Market Roundup
- EUR/USD +0.07%, USD/JPY -0.06%, GBP/USD -0.3%, AUD/USD -0.13%
- DXY +0.01%, DAX +0.11%, FTSE +0.19%, Gold +0.13%
- Eurozone May inflation estimated at 1.4 pct y/y vs 1.9 pct in April
- Eurozone April unemployment falls to 9.3 pct vs 9.4 pct in March
- May could lose majority in UK parliament -YouGov study in The Times
- UK April mortgage approvals 64,645 vs March 66,043, lowest since Sept
- UK April net consumer credit +1.525 bln stg vs March +1.613 bln
- Germany retail sales -0.2 pct m/m, -0.9 pct y/y in April
- Germany seasonally adjusted ILO employment +31,000 in April vs +41,000 in March
- Greece needs debt relief deal in June, ECB's Coeure says
- China May official services PMI rises to 54.5 vs 54.0 in April
- China May official manufacturing PMI at 51.2 (Rtrs poll 51, prev month 51.2)
- OPEC, non-OPEC committed to cutting inventories to 5-yr average-Falih
- Japan Apr industrial output +4.0% m/m, +4.3% eyed, May -2.5% eyed, June +1.8%
- Japan Output touch below forecast but at 6-year high, exports solid
- Indonesia prices Y100 bln 3-tranche samurais via Mizuho, Nikko, Nomura - IFR
Economic Data Ahead
- (0830 ET/1230 GMT) The Statistics Canada is expected to report that gross domestic product increased at a 3.9 percent annual rate in the first quarter after rising at a 2.6 percent pace in the last quarter. While on monthly basis, it is likely to rise 0.2 percent in March, after staying unchanged in the prior month.
- (0945 ET/1345 GMT) Chicago Purchasing Managers' Index is likely to show that business conditions declined to 57.0 in May from 58.3 last month.
- (1000 ET/1400 GMT) The National Association of Realtors is likely to report that U.S. pending home sales increased 0.3 percent in April after falling 0.8 percent in March.
- (1030 ET/1430 GMT) The Federal Reserve Bank of Dallas issues its services sector outlook survey for the month of May.
- (1400 ET/1800 GMT) The Fed issues its Beige Book, a summary of anecdotes on the health of the economy.
- (1630 ET/2030 GMT) API reports its weekly crude oil stock.
- (1930 ET/2330 GMT) Australian Industry Group (AiG) releases its performance of manufacturing index for the month of May. The index stood at 59.2 in April.
- (1950 ET/2350 GMT) Japan's Ministry of Finance will report foreign bond investment for the week ending May 26.
- (1950 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic stocks for the week ending May 26.
Key Events Ahead
- (0800 ET/1200 GMT) The Federal Reserve Bank of Dallas President Robert Kaplan speaks before the C. Peter McColough Series on International Economics, hosted by the Council on Foreign Relations in New York.
- (1145 ET/1545 GMT) FedTrade operation 30-year Ginnie Mae (max $1.2 bn)
- (1930 ET/2330 GMT)San Francisco Fed President John Williams speaks before the Bank of Korea International Conference 2017 "Global Economic and Financial Challenges: The Decade Ahead" in Seoul.
FX Beat
DXY: The dollar tumbled versus the euro and the yen as doubts whether the Fed can hike interest rates two more times this year weighed on market sentiment. The greenback against a basket of currencies traded down at 97.14, pulling away from a high of 97.78 hit in the prior session, it’s highest since May 19. FxWirePro's Hourly Dollar Strength Index stood at -127.38 (Highly Bearish) by 1000 GMT.
EUR/USD: The euro edged up, reversing early session losses after data showed Eurozone's unemployment rate declined to an eight-year low of 9.3 percent in April. However, the continents consumer prices slowed to 1.4 percent year-on-year from 1.9 percent in May, slightly below expectations of a 1.5 percent rise. The European currency traded 0.3 percent up at 1.1215, having touched a low of 1.1109 on Tuesday, its lowest since May 19. FxWirePro's Hourly Euro Strength Index stood at 5.99 (Neutral) by 1000 GMT. The top formed around 1.12678 will be acting as major resistance and any violation above will take the pair to next level till 1.1300 Nov high/1.13660. 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.
USD/JPY: The dollar turned lower as investors' remained concerned about the investigations into President Donald Trump's ties with Russia, that could hamper his administration's progress on tax cuts and other promised stimulus measures. The major traded down at 110.79, hovering towards a low of 110.66 hit on Tuesday, its lowest since May 18. FxWirePro's Hourly Yen Strength Index stood at 44.01 (Neutral) by 1000 GMT. The pair is facing support at 110 and any break below 110 will drag the pair down till 108.13. On the higher side, close above 111.77 (89 EMA) will take it to next level till 113.40/114.36 likely.
