Market Roundup
- EUR/USD -0.14%, USD/JPY flat, GBP/USD +0.13%, EUR/GBP -0.21%
- DXY +0.06%, DAX flat, FTSE -0.29%, Brent +0.21%, Gold +0.09%
- Saudi Arabia, Egypt, UAE sever ties with Qatar over "terrorism"
- Lead of UK PM May's Conservatives slips to 11 points
- Oil prices gain as Saudi Arabia cuts ties with Qatar
- Gold hits six-week high after Friday's U.S. jobs report
- Germany humming factories outpace services in May-PMIs; 57.4 vs previous 57.3
- EZ bis activity maintained growth in May- PMI; 56.8 vs previous 56.8
- Election jitters, consumer squeeze hit UK services -PMI; 53.8 vs previous 55.8
- China services sector expands at fastest pace in 4 months in May - PMI
- Japan's services sector grows at fastest pace in 2 years in May-PMI
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Labor Department is likely to report that non-farm productivity edged lower 0.2 percent in the first quarter, after declining 0.6 percent in the previous quarter.
- (0830 ET/1230 GMT) The U.S. Labor Department will release unit labor costs figures for the first quarter. The indicator is expected to rise 2.5 percent after posting a gain of 3.0 percent in the previous quarter.
- (0900 ET/1300 GMT) Mexico releases its consumer confidence for the month of May and gross fixed investment data for March.
- (0900 ET/1300 GMT) Brazil reports its Markit's composite and services PMI figures for the month of May.
- (0945 ET/1345 GMT) Markit Economics reports final U.S. services PMI for the month of May. The index posted a final reading of 54.0 in April.
- (1000 ET/1400 GMT) The Institute for Supply Management (ISM) is expected to report that U.S. non-manufacturing Purchasing Managers' index eased to a final reading of 57.0 in May from 57.5 in April.
- (1000 ET/1400 GMT) The United States is likely to report that factory orders decreased 0.2 percent in April after posting a rise of 0.2 percent in the prior month.
- (1000 ET/1400 GMT) The Fed releases its labor market conditions index (LMCI) for the month of May. The indicator posted a rise of 3.5 in the previous month.
- (1901 ET/2301 GMT) The British Retail Consortium (BRC) will report its Like-for-Like Retail Sales for the month of May. The index rose at an annualized rate of 5.6 percent in April.
Key Events Ahead
- (1145 ET/1545 GMT) FedTrade operation 30-year Ginnie Mae (max $1.2 bn)
FX Beat
DXY: The dollar gained versus its major peers following a rise in the U.S. Treasury yields. The greenback against a basket of currencies traded 0.2 percent up at 96.90, having touched a low of 96.65 on Friday, it’s lowest since Nov. 9. FxWirePro's Hourly Dollar Strength Index stood at -61.54 (Bearish) by 1100 GMT.
EUR/USD: The euro declined, retreating from a near 7-month high touched in the previous session as the Euro took a hit on renewed cross-driven weakness. The EUR/GBP cross fell following the release of the latest ICM UK election poll, which showed Conservatives with an 11 percentage point lead versus Labour. The European currency traded 0.3 percent down at 1.1246, having touched a high of 1.1285 on Friday, its highest since Nov 9. FxWirePro's Hourly Euro Strength Index stood at -41.76 (Neutral) by 1000 GMT. The pair is still bullish as long as minor support 1.1197 (daily Tenkan-Sen) holds and any break below will drag it down till 1.1160/1.1100 (May 30 low). The near term major resistance is around 1.1300 and any break above will take it till 1.13660/1.14300.
USD/JPY: The dollar retreated from a 3-week low hit earlier in the session as U.S. Treasury yields rose and markets signalled they expect the Federal Reserve to hike interest rates next week. The major traded 0.2 percent up at 110.61, having touched a low of 110.30 earlier, its lowest since May 18. FxWirePro's Hourly Yen Strength Index stood at 38.01 (Neutral) 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 111.71 (89 EMA) will take it to next level till 113.40/114.36 likely.
GBP/USD: Sterling rebounded from early losses witnessed in early Asian deals as traders reacted to another terrorist attack over the weekend in London ahead of Britain's national election this week. The major recovered sharply after the latest ICM opinion poll showed that the UK PM May’s Conservatives lead expanding to 11 points against its opposition- Labour party. Sterling trades 0.1 percent up at 1.2906, hovering away from a low of 1.2769 hit on Wednesday, its weakest since Apr. 21. FxWirePro's Hourly Sterling Strength Index stood at 16.57 (Neutral) by 1100 GMT. On the higher side, minor resistance is around 1.2905 (10- day MA) and any break above will take the pair till 1.2950/ 1.3000. The major support is around 1.2750 (Apr 21st low) and any break below will drag it down till 1.2705/1.2600. Against the euro, the pound traded 0.4 percent down at 87.12 pence, having touched a near 3-month low of 87.67 earlier.
