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Asian Equity Markets Are Mixed
Market movers today
The data calendar is thin today with no release expected to move the markets.
The most interesting event is likely to be the ECB's Chief Economist Peter Praet's speech, as one of the final ECB speakers ahead of the silent period where no monetary policy messages can be conveyed ahead of the Governing council meeting next week. Markets will also digest the latest ‘sources' from late last night that suggest ed he ECB could change its communication next week.
Focus will also continue to be on the Italian political developments and the new government formation.
Selected market news
Asian equity markets are mixed this morning as investors take a more cautious view amid renewed concerns about Italy and global trade protectionism. Yesterday, the new Italian prime minister held his first speech in the Italian parliament, calling for a review of eurozone rules and governance and saying that debt reduction would only be achieved through economic growth, rather than austerity. On the back of the speech, Italian bonds sold off and these are likely to remain under pressure today.
Ahead of the G7 meeting this week, focus remains on the outlook for global trade given the US's move to impose tariffs on steel imports from Europe, Canada and Mexico and the failed trade talks between China and the US over the weekend. Yesterday, Mexico unveiled tariffs against US agricultural and st eel products in retaliation to last week's US tariffs. The Mexican move follows EU and Canadian announcements of similar retaliatory moves, which are prompting investor concerns about the out look for global trade. On the strained trade talks between China and the US.
Bloomberg reported yesterday afternoon that ECB sources say that it will use the ECB meeting next week to discuss the asset purchases and that the meeting could result in announcement on when to end the purchases. However, we remain sceptical that the ECB will change its communication on its asset purchase programme already, especially given the latest bout of weak indicators of euro area economic activity and wobbly market sentiment relating to the new government in Italy. We see a good chance that the ECB's growth projections will be revised down while headline inflation will be revised slightly up on the back of higher oil prices.
Growth In The Euro-Zone’s Service Sector Slowed To A 1.5 Year Low
For the 24 hours to 23:00 GMT, the EUR rose 0.15% against the USD and closed at 1.1714.
In economic news, the Euro-zone's final Markit services PMI dropped more than initially estimated to a level of 53.8 in May, while the preliminary print had indicated a fall to a level of 53.9. In the prior month, the PMI had registered a reading of 54.7. On the contrary, the region's seasonally adjusted retail sales rose 0.1% on a monthly basis in April, compared to a revised gain of 0.4% in the previous month. Markets were anticipating retail sales to rise by 0.5%.
Meanwhile, in Germany, the final services PMI fell to a level of 52.1 in May, meeting market expectations. The PMI had registered a level of 53.0 in the prior month. The preliminary figures had also recorded a drop to a level of 52.1.
In the US, data indicated that the nation's ISM non-manufacturing PMI climbed to a level of 58.6 in May, beating market expectations for a rise to a level of 57.6. In the prior month, the PMI had registered a level of 56.8. Meanwhile, the nation's final Markit services PMI was revised higher to a level of 56.8 in May, notching its highest level in more than three years. The preliminary figures had indicated a rise to a level of 55.7. In the previous month, the PMI had recorded a reading of 54.6.
In the Asian session, at GMT0300, the pair is trading at 1.1722, with the EUR trading 0.07% higher against the USD from yesterday's close.
The pair is expected to find support at 1.1672, and a fall through could take it to the next support level of 1.1621. The pair is expected to find its first resistance at 1.1754, and a rise through could take it to the next resistance level of 1.1785.
Amid no major macroeconomic releases in the Euro-zone today, investors would focus on the US trade balance figures for April, set to release later in the day.
The currency pair is trading above its 20 Hr and 50 Hr moving averages.
Growth In UK’s Services Sector Climbed To A 3-Month High In May
For the 24 hours to 23:00 GMT, the GBP rose 0.56% against the USD and closed at 1.3389, following upbeat in UK's service data.
On the macro front, UK's services PMI jumped to a level of 54.0 in May, hitting a 3-month high and beating market expectations for a rise to a level of 53.0. In the prior month, the PMI had registered a reading of 52.8.
In the Asian session, at GMT0300, the pair is trading at 1.3406, with the GBP trading 0.13% higher against the USD from yesterday's close.
The pair is expected to find support at 1.3333, and a fall through could take it to the next support level of 1.326. The pair is expected to find its first resistance at 1.3448, and a rise through could take it to the next resistance level of 1.349.
The currency pair is trading above its 20 Hr and 50 Hr moving averages.
Japanese Yen Trading Lower This Morning
For the 24 hours to 23:00 GMT, the USD declined 0.15% against the JPY and closed at 109.74.
In the Asian session, at GMT0300, the pair is trading at 109.84, with the USD trading 0.09% higher against the JPY from yesterday’s close.
The pair is expected to find support at 109.54, and a fall through could take it to the next support level of 109.24. The pair is expected to find its first resistance at 110.07, and a rise through could take it to the next resistance level of 110.3.
The currency pair is trading above its 20 Hr and 50 Hr moving averages.
Swiss Franc Trading Higher, Ahead Of Switzerland’s Crucial Inflation Data
For the 24 hours to 23:00 GMT, the USD declined 0.35% against the CHF and closed at 0.9847.
In the Asian session, at GMT0300, the pair is trading at 0.9839, with the USD trading 0.08% lower against the CHF from yesterday's close.
The pair is expected to find support at 0.9815, and a fall through could take it to the next support level of 0.9791. The pair is expected to find its first resistance at 0.9878, and a rise through could take it to the next resistance level of 0.9917.
Trading trend in Switzerland will be determined by the crucial consumer price inflation numbers for May, slated to release in few hours.
The currency pair is trading below its 20 Hr and 50 Hr moving averages.
Loonie Trading On Stronger Footing This Morning
For the 24 hours to 23:00 GMT, the USD rose 0.36% against the CAD and closed at 1.2975.
In the Asian session, at GMT0300, the pair is trading at 1.2946, with the USD trading 0.22% lower against the CAD from yesterday’s close.
The pair is expected to find support at 1.2885, and a fall through could take it to the next support level of 1.2824. The pair is expected to find its first resistance at 1.3037, and a rise through could take it to the next resistance level of 1.3128.
Going forward, investors will eye on Canada’s building permits data for April and Ivey Purchasing Managers Index for May, scheduled to release later in the day.
The currency pair is trading below its 20 Hr moving average and showing convergence with its 50 Hr moving average.
Australia’s Economy Grows At Fastest Pace In Nearly Two Years
For the 24 hours to 23:00 GMT, the AUD declined 0.51% against the USD and closed at 0.7613.
LME Copper prices rose 0.52% or $36.0/MT to $6971/MT. Aluminium prices declined 0.43% or $10.0/MT to $2314.5/MT.
In the Asian session, at GMT0300, the pair is trading at 0.7652, with the AUD trading 0.51% higher against the USD from yesterday's close, after Australia's first quarter economic growth came in better-than-expected.
Earlier in the session, data showed that Australia's seasonally adjusted gross domestic product (GDP) advanced 1.0% in the first quarter of 2018, driven by exports of mining commodities and compared to a revised rise of 0.5% in the prior quarter. Market participants had expected the GDP to rise by 0.9%.The pair is expected to find support at 0.761, and a fall through could take it to the next support level of 0.7567. The pair is expected to find its first resistance at 0.768, and a rise through could take it to the next resistance level of 0.7707.
Moving ahead, traders would closely monitor Australia's trade balance data for April, set to be released early morning tomorrow. Also, the nation's AiG performance construction for May, due to be released overnight, will garner significant amount of investor attention.
The currency pair is trading above its 20 Hr and 50 Hr moving averages.
Gold: Yellow Metal Trading A Tad Lower In The Asian Session
For the 24 hours to 23:00 GMT, Gold rose 0.42% against the USD and closed at USD1301.70 per ounce, as weakness in greenback increased demand for the safe haven asset.
In the Asian session, at GMT0300, the pair is trading at 1301.30, with gold trading slightly lower against the USD from yesterday’s close.
The pair is expected to find support at 1294.93, and a fall through could take it to the next support level of 1288.57. The pair is expected to find its first resistance at 1306.23, and a rise through could take it to the next resistance level of 1311.17.
The yellow metal is trading above its 20 Hr and 50 Hr moving averages.
Silver: White Metal Extends Gains In The Morning Session
For the 24 hours to 23:00 GMT, Silver rose 0.52% against the USD and closed at USD16.51 per ounce, tracking gains in gold prices.
In the Asian session, at GMT0300, the pair is trading at 16.53, with silver trading 0.15% higher against the USD from yesterday’s close.
The pair is expected to find support at 16.42, and a fall through could take it to the next support level of 16.30. The pair is expected to find its first resistance at 16.60, and a rise through could take it to the next resistance level of 16.66.
The white metal is trading above its 20 Hr and 50 Hr moving averages.
Crude Oil: Oil Trading On A Stronger Footing, Ahead Of EIA’s Weekly Crude Oil Stockpiles Data
For the 24 hours to 23:00 GMT, Crude Oil rose 0.57% against the USD and closed at USD65.34 per barrel, amid reports that the US government asked Saudi Arabia and some other OPEC producers to increase oil output by 1.0 million barrels per day. Additionally, the American Petroleum Institute (API) reported that US crude oil inventories fell by 2.0 million barrels to 432.8 million barrels in the week ended 01 June.
In the Asian session, at GMT0300, the pair is trading at 65.67, with oil trading 0.51% higher against the USD from yesterday's close.
The pair is expected to find support at 64.68, and a fall through could take it to the next support level of 63.69. The pair is expected to find its first resistance at 66.2, and a rise through could take it to the next resistance level of 66.73.
Crude oil is trading above its 20 Hr and 50 Hr moving average.
