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Market movers today

A very light calendar today albeit watch out for quite a few ECB speakers including Lautenschlager and Praet during the day.

Key releases this week will be US retail sales, German ZEW and the monthly batch of Chinese data for industrial production, fixed investment and retail sales. Further, the US Empire and Philly Fed indices will be key in judging whether the US is weathering the global slowdown as well as has been the case so far. Finally, Fed nominees Clarida and Bowman are due to testify to the US Senate Banking Committee.

The US-China trade talks will also be in focus as China's top economic adviser and vice premier Liu He is planned to come to the US for further negotiations.

In the Scandi sphere, Sweden releases average house prices and PES unemployment rate.

Selected market news

Following a week where the US withdrew from the Iranian nuclear deal and thus added fuel to a looming deterioration in risk sentiment - which has been building recently by a weakening business cycle - this week looks set to start on a more positive note as hopes of a fading US-China trade war are mounting. In a noteworthy move, US President Trump might have paved the way for more constructive talks this week, when over the weekend he ordered the US Commerce Department to make sure Chinese telecom equipment maker ZTE could be cleared to get supplies from US companies after a ban was set to cripple the company. It seems to have been a demand from China's president Xi Jinping for China to continue negotiations, see Bloomberg , and Trump has seemingly now provided an outstretched hand to China.

In the euro zone, risk sentiment has so far been largely unmoved by the increasing likelihood of a coalition government formed by the two anti-establishment parties , the Five-Star Movement and Northern League. The two parties are due to present a possible government program today which would reportedly (and unsurprisingly) include cutting taxes and boosting spending. However, Italian government-bond markets - and the single currency - are little moved by this prospect. While the 10Y yield edged a tad higher last week, it currently stands just above the 1.85% mark, notably down from the 2%+ levels seen at the start of the year.

Stock markets have generally had a decent run in both the US and Asian sessions. EM currencies remain wobbly though but the USD momentum has crucially stalled somewhat helped by the US inflation miss last Thursday, and as the US 10Y once again failed to make a firm break of the 3% level last week. Oil prices remain close to USD77/bbl (Brent) and may be coming off a peak as OPEC is keen to stress that it holds the spare capacity to fill in for possible lost Iranian supplies.

UK Prime Minister Theresa May reiterated UK's commitment to the Iran nuclear deal to Iran President Hassan Rouhani over a phone call during the weekend. And she urged release of jailed British Iranians "on humanitarian grounds". A Downing Street spokesman said that " it is in both the UK and Iran's national security interests to maintain the deal and welcomed president Rouhani's public commitment to abide by its terms, adding that it is essential that Iran continues to meet its obligations."

Foreign Ministers of the UK, Germany and France will meet this Tuesday to discuss on keeping the Iran nuclear after after US withdrawal.

Separately, French Finance Minister Bruno Le Maire urged EU to " to work among ourselves in Europe to defend our economic sovereignty." And, EU should hold "collective discussions with the United States to obtain... different rules" covering European companies that do business with Iran. Le Maire added that "Do we accept extraterritorial sanctions? The answer is no." And, "Do we accept that the United States is the economic gendarme of the planet? The answer is no."

The USD/JPY is testing key support trend lines (blue/green) of the uptrend. A bullish bounce could indicate the continuation of the bullish channel whereas a bearish breakout could lead to a larger correction within wave X (pink). A break above the resistance and previous top at 110 remains important for the bulls and offers space to 111.50 which is where the 50% Fib is located. The bearish breakout could confirm a larger ABC (blue) correction and price could move towards that Fib targets of wave X (pink).

The USD/JPY is building a triangle consolidation pattern and is challenging the support and resistance trend lines. A breakout below the resistance (red) or support (green) trend line is needed before a larger impulsive price action could be expected.

The EUR/USD bullish breakout is building an uptrend channel. Although the bullish breakout could indicate the end of wave 3 (green), price is still expected to continue with the downtrend if price respects and reverses at Fibonacci resistance levels of wave 4 (green). A retracement towards the 38.2% or 50% Fibonacci level is considered a normal retracement for such a wave 4 whereas a break above the 61.8% Fib would make such a wave 4 (green) pattern less likely.

