Market Roundup
- China ready to hit back at U.S. with rare earths - ruling party newspaper
- U.S. Treasury says nine trade partners deserve scrutiny over currency practices
- Huawei asks U.S. court to declare defence bill 'unconstitutional'
- China c.bank makes biggest daily net OMO injection in over 4 mths
- EU leaders agree to pick new 'Mr or Ms Europe' next month
- British Labour leader Corbyn set to back 2nd Brexit referendum -report
- BOJ's Kuroda signals room for more flexible inflation target
- New Zealand central bank says financial system resilient, but risks remain elevated
- New Zealand business confidence improves in May - ANZ survey
- Canada to present bill on ratification of new North American trade pact -source
Economic Data Ahead
- (0355 ET/0755 GMT) Germany May Unemployment Change SA, -8k f'cast, -12k prev
- (0355 ET/0755 GMT) Germany May Unemployment Rate SA, 4.9% f'cast, 4.9% prev
- (0400 ET/0800 GMT) Italy May MFG Business Confidence, 100.4 f'cast, 100.6 prev
- (0400 ET/0800 GMT) Italy May Consumer Confidence, 110.0 f'cast, 110.5 prev
Key Events Ahead
- N/A Bank of Italy Governor Ignazio Visco presents "Final Considerations" on occasion of presentation of 2018 annual report in Rome
- N/A ECB's Bostjan Vasle speaks at banking conference in Ljubljana
- (0300 ET/0700 GMT) Bundesbank's Jens Weidmann speaks at Bundesbank conference in Frankfurt
- (0330 ET/0730 GMT) ECB's Yves Mersch speaks at conference in Frankfurt
- (0400 ET/0800 GMT) ECB's Luis de Guindos presents bank's regular Financial Stability Report in Frankfurt
- (0500 ET/0900 GMT) ECB's Andrea Enria participates in roundtable discussion on "Experience of five years of SSM - view of supervisors and banks" in Ljubljana
- (1000 ET/1400 GMT) Bank of Canada key policy interest rate announcement in Ottawa
- (1700 ET/2100 GMT) Reserve Bank of New Zealand holds Financial Stability Report media conference in Wellington
FX Beat
DXY: The dollar rose, extending gains for the third straight session after data showed U.S. consumer confidence jumped in May as households grew more upbeat about the labor market. The greenback against a basket of currencies traded 0.05 percent up at 97.93, having touched a high of 98.37 on Thursday, its highest since May 2017. FxWirePro's Hourly Dollar Strength Index stood at 25.61 (Neutral) by 0500 GMT.
EUR/USD: The euro steadied after falling to a near 1-week low earlier on uncertainty surrounding the euro zone economy and the bloc's political future. On Tuesday, Italian Deputy Prime Minister Matteo Salvini called for a new role for the European Central Bank, which should guarantee government debt in order to keep bond yields low. The European currency traded flat at 1.1163, having touched a high of 1.1215 on Monday, its highest since May 16. FxWirePro's Hourly Euro Strength Index stood at -52.89 (Bearish) by 0500 GMT. Investors’ attention will remain on a series of data from the Eurozone economies, ahead of the Richmond Fed manufacturing index. Immediate resistance is located at 1.1229 (Apr. 30 High), a break above targets 1.1262 (April 22 High). On the downside, support is seen at 1.1150 (May 20 Low), a break below could drag it below 1.1118 (April 25 Low).
USD/JPY: The dollar plunged to a 2-week low, as benchmark 10-year U.S. Treasury yields hit their lowest since September 2017 amid lingering fears of a further escalation in the U.S.-China trade dispute. Moreover, worries about Italy's budget policy and no-deal Brexit fears supported the Japanese yen's safe-haven appeal. The major was trading 0.1 percent down at 109.28, having hit a low of 109.14, its lowest since May 15. FxWirePro's Hourly Yen Strength Index stood at 183.77 (Highly Bullish) by 0500 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the Richmond Fed manufacturing index. Immediate resistance is located at 109.74 (May 24 High), a break above targets 110.11 (May 11 High). On the downside, support is seen at 109.01 (May 13 Low), a break below could take it lower at 108.80 (Jan. 30 Low).
