Market Roundup
- EUR/USD -0.52%, USD/JPY -0.08%, GBP/USD flat, EUR/GBP -0.27%
- DXY +0.15%, DAX +0.18%, FTSE +0.25%, Brent -0.5%, Gold -0.19%
- Euro hits 4-day low of $1.1220, BBG says ECB will cut inflation forecast
- UAE turns screws on Qatar, threatens sympathizers with jail
- German industrial orders fall;-2.1% vs previous 1.0% revised 1.1%
- UK yy house price growth hits 4-year low in May; +3.3% vs previous 3.8%
- Britain's tumultuous election campaign enters final day
- Attackers raid Iran parliament and mausoleum, up to seven dead
- China May FX reserves rise more than expected on weaker dollar
- Japan's April coincident index hits 9-year high on robust output
- Japan to promote direct JPY-Asian currency exchanges – Nikkei
- Japan end-May foreign reserves Y1.2518 tln, end-April Y1.2423 tln
Economic Data Ahead
- (0830 ET/1230 GMT) The Statistics Canada reports its building permits for the month of April. The indicator declined 5.8 percent in March.
- (1000 ET/1400 GMT) The Investor's Business Daily (IBD)/ TechnoMetrica Institute of Policy and Politics (TIPP) will release U.S. Economic Optimism index for the month of June. The indicator posted a reading of 51.3 in the previous month.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending June 3.
- (1500 ET/1900 GMT) The U.S. Federal Reserve is likely to report that consumer credit dropped to $15.50 billion in April from $16.43 billion the month before.
- (1901 ET/2301 GMT) The Royal Institution of Chartered Surveyors (RICS) will report Britain's Housing Price Balance for the month May. The indicator is expected to have decreased to 20 percent from 22 percent in April.
- (1950 ET/2350 GMT) Japan's Cabinet Office will release gross domestic product for the first quarter. The economy is expected to grow at an annualized pace of 2.4 percent after rising 2.2 percent in the previous quarter.
- (1950 ET/2350 GMT) Japan's Ministry of Finance will report foreign bond investment for the week ending June 2.
- (1950 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic stocks for the week ending June 2.
- (1950 ET/2350 GMT) Japan's Ministry of Finance is likely to report that Current Account (N.S.A) surplus narrowed to 1,698.8 billion yen in April from 2,907.7 billion yen in March.
- (1850 ET/2350 GMT) Japan's Customs Office will release Trade Balance (BOP Basis) figures for the month of April. The economy posted a trade surplus of 865.5 billion yen in the earlier month.
Key Events Ahead
- (1000 ET/1400 GMT) Director of National Intelligence Daniel Coats, Acting FBI Director Andrew McCabe, National Security Agency Director Mike Rogers and Deputy U.S. Attorney General Rod Rosenstein will testify before the Senate Intelligence Committee.
- (1145 ET/1545 GMT) FedTrade operation 30-year Ginnie Mae (max $1.2 bn)
FX Beat
DXY: The dollar retreated from a 1-1/2 month low against the yen following a rebound in the U.S. Treasury yields. The greenback against a basket of currencies traded 0.3 percent up at 96.87, recovering from a low of 96.52 hit in the prior session, it’s lowest since Nov. 9. FxWirePro's Hourly Dollar Strength Index stood at 33.22 (Neutral) by 1100 GMT.
EUR/USD: The euro declined on news, via Bloomberg that the European Central Bank could cut inflation outlook through 2019; while raising GDP outlook by around 0.1 point through 2019. The European currency traded 0.6 percent down at 1.1206, drifting away from a high of 1.1285 touched on Friday, its highest since Nov 9. FxWirePro's Hourly Euro Strength Index stood at -40.26 (Neutral) by 1000 GMT. The pair should break below 1.1100 (May 30 low) for a bearish continuation and any break below 1.1200 will drag it down till 1.1170 (61.8% retracement of 1.11092 and 1.12851)1.1100. On the higher side, major resistance is around 1.1300 and further bullish continuation only above 1.13660/1.1430.
USD/JPY: The dollar slumped to a fresh 1-1/2 month low against the Japanese yen as investors turned cautious ahead of former FBI Director J. Comey's testimony before the Senate Intelligence Committee. However, the major recovered following a rebound in the U.S. Treasury yields. The major traded up at 109.45, having touched a low of 109.11 earlier, its lowest since Apr. 21. FxWirePro's Hourly Yen Strength Index stood at 35.44 (Neutral) by 1000 GMT. The pair is facing support at 108 and any break below will drag it down till 106.80. On the higher side, close above 111.71 (89 EMA) will take it to next level till 113.40/114.36 likely.
GBP/USD: Sterling consolidated between a narrow range as investors remained cautious ahead of UK election, where the PM May’s Conservatives Party is widely expected to fall short of a majority that could result in a hung parliament. The major traded flat at 1.2906, but within the sight of a high of 1.2949 hit in the previous session, it’s strongest since May 25. FxWirePro's Hourly Sterling Strength Index stood at 26.19 (Neutral) by 1100 GMT. The major resistance is around 1.2950 and any break above 1.3050 will take the pair till 1.3120. On the lower side, major support is around 1.27500 and any break below will drag it till 1.2705/1.26850 (38.2% retracement of 1.21088 and 1.30476)/1.2589 (200 – MA). Against the euro, the pound traded 0.6 percent up at 86.83 pence, recovering from a near 3-month low of 87.67 hit on Monday.
USD/CHF: The Swiss franc eased to a 3-day low against the dollar, as the greenback rebounded from 7-month lows on the back of rising U.S. Treasury yields. The major trades 0.6 percent up at 0.9672, retreating from a low of 0.9613 hit on Tuesday, its lowest since Nov 9. FxWirePro's Hourly Swiss Franc Strength Index stood at -120.07 (Highly Bearish) by 1100 GMT. Any break above 0.9808 high made on May 30 will take the pair till 0.9835 (38.2% retracement of 1.00998 and 0.96220)/0.9900/0.9925 (50- day MA). Any close below will 0.9617 will drag it down till 0.9580/0.95490 (Nov 9 low).
AUD/USD: The Australian dollar rallied to a 6-week high following the release of better-than-expected Australian GDP growth figures. The Aussie trades 0.6 percent up at 0.7555, having hit a high of 0.7566 earlier, it’s strongest since Apr. 25. FxWirePro's Hourly Aussie Strength Index stood at 96.69 (Slightly Bullish) by 1100 GMT. On the lower side, near term support is around 0.7450 (21 –EMA) and any break below will drag the pair till 0.7385 (61.8% retracement of 0.71599 and 0.77493) /0.7325/0.7300. The near term resistance is around 0.75880 (61.8% retracement of 0.77479 and 0.73285) and any close above targets 0.7650/0.7700.
Equities Recap
European shares traded in a volatile market, while the euro edged down from recent highs as investors remained cautious ahead of European Central Bank policy meeting on Thursday.
The pan-European STOXX 600 index rallied 0.5 percent to 391.52 points, while the FTSEurofirst 300 index advanced 0.5 percent to 1,538.70 points.
Britain's FTSE 100 trades 0.1 percent up at 7,535.76 points, while mid-cap FTSE 250 added 0.5 percent to 19,757.97 points.
Germany's DAX gained 0.3 percent at 12,732.25 points; France's CAC 40 trades 0.9 percent higher at 5,314.58 points.
Commodities Recap
Crude oil prices declined as rising tensions within the export group over Qatar and growing U.S. output weighed on market sentiment. International benchmark Brent crude was trading 0.2 percent down at $49.84 per barrel by 1027 GMT, having hit a low of $48.99 last week, its weakest since May 10. U.S. West Texas Intermediate traded 0.1 percent up at $47.99 a barrel, after falling as low as $46.77on Friday, its lowest since May 10.
Gold steadied after rising to its highest in seven months in the prior session as key political and economic events are expected to stoke bullion's safe-haven appeal. Spot gold fell 0.1 percent to $1,291.49 per ounce at 1030 GMT, having gained 1.1 percent to hit a peak of $1,295.89 an ounce on Tuesday, its strongest since Nov. 9. U.S. gold futures for August delivery dipped 0.2 percent to $1,294.9 an ounce.
Treasuries Recap
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, slumped 2-1/2 basis points to 2.15 percent, the super-long 30-year bond yields also plunged 2-1/2 basis points to 2.82 percent and the yield on short-term 2-year note traded 1-1/2 basis points lower at 1.29 percent.
The UK gilts traded narrowly mixed Wednesday as the upcoming snap election in the country, scheduled for June 8 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, hovered around 0.98 percent, the super-long 30-year bond yields slipped around 1 basis point to 1.65 percent while the yield on the short-term 2-year traded almost 1 basis point higher at 0.09 percent.
The Eurozone periphery bonds slumped ahead of the eurozone’s first-quarter gross domestic product (GDP), scheduled to be released on June 8. Further, the European Central Bank’s (ECB) monetary policy decision, scheduled to be held tomorrow will add further direction to the debt market. The German 10-year bond yields, rose nearly 1 basis point to 0.26 percent, the French 10-year bond yields, also climbed 1 basis point to 0.68 percent; however, Irish 10-year bonds yield fell nearly 1 basis point to 0.73 percent, Italian equivalent jumped nearly 4 basis points to 2.27 percent, Netherlands 10-year bonds yield ticked close to 1 basis point higher to 0.48 percent, Portuguese equivalents up 1 basis point to 3.08 percent and the Spanish 10-year yields traded 1-1/2 basis points higher at 1.54 percent.
The Japanese government bonds traded flat ahead of Japan’s gross domestic product (GDP) for the first quarter of this year, due for release on June 8. The benchmark 10-year bond yield, hovered around 0.04 percent, the long-term 30-year bond yields remained flat at 0.79 percent and the yield on the short-term 2-year note traded steady at -0.12 percent.
The New Zealand closed on the upside after dairy prices eased at the country’s 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, slumped 2-1/2 basis points to 2.72 percent, the yield on 7-year note also plunged 2-1/2 basis points to 2.62 percent and the yield on short-term 2-year note ended 1-1/2 basis points lower at 1.92 percent.
The Australian bonds slid after reading a higher-than-expected gross domestic product for the first quarter of this year, released earlier today. The yield on the benchmark 10-year Treasury note, rose nearly 1 basis point to 2.39 percent, the yield on 15-year note traded flat at 2.77 percent while the yield on short-term 2-year traded 2-1/2 basis points higher at 1.62 percent.
