Market Roundup
•German Apr WPI (YoY) -1.8%, -3.0% previous
• German Apr WPI (MoM) 0.4%, 0.1% forecast,0.2% previous
• Sweden Apr Trade Balance 7.90B,4.80B previous
• UK May CBI Distributive Trades Survey 8,-24 forecast,-44 previous
• France Jobseekers Total 2,775.4K,2,812.2K previous
Looking Ahead Economic Data(GMT)
•12:30 Canada Apr RMPI (YoY) 0.8% previous
•12:30 Canada Apr IPPI (YoY) -0.5% previous
•12:30 Canada Apr RMPI (MoM) 3.1% forecast,4.7% previous
•12:30 Canada Apr IPPI (MoM) 0.8% forecast,0.8% previous
•13:00 US Mar House Price Index (MoM) 0.5% forecast,1.2% previous
•13:00 US Mar S&P/CS HPI Composite - 20 n.s.a. (YoY) 7.3% forecast,7.3% previous
•13:00 US Mar S&P/CS HPI Composite - 20 n.s.a. (MoM) 0.9% previous
•13:00 US House Price Index 423.0 previous
•14:00 US May CB Consumer Confidence 96.0 forecast,97.0 previous
•14:00 US 6-Month Bill Auction 5.160% previous
•14:00 US 3-Month Bill Auction 5.245% previous
•14:30 US May Dallas Fed Mfg Business Index -14.5 previous
Looking Ahead Events And Other Releases (GMT)
•17:05 US Fed Governor Cook Speaks
•17:05 US FOMC Member Daly Speaks
Currency Forecast
EUR/USD: The euro strengthened on Tuesday despite some dovish comments from European Central Bank (ECB) policymakers on Monday and data showing German business morale stagnated in May.ECB's Francois Villeroy de Galhau confirmed market expectations that, barring major surprises, a first rate cut next week is a done deal. But investors have recently updated their bets on future ECB moves, pricing in less than a cut in every quarter in 2024 and early 2025.German inflation data due on Wednesday and the wider euro zone's reading on Friday will be watched for clues on how soon easing from the central bank could come.All of that data, however, will be a sideshow to the main focus for markets on Friday when the U.S. core personal consumption expenditures (PCE) price index report - the Federal Reserve's preferred measure of inflation - is released. Expectations are for it to hold steady on a monthly basis. Immediate resistance can be seen at 1.0879(23.6%fib), an upside break can trigger rise towards 1.0917(Higher BB).On the downside, immediate support is seen at 1.0800 (38.2% fib), a break below could take the pair towards 1.0738(50% fib).
GBP/USD: The pound hit a fresh two-month high against the dollar as expectations as Bank of England (BoE) rate cuts and growing investor risk appetite supported the British currency. Market focus this week will be on comments from BoE Governor Bailey on Thursday for more insights into the timing of the central bank's first interest rate cut. Market focus this week will be on comments from BoE Governor Bailey on Thursday for more insights into the timing of the central bank's first interest rate cut.Traders are pricing in a 50% chance of the first rate cut in September, with a cut fully priced in only in November. Sterling was flat at $1.2768 after hitting $1.2783 earlier in the session, its highest level since March 21.Immediate resistance can be seen at 1.2793(23.6%fib), an upside break can trigger rise towards 1.2817(Higher BB).On the downside, immediate support is seen at 1.2764(Daily low), a break below could take the pair towards 1.2704(38.2% fib).
USD/CHF: The dollar declined against the Swiss franc on Tuesday as investors awaited inflation data from both sides of the Atlantic due later in the week. U.S. PCE inflation and CPI inflation data from major euro zone economies this week are the main things that could jolt markets out of their current thinking by affecting expectations of when major central banks will start cutting rates. Inflation data in the euro zone is released from Wednesday, followed by the PCE on Friday.Markets are currently fully pricing one 25 basis-point Fed rate cut this year, most likely in September or November. They see a one-third chance of a second 25 bps cut by year-end.In the euro zone, it is all but certain the European Central Bank will cut rates at its meeting next month, though markets are only betting on one further cut by December. Immediate resistance can be seen at 0.9150 (23.6% fib), an upside break can trigger rise towards 0.9173 (Higher BB).On the downside, immediate support is seen at 0.9093(38.2% fib), a break below could take the pair towards 0.9093(50% fib).
USD/JPY: The U.S. dollar eased against yen on Tuesday but remained in tight range ahead of key inflation data from major economies this week that could inform the global interest rate outlook.The Bank of Japan's (BOJ) three key measurements of underlying inflation all fell below 2% in April for the first time since August 2022, data showed on Tuesday, heightening uncertainty over the timing of its next interest rate hike.That comes ahead of Friday's Tokyo inflation data, a leading indicator of nationwide figures.BOJ Governor Kazuo Ueda said on Monday the central bank would proceed cautiously with inflation-targeting frameworks, noting that some challenges were "uniquely difficult" for Japan after years of ultra-easy monetary policy. The yen languished near 157 per dollar and last stood at 156.67 per dollar. Strong resistance can be seen at 157.40(23.6%fib), an upside break can trigger rise towards 157.89(Higher BB).On the downside, immediate support is seen at 155.77(50% fib), a break below could take the pair towards 155.00(Psychological level).
Equities Recap
European shares struggled for direction on Tuesday after the European Central Bank's survey showed consumers' easing inflation expectations in April, while real estate shares kept the index afloat.
UK's benchmark FTSE 100 was last down by 0.30 percent, Germany's Dax was last down by 0.06 percent, France’s CAC was last down by 0.72 percent.
Commodities Recap
Gold prices slipped on Tuesday with investors booking profits after a recent rally, amid pressure from the reduced probability of Federal Reserve rate cuts, while the market awaited key U.S. inflation data due later this week.
Spot gold fell 0.3% to $2,344.20 per ounce by 1119 GMT, after rising 0.7% on Monday.
Global oil prices steadied on Tuesday as the prospect of OPEC+ maintaining oil supply curbs at its June 2 meeting and hopes of strong U.S. summer fuel demand balanced concern about higher-for-longer U.S. interest rates.
The July contract for Brent, the global benchmark, rose 12 cents, or 0.1%, to $83.22 a barrel by 1155 GMT. U.S. West Texas Intermediate (WTI) crude was at $78.79, up $1.07, or 1.4%, from Friday's close, having traded through a U.S. holiday to mark Memorial Day without a settlement.