The EUR/USD seems to be building a larger WXY (orange) correction and price is now probably in the 3rd leg which is the wave Y (orange). A bullish continuation could be expected as long as price stays above the support trend line (green) and Fibonacci retracement levels of wave B (orange).

For the 24 hours to 23:00 GMT, the EUR rose 0.23% against the USD and closed at 1.1944 on Friday.

Macroeconomic data released in the US indicated that the preliminary Reuters/Michigan consumer sentiment index remained steady at a level of 98.8 in May, compared to market expectations for a drop to a level of 98.3.

In the Asian session, at GMT0300, the pair is trading at 1.1964, with the EUR trading 0.17% higher against the USD from Friday’s close.

The pair is expected to find support at 1.1914, and a fall through could take it to the next support level of 1.1864. The pair is expected to find its first resistance at 1.1991, and a rise through could take it to the next resistance level of 1.2018.

With no macroeconomic releases in the Euro-zone today, investor sentiment would be determined by global macroeconomic events.

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 0.18% against the USD and closed at 1.3542 on Friday.

In the Asian session, at GMT0300, the pair is trading at 1.3568, with the GBP trading 0.19% higher against the USD from Friday’s close.

The pair is expected to find support at 1.3515, and a fall through could take it to the next support level of 1.3461. The pair is expected to find its first resistance at 1.3609, and a rise through could take it to the next resistance level of 1.3649.

In absence of key economic releases in the UK today, investors would focus on global macroeconomic events for further direction.

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

For the 24 hours to 23:00 GMT, the USD declined 0.06% against the JPY and closed at 109.32 on Friday.

In the Asian session, at GMT0300, the pair is trading at 109.33, with the USD trading slightly higher against the JPY from Friday’s close.

The pair is expected to find support at 109.15, and a fall through could take it to the next support level of 108.96. The pair is expected to find its first resistance at 109.52, and a rise through could take it to the next resistance level of 109.70.

Moving ahead, market participants would keep a close watch on Japan’s flash machine tool orders for April, due to release in a while.

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 0.18% against the CHF and closed at 1.0010 on Friday.

In the Asian session, at GMT0300, the pair is trading at 0.9991, with the USD trading 0.19% lower against the CHF from Friday’s close.

The pair is expected to find support at 0.9965, and a fall through could take it to the next support level of 0.9940. The pair is expected to find its first resistance at 1.0028, and a rise through could take it to the next resistance level of 1.0066.

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

For the 24 hours to 23:00 GMT, the USD rose 0.19% against the CAD and closed at 1.2791 on Friday.

On the macro front, Canada's unemployment rate remained steady at 5.8% in April, meeting market expectations.

In the Asian session, at GMT0300, the pair is trading at 1.2785, with the USD trading 0.05% lower against the CAD from Friday's close.

The pair is expected to find support at 1.2743, and a fall through could take it to the next support level of 1.2702. The pair is expected to find its first resistance at 1.2813, and a rise through could take it to the next resistance level of 1.2842.

Later today, investors would look forward to Canada's Teranet/National Bank house price index for April.

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

For the 24 hours to 23:00 GMT, the AUD rose 0.19% against the USD and closed at 0.7546 on Friday.

LME Copper prices rose 0.10% or $7.0/MT to $6869.0/MT. Aluminium prices declined 2.30% or $53.5/MT to $2273.5/MT.

In the Asian session, at GMT0300, the pair is trading at 0.7558, with the AUD trading 0.16% higher against the USD from Friday’s close.

The pair is expected to find support at 0.7533, and a fall through could take it to the next support level of 0.7508. The pair is expected to find its first resistance at 0.7575, and a rise through could take it to the next resistance level of 0.7592.

Going ahead, traders would closely monitor the Reserve Bank of Australia’s May meeting minutes, due to release overnight.

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