12
May
Off

Market Roundup

  • China c.bank injects 66.5 bln yuan via 6-mth MLF and 392.5 bln yuan via 1-yr MLF – statement 
     
  • China launches emergency probe on banks to check risky lending – sources 
     
  • U.S., China reach deals on access for beef, financial services 
     
  • Australia’s AAA ratings underpinned by high fiscal strength-Moody’s 
     
  • New Zealand house prices rise 0.9% in Apr -REINZ
     
  • Drop in NZ April manufacturing PMI to 56.8 vs 57.8 prev
     
  • European stock funds in US attracted near-record cash, $1.7 bln – Lipper 
     
  • U.S.- based taxable bond funds reeled in $2.2 bln of inflows 
     
  • High-yield bond funds posted $1.7 bln in withdrawals, largest outflow in about 2 mths
     
  • EM stock funds in US withdraw $305 mln, tech sector funds attracted $557 mln 
     
  • Foreign CB US debt holdings +$6.515 bln to $3.221 trln May 10 week, Treasuries +$6.41 bln to $2.905 trln, agencies -$24 mln to $255.313 bln.
    ​

Economic Data Ahead

  • (0245 ET/0645 GMT) France Q1 Non-farm Payrolls q/q, last 0.4%    
     
  • (0300 ET/0700 GMT) Spain Apr CPI, 2.6% y/y, 1.0% m/m eyed; last 2.3%, 0.0%
     
  • (0300 ET/0700 GMT) Spain Apr HICP, 0.9% m/m, 2.6% y/y; last 1.1%, 2.6%
     
  • (0500 ET/0900 GMT) Eurozone Mar Industrial Production, 2.3% y/y, 0.3% m/m eyed; last 1.2%, -0.3%    
     

Key Events Ahead

  • N/A ECB’s Vitor Constancio chairs a policy panel “What macroprudential framework for Europe?” 
     
  • N/A Riksbank’s Martin Floden participates in the concluding panel at the Riksbank’s intl conference 
     
  • N/A ECB Supervisory Board meeting in Helsinki
     
  • N/A Swedish c.bank holds a conference on Future of Forward Guidance (Final Day)
     
  • (0310 ET/0710 GMT) Riksbank’s Ingves speaks on “Should macroprudential policy target real estate prices?” 
     
  • (0345 ET/0745 GMT) Riksbank’s Henry Ohlsson discusses monetary policy in Kammarkollegiet’s capital market day 
     
  • (0500 ET/0900 GMT) Riksbank’s Per Jansson discusses the latest interest rate decision and monetary policy
     
  • (0900 ET/1300 GMT) Fed’s Evans speaks before the 56th ACI Financial Markets Association World Conference
     
  • (1135 ET/1535 GMT) ECB’s Mario Draghi, Benoit Coeure participate in G7 finmins, c.bank governors meeting
     

FX Beat

DXY: The dollar declined against the Japanese yen as U.S. political turmoil strengthened safe-haven assets. The greenback against a basket of currencies traded 0.1 percent down at 99.58, having hit a high of 99.89 on Thursday, it’s highest since Apr. 21. FxWirePro’s Hourly Dollar Strength Index stood at 46.71 (Neutral) by 0400 GMT.

EUR/USD: The euro steadied after declining to an over 2-week low in the previous session as the greenback continued to ease following U.S. President Donald Trump’s unexpected dismissal of FBI chief James Comey. The European currency traded up at 1.0867, having touched a low of 1.0839 the day before, its lowest since Apr. 24.  FxWirePro’s Hourly Euro Strength Index stood at -65.22 (Bearish) by 0400 GMT. Investors’ attention will remain on Eurozone’s industrial production report, ahead of U.S. retail sales, consumer price index and business inventories data. Immediate resistance is located at 1.0911 (10-DMA), a break above targets 1.0950. On the downside, support is seen at 1.0829 (21-DMA), a break below could drag it near 1.0800.

USD/JPY: The dollar declined, extending losses below the 114.00 handle as concerns over the fallout of U.S. President Donald Trump’s unexpected dismissal of FBI chief James Comey undermined the major. The pair traded 0.1 percent down at 113.72, having touched a peak of 114.36 on Thursday, its highest since Mar. 15. FxWirePro’s Hourly Yen Strength Index stood at -1.42 (Neutral) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of U.S. retail sales, consumer price index, business inventories and preliminary Michigan consumer sentiment index. Immediate resistance is located at 114.36 (Previous Session High), a break above targets 114.88. On the downside, support is seen at 113.13 (May 9 Low), a break below could take it lower 113.00.

