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Forex News Timeline

Tuesday, May 22, 2018

The AUD/USD pair is consolidating near 0.7600, on its way for the third consecutive daily gain. The Australian dollar is among the top performers...

Australian dollar among top performers on Tuesday.AUD/USD holds to gains but unable to break 0.7600.The AUD/USD pair is consolidating near 0.7600, on its way for the third consecutive daily gain. The Australian dollar is among the top performers supported by risk appetite, positive expectation on US-China trade negotiations and also by higher commodity prices. The pair reached earlier today levels on top of 0.7600 for the first time since April 24 but it failed to extend the run above and pulled back. The retreat from the top found support at 0.7580. During the last hours, AUD/USD has been moving in a range, between 0.7580 and 0.7600 consolidating a modest daily gain. The US dollar continues to show strength in the market support by higher US yields but on Tuesday moves so far have been limited. On Wednesday, the release of the FOMC minutes could influence on the greenback.Levels to watchTo the downside, immediate support is seen at 0.7580 (lower limit of current range), followed by 0.7565 and 0.7540. On the upside, above 0.7600 resistance might be seen at 0.7615 and 0.7660.

United States 52-Week Bill auction climbed from previous 2.2% to 2.275%

The GBP/USD currency pair is trading at around 1.3442 up 0.14% on Tuesday.  GBP/USD found an intraday ceiling 1.3490 in Early Europe ahead of the UK’

The FOMC’s minutes and the UK’s inflation should give GBP/USD its next directional move.GBP/USD established a fresh 2018 low at 1.3390 on Monday and is now consolidating above the level.The GBP/USD currency pair is trading at around 1.3442 up 0.14% on Tuesday.  GBP/USD found an intraday ceiling 1.3490 in Early Europe ahead of the UK’s Inflation Report Hearings then the Cable retreated to the 1.3425 region which was also the Asian range.  Investors are starting to focus on the FOMC’s minutes and the UK inflation data on Wednesday as in early Europe, the Consumer Price Index, the Retail Sales Index and the Producer Price Index for April will likely provide GBP/USD with much volatility as the Bank of England (BoE) recently said that it was data-dependant. Later in the day, investors will closely watch the FOMC’s minutes for any growth and inflation clues. It is scheduled at 18:00 GMT on Wednesday In fact, earlier in the day BoE’s Governor Mark Carney testified on the inflation and economic outlook before the Parliament’s Treasury Select Committee (TSC). It was widely expected that he would make dovish and cautious comments. Indeed, he said that “it is right to wait for more data ” and that “households, businesses understand that rates are likely to rise at a gentle pace,” therefore signaling that the BoE is data-dependant for further rates hikes and it will closely watch any inflation data.  The US Dollar Index (DXY) is trading mixed on Tuesday and is virtually unchanged. However, the bull trend remains strong as the greenback is trading at multi-week’s highs. GBP/USD 4-hour chart The main trend is bearish as the market is trading below its 50, 100 and 200-period simple moving averages on the 4-hour chart. Supports are seen at the 1.3400 handle and at the 1.3350 figure while resistances are priced in at the 1.3450 and 1.3500 previous swing levels and at 1.3618 cyclical high. 

The EUR/CHF pair lost 85 pips from daily highs and broke below yesterday’s lows, falling under 1.1700. The decline took place amid...

Swiss franc among top performers amid political risk in Italy.EUR/CHF resumes slide after short-lived recovery. The EUR/CHF pair lost 85 pips from daily highs and broke below yesterday’s lows, falling under 1.1700. The decline took place amid a rally of the Swiss franc across the board amid Eurozone political risks. Several weeks ago, a question around traders was when EUR/CHF would break above the famous 1.2000 area and now it appears to be how much can it fall. During the last eight trading days it lost ground on seven. The main driver has been the political situation in Italy with the government agreement between the anti-establishment Five Star Movement and the far-right League.Technical levelsEUR/CHF bottomed today at 1.1683, hitting the lowest level since April 26. As of writing it was trading at 1.1695, down 260 pips for the month and on its way for the fourth weekly decline in-a-row. To the downside, support levels might be located at 1.1675, 1.1645 and 1.1595/1.1600. On the upside, resistance could be seen at 1.1705, followed by 1.1730 and 1.1770 (weekly high).  

Another day, another drop in the Turkish Lira. USD/TRY is now easing from earlier new all-time highs above the 4.66 handle, navigating around 4.64/65.

