Market Roundup
- EUR/USD -0.03%, USD/JPY -0.072%, GBP/USD +0.11%, EUR/GBP -0.14%
- DXY -0.07%, DAX -0.59%, FTSE -0.04%, Brent +0.22%, Gold +0.73%
- Qatar seeks Kuwaiti mediation after powerful Arab nations shun it
- British PM May seen 22 seats short of majority in June 8 vote -YouGov
- Eurozone April retail sales rise slightly due to food; 2.5% vs previous 2.3%
- Eurozone June Sentix Index 28.4 vs previous 27.4
- UK consumer stumbles in May as surveys show spending squeezed
- Oil slips on worries Mideast rift could undermine OPEC cuts
- Australia central bank sticks to upbeat tune as economy underperforms
- Japan Apr real wages unch y/y, total cash earnings +0.5%, overtime pay -0.2%.
Economic Data Ahead
- (1000 ET/1400 GMT) The U.S. Labor Department releases Job Openings and Labor Turnover Survey (JOLTS) report for the month of April. The report showed job openings rose to 5.743 million 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.
- (1000 ET/1400 GMT) The Richard Ivey School of Business releases Canada's seasonally adjusted Ivey Purchasing Managers Index for the month of May. The index printed a reading of 62.4 in the prior month.
- (1630 ET/2030 GMT) API reports its weekly crude oil stock.
- (1845 ET/2245 GMT) New Zealand will release its manufacturing sales report for the first quarter. The indicator declined 1.8 percent in the previous quarter.
- (1930 ET/ 2330 GMT) The Australian Industry Group (AiG) releases its Performance of Construction Index for the month of May. The index stood at 51.9 in the month of April.
- (1950 ET/2350 GMT) Japan releases Foreign Exchange Reserves report for the month of May.
Key Events Ahead
- N/A Canada's Foreign Affairs Minister Chrystia Freeland will unveil her vision for the country's foreign policy.
- (1430 ET/1830 GMT) FedTrade operation 30-year Fannie Mae / Freddie Mac (max $1.625 bn)
FX Beat
DXY: The dollar tumbled versus its Japanese counterpart by more than 1 percent to a 6-week low as investors remained cautious ahead of former FBI Director James Comey's testimony before a Senate committee this week. The greenback against a basket of currencies traded 0.1 percent down at 96.71, having touched a low of 96.53 earlier, it’s lowest since Nov. 9. FxWirePro's Hourly Dollar Strength Index stood at -124.20 (Highly Bearish) by 1100 GMT.
EUR/USD: The euro eased, drifting away from a seven-month high touched on Friday, as traders refrained from taking big positions ahead of the European Central Bank policy meeting later in the week. The European currency traded 0.1 percent down at 1.1245, having touched a high of 1.1285 on Friday, its highest since Nov 9. FxWirePro's Hourly Euro Strength Index stood at -68.27 (Bearish) by 1100 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 slumped to a fresh 6-week low as attacks in Australia triggered a bout of risk aversion, sending investors seeking safe haven assets. Moreover, Britain's election, a European Central Bank meeting, and former head of FBI James Comey's testimony before a Senate committee later in the week also underpinned the demand for the safe haven Japanese yen. The major traded 1.0 percent down at 109.30, having touched a low of 109.28 earlier, its lowest since Apr. 21. FxWirePro's Hourly Yen Strength Index stood at 143.41 (Highly Bullish) by 1100 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 rallied to a near 2-week high against the dollar, strengthened by expectations that the ruling Conservative party would probably win a majority of parliamentary seats in Thursday's elections. Investors seem to have ignored the latest YouGov opinion model on the UK election, which showed that Conservatives are likely to fall 22 seats short of majority. Sterling trades up at 1.2904, having touched a high of 1.2949 earlier in the session, its strongest since May 25. FxWirePro's Hourly Sterling Strength Index stood at -71.40 (Bearish) by 1100 GMT. On the higher side, minor resistance is around 1.2940 (61.8% retracement of 1.30457 and 1.27688) 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 up at 87.16 pence, recovering from a near 3-month low of 87.67 hit the day before.
