Sample Category Title

Asia Mid-Session Market Update: Japan manufacturing PMI slows to 6-month low; 19 killed in UK explosion investigated as terror attack

US Session Highlights

OPEC Sec Gen Barkindo: within OPEC and other oil-producing countries reached a growing consensus to extend production cuts

(US) Apr Chicago Fed National Activity Index: 0.49 v 0.10e

(IR) Iran President Rouhani: Iran will test missiles when needed and will continue ballistic missiles program; will not seek US approval to conduct tests

Stock continued to rise for a third consecutive day to start the week on a positive note. Investors were bullish, and the VIX fell back into the ~10.00 range. However, there was a sign of caution, as 10-year Treasury yields were only up 1.5bps as investor show no hurry to get rid of haven assets just yet, and the reflation trade takes a subdued tone. Best performing sectors in the S&P were Technology and Utilities, up 0.8% and 0.9% respectively.

US markets on close: Dow +0.4%, S&P500 +0.5%, Nasdaq +0.8%

Best Sector in S&P500: Technology

Worst Sector in S&P500: Energy

Biggest gainers: BRO +7.5%; QRVO +3.4%; ADSK +3.1%

Biggest losers: AAP -2.7%; TRIP -2.5%; MNK -2.5%

At the close: VIX 10.9 (-1.1pts); Treasuries: 2-yr 1.28% (flat), 10-yr 2.25% (+1bps), 30-yr 2.92% (+1bps)

US movers afterhours

A: Reports Q2 $0.58 adj v $0.48e, R$1.10B v $1.05Be; Guides Q3 $0.49-0.51 v $0.53e, R$1.06-1.08B v $1.08Be; +5.0% afterhours

TTWO: Weakness attributed to tech blog report 'Red Dead Redemption 2' release delayed to next year; Launch had been expected this fall; -8.2% afterhours

Key economic data

(JP) JAPAN MAY PRELIMINARY PMI MANUFACTURING: 52.0 V 52.7 PRIOR (6-month low; 9th consecutive expansion)

(AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 110.5 v 109.4 prior

(KR) South Korea Q1 Household Debt (KRW) q/q: 1.36T v 1.34T prior (fresh record high)

Asia Session Notable Observations, Speakers and Press

Asia indices trading mixed and US/Europe futures are slightly lower amid geopolitical concerns in UK and US. An explosion at a concert stadium in Manchester arena left 19 people killed and over 50 injured. Local police continues to investigate the cause of the explosion with a possible link to terror activity and a range of speculation in the media - from exploded transformer to a suicide nail bomb. Stateside, Washington Post reported that Pres Trump may have made requests back in March that Director of National Intelligence Coats and NSA director Rogers formally deny links between the Trump campaign and Russia. Report goes on to say that Rogers documented this contact in an internal memo which may be available to the special counsel and congressional investigators.

Also of note in US, White House summary documents disclosed the outline of Trump's budget proposal seeking $3.6T in cuts over the next 10 years. Military spending benefits at the expense of social program cuts targeting food stamps and Medicaid. The budget also outlines fairly rosy forward growth projections, with 2018 GDP seen at 2.4%, 2019 at 2.7% and 2021-and-beyond growth at 3% or more.

In FX, modest risk-off flows boosted JPY along with overall renewed selling in USD. USD/JPY fell as much as 50pips below 110.90, while AUD/USD and NZD/USD saw 3-week and 4-week highs respectively around 0.75 and 0.70.

In economic data, Japan flash May manufacturing PMI expanded for 9th straight month but also registered a 6-month low. Output, New orders, and employment components were all at Nov-lows, while input and output prices grew at a slower rate. Markit economist noted “wait-and-see” attitudes amongst clients, excess warehouse inventories undermining expansion.

China

(CN) PBOC Advisor Sheng Songcheng: Monetary policy adjustments is a trial and error process; The central bank will not excessively adjust monetary policy - China press

(CN) China insurance regulator CIRC: Insurers' risks are controllable; to increase risk analysis and checks - press

(CN) Various Chinese companies cancel planned bond sales on market volatility – US financial press

Japan

(JP) Japan said to target large increase in use of generic drugs - press

(JP) Japan Fin Min Aso: Will send a strong message about free trade at G7

BOJ likely to maintain JGB buying targets with yields moving closer to central bank's target - Nikkei

Australia

(AU) S&P: Number of delinquent loans underlying prime RMBS declined in Mar to 1.16% from 1.23% in Feb - press

Korea

(KR) S&P to visit South Korea as part of an annual review of the sovereign rating this week

