Posted at 23 May 2019 / Categories Market Roundups
Market Roundup
Economic Data Ahead
Key Events Ahead
FX Beat
DXY: The dollar index surged to a near 4-week peak after the U.S. Federal Reserve officials at their last meeting agreed that their current patient approach to setting monetary policy could remain in place for some time. The greenback against a basket of currencies traded 0.1 percent up at 98.19, having touched a high of 98.26 earlier, its highest since April 26. FxWirePro's Hourly Dollar Strength Index stood at 32.90 (Neutral) by 1000 GMT.
EUR/USD: The euro declined to a 4-week low after data showed German business morale deteriorated more than expected in May due mainly to a fall in services sector confidence. Additionally, the European parliamentary elections are due to begin, with eurosceptic parties expected to poll well. The European currency traded 0.2 percent down at 1.1133, having touched a low of 1.1129 earlier, its lowest since Apr. 26. FxWirePro's Hourly Euro Strength Index stood at -44.21 (Neutral) by 1000 GMT. Immediate resistance is located at 1.1218 (May 7 High), a break above targets 1.1262 (April 22 High). On the downside, support is seen at 1.1118 (April 25 Low), a break below could drag it below 1.1100.
USD/JPY: The dollar eased to a 3-day low below the 110.00 handle, as the latest round of U.S.-China trade dispute and a soft set of business surveys dented investors' risk appetite. The major was trading 0.3 percent down at 110.04, having hit a high of 110.67 on Tuesday, its highest since May 7. FxWirePro's Hourly Yen Strength Index stood at 32.90 (Neutral) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. unemployment benefit claims, Markit prelim PMI's, home sales and speeches by Fed Kaplan, Daly, Bostic and Barkin. Immediate resistance is located at 110.68 (61.8% retracement of 111.68 and 109.01), a break above targets 111.11 (78.6% retracement). On the downside, support is seen at 109.80 (May 20 Low), a break below could take it lower at 109.47 (May 10 Low).
GBP/USD: Sterling plunged to a fresh 4-1/2 month low, as pressure mounted on Prime Minister Theresa May to name a date for her departure after her final attempt to secure a Brexit deal failed to win over lawmakers. The major traded 0.1 percent down at 1.2647, having hit a low of 1.2605 earlier; it’s lowest since Jan. 3. FxWirePro's Hourly Sterling Strength Index stood at -55.97 (Bearish) 1000 GMT. Immediate resistance is located at 1.2726 (23.6% retracement of 1.3047 and 1.2624). a break above could take it near 1.2788 (38.2% retracement). On the downside, support is seen at 1.2570 (Dec. 17 Low), a break below targets 1.2529 (Dec. 14 Low). Against the euro, the pound was trading 0.05 percent down at 88.06 pence, having hit a low of 88.39 on Wednesday, it’s lowest since Feb. 14.
USD/CHF: The Swiss franc rose, extending previous session gains, as persistent U.S.-China trade fears and Brexit concerns supported risk aversion. The major trades 0.1 percent down at 1.0083, having touched a low of 1.0066 on Wednesday; it’s lowest since May 15. FxWirePro's Hourly Swiss Franc Strength Index stood at 87.90 (Slightly Bullish) by 1000 GMT. On the higher side, near-term resistance is around 1.0159 (Apr. 18 High) and any break above will take the pair to next level till 1.0196 (May 6 High). The near-term support is around 1.0049 (May 13 Low), and any close below that level will drag it till 1.0000.
Equities Recap
European shares plunged as concerns grew that the China-U.S. trade conflict was turning into a technology cold war between both the economies.
The pan-European STOXX 600 index tumbled 1.6 percent at 373.33 points, while the FTSEurofirst 300 index slumped 1.5 percent to 1,470.32 points.
Britain's FTSE 100 trades 1.4 percent down at 7,233.81 points, while mid-cap FTSE 250 fell 1.4 to 19,045.74 points.
Germany's DAX declined 1.9 percent at 11,939.78 points; France's CAC 40 trades 1.8 percent lower at 5,281.63 points.
Commodities Recap
Crude oil prices plunged to a 2-week trough amid surging U.S. crude inventories as ample supply and weak refinery data weighed on demand. International benchmark Brent crude was trading 1.5 percent lower at $69.78 per barrel by 1028 GMT, having hit a high of $73.39 on Monday, its highest since Apr, 26. U.S. West Texas Intermediate was trading 1.6 percent down at $60.34 a barrel, after rising as high as $63.79 on Monday, its highest since the May 1.
Gold prices rose after falling for seven straight sessions, as simmering U.S.-China trade tensions and the minutes of the U.S. Federal Reserve meeting indicating that rates will remain unchanged underpinned the dollar. Spot gold was trading 0.3 percent up at $1,276.48 per ounce by 1033 GMT, having touched a low of $1,269.41 on Tuesday, its lowest since May 3. U.S. gold futures were unchanged at $1,274.20.
Treasuries Recap
The yields on the U.S. 2-year Treasuries were at 2.237 percent, while 10-year U.S. Treasury yields tumbled to 2.35 percent, their lowest level in almost two months.
The German 10-year bond yield fell further into negative territory after a survey indicated that business activity in the eurozone was weaker than expected in May. German 10-year government bond yield fell three basis points to minus 0.112 percent, sliding back down towards recent 2-1/2 year lows of minus 0.132 percent, while French 10-year yields fell to 0.29 percent, down two basis points, with yields across the bloc 2-3 bps lower on the day.
The Britain 10-year bond yield fell to 0.98 percent, its lowest level since late March.
The Japanese government bond prices edged higher, with the five-year and 10-year JGB yields each declining 0.5 basis point to minus 0.170 percent and minus 0.060 percent, respectively. The 30-year yield also fell half a basis point to 0.515 percent.