Market Roundup
- EUR/USD -0.09%, USD/JPY +0.31%, GBP/USD -0.4%, AUD/USD -0.46%
- DXY +0.2%, DAX +0.36%, FTSE +0.42%, Gold -0.22%
- Eurozone May IHS Markit final manufacturing PMI 57.0 (56.7 April final); highest since Apr 2011
- UK May manufacturing PMI 56.7 (Reuters poll 56.5) vs April 3-yr high of 57.3
- YouGov poll puts UK's Conservatives on 42 pct, Labour on 39 pct
- Fed's Williams bullish on US economy, sees total 3 rate hikes this year
- POLL-ECB may raise economic risks assessment to balanced on June 8
- French central bank chief backs euro zone budget, minister, bonds
- China May Caixin manufacturing PMI falls to 11-month low of 49.6 (vs poll 50.1, April 50.3)
- BoJ PB Harada – Optimistic inflation to rise, nothing decided on exit
- Japan Q1 CAPEX +4.5% y/y, +1.3% ex-software, firm profits +26.6%, sales +5.6%
- Japan May manufacturing PMI – final 53.1, better than 52.0 flash, April final 52.7
- Japan MoF flow data May 27 week – Japanese buy more foreign bonds, Y732.1 bln
- Japan MoF flow data – Foreign investors buy some Japanese stocks, JGBs, sell bills
Economic Data Ahead
- (0815 ET/1215 GMT) Payrolls processor ADP releases U.S. employment report for the month of May. The report is expected to show that 185,000 jobs were added as compared with 177,000 jobs in April.
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 5,000 to a seasonally adjusted 239,000 for the week ended May 26 while continuing claims for the week ended May 19 is expected to decline to 1.920 million from 1.923 million.
- (0930 ET/1330 GMT) Markit Economics reports Canada's Manufacturing PMI for the Month of May. The indicator stood at 55.9 in the prior month.
- (0945 ET/1345 GMT) Financial firm Markit releases U.S. Manufacturing PMI for the month of May. The index posted a final reading of 52.5 in the previous month.
- (1000 ET/1400 GMT) The Institute for Supply Management (ISM) is expected to report that U.S. manufacturing Purchasing Managers' index eased to 54.5 in May from 54.8 in April.
- (1000 ET/1400 GMT) The Commerce Department is likely to report that U.S. construction spending increased 0.5 percent in April after falling 0.2 percent in the previous month.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending February 3.
- N/A Bank of Mexico publishes the minutes of its latest monetary policy meeting.
- (1100 ET/1500 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending May 26.
- (1530 ET/1930 GMT) Autodata Corp is expected to report that U.S. auto sales figures rose to 16.97 million units in May from 16.88 million units the month before.
Key Events Ahead
- (0800 ET/1200 GMT) Federal Reserve Board Governor Jerome Powell is scheduled to speak on "Thoughts on the Normalization of Monetary Policy" before the Economic Club of New York.
- (1145 ET/1545 GMT) Evan Siddall, the head of Canada's federal housing agency is scheduled to give a speech in Toronto on the Canadian national housing strategy.
- (1145 ET/1545 GMT) FedTrade operation 15-year Fannie Mae / Freddie Mac (max $625 mn)
FX Beat
DXY: The dollar rebounded across the board, underpinned by higher U.S. Treasury yields and growing expectations of a rise in interest rates this month. The greenback against a basket of currencies traded 0.2 percent up at 97.16, having touched a low of 96.86 hit in the prior session, it’s lowest since May 23. FxWirePro's Hourly Dollar Strength Index stood at 0.31 (Neutral) by 1100 GMT.
EUR/USD: The euro edged down as the greenback rebounded on the back of higher U.S. Treasury yields and growing expectations of a rise in Fed interest rates this month. Meanwhile, investors seem to have ignored Eurozone's final manufacturing PMI report, which showed Markit manufacturing PMI rose to 57.0 in May, in line with estimates and previous. The European currency traded 0.1 percent down at 1.1227, having touched a high of 1.1268 touched last week, its highest since Nov 9. FxWirePro's Hourly Euro Strength Index stood at 35.07 (Neutral) by 1100 GMT. Any violation above 1.12678 yearly high will take the pair to next level till 1.1300 Nov high. It should close above 1.1300 for further bullish continuation. On the lower side, any break below 1.1100 (23.6% retracement of 1.105694 and 1.12678) will drag it down till 1.1050/1.1000. The near term support is around 1.1180 (200- HMA)/1.1160.
USD/JPY: The dollar retreated from a 2-week low as improving risk sentiment coupled with rising U.S. Treasury yields and expectations of a Federal Reserve interest rate hike this month, boosted the bid tone around the major. The major traded 0.3 percent up at 111.15, rebounding from a low of 110.48 hit on Wednesday, its lowest since May 18. FxWirePro's Hourly Yen Strength Index stood at -80.17 (Slightly Bearish) by 1100 GMT. The pair is facing support at 110 and any break below will drag it down till 108.13. On the higher side, close above 111.75 (89 EMA) will take it to next level till 113.40/114.36 likely.
GBP/USD: Sterling declined, reversing most of its previous session gains after Yougov Election Model published by the Times showed UK PM May's Conservative Party 9 seats short of an overall majority. Investors ignored better-than-expected manufacturing sector survey, which showed Britain's manufacturing PMI rose to 56.7 in May, beating forecasts of 56.5. Sterling trades 0.3 percent down at 1.2849, hovering towards a low of 1.2769 hit on Wednesday, its weakest since Apr. 21. FxWirePro's Hourly Sterling Strength Index stood at 99.04 (Slightly Bullish) by 1100 GMT. On the higher side, minor resistance is around 1.2925 (10- day MA) and any break above will take the pair till 1.2950/1.3000. The major support is around 1.2750 (Apr 21 low) and any break below will drag it down till 1.2705/1.2600. Against the euro, the pound traded 0.1 percent down at 87.30 pence, having hit a fresh 2-1/2 month low of 87.54 earlier.
USD/CHF: The Swiss franc edged down after rising to a near 7-month high, as the greenback rebounded following a rally in the U.S. Treasury yields. The major trades 0.2 percent up at 0.9699, having hit a low of 0.9665 earlier, its highest since Nov 9. FxWirePro's Hourly Swiss Franc Strength Index stood at 103.12 (Highly Bullish) by 1100 GMT. Any minor bullishness can be seen only above 0.9808 and jump till 0.9850/ 0.9900 is possible above that level. The minor resistance is at 0.9740 (10- day MA)/0.9760. On the lower side, support is around 0.9665 and any break below will drag the pair till 0.9635/ 0.9617/ 0.9600 (50% projection of 1.0100-0.9692 measuring from 0.9808).
AUD/USD; The Australian dollar slumped to a 2-week low after the China Caixin manufacturing PMI dipped into contraction zone, raising doubts over a slowdown in the world's second economy. The Aussie trades 0.4 percent down at 0.7395, having hit a low of 0.7384 earlier, it’s weakest since May 15. FxWirePro's Hourly Aussie Strength Index stood at -123.68 (Highly Bearish) by 1100 GMT. On the lower side, near term support is around 0.7385 (61.8% retracement of 0.71599 and 0.77493) and any close below will drag the pair till 0.7325/0.7300. The near term resistance is around 0.7520 (89- EMA) and any close above targets 0.7580/0.7650.
Equities Recap
European shares rallied in early deals, as improving risk sentiments coupled with upbeat Eurozone's Markit manufacturing PMI, drove investors towards risky assets.
The pan-European STOXX 600 index advanced 0.3 percent to 391.20 points, while the FTSEurofirst 300 index gained 0.3 percent to 1,536.28 points.
Britain's FTSE 100 trades 0.4 percent up at 7,550.25 points, while mid-cap FTSE 250 added 0.1 percent to 19,994.35 points.
Germany's DAX rose 0.3 percent at 12,660.56 points; France's CAC 40 trades 0.7 percent higher at 5,321.70 points.
Commodities Recap
Crude oil prices declined, drifting towards multi-week lows as an increase in Libyan oil production added to monthly OPEC crude output in May, recording the first monthly rise this year. International benchmark Brent crude was trading 0.5 percent down at $50.70 per barrel by 1036 GMT, having hit a low of $50.21 on Wednesday, its weakest since May 10. U.S. West Texas Intermediate fell 0.4 percent to $48.40 a barrel, after falling as low as $47.71 the day before, its lowest since May 12.
Gold edged down after rising to a nearly five-week high in the previous session, as expectations that the U.S. Federal Reserve will hike interest rates this month weighed on prices. Spot gold was trading 0.1 percent down at $1,266.25 per ounce at 1041 GMT, having touched a high of $1,274.00 an ounce on Wednesday, its strongest since April 25. U.S. gold futures fell 0.5 percent to $1,265 an ounce.
Treasuries Recap
The U.S. Treasuries lost ahead of the country’s initial jobless claims, scheduled to be released later in the day. The yield on the benchmark 10-year Treasury, jumped nearly 2 basis points to 2.22 percent, the super-long 30-year bond yields climbed 1-1/2 basis points to 2.87 percent and the yield on short-term 2-year note traded nearly 1-1/2 basis points higher at 1.29 percent.
The UK gilts traded lower after reading higher-than-expected manufacturing PMI for the month of May. Also, investors are looking forward to the country’s construction PMI, scheduled to be released on June 2 for further direction in the debt market. The yield on the benchmark 10-year gilts, rose nearly 1 basis point to 1.06 percent, the super-long 30-year bond yields traded flat at 1.69 percent and the yield on the short-term 3-year traded 1 basis point higher at 0.19 percent.
The Eurozone periphery bonds remained mixed after reading a diverse bag of manufacturing PMI data from the Eurozone economies. Moreover, trading volumes remained muted against a lack of economic data ahead of the approaching weekend. The German 10-year bund yields, hovered around 0.30 percent, the French 10-year bond yields, also traded flat at 0.63 percent, Irish 10-year bonds yield dipped 1 basis point to 0.76 percent, Italian equivalent jumped 2-1/2 basis points to 2.20 percent, Netherlands 10-year bonds yield ticked 1/2 basis point higher to 0.52 percent, Portuguese equivalents climbed nearly 3 basis points to 3.06 percent and the Spanish 10-year yield rose nearly 2-1/2 basis points to 1.55 percent.
The Japanese government bonds traded flat after witnessing steady demand at the 10-year auction, held earlier today. The benchmark 10-year bond yield remained flat at 0.04 percent, the long-term 30-year bond yields also hovered around 0.82 percent and the yield on the short-term 2-year note too traded steady at -0.16 percent.
The New Zealand 10-year bond yields hit a 6-1/2 month low as the market witnessed a massive short-covering by the investors and after the Reserve Bank of New Zealand (RBNZ) released a balanced outlook on the Financial Stability Report (FSR) for the month of May. 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.
The Australian bonds jumped despite a rebound in the country’s retail sales for the month of April. However, the disappointment in CAPEX data in the first quarter of this year supported prices in the debt market. The yield on the benchmark 10-year Treasury note, fell 1 basis point to 2.38 percent, the yield on 15-year note slumped 2 basis points to 2.76 percent while the yield on short-term 2-year hovered around 1.55 percent.
