the yield on the benchmark 10-year bond slumped 5-1/2 basis points to 2.75 percent, the yield on 7-year note plunged 4 basis points to 2.65 percent and the yield on short-term 2-year note ended 1-1/2 basis points lower at 1.93 percent.