GBP/USD: Sterling slumped to a fresh 6-week low against the dollar after YouGov's poll showed British Prime Minister Theresa May's Conservative Party falling short of an overall majority in the June 8 national election. However, the major recovered almost all of day's losses after Panelbase poll showed 15 point Conservative lead. Sterling trades 0.1 percent down at 1.2844, having hit a low of 1.2769 earlier, its weakest since Apr. 21. FxWirePro's Hourly Sterling Strength Index stood at -29.84 (Neutral) by 1000 GMT. On the higher side, minor resistance is around 1.2880 (21- EMA) and any break above will take the pair till 1.2950/1.3000. The major support is around 1.2775 (resistance turned into support) and any break below will drag it down till 1.2705/1.2600. Against the euro, the pound traded 0.3 percent down at 87.25 pence, hovering towards a 2-1/2 month low of 87.50 hit on Friday.
USD/CHF: The Swiss franc rose, extending previous session gains as investors turned cautious over political worries in Europe as well as weaker stock and commodity markets. The major trades 0.3 percent down at 0.9712, having hit a high of 0.9808 the day before, its highest since May 18. FxWirePro's Hourly Swiss Franc Strength Index stood at 26.31 (Neutral) by 1000 GMT. The upside is capped by 0.9820 (support turned into resistance) and any break above targets till 0.9855 (21 EMA)/0.98960 (50% retracement of 1.00998 and 0.96918). The pair is facing strong support at 0.9690 and any further bearish continuation can be seen only if it closes below that level. The near term major support is around 0.9678 and break below targets 0.96170.
AUD/USD: The Australian dollar eased after rising to a 1-week high on the back of by better-than-expected manufacturing data from China. The Aussie trades down at 0.7456, having hit a high of 0.7475 earlier, it’s strongest since May. 25. FxWirePro's Hourly Aussie Strength Index stood at 45.43 (Neutral) by 1000 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 declined in early deals, as a fall in mining weighed on resource-linked stocks, while sterling slumped after an opinion poll suggested the ruling Conservatives could lose seats in next week's UK general election.
The pan-European STOXX 600 index slumped 0.03 percent to 390.40 points, while the FTSEurofirst 300 index gained 0.01 percent to 1,533.79 points.
Britain's FTSE 100 trades 0.2 percent up at 7,539.90 points, while mid-cap FTSE 250 added 0.01 percent to 19,994.03 points.
Germany's DAX rose 0.1 percent at 12,610.54 points; France's CAC 40 trades 0.05 percent lower at 5,303.92 points.
Commodities Recap
Crude oil prices declined by more than 1 percent as rising Libyan production offset the OPEC-led output cut efforts. International benchmark Brent crude was trading 1.7 percent down at $51.26 per barrel by 1006 GMT, having hit a low of $50.70 on Friday, its weakest since May 12. U.S. West Texas Intermediate fell 1.7 percent to $48.73 a barrel, after falling as low as $48.16 on Friday, its lowest since May 18.
Gold prices gained, reversing some of its previous session losses, however, was set for its first monthly drop since December as U.S. economic data boosted the case for an interest rate hike by the Federal Reserve next month. Spot gold rose 0.1 percent at $1,264.79 per ounce at 1013 GMT, having touched a high of $1,270.40 on Tuesday, its highest since May 1. U.S. gold futures were unchanged at $1,261.80.
Treasuries Recap
The U.S. Treasuries lost ahead of the ADP non-farm employment and initial jobless claims, scheduled to be released on June 1. The yield on the benchmark 10-year Treasury, rose nearly 1 basis point to 2.22 percent, the super-long 30-year bond yields traded flat at 2.88 percent and the yield on short-term 2-year note traded tad 1/2 basis point higher at 1.29 percent.
The UK gilts traded narrowly mixed as investors await the country’s manufacturing PMI for the month of April, due on June 1. The yield on the benchmark 10-year gilts, barely fell 1/2 basis point to 0.99 percent, the super-long 30-year bond yields declined nearly 1 basis point to 1.64 percent while the yield on the short-term 2-year traded nearly 1/2 basis points higher at 0.09 percent.
The German bunds sunk, after witnessing a fall in the country’s unemployment rate for the month of May, released today. However, a weaker-than-expected consumer price inflation in the Eurozone for May has cushioned deeper falls in the bond prices. The yield on the benchmark 10-year bond, hovered around 0.30 percent, the long-term 30-year bond yields rose 1 basis point to 1.15 percent while the yield on short-term 2-year bond traded nearly 1/2 basis point higher at -0.70 percent.
The Japanese government bonds traded flat ahead of the 10-year auction, scheduled on June 1. The benchmark 10-year bond yield, remained flat at 0.04 percent, the long-term 30-year bond yields also hovered around 0.80 percent and the yield on the short-term 2-year note traded steady at -0.16 percent.
The New Zealand bonds closed mixed after the Reserve Bank of New Zealand (RBNZ) released a balanced outlook on the Financial Stability Report (FSR) for the month of May, released early today. At the time of closing, the yield on the benchmark 10-year bond, slumped 4-1/2 basis points to 2.80 percent, the yield on 7-year note hovered around 2.69 percent and the yield on short-term 2-year note too ended 2 basis points lower at 1.95 percent.
The Australian bonds traded tad higher as investors cashed in profits ahead of the country’s retail sales, scheduled to be released on June 1. The yield on the benchmark 10-year Treasury note, fell 1/2 basis point to 2.40 percent, the yield on 15-year note hovered around 2.78 percent while the yield on short-term 2-year slumped nearly 2 basis points to 1.55 percent.
