Market Roundup
- EUR/USD -0.18%, USD/JPY +0.27%, GBP/USD -0.14%, EUR/GBP -0.05%
- DXY +0.15%, DAX +0.44%, FTSE -0.05%, Brent +0.79%, Copper +1.17%
- ECB to keep taps open as economic outlook uncertain
- UK Voting ends at 2100 GMT. First rounds of results are expected by 2300 GMT
- Former FBI Director James Comey's will be grilled by Congress today
- Rising industry output points to German economic upswing; 0.8% vs revsd -0.1%
- Euro zone growth revised up to highest rate in a year in Q1; 1.9% vs prev 1.7%
- N.Korea fires suspected land-to-ship missiles as S.Korea delays THAAD
- China May imports, exports unexpectedly speed up but seen fading
- Oil crawls off one-month lows, but supply gloom caps gains
- Japan Q1 GDP rev +0.3% q/q, +1.0% AR, +0.6%, prelim +0.5%, +2.2%
- Japan Apr c/a surplus Y1.9519 trln, Y1.6988 trln eyed, Mar Y2.9077 trln
- BoJ DepGov Iwata – Hard to issue scenarios on exit strategy now – Reuters
- Japanese back buying foreign bonds in May, to continue?
- Japan May outstanding bank loans +3.2% y/y, ex-shinkin +3.3%, rise pace up
- Japan to require regional banks to contain bond holding risk – Nikkei
Economic Data Ahead
- (0830 ET/1230 GMT) Initial Jobless Claims (Jun 3 week) (mkt 238k, prev 248k)
- (0830 ET/1230 GMT) Continued Claims (May 27 week) (mkt 1.925 mn, prev 1.915 mn)
- (1000 ET/1400 GMT) Quarterly Services Survey (Q1)
Key Events Ahead
- (0745 ET/1145 GMT) ECB monetary policy decision
- (1000 ET/1400 GMT) Former FBI Director Comey testifies before Senate Intelligence Committee
- (1145 ET/1545 GMT) FedTrade operation 30-year Fannie Mae / Freddie Mac (max $1.625 bn)
FX Beat
DXY: US Dollar index recovered after making a low of 96.52. It is currently trading around 96.94. The near term resistance is around 97.04 (10 – day MA) and any close above will take the index till 97.52 (21- EMA)/98/98.60 (support turned into resistance). On the lower side, major near term support is around 96.40 (61.8% fibo) and any break below will drag the index till 95.91 (Nov 9 th 2016 low)/95.
GBP/USD: GBP/USD consolidates upside seen in the past few sessions. Out of consensus UK election results could easily swing the pair one way or the other. Election results will shape up next direction for the pound in the coming months. Brexit negotiations and the possibility of ‘Hard Brexit’ to keep pressure on the pound. Any break above 1.3050 confirms bullish continuation, will take the pair till 1.3120/1.3220 (161.8% retracement of 1.30476 and 1.27688). On the lower side, major support is around 1.27500 and any break below will drag the pair till 1.2705/1.26850 (38.2% retracement of 1.21088 and 1.30476)/1.2589 (200 – MA).
EUR/USD: Euro ignores upbeat final reading of the Eurozone Q1 GDP, EUR/USD flirts with lows near 1.1240 as traders await the ECB monetary policy decision. Focus also on ex-FBI director Comey’s testimony which will also have a major bearing. The pair is facing strong support at 1.1200 and any close below will confirm further weakness. It should break below 1.1100 (May 30 th 2017 low) for bearish continuation. On the higher side, major resistance is around 1.1300 and further bullish continuation only above 1.13660/1.1430.
USD/JPY: USD/JPY bounces off lows, eyes 110.00 ahead of the key testimony by former FBI Chief James Comey before the Senate Intelligence Committee. 10-year US treasuty yields hit fresh record highs, at 5-day peaks around 2.19 percent at the time of writing. The pair is consolidating break below 200-DMA. Price action has also broken below daily cloud and is now below all major moving averages. We see scope for test of 50% Fib of 98.787 to 118.662 rally at 108.72, with bearish invalidation only on close above 200-DMA.
AUD/USD: Australian dollar took a big hit early in the Asian session following the release of worse-than expected Australian trade figures. Downside was capped and AUD/USD retraced dip after upbeat China trade data which showed spike in exports and imports. Technically, the pair has closed above 200-DMA at 0.7531 on Wednesday's trade, raising scope for upside. RSI strong at 61 levels and biased higher, while MACD supports trend higher.
