Spot values at a glance:
Asian equities rose after Chinese manufacturing data exceeded estimates while the British pound fell for the first time this week as a poll showed Theresa May’s Conservative Party may miss a majority in next week’s election. Gold and crude oil extended declines.
- The Fed’s preferred price measure, the PCE deflator, rose 1.7% year-on-year in April, down from a 1.9% increase in Match and 2.1% in February; analysts were predicting a 1.7% rise. On a month-to-month basis, the PCE deflator gained 0.2%, matching estimates.
- According to A Bloomberg news report, while the shortfall in inflation isn’t expected to prevent central bankers from raising interest rates next month, a sustained stall would make to more difficult for Chair Janet Yellen to follow through with another rate hike later in the year, as their March predictions indicated.
- Both personal income and spending gained 0.4% in April, matching respective consensus estimates.
- US President Donald Trump has blasted Germany again, over trade and defense, commenting that the US has a “massive trade deficit with Germany” and that the Germans “pay far less than then should on NATO and military”.
- Federal Reserve Governor Lael Brainard said the time for a change in the central bank’s balance sheet policy is “coming into clearer view” as the normalization of fed funds rate approaches a range that can be considered “well under way”. She added it is appropriate to bring the fed funds rate to neutral level “soon”.
- The US dollar pared an overnight decline, with the Bloomberg Dollar Spot Index gaining 0.1% earlier today. Barring a last minute reprieve, the US dollar gauge looks poised to log its third straight monthly decline; that would match its 2 longest slumps since early 2011.
- The benchmark 10yr Treasury yield gained 1bp to 2.22% earlier, paring an overnight decline of 4bps which was a result of the Fed’s Brainard indicating softness in last night’s core inflation.
- US equities ended slightly lower, with the S&P 500 Index falling 0.1% to snap a 7-day winning streak. Amazon.com broke above the $1,000-mark on an intraday basis, underscoring the continuing divide between technology-related equities and everything else.
- German CPI in April rose 1.5% from a year ago, slowing from the prior rise of 2.0% and missing the median estimate of 1.6%.
- Spanish CPI over the same period gained 1.9%, decelerating from 2.6% in the month prior, and missing the expected rise of 2.1%.
- The French economy expanded 1.0% year-on-year and 0.4% quarter-on-quarter during the first 3 months of this year, beating estimates of 0.3% and 0.8% respectively.
- A YouGov pol in the Times showed the ruling Conservatives may lose 20 seats at the June 8 election while the main opposition Labour Party could gain 28. They survey cast doubts over whether PM May will be able to hold on to her majority in the Houses of Parliament, let alone increase it.
- Manufacturing PMI in May remained at 51.2 for a second straight month in May, compared with a median estimate of 51.0. Non-manufacturing PMI rose to 54.5, from 54.0 last month.
- Industrial production in April rose 4.0% month-on-month and 5.7% year-on-year, missing estimates of 4.2% and 6.1% respectively.
- Australia’s dollar is the worst-performing major developed currency in the past 3 months and the country’s equity market is among the world’s weakest this year. As key export iron ore tumbles at the fastest pace since 2008, swap traders have switched from betting the RBA will raise rates by year’s end to pricing in about a one in five chance for a rate cut instead.
- Wages in Singapore grew last year at the slowest pace since the 2009 global financial crisis, reflecting a weak labor market and sliding profits. Including employers’ pension contributions, workers’ total pay rose 3.1% in 2016, down from 4.9% the previous year, the Ministry of Manpower said in a report.
- Spot gold fell 0.3% to $1,259.48/Oz, and looks set to decline a second day after US income and consumer spending improved, signalling a second quarter rebound that is on track.
- After consolidating between the $1,250/Oz and $1,260/Oz handles, last Friday’s break above $1,260/Oz may signal further upside for the yellow metal.
- From a technical analysis point-of-view, a golden cross has formed and could be a bullish signal. A golden cross is formed when the 50-day moving average crosses above the 200-day moving average, and has only occurred 4 times in the past 5 years for gold and typically marks a multi-week trend.
- Silver for immediate delivery declined after reaching a 1-month high yesterday, falling 0.5% to $17.2233/Oz earlier today.
- Crude oil futures expiring in July slipped 0.8% to $49.27/bbl, as investors weigh resilient US supplies against prolonged output cuts from OPEC and its allies.
- While US crude stockpiles are forecast to have extended declines for an eighth week, American drillers continue to add rigs to shale fields. The OPEC-led deal to reduce production has helped to “stabilize the situation on the world hydrocarbons market”, Russia President Vladimir Putin said at a meeting in Moscow with Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman.
- Spot 1.3853
- USDSGD declined 0.2% to 1.3839 earlier in the session. The pair has been consolidating between 1.3800 and 1.3900 over the past week.
- The resistance at 1.3918 remains. To the downside, a break below 1.3800 and the next level of 1.3725 may be tested soon.
- Spot 0.7453
- AUDUSD gained by as much as 0.4% to 0.7476, following better-than-expected Chinese PMI data released earlier.
- Spot 1.3460
- USDCAD erased earlier gains late last night, and continues to be little changed earlier today, despite an earlier fall in crude oil prices.
- The pair has been moving in a tight trading range ahead of the next 3 days where a deluge of US and Canadian data is expected.
- Spot 6.8087
- The PBOC strengthened its fixing earlier today by 0.09%, to 6.8633 to a US dollar.
- USDCNH fell 0.3% to 6.8077, and looks likely to test the key level of 6.8000 again.
- Spot 111.10
- USDJPY rose 0.2% to 111.24, recovering back above the 111 handle amid US dollar buying across the board today.
- The 115 handle is expected to be a region of resistance, while the 200-day moving average of 110 is likely to provide support.
- Spot 1.2823
- GBPUSD declined 0.5% to 1.2792, as anxieties surrounding the outcome of the UK general election heightened after a poll showed Theresa May’s Conservative Party may lose its majority by 16 seats.
- With a decline back below the key 1.3000 level, an 11-week rally in GBPUSD looks poised to come to an end should the pair breach back below 1.2800.