Forex today was mainly driven by the Euro rebound from half-year troughs, as the EUR bulls were rescued by the Italian politics. The rejection of the Eurosceptic Italian Economy Minister and the resultant failure to form the coalition government turned out to be EUR supportive. Subsequently, the US dollar was aggressively sold-off across the board, offering some lift to most majors while easing US-North Korea risks also boosted the sentiment around the Antipodeans.
However, USD/JPY traded listlessly around 109.40 levels amid a lack of fresh catalysts and cautious ahead of the key US jobs data due later this week. The Asian markets also failed to benefit from easing geopolitical tensions, as tumbling oil prices, in the wake of potential output ramp up, dragged the energy and resources stocks lower on the indices. Meanwhile, gold prices on Comex consolidated in a tight range below the $ 1300 mark heading into holiday-thinned trading.
Main topics in Asia
Italy's attempt to form government fails as President sides with the Euro - Reuters
US-North Korea summit preparations are moving forward - Reuters
UK's Boris Johnson calls for Britain to leave EU customs union - The Telegraph
UK's preparations for a 'no-deal Brexit' have come to a halt - Financial Times
Moody's places Italy on downgrade watch, Baa2 rating threatened
Oil on the way down again, WTI hits $66.00 as production increases scuttle the bull trend
PBOC hikes 28-day reverse repo rates by 5 bps
N Korean delegates head for Singapore today - Yonhap
Asia stocks middle on the week, Japan's Nikkei 225 gaps into ¥22,500.00
Key Focus ahead
It’s a holiday-thinned light trading session today for the traders, as the UK and US observe the Spring Day and Memorial Day holiday respectively. Hence, markets will be left at the mercy of illiquid trades and developments surrounding the Italian politics while any latest updates on the US – North Korea Summit could also have a significant bearing on the US dollar trades, as the main focus remains on this Friday’s US non-farm payrolls release for fresh outlook on the US interest rates.
In the meantime, we have a second-liner Swiss employment data due for release today at 0715 GMT, which will offer some incentives to the investors. Also, the oil-price action and risk trends will play a key role heading into a quiet trading session.
EUR/USD looks to extend the bounce above 1.1700, Italian politics in focus
The EUR/USD pair opened the NFP week with a bullish gap of 35-pips and extended the rebound from six-month lows of 1.1646 well above the 1.1700 levels on the back of weekend’s news that the attempts at forming a coalition between the Five Star Movement and League have failed.
GBP/USD dovetailing into 1.33 as Sterling eyes a thin week
The UK is on holidays for Monday for the Spring Bank Holiday, pulling a long weekend and giving the new trading week a quiet start. The first macro release for the UK won't be hitting until late Wednesday.
Buckle in for an action-packed holiday-shortened week
Buckle in for an action-packed holiday-shortened week brimmed with essential events, none more significant than the May employment report particularly in light of the recent dovish conversation on wage growth in the May 2 FOMC minutes.
The week ahead: eyes turn to nonfarm payrolls - Nomura
Analysts at Nomura highlight the key scheduled data events for the week ahead.
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