USD/CHF: The Swiss franc rose, drifting closer towards a 7-month high touched last session as renewed selling seen in oil and stock prices, triggered a fresh bout of risk-off sentiment. The major trades 0.1 percent down at 0.9639, having hit a low of 0.9620 on Monday, its lowest since Nov 9. FxWirePro's Hourly Swiss Franc Strength Index stood at 21.34 (Neutral) 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). The pair declined till 0.9620 100% projection of 1.0342 to 0.9860 from 1.0099. Any daily close below will 0.9617 will drag the pair down till 0.9580/0.95490 (Nov 9 low).
AUD/USD: The Australian dollar turned flat after rising earlier in the day following Reserve Bank of Australia’s decision to leave its cash rate at a record low of 1.5 percent. The Aussie trades flat at 0.7484, having hit a high of 0.7498 on Monday, it’s strongest since May 25. FxWirePro's Hourly Aussie Strength Index stood at 100.77 (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 in early trade as weaker oil prices weighed down by a major diplomatic rift between Gulf Arab states, heightened geopolitical tensions.
The pan-European STOXX 600 index slumped 0.5 percent to 390.07 points, while the FTSEurofirst 300 index fell 0.3 percent to 1,534.74 points.
Britain's FTSE 100 trades 0.01 percent down at 7,525.87 points, while mid-cap FTSE 250 shed 1.1 percent to 19,638.73 points.
Germany's DAX declined 0.6 percent at 12,743.35 points; France's CAC 40 trades 0.4 percent lower at 5,285.73 points.
Commodities Recap
Crude oil prices declined, extending losses further below $50 a barrel on concerns that a diplomatic rift between Qatar and other Arab states could undermine efforts by OPEC to tighten the market. International benchmark Brent crude was trading down at $49.41 per barrel by 1035 GMT, having hit a low of $48.99 last week, its weakest since May 10. U.S. West Texas Intermediate traded 0.2 percent down at $47.27 a barrel, after falling as low as $46.77 on Friday, its lowest since May 10.
Gold price rose by nearly 1 percent to its highest in near seven weeks as equity markets and the dollar weakened ahead of a UK national election and a European Central Bank meeting due later this week. Spot gold rose 0.9 percent to $1,291.16 per ounce, as of 1039 GMT, having touched a peak of $1,291.56 an ounce, its strongest since April 18. U.S. gold futures climbed 0.7 percent to $1,291.8 an ounce.
Treasuries Recap
The U.S. Treasuries jumped amid a muted trading session that witnessed data of little economic significance and ahead of 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 slumped 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, slumped 3 basis points to 1.02 percent, the super-long 30-year bond yields slipped 1 basis point to 1.68 percent and the yield on the short-term 2-year traded 1-1/2 basis points lower at 0.08 percent.
The Eurozone periphery bonds jumped, after reading weaker-than-expected retail sales for the month of April and ahead of the zone’s first-quarter gross domestic product (GDP), scheduled to be released on June 7. Further, German 10-year equivalents hit a 6-week high today as investors poured into safe-haven instruments ahead of the European Central Bank’s (ECB) monetary policy decision, scheduled to be held on June 8. The German 10-year bond yields, slumped nearly 2 basis points to 0.28 percent, the French 10-year bond yields, plunged 3 basis points to 0.69 percent, Irish 10-year bonds yield fell nearly 2-1/2 basis points to 0.76 percent, Italian equivalent lower 3-1/2 basis points to 2.24 percent, Netherlands 10-year bonds yield ticked 2 basis points lower to 0.48 percent, Portuguese equivalents also slipped 2 basis points to 3.04 percent while the Spanish 10-year yields traded nearly 4 basis points down at 1.54 percent.
The Japanese government bonds remained slightly mixed ahead of 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, hovered around 0.04 percent, the long-term 30-year bond yields fell 1 basis point to 0.81 percent while the yield on the short-term 2-year note traded tad higher at -0.14 percent.
The New Zealand 10-year bond yields hit 7-month low as investors wait to watch the country’s GlobalDairyTrade (GDT) price auction, scheduled to be held on June 6. 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 rallied, following expectations of a softer gross domestic product (GDP) of the country in the first quarter of this year, scheduled to be released on June 7. The yield on the benchmark 10-year Treasury note, slumped 2 basis points to 2.38 percent, the yield on 15-year note plunged 2-1/2 basis points to 2.77 percent while the yield on short-term 2-year traded 2 basis points lower at 1.57 percent.