The Turkish Lira dropped to new all-time highs above 4.66 vs. the buck.TRY is the worst performing currency on a daily basis.All eyes remain on the CBRT and Erdogan.Another day, another drop in the Turkish Lira. USD/TRY is now easing from earlier new all-time highs above the 4.66 handle, navigating around 4.64/65.USD/TRY looks to CBRT, ErdoganTRY continues to depreciate this week, losing around 25% so far this year. Today’s up move in the pair comes despite the softer tone in the greenback, although the political/economic situation in Turkey continues to prevail as the exclusive driver behind the currency’s rout. TRY came under renewed selling pressure after President Erdogan commented last week that he intends to take further control of the country’s monetary policy in the near future. In addition, Erdogan’s preferences for lower rates are well known to market participants - particularly as elections in the country are imminent - despite that plots against already increasing inflation and the willingness of Governor Cetinkaya. In the meantime, investors keep pricing in an emergency rate hike at some point in the (very) near future, likely between 100-200 bps.USD/TRY key levelsAt the moment the pair is up 1.75% at 4.6539 facing the next hurdle at today’s all-time high at 4.6645. On the flip side, the next support is located at 4.4250 (10-day sma) followed by 4.2812 (21-day sma) and then 4.2197 (low May 10).

Gold is trading at around $1292.00 a troy ounce virtually unchanged on Tuesday. Gold found an intraday floor at 1288.00 in Europe and then bounce to

The FOMC’s minutes are likely going to be the next market-mover for gold. It scheduled for Wednesday at 18:00 GMT. The correction in USD helps gold prices to be supported on Tuesday.  Gold is trading at around $1292.00 a troy ounce virtually unchanged on Tuesday. Gold found an intraday floor at 1288.00 in Europe and then bounce to the 1296.00 level in the early American session. The metal has retreated from the level and is now trading in the 1292.00 region.  Gold is mainly inversely correlated to the US Dollar Index (DXY) which saw some profit-taking in early European session helping gold reach the 1296.00 region which is a major weekly resistance zone level. However, both DXY and the US 10-year Treasury yield are being rather supported in the American session.  On the geopolitical front the recent news that US and China have put the trade war “on hold” as mentioned by Mnuchin, US Treasury Secretary, overall eases the demand for the precious metal as the news is seen as risk-on by markets.  The next catalyst for gold and USD alike can be with the FOMC’s minutes release on Wednesday at 18:00 GMT. Traders will be on the lookout to know if the inflation and growth outlook are on track. Market participants are expecting the Federal Reserve Bank to raise three to four times in 2018. Therefore, traders are buying USD in order to take advantage of the interest rates it yields. On the other hand, gold is a non-yielding safe-haven asset.Gold 4-hour chart The main trend is bearish as the market is trading below its 50, 100 and 200-period simple moving averages on the 4-hour chart. Supports are seen at the 1290.00 handle, 1281.70 swing low and at 1270.00 figure while resistances are seen at 1296.92 swing high and at the 1300.00 figure.

Major US equity indices built on overnight strong up-move and opened with modest gains on Tuesday, albeit quickly drifted into negative territory. Tr

Major US equity indices built on overnight strong up-move and opened with modest gains on Tuesday, albeit quickly drifted into negative territory. Trade tensions between the US and China showed further signs of easing after the Chinese government announced to cut import duties on passenger cars to 15% from the current 25% effective from July 1. Meanwhile, both the countries are also reportedly nearing an agreement to settle the controversy over Chinese telecom giant ZTE.  Adding to this, some renewed buying around tech-stocks lifted the overall market sentiment and was seen supporting a mildly positive sentiment during the opening hour of trade. Bulls, however, lacked strong conviction amid a continuous upsurge in crude oil prices, which now seemed to fuel inflationary concerns. This coupled with elevated US Treasury bond yields, amid expectations over a faster Fed monetary policy tightening cycle, might further contribute towards capping any additional gains.  At the time of writing this report, the Dow Jones Industrial Average was down around 35-points and retreated back below the 25K psychologically important level. Meanwhile, the broader S&P 500 Index and tech-heavy Nasdaq Composite Index both held just above previous session’s closing levels, around 2,735 and 7,396 respectively.

