Easing tensions over the US-China trade dispute boosted the appetite for risk assets across the financial markets in Asia at the start of a brand new week. Across the fx board, the US dollar extended its upsurge and posted fresh five-month highs versus its main competitors.
The Yen emerged the weakest in Asia, having faced double-whammy amid risk-on markets profile. The Kiwi extended loses below the 0.69 handle following New Zealand’s retail sales miss while the Aussie bucked the trend and advanced above 0.7500 levels, tracking higher copper and oil prices. The common currency and pound were sold-off into broad-based US dollar strength while political drama continued to drive the sentiment around both the currencies.
Main topics in Asia
US' Mnuchin, Lighthizer deliver conflicting messages on China - WSJ
As reported by The Wall Street Journal, this weekend saw mixed messages from the US Treasury Secretary Steven Mnuchin and the US Trade Representative Robert Lighthizer regarding the US-China trade standoff.
NZ: Weaker retail spending numbers - Westpac
Satish Ranchhod, Senior Economist at Westpac, explains that it was a soft start to the year for New Zealand’s retail spending as after adjusting for price changes, retail spending was essentially flat over the March quarter.
US fiscal outlook has some alarming points - Goldman Sachs
Goldman Sachs' analysts delivered a weekend note on the United States' fiscal outlook, which carries some worrisome projections looking forward.
US stock futures jump, Nikkei flashes green on easing US-China trade tensions
US stock futures picked up a bid on Monday as China and US agreed to halt imposing punitive import tariffs.
Japan's trade surplus with the US rose 4.7 percent in April
Japan logged a trade surplus of JPY 615.7 billion with the US in April - up 4.7 percent year-on-year as exports rose 4.3 percent year-on-year in April, faster than a 0.2 percent annual increase in March, according to Reuters.
Venezuela’s Nicolas Maduro wins the presidential election - Bloomberg
Bloomberg is out with the breaking news, citing that Venezuela’s Nicolas Maduro wins the presidential election for another six-year term.
5-Star, League want ECB to forgive €250 billion of Italy debt
The anti-establishment 5-Star Movement and far-right Northern League plan to ask the European Central Bank (ECB) to forgive €250 billion of Italian debt.
Nicole Sturgeon to "restart" the debate on Scottish independence in the coming weeks
Scotland's Prime Minister Nicola Sturgeon has said she will "restart" the debate on Scottish independence in the coming weeks, according to The Independent.
Key Focus ahead
Most major European markets remain closed today in observance of Whit Monday, leaving the fx pairs at the mercy of the US dollar dynamics and broader market sentiment. However, the ECB Financial Stability Review and Bundesbank monthly report will offer some trading incentives to the market. The NA session also remains data-quiet, with Canada on Victoria Day holiday while the US docket has nothing to report, except for a slew of speeches by the FOMC members Bostic, Kashkari and Harker.
Also, in focus remains the Oil and Petroleum Exporting Countries’ (OPEC) Joint OPEC-Non-OPEC Ministerial Monitoring Committee (JMMC) meeting, which will be held later on Monday.
EUR/USD closed below 76.4% Fib despite oversold conditions, focus on Italy
The EUR/USD closed below 1.1790 - 38.2 percent Fibonacci retracement on Friday and dipped to a fresh four-month low of 1.1744, despite the oversold conditions as shown by the RSI.
The week is starting off on a quiet note for the Sterling, although Wednesday will be bringing Inflation Report Hearings at 08:00 GMT, followed by Retail Sales on Thursday.
This week should be all about contesting and consolidating last week’s significant breakouts in 10 year UST, EURUSD, USDJPY and Oil Prices.
The week ahead data preview: eyes on FOMC minutes - Nomura
Analysts at Nomura explained their outlook for the week's key events coming up.
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EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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