GBP/USD: Sterling consolidated near a 1-week low as investors refrained from taking big positions amid mounting Brexit tensions after foreign minister Jeremy Hunt said no-deal Brexit would amount to political uncertainty. The major traded 0.1 percent up at 1.2663, having hit a low of 1.2650 earlier; it’s lowest since May 24. FxWirePro's Hourly Sterling Strength Index stood at -13.11 (Neutral) 0500 GMT. Investors’ attention will remain on the U.S. fundamental drivers, amid a lack of data from the UK docket. Immediate resistance is located at 1.2774 (38.2% retracement of 1.3047 and 1.2605). a break above could take it near 1.2827 (50.0% retracement). On the downside, support is seen at 1.2624 (May 22 Low) a break below targets 1.2581 (Jan. 2 Low). Against the euro, the pound was trading flat at 88.17 pence, having hit a low of 88.50 on Friday, it’s lowest since Jan. 21.
AUD/USD: The Australian dollar rose, extending previous session gains, as local gross domestic product data for the March quarter due out next week is likely to justify that dovish outlook with annual economic growth seen slowing to just 1.8 percent or less. The Aussie trades 0.05 percent up at 0.6926, having hit a high of 0.6938 on Monday, it’s highest since May 15. FxWirePro's Hourly Aussie Strength Index stood at 49.28 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6881 (May 24 Low), a break below targets 0.6846. On the upside, resistance is located at 0.6946 (May 15 High), a break above could take it near 0.6961 (Apr. 30 High).
NZD/USD: The New Zealand dollar steadied after the country's central bank in its half-yearly financial stability review stated that the financial system is resilient but the risks remained elevated, adding that current mortgage restrictions are appropriate for now. The Kiwi trades flat at 0.6539, having touched a low of 0.6481 on Thursday, its lowest level Oct. 26. FxWirePro's Hourly Kiwi Strength Index was at 50.63 (Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6591 (May 14 High), a break above could take it near 0.6614 (May 10 High). On the downside, support is seen at 0.6474 (Oct. 4 Low), a break below could drag it below 0.6442 (Oct. 10 Low).
Equities Recap
Asian shares declined as investor sentiment weakened over growing worries about world growth with trade tensions between Washington and Beijing showing no signs of easing.
MSCI's broadest index of Asia-Pacific shares outside Japan plunged 0.5 percent
Tokyo's Nikkei eased 1.2 percent to 21,003.37 points, Australia's S&P/ASX 200 index declined 0.7 percent to 6,440.00 points and South Korea's KOSPI slumped 1.2 percent to 2,024.40 points.
Shanghai composite index rose 0.4 percent to 2,919.99 points, while CSI 300 index traded 0.05 percent down at 3,671.15 points.
Hong Kong’s Hang Seng traded 0.4 percent lower at 27,288.30 points. Taiwan shares added 0.1 percent to 10,301.78 points
Commodities Recap
Crude oil prices declined on concerns the U.S.-China trade war could trigger a global economic downturn, however, relatively tight supply amid OPEC output cuts and political tensions in the Middle East limited downside. International benchmark Brent crude was trading 0.6 percent lower at $69.64 per barrel by 0505 GMT, having hit a high of $70.57 on Tuesday, its highest since May 23. U.S. West Texas Intermediate was trading 0.8 percent down at $58.52 a barrel, after falling as low as $57.32 on Thursday, its lowest since the Mar. 13.
Gold prices steadied as global economic concerns dented risk appetite, however, a strong dollar capped gains. Spot gold rose 0.2 percent to $1,281.11 per ounce by 0508 GMT, having touched a high of $1,287.27 on Monday, its highest since May 17. U.S. gold futures were up 0.2 percent at $1,279.20 an ounce.
Treasuries Recap
The benchmark 10-year U.S. Treasury yields hit as low as 2.243 percent, their lowest since September 2017
The Japanese government bond prices edged higher, with the 20-year JGB yield falling 1 basis point to 0.320 percent, its lowest since August 2016. The 30-year yield declined 1.5 basis points to 0.490 percent.
The yields on three-year Australian paper hit an historic low of 1.082 percent, while futures firmed to 98.915.
The Canadian government bond prices were higher across a flatter yield curve. The 10-year climbed 25 Canadian cents to yield 1.574 percent. The yield touched its lowest intraday since March 29 at 1.563 percent.