(KR) South Korea denies JoongAng Ilbo report that President Moon Jae-in has written Pope Francis a letter asking him to mediate a summit between South Korea and North Korea

Asian Equity Indices/Futures (00:30ET)

Nikkei -0.1%, Hang Seng +0.3%, Shanghai Composite -0.1%, ASX200 -0.2%, Kospi +0.8%

Equity Futures: S&P500 -0.1%; Nasdaq -0.1%, Dax -0.1%, FTSE100 -0.1%

FX ranges/Commodities/Fixed Income (00:30ET)

EUR 1.1230-1.1255; JPY 110.85-111.35; AUD 0.7465-0.7505; NZD 0.6990-0.7020

June Gold flat at 1,262/oz; July Crude Oil -0.4% at $50.95/brl; July Copper -0.7% at $2.59/lb

SPDR Gold Trust ETF daily holdings rise 1.8 tonns to at 852.5 tonne; 1st increase since Apr 24th

(CN) PBOC SETS YUAN MID POINT AT 6.8661 V 6.8673 PRIOR; 2nd straight firmer Yuan fix

(CN) PBOC to inject combined CNY140B v CNY40B prior

Asia equities notable movers

Australia

OFX Group (OFX) +15.2%; Reports FY17

Woodside Petroleum (WPL) +0.3%; investor day comments

Japan

Sony (6758) +0.7%; Investor relations day comments

Fujifilm (4901) -1.2%; To further delay release of FY16/17 results

Hong Kong

Tai Ping Carpets (146) +4.3%; Strategic review update

Vanke (2202) +1.3; To spend CNY5B to form 2 investment funds with China Merchants Bank

Tingyi Holding (322) -3.4%; Reports Q1

Tongda Group (698) -17.1%; Weakness attributed to shorts targeting the company

For the 24 hours to 23:00 GMT, the AUD rose 0.17% against the USD and closed at 0.7453.

LME Copper prices rose 1.45% or $81.0/MT to $5677.0/MT. Aluminium prices rose 0.26% or $5.0/MT to $1943.0/MT.

In the Asian session, at GMT0300, the pair is trading at 0.7496, with the AUD trading 0.58% higher against the USD from yesterday's close.

The pair is expected to find support at 0.7436, and a fall through could take it to the next support level of 0.7418. The pair is expected to find its first resistance at 0.7467, and a rise through could take it to the next resistance level of 0.7480.

Moving forward, Australia's Westpac leading index for April, due for release overnight, will be closely assessed by traders.

The currency pair is trading between its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the EUR rose 0.44% against the USD and closed at 1.1240, after German Chancellor, Angela Merkel, blamed the European Central Bank's (ECB) ultra-low interest rates and its quantitative easing programme for weakness in the Euro. However, she admitted that Germany's trade exports have gained huge benefits from a weaker Euro.

In economic data, the Chicago Fed national activity index rose more than expected to 0.49 in April, hitting a three-year high level, suggesting an increase in production and hiring activity following a subdued first quarter. Investors had expected the index to rise to a level of 0.10 from 0.07 recorded in the previous month.

Meanwhile, the Federal Reserve Bank of Minneapolis President, Neel Kashkari, stated it is wrong to believe that the US Fed's monetary policy can solve all the economic problems.

Separately, Federal Reserve Board Governor, Lael Brainard, commented that it is still not clear whether the nation's economy is at full employment or there is still more slack left in the labour market.

In the Asian session, at GMT0300, the pair is trading at 1.1250, with the EUR trading 0.09% higher against the USD from yesterday's close.

The pair is expected to find support at 1.1185, and a fall through could take it to the next support level of 1.1121. The pair is expected to find its first resistance at 1.1289, and a rise through could take it to the next resistance level of 1.1329.

Going forward, the preliminary manufacturing and services PMI data across the Euro-zone, both for May, slated for today, will be closely watched by market participants. Additionally, data on Germany's GDP growth for the first quarter and the Ifo survey for May, will be on investors' radar. Moreover, the US Markit manufacturing and services PMI data for May, along with new home sales figures for April, scheduled later in the day, will also garner a lot of market attention.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the GBP rose 0.08% against the USD and closed at 1.3003.

Meanwhile, latest polls showed that the UK Prime Minister, Theresa May's lead over her opposition leaders had narrowed to nine points from around 20 points, ahead of the general elections due to take place on 8 June.

In the Asian session, at GMT0300, the pair is trading at 1.2987, with the GBP trading 0.12% lower against the USD from yesterday's close.