USD/CHF: The Swiss franc edged down, retreating from a 7-month high as the greenback rebounded across the board following a rise in the U.S. Treasury yields. The major trades 0.3 percent up at 0.9655, having hit a low of 0.9620 earlier in the session, its lowest since Nov 9. FxWirePro's Hourly Swiss Franc Strength Index stood at 4.83 (Neutral) by 1100 GMT. Any break above 0.9808 will take the pair till 0.9835 (38.2% retracement of 1.00998 and 0.96220)/0.9900/0.9925 (50- day MA). On the lower side, any break below 0.9617 will drag it down till 0.9580/0.95490 (Nov 9 low).
AUD/USD: The Australian dollar rose to a near 2-week high as better-than-expected corporate profits data from Australia and stronger Chinese services PMI extended Friday's strong up-surge. The Aussie trades 0.4 percent up at 0.7475, having hit a low of 0.7371 on Friday, it’s weakest since May 12. FxWirePro's Hourly Aussie Strength Index stood at 102.94 (Highly Bullish) 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 0.7532 (200- MA) and any close above targets 0.7580/0.7650.
Equities Recap
European shares tumbled as an early boost from energy stocks faded, while dollar recovered from last week's seven-month lows.
The pan-European STOXX 600 index declined 0.2 percent to 391.83 points, while the FTSEurofirst 300 index fell 0.2 percent to 1,539.04 points.
Britain's FTSE 100 trades 0.3 percent down at 7,525.97 points, while mid-cap FTSE 250 shed 0.3 percent to 19,940.75 points.
France's CAC 40 trades 0.6 percent lower at 5,312.08 points.
Commodities Recap
Crude oil prices rallied after top crude exporter Saudi Arabia and other Arab states closed transport links with liquefied natural gas (LNG) and condensate shipper Qatar. International benchmark Brent crude was trading flat at $49.92 per barrel by 1021 GMT, having hit a low of $48.99 the prior session, its weakest since May 10. U.S. West Texas Intermediate traded flat at $47.70 a barrel, after falling as low as $46.77 on Friday, its lowest since May 10.
Gold prices rose to its highest level in over six weeks, as disappointing U.S. jobs data appeared to reduce the prospects for an aggressive string of interest rate hikes in the United States. Spot gold gained 0.1 percent to $1,280.08 per ounce by 1023 GMT, having touched a peak of $1,281.90 an ounce, its strongest since April 24. U.S. gold futures for August delivery were up 0.3 percent at $1,283.4 an ounce.
Treasuries Recap
The U.S. Treasuries lost amid a silent trading session that witnessed data of little economic significance and despite disappointment in the country’s labour market report for the month of May, released end of last week. The yield on the benchmark 10-year Treasury, jumped 2-1/2 basis points to 2.18 percent, the super-long 30-year bond yields climbed 2 basis points to 2.83 percent and the yield on short-term 2-year note traded nearly 1-1/2 basis points higher at 1.30 percent.
The UK gilts plunged after investors largely shrugged-off lower-than-expected services Purchasing Managers’ Index (PMI) for the month of May, released earlier today. Also, investors are eyeing the 5-year auction, scheduled to be held on June 6, for further direction in the debt market. In addition, the upcoming snap election in the country, scheduled for June 8 as was declared by Prime Minister Theresa May has added further uncertainties and clouded the outlook for the money market. The yield on the benchmark 10-year gilts, jumped 3 basis points to 1.06 percent, the super-long 30-year bond yields also climbed 3 basis points to 1.72 percent and the yield on the short-term 2-year traded 1 basis point higher at 0.12 percent.
The Eurozone periphery bonds slumped as investors remain cautious ahead of the European Central Bank’s (ECB) monetary policy decision, scheduled to be held on June 8. Also, Germany, the benchmark for Eurozone debt markets, remain closed today, on account of Whit Monday, which further lent dullness in investors trading. The French 10-year bond yields, jumped 2 basis points to 0.72 percent, Irish 10-year bonds yield rose 1 basis point to 0.77 percent, Italian equivalent also climbed nearly 1 basis point to 2.26 percent, Netherlands 10-year bonds yield ticked 2 basis points higher to 0.50 percent, Portuguese equivalents up nearly 1-1/2 basis points to 3.04 percent while the Spanish 10-year yields traded nearly flat at 1.56 percent.
The Japanese government bonds traded flat as investors wait to watch the country’s 30-year auction, scheduled to be held on June 6 amid expectations of a rise in the Japan’s gross domestic product (GDP) for the first quarter of this year, due for release on June 7. The benchmark 10-year bond yield, traded flat at 0.05 percent, the long-term 30-year bond yields also hovered around 0.80 percent while the yield on the short-term 2-year note traded tad lower at -0.14 percent.
The Australian bonds started the week on a strong note, following expectations of a softer gross domestic product (GDP) of the country in the first quarter of this year and as investors wait to watch the Reserve Bank of Australia’s (RBA) monetary policy decision, scheduled to be unveiled on June 6 by 04:30GMT. The yield on the benchmark 10-year Treasury note, slumped nearly 3 basis points to 2.39 percent, the yield on 15-year note plunged 3-1/2 basis points to 2.77 percent while the yield on short-term 2-year traded 1-1/2 basis points lower at 1.57 percent.
