Posted at 03 June 2019 / Categories Market Roundups
Market Roundup
• Mexico draws red line on asylum in talks to stop Trump tariffs
• Pompeo says U.S. trying to level the playing field with China
• Mounting trade concerns pull dollar lower against yen, franc
• US May ISM Manufacturing PMI, 52.1, 53.0 forecast, 52.8 previous
• US May Markit Mfg PMI Final, 50.5, 50.6 previous
• US Apr Construction Spending MM, 0.0%, 0.4%, forecast, -0.9% previous
• US May ISM Mfg Prices Paid, 53.2, 52.0 forecast, 50.0 previous
• US May ISM Manuf Employment Idx, 53.7, 52.5 forecast, 52.4 previous
• CA May Markit Mfg PMI SA, 49.1, 49.7 previous
Looking Ahead - Economic Data (GMT)
• 3 June 22:45 New Zealand Q1 Terms of Trade QQ, 1.0% forecast, -3.0% previous
• 4 June 01:30 Australia Q1 Current Account Balance, A$ -2.5 bln forecast, A$ -7.2 bln previous
• 4 June 01:30 Australia Q1 Net Exports Contribution, 0.2% forecast, -0.2% previous
• 4 June 01:30 Australia Apr Retail Sales MM, 0.2% forecast, 0.3% previous
• 4 June 01:30 Australia Jun RBA Cash Rate, 1.25% forecast, 1.50% previous
Looking Ahead - Events, Other Releases (GMT)
• 12:00 Federal Reserve Bank of Chicago President Charles Evans is interviewed live on CNBC's "Squawk Box"
• 12:30 Federal Reserve Bank of New York President John Williams speaks in New York
• 13:55 Federal Reserve Chairman Jerome Powell speaks in Chicago
Currency Summaries
EUR/USD: The euro strengthened against dollar on Monday, as traders pared greenback holdings after St. Louis Federal Reserve President James Bullard said an interest rate cut "may be warranted soon," given the rising economic risk posed by global trade tensions as well as weak U.S. inflation.Bullard said that while the Fed cannot respond to every change in the rapidly evolving trade feud, recent events like the unexpected announcement of new tariffs on Mexican imports have created an environment of elevated uncertainty, that could feed back to U.S. macroeconomic performance as the global economy slows. At (2016 GMT), the euro was up 0.66 percent at $1.1242. Immediate resistance can be seen at 1.1257 (Higher Bollinger band), an upside break can trigger rise towards 1.1300 (Psychological level).On the downside, immediate support is seen at 1.1183 (21 DMA), a break below could take the pair towards 1.1210 (50 DMA).
GBP/USD: The pound strengthened against greenback on Monday, as investors dumped riskier assets as heightened Sino-U.S. trade tensions and Washington's threat of tariffs on Mexico stoked worries of a global recession. Tensions between the United States and China escalated during the weekend as the two countries clashed over trade, technology and security. A senior Chinese official and trade negotiator said on Sunday the United States cannot use pressure to force a trade deal on China, refusing to be drawn on whether the leaders of the two countries would meet at the G20 summit to work out an agreement later this month. At (GMT 2108), sterling was last trading at $1.2662, up 0.01 percent on the day. Immediate resistance can be seen at 1.2671 (9 SMA), an upside break can trigger rise towards 1.2780 (20 DMA).On the downside, immediate support is seen at 1.2500 (Psychological level), a break below could take the pair towards 1.2474 (Lower Bollinger Bands).
USD/CAD: The Canadian dollar strengthened to a nearly one-week high against its U.S. counterpart on Monday, as rising expectations of a Federal Reserve interest rate cut this year weighed on the greenback.The U.S. dollar tumbled against a basket of major currencies after St. Louis Federal Reserve President James Bullard said an interest rate cut "may be warranted soon," given the rising economic risk posed by global trade tensions as well as weak U.S. inflation. The Canadian dollar was trading 0.6% higher at 1.3441 to the greenback, or 74.40 U.S. cents. The currency, which fell in May for the fourth straight month, touched its strongest level since last Tuesday at 1.3435. Immediate resistance can be seen at 1.3535 (Higher Bollinger Bands), an upside break can trigger rise towards 1.3565 (May 31st high).On the downside, immediate support is seen at 1.3416 (50 DMA), a break below could take the pair towards 1.3385 (20 DMA).
USD/JPY: The dollar weakened against the Japanese yen on Monday, as U.S. President Donald Trump's hard stance on trade broadened to countries beyond China, stoking investor demand for safe-haven assets. With trade issues remaining front-and-centre, investor appetite for risk has been dampened by fears of a global growth slowdown that has helped stoke demand for government debt and triggered an equity sell-off. The yen is considered a safe haven asset in times of geopolitical and financial turmoil as Japan is the world's biggest creditor nation. The dollar was 0.20 percent lower versus the Japanese yen at 108.07. Strong resistance can be seen at 108.93 (5 DMA), an upside break can trigger rise towards 109.47 (11 DMA).On the downside, immediate support is seen at 107.81 (38.2 % retracement level), a break below could take the pair towards 107.30 (23.6 % retracement level).
Equities Recap
European shares recovered from early losses to end Monday higher as gains in healthcare stocks helped head off weakness in trade-sensitive sectors like technology after the latest twist in the U.S.-China trade war.
The UK's benchmark FTSE 100 closed down by 0.4 percent, FTSEurofirst 300 ended the day up by 0.35 percent, Germany's Dax ended up by 0.5 percent, and France’s CAC finished the up by 0.6 percent.
The three major U.S. stock indexes declined on Monday on weaker-than-expected economic data, while shares of Alphabet, Facebook and Amazon.com fell sharply on fears the companies are the targets of U.S. government antitrust regulators, putting pressure on the tech-laden Nasdaq.
Dow Jones closed down by 0.02 percent, S&P 500 ended down 0.30 percent, Nasdaq finished the day down by 1.66 percent.
Treasuries Recap
U.S. Treasury yields fell to their lowest levels since September 2017 on Monday,as investors piled more cash into low-risk debt to seek protection from market volatility due to growing trade conflicts between the United States and its trade partners.
The benchmark 10-year Treasury yields fell 6.10 basis points to 2.081% after hitting 2.071%, their lowest level since September 2017. Ten-year yields were set for their biggest two-day fall in just over a year.
Two-year yields declined 10.20 basis points to 1.842%. They touched 1.838% earlier Monday, which was their lowest since December 2017.
Commodities Recap
Gold climbed more than 1.5% on Monday to its highest level in more than three months on concerns that U.S.-Chinese trade tensions and Washington's threat of tariffs on Mexico would hurt the global economy.
Spot gold climbed 1.4% to $1,323.62 per ounce by (1826 GMT), after rising as much as 1.6% to its highest price since Feb. 28 at $1,325.72.U.S. gold futures settled up 1.28% at $1,327.90 an ounce.
Oil fell on Monday as U.S. trade disputes with Mexico and China deepened concerns about weakening global crude demand, while a slump in equities also weighed on crude futures.
Brent crude futures settled at $61.28 a barrel, losing 71 cents, or 1.2%. U.S. West Texas Intermediate (WTI) crude ended 25 cents, or 0.5%, lower at $53.25 a barrel.