The pair is expected to find support at 1.2952, and a fall through could take it to the next support level of 1.2918. The pair is expected to find its first resistance at 1.3032, and a rise through could take it to the next resistance level of 1.3078.

Ahead in the day, investors will look forward to UK's public sector net borrowings data for April and Inflation report hearings for further direction.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0.12% against the JPY and closed at 111.32.

Overnight data showed that Japanese manufacturing activity dipped to 52.0 in May from 52.7 reported in the prior month, thereby expanding at the slowest pace in six months as export orders slowed.

In the Asian session, at GMT0300, the pair is trading at 111.17, with the USD trading 0.13% lower against the JPY from yesterday's close.

The pair is expected to find support at 111.11, and a fall through could take it to the next support level of 110.9. The pair is expected to find its first resistance at 111.55, and a rise through could take it to the next resistance level of 111.78.

Looking ahead, investors will concentrate on a speech by the Bank of Japan's (BoJ) Governor, Haruhiko Kuroda, scheduled at night, to get his views on economy.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0% against the CHF and closed at 0.9739.

On macro front, Switzerland's total sight deposits rose to a level of CHF575.5 billion in the week ended 19 May, from a level of CHF575.0 billion in the previous week.

In the Asian session, at GMT0300, the pair is trading at 0.9725, with the USD trading 0.14% lower from yesterday's close.

The pair is expected to find support at 0.9728, and a fall through could take it to the next support level of 0.9716. The pair is expected to find its first resistance at 0.9758, and a rise through could take it to the next resistance level of 0.9776.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD declined 0.06% against the CAD and closed at 1.3519.

In the Asian session, at GMT0300, the pair is trading at 1.3485, with the USD trading 0.25% lower from yesterday’s close.

The pair is expected to find support at 1.3505, and a fall through could take it to the next support level of 1.349. The pair is expected to find its first resistance at 1.3534, and a rise through could take it to the next resistance level of 1.3548.

With no major economic data in Canada today, investors will now await the Bank of Canada’s (BoC) interest rate decision, due tomorrow, to get further insights.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

Daily Pivots: (S1) 1.1178; (P) 1.1220 (R1) 1.1280; More....

With 1.1161 minor support intact, intraday bias in EUR/USD remains on the upside for further rally. We stay cautious on strong resistance from 1.1245/98 (138.2% projection of 1.0339 to 1.0828 from 1.0569 at 1.1245) resistance zone to limit upside and bring reversal. However, decisive break of 1.1298 will carry larger bullish implication and target 1.1615 resistance next. On the downside, below 1.1161 minor support will turn bias neutral first.

In the bigger picture, the case for medium term reversal continues to build up with EUR/USD now far above 55 week EMA. Also, bullish convergence condition is seen in weekly MACD. Focus will now be on 1.1298 key resistance. Rejection from there will maintain medium term bearishness and would extend the whole down trend from 1.6039 (2008 high). However, firm break of 1.1298 will indicate reversal. In such case, further rally would be seen back to 1.2042 support turned resistance next.

Daily Pivots: (S1) 0.9694; (P) 0.9730; (R1) 0.9768; More.....

With 0.9765 minor resistance intact, intraday bias in USD/CHF stays on the downside. Current fall from 1.0342 should target 100% projection of 1.0342 to 0.9860 from 1.0099 at 0.9617. We'll start to look for bottoming signal again below there. On the upside, above 0.9765 minor resistance will turn intraday bias neutral again and bring consolidations first, before staging another fall.

In the bigger picture, USD/CHF is bounded in medium term range of 0.9443/1.0342 for the moment. Consolidative trading would likely continue and medium term outlook remains neutral. Break of 1.0342 key resistance is needed to confirm underlying bullish momentum in the pair. Meanwhile, downside attempts should be contained by 0.9443 key support level.

Daily Pivots: (S1) 1.2961; (P) 1.3002; (R1) 1.3039; More...

GBP/USD's consolidative pattern from 1.3047 is still extending and intraday bias remains neutral. As long as 1.2844 minor support holds, further rise remains mildly in favor. Nonetheless, as we are still viewing price actions from 1.1946 as a corrective move, we'd expect upside to be limited below 1.3444 resistance to bring near term reversal. On the downside, break of 1.2844 will indicate short term topping and turn bias back to the downside for 1.2614 resistance turned support first.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There are signs of reversal, like breaking of 55 week EMA, weekly MACD turned positive, and monthly MACD crossed above signal line. But still, break of 1.3444 resistance is need to confirm medium term bottoming. Otherwise, outlook will remains bearish for extend the down trend through 1.1946 low.