Prices of the West Texas Intermediate are trading with marginal losses on Tuesday, keeping the familiar range above the key $72.00 mark per barrel. W

The barrel of WTI posts marginal losses ahead of the API report.WTI recorded fresh multi-year peaks around $72.70 earlier today.The API report is due later today ahead of the EIA report due tomorrow.Prices of the West Texas Intermediate are trading with marginal losses on Tuesday, keeping the familiar range above the key $72.00 mark per barrel.WTI now looks to APIPrices of the barrel of the American benchmark for the sweet light crude oil keep the upper end of the range so far on Tuesday, navigating near earlier more than 3-year peaks around $72.70. Potential US sanctions against Venezuela – following the re-election of President Maduro - and Iran after the US withdrawal from the nuclear deal have been sustaining the up move in crude oil in past weeks, which gained almost 25% since YTD lows in the $58.20 region seen in mid-February. Later in the week, the API and the EIA will report on US crude oil stockpiles on Tuesday and Wednesday, respectively, ahead of the weekly US oil rig count tracked by driller Baker Hughes, on Friday.WTI significant levelsAt the moment the barrel of WTI is losing 0.28% at $72.33 facing the next down barrier at $71.48 (10-day sma) followed by $70.28 (low May 14) and finally $69.95 (21-day sma). On the flip side, a breakout of $72.67 (2018 high May 22) would open the door to $73.00 (psychological level) and then $77.77 (high Nov.21 2014).

The EUR/JPY currency cross is trading at around 130.78 down 0.12% this Tuesday.  EUR/JPY found an intraday ceiling at 131.37 in early Europe and then

Coming up next for euro traders, the preliminary Eurozone and German Markit PMI and the preliminary German Gross Domestic Product for May, all scheduled on Wednesday.EUR/JPY technicals suggest a mild upward bias with 130.60 as demand zone.The EUR/JPY currency cross is trading at around 130.78 down 0.12% this Tuesday.  EUR/JPY found an intraday ceiling at 131.37 in early Europe and then retreated to the 130.70 region where the cross was ranging earlier in Asia.  EUR/JPY is mainly mimicking EUR/USD which is having a rebound on the back of USD short covering.  The euro currency overall remains negatively affected by the recent lackluster macroeconomic data and the political situation in Italy. On the broader picture, investors are quite worried as the 5 Star and League coalition said they intended to fight the Eurozone’s budget guideline, ask the European Central Bank to write-off the Italian debt and take control of the immigration policy in Italy.  However, the euro and Italian equities had a small rebound as the two populist leading parties proposed Giuseppe Conte for Prime Minister. Euro traders will pay attention to the preliminary Eurozone and German Markit PMI (Purchasing Managers' Index) monthly Composite, Manufacturing and Services reports for May as well as the preliminary German Gross Domestic Product for May. If that data comes in above-estimates it should support EUR in the short-term. The numbers are due this Wednesday. In Japan, the Nikkei Purchasing Managers' Index (PMI) is scheduled for 00:30 on Wednesday but the tier-two data should not be a major market-mover.  As the yen is seen as a safe-haven currency the recent positive developments over the US-China trade war are not supportive of the Japanese currency. Overnight in Asia, Bank of Japan’s officials made some hawkish comments. BoJ's Governor Haruhiko Kudora said he intended to exit the current ultra-loose monetary policy if the inflation rises in Japan while Bank of Japan Deputy Governor Masazumi Wakatabe commented: “my feeling now is that we can achieve our inflation target with the current policy.” Although the comments sound hawkish, market participants have not rushed to buy the yen as the BoJ has made those remarks many times without really making any changes to its monetary policy.EUR/JPY 4-hour chartEUR/JPY is trading above its 50 and 100-period simple moving averages (SMA) on the 4-hour time-frame but below its 200-period SMA, suggesting a mild upward bias. Support is seen at 130.60 demand level and at 129.53 swing low while resistance is priced in at 131.37 swing high and at 132.00 and 133.00 figures. 

United States Richmond Fed Manufacturing Index came in at 16, above forecasts (9) in May

   •  Mid-European session recovery attempt gets sold into near 1.2780 level.    •  Subdued USD demand/US bond yields keep exerting downward pressure

   •  Mid-European session recovery attempt gets sold into near 1.2780 level.
   •  Subdued USD demand/US bond yields keep exerting downward pressure.
   •  Bullish oil prices further underpin Loonie and add to the selling bias.
The USD/CAD pair's mid-European session recovery attempt fizzled near the 1.2780 level, with bears now trying to push it through mid-1.2700s support area. Against the backdrop of a follow-through US Dollar retracement slide, the ongoing bullish run in crude oil prices underpinned the commodity-linked currency - Loonie and kept exerting downward pressure on the major for the second consecutive session.  Meanwhile, a subdued action around the US Treasury bond yields did little to revive the USD demand and stall the pair's downfall back closer to an immediate strong support near the 1.2750 region.  It, however, remains to be seen if the pair continues finding some buying interest near the mentioned support or extends its bearish slide through the NY trading session amid absent market moