Market Roundup
- EUR/ EUR/USD +0.04%, USD/JPY +0.04%, GBP/USD +0.3%, AUD/USD -0.05%
- DXY -0.11%, DAX -0.06%, FTSE +0.4%, Gold +0.05%
- Fed's Williams says Fed committed to shrinking balance sheet gradually
- Williams says U.S. economy is as close as it has ever been to Fed's two goals
- Williams says gradually raising rates will prevent U.S. economy from overheating
- Spanish retail sales rise 1.8 pct y/y in April
- Eurozone corporate lending growth hits post-crisis high: ECB
- S&P sees no need for an out-of-schedule China rating review -exec
Economic Data Ahead
- (1845 ET/2245 GMT) The Statistics New Zealand releases building permits seasonally adjusted data for the month of April. The index posted a decline of 1.8 percent in March.
- (1930 ET/2330 GMT) Japan's Statistics Bureau is expected to report that unemployment rate remained unchanged at 2.8 percent for the month of April.
- (1830 ET/2330 GMT) Japan's overall household spending probably declined at an annualized rate of 0.7 percent in April after tumbling 1.3 percent in March.
- (1850 ET/2350 GMT) Japan's Ministry of Economy, Trade, and Industry releases retail trade data for the month of April. The indicator is likely to post an annualized rise of 2.1 percent after rising 2.1 percent in the prior month.
Key Events Ahead
- (0900 ET/1300 GMT) European Central Bank (ECB) President Mario Draghi's Speech.
FX Beat
DXY: The dollar eased versus its major peers as continuing political turmoil in Washington kept investors cautious, amid holiday-thinned trading. The greenback against a basket of currencies traded down at 97.36, hovering towards a 1-week of 96.04 hit on Friday, it’s highest since May 19. FxWirePro's Hourly Dollar Strength Index stood at 26.78 (Neutral) by 1000 GMT.
EUR/USD: The euro edged up, halting its 2-day losing streak, ahead of ECB President Draghi's testimony about the economy and monetary developments before the Economic and Monetary Affairs Committee, in Brussels. The central bank’s President is likely to reiterate the last week’s message on Eurozone recovery, hence, his testimony could turn out to be a non-event for the major. The European currency traded 0.1 percent up at 1.1189, having touched a low of 1.1160 on Friday, its lowest since May 19. FxWirePro'sHourly Euro Strength Index stood at -20.78 (Neutral) by 1000 GMT. The pair is struggling to break above 1.12678 and any violation above will take it to next level till 1.1300 Nov 2016 high/1.13660. On the lower side, any break below 1.1160 will drag it down till 1.110 (23.6% retracement of 1.105694 and 1.12678)/1.1050/1.1000.
USD/JPY: The dollar slightly edged up amid subdued trading, supported by Friday's upward revision of the US Q1 GDP growth numbers. However, North Korea's latest ballistic missile test triggered a fresh bout of risk aversion, supporting the Japanese Yen's safe-haven appeal. The major traded up at 111.33, rebounding from a low of 110.87 touched on Friday, its lowest since May 23. FxWirePro's Hourly Yen Strength Index stood at 54.38 (Bullish) by 1000 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 111.82 (89 EMA) will take the pair to next level till 113.40/114.36 likely.
GBP/USD: Sterling rebounded after slumping to a three-week low below the 1.2800 handle on Friday as weekend polls showed Prime Minister Theresa May is set to win next week's elections. The trading volumes are likely to be thin on account of the bank holiday in London. Sterling trades 0.3 percent up at 1.2843, having hit a low of 1.2775 on Friday, its weakest since Apr. 25. FxWirePro's Hourly Sterling Strength Index stood at -117.97 (Highly Bearish) by 1000 GMT. On the higher side, any close above 1.3050 confirms bullish continuation and a jump till 1.3088/13120 likely. The major support is around 1.27750 (resistance turned into support) and any break below will drag the pair down till 1.2705/1.2600. Against the euro, the pound traded 0.2 percent up at 87.08 pence, having hit a fresh 2-1/2 month low of 87.50 on Friday.
USD/CHF: The Swiss franc nudged up against the dollar as investors refrained from taking big positions amid a fresh bout of risk aversion. The major trades 0.1 percent down at 0.9733, having hit a low of 0.9691 last week, its weakest since Nov 9. FxWirePro's Hourly Swiss Franc Strength Index stood at 2.92 (Neutral) by 1000 GMT. The pair is facing strong support at 0.9690 and any further bearish continuation can be seen only if it closes below that trend line. The near-term major support is around 0.96788 and a break below targets 0.96170. On the higher side, near term resistance is around 0.9785 and any break above will take the pair till 0.9820 (support turned into resistance)/0.9860.
AUD/USD: The Australian dollar declined, extending losses for the third consecutive session, as the crude oil prices tumbled to multi-week lows on increasing U.S. drilling activity. The Aussie trades 0.1 percent down at 0.7437, having hit a low of 0.7422 last week, it’s weakest since May. 19. FxWirePro's Hourly Aussie Strength Index stood at -69.66 (Bearish) 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 it 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 subdued trading, as worries over possible early elections weighed down Italian banking stocks, while sterling rebounded from recent lows.
The pan-European STOXX 600 index slumped 0.02 percent to 391.27 points, while the FTSEurofirst 300 index declined 0.03 percent to 1,536.94 points.
Germany's DAX fell 0.02 percent at 12,599.98 points; France's CAC 40 trades 0.06 percent lower at 5,333.34 points.
Commodities Recap
Crude oil prices declined, hovering towards multi-week lows as further increases in U.S. drilling activity undermined OPEC's efforts to tighten supply. International benchmark Brent crude was trading 0.5 percent down at $51.92 per barrel by 1026 GMT, having hit a low of $50.70 the previous session, its weakest since May 12. U.S. West Texas Intermediate fell 0.5 percent to $49.58 a barrel, after falling as low as $48.16 on Friday, its lowest since May 18.
Gold prices steadied near its highest in four weeks after rising almost 1 percent in the previous session, as geopolitical tensions strengthened its safe-haven appeal. Spot gold little changed at $1,267.22 per ounce at 1030 GMT, having rallied 0.9 percent to hit its strongest since May 1 at $1,269.35 on Friday. U.S. gold futures slipped 0.1 percent to $1,266.9.
Treasuries Recap
The German bunds traded narrowly mixed as investors wait to watch the European Central Bank (ECB) President Mario Draghi’s speech, scheduled to be held later in the day. Also, the release of the country’s consumer price inflation for the month of May will provide further direction to the debt market. The yield on the benchmark 10-year bond, fell 1/2 basis point to 0.34 percent, the long-term 30-year bond yields rose nearly 1 basis point to 1.16 percent while the yield on the short-term 2-year bond traded nearly 1 basis point lower at -0.69 percent.
The Japanese government bonds shrunk as investors wait to watch the country’s 10-year auction, scheduled to be held later this week amid expectations of a rise in the Japan’s retail sales for the month of April, due for release on May 30. The benchmark 10-year bond yield, rose nearly 1 basis point to 0.04 percent, the long-term 30-year bond yields also climbed almost 1 basis point to 0.80 percent while the yield on the short-term 2-year note traded flat at -0.16 percent.
The New Zealand bonds plunged as investors wait to watch the Reserve Bank of New Zealand (RBNZ) Governor Graeme Wheeler’s speech, later this week amid a muted trading session. At the time of closing, the yield on the benchmark 10-year bond, jumped 3-1/2 basis points to 2.86 percent, the yield on 7-year note also climbed 3-1/2 basis points to 2.74 percent while the yield on short-term 2-year note traded 1 basis point lower at 1.96 percent.
The Australian bonds sunk as investors cashed in profits, following a silent trading session that witnessed data of less economic significance. Also, the US and UK markets will remain closed today on account of Memorial Day and Bank Holiday, which further lent dullness to financial markets. The yield on the benchmark 10-year Treasury note, jumped 2 basis points to 2.44 percent, the yield on the 15-year note climbed nearly 1-1/2 basis points to 2.83 percent and the yield on short-term 2-year traded nearly 2 basis points higher at 1.60 percent.