GBP/USD: Sterling steadied after tumbling to a 1-week low in the previous session after the Bank of England’s inflation report showed interest rates were unlikely to rise within the next two years. The BoE’s Monetary Policy Committee voted in favor of holding interest rates at their record low 0.25 percent this month, slashing some bets that a second official would support a hike. Sterling trades flat at 1.2886, having hit a low of 1.2849 on Thursday, its lowest since May 4. FxWirePro’s Hourly Sterling Strength Index stood at -5.41 (Neutral) by 0400 GMT. Investors’ attention will remain on the U.S. fundamental drivers, as the UK economic calendar remains absolutely data empty. Immediate resistance is located at 1.2936 (5-DMA), a break above could take it near 1.2987 (May 10 High). On the downside, support is seen at 1.2849 (Previous Session Low), a break below targets 1.2800. Against the euro, the pound traded down at 84.33 pence, having hit a low of 84.51 the day before.

AUD/USD: The Australian dollar edged up but was still within reach of a four-month trough touched earlier in the week and on track for its seventh weekly loss in eight. The Aussie trades up at 0.7379, having hit a low of 0.7328 on Tuesday, it’s weakest since Jan. 1. FxWirePro’s Hourly Aussie Strength Index stood at 74.06 (Bullish) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of the U.S economic releases. Immediate support is seen at 0.7350, a break below targets 0.7328 (May 9 Low). On the upside, resistance is located at 0.7414 (61.8 retracements of 0.7556 and 0.7328), a break above could take it near 0.7441 (50.0% retrace).

NZD/USD: The New Zealand dollar continued to fall, having declined to an almost one-year low on Thursday after the Reserve Bank of New Zealand held to a neutral bias on policy, keeping interest rates steady at a record low 1.75 percent. The Kiwi trades 0.1 percent down at 0.6840, having touched a low of 0.6817 the day before, its weakest since Jun. 03. FxWirePro’s Hourly Kiwi Strength Index was at -76.57 (Slightly Bearish) by 0400 GMT. Investors’ will continue to track sentiments around the commodity bloc, ahead of the U.S. economic data. Immediate resistance is located at 0.6868 (61.8% retracement of 0.6950 and 0.6817), a break above could take it near 0.6894 (10-DMA). On the downside, support is seen at 0.6817 (Previous Session Low), a break below could drag it till 0.6800.

Equities Recap

Asian shares rose and were on track for weekly gains, while greenback slightly edged down on U.S. political turbulence.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.1 percent.

Tokyo’s Nikkei fell 0.6 percent to 19,846.42 points, Australia’s S&P/ASX 200 index eased 0.8 percent to 5,828.10 points and South Korea’s KOSPI lost 0.5 percent at 2,285.32 points.

Shanghai composite index edged up 0.5 percent to 3,077.38 points, while CSI300 index was trading 0.6 percent higher at 3,376.68 points.

Hong Kong’s Hang Seng was trading 0.1 percent higher at 25,148.79 points. Taiwan shares shed 0.3 percent to 9,968.81 points.

Commodities Recap

Crude oil prices steadied, after rising to a 1-week high in the previous session as traders expect OPEC-led production cuts to extend beyond the middle of this year. International benchmark Brent crude was trading 0.2 percent up at $50.83 per barrel by 0403 GMT, having hit a high of $51.13 on Thursday, its strongest since May. 3. U.S. West Texas Intermediate rallied 0.2 percent at $47.90 a barrel, after rising as high as $48.19 the day before, its highest since May. 3.

Gold prices rose, extending gains for a second straight session as political uncertainty in the United States pressured the dollar. Spot gold rose 0.2 percent to $1,226.38 per ounce at 0408 GMT, having hit an eight-week low of $1,214.13 an ounce on Tuesday. U.S. gold futures were up 0.2 percent at $1,226.60 an ounce.

Treasuries Recap

The 10-year U.S treasury yield stood at 2.378 percent lower by 0.022 bps, while 5-year yield was 0.016 bps down at 1.909 percent.

The Australian government bonds jumped, tracking U.S. Treasuries, following a positive rebound in the latter’s producer prices, released yesterday. The yield on the benchmark 10-year Treasury note plunged nearly 3 basis points to 2.64 percent, the yield on 15-year note also slumped 3 basis points to 3.04 percent and the yield on short-term 2-year also traded 2-1/2 basis points lower at 1.66 percent.

The New Zealand 10-year bond yields hit over 3-week low as investors poured into safe-haven assets amid ongoing political and global financial uncertainties. At the time of closing, the yield on the benchmark 10-year bond slumped 6-1/2 basis points to 2.99 percent, the yield on 7-year note also plunged 6-1/2 basis points to 2.65 percent and the yield on the short-term 2-year note too traded 6 basis points lower at 1.98 percent.

The Canadian government bond prices were higher across the yield curve, with the two-year up 2.5 Canadian cents to yield 0.709 percent and the 10-year rising 28 Canadian cents to yield 1.608 percent. The spread between the lower yield on 2-year Canadian bonds versus their U.S. equivalent is near its widest since 2007.

The material has been provided by InstaForex Company – www.instaforex.com