EUR/GBP: Rangebound trade seen in EUR/GBP ahead of UK elections. Technically, on the daily charts, the pair is trading with a neutral to slightly bearish bias. Stochs have rolled over from overbought levels and MACD is on the verge of a bearish crossover on signal line. Strong support is seen at 0.8652 (converged 20-DMA and 38.2% Fibo 0.92253 to 0.82970 fall). Break below will see test of 200-DMA at 0.8602 and then 100-DMA at 0.8564. On the flipside, we see scope for upside only on break above 50% Fib at 0.8761.
Equities Recap
European indices inched higher and the euro and the pound remained largely muted, as markets remained cautious ahead of major risk events - ECB meeting, a British election and testimony by the ex-FBI chief fired by Donald Trump last month.
The European STOXX 50 index rallied 0.62 percent to 3570.52 points, while Britain's FTSE 100 was trading largely unchanged at 7,476.50 points.
Germany's DAX gained 0.50 percent at 12,735.50 points; France's CAC 40 was up 0.47 percent higher at 5,290.0 points; Italy's FTSE MIB was up 1.03 percent at 20952.50 points.
Commodities Recap
Gold held steady on Thursday as investors awaited cues on market direction amid a number of geopolitical events later in the day. Spot gold was nearly flat at $1,285.91 per ounce, as of 0809 GMT. U.S. gold futures for August delivery dipped 0.4 percent to $1,288.20 an ounce.
Palladium gained as much as 0.7 percent to $840.10 an ounce. Platinum climbed 0.6 percent to $947.80 per ounce. Silver rose 0.5 percent to $17.63.
Oil edges higher from one-month lows, but supply gloom caps gains. Brent crude was up 43 cents by 0900 GMT at $48.49 a barrel, while U.S. crude futures rose 38 cents to $46.10 a barrel.
Treasuries Recap
U.S.: The U.S. Treasuries slumped on expectations of a fall in the country’s initial jobless claims, scheduled to be released on June 8. The yield on the benchmark 10-year Treasury, jumped 1-1/2 basis points to 2.19 percent, the super-long 30-year bond yields also climbed nearly 1-1/2 basis points to 2.85 percent and the yield on short-term 2-year note traded 1/2 basis point higher at 1.32 percent.
UK: The UK gilts slumped as the upcoming snap election in the country, scheduled for today as was declared by Prime Minister Theresa May has added uncertainties and clouded the outlook for the money market. The yield on the benchmark 10-year gilts, jumped 2-1/2 basis points to 1.02 percent, the super-long 30-year bond yields climbed 1-1/2 basis points to 1.67 percent while the yield on the short-term 3-year traded almost 1 basis point higher at 0.18 percent.
EUR: The Eurozone periphery bonds remained mixed after witnessing a higher-than-expected gross domestic product (GDP) for the first quarter of this year. Further, the European Central Bank’s (ECB) monetary policy decision, scheduled to be held later today will add further direction to the debt market. The benchmark German 10-year bond yields, jumped 2 basis points to 0.27 percent, the French 10-year bond yields, climbed nearly 1-1/2 basis points to 0.69 percent; however, Irish 10-year bonds yield traded flat at 0.74 percent, Italian equivalent fell 1 basis point to 2.26 percent, Netherlands 10-year bonds yield ticked 2 basis points higher to 0.50 percent, Portuguese equivalents down nearly 1 basis point to 3.06 percent and the Spanish 10-year yields also slipped 1 basis point to 1.54 percent.
JGBs: The Japanese government bonds traded flat, post the release of the country’s gross domestic product (GDP) for the first quarter of this year, released earlier today. The benchmark 10-year bond yield, hovered around 0.06 percent, the long-term 30-year bond yields struggled tad higher by nearly 1 basis point at 0.84 percent while the yield on the short-term 2-year note traded flat at -0.10 percent.
NZD: The New Zealand bonds rallied at close in a silent trading session that witnessed no significant data. Also, the country’s dairy prices eased at the latest GlobalDairyTrade (GDT) price auction, held earlier today. However, prices rose for the sixth consecutive time, albeit at a moderate pace. At the time of closing, the yield on the benchmark 10-year bond, fell 1 basis point to 2.75 percent, the yield on 7-year note also slipped nearly 1 basis point to 2.65 percent and the yield on short-term 2-year note ended 1/2 basis point lower at 1.95 percent.
AUS: The Australian bonds slumped as investors booked in profits amid lack of significant data through the day. However, investors have largely shrugged off the easing in the country’s trade surplus for the month of April. The yield on the benchmark 10-year Treasury note, jumped 2-1/2 basis points to 2.42 percent, the yield on 15-year note climbed 3-1/2 basis points to 2.81 percent while the yield on short-term 2-year traded 1/2 basis point higher at 1.62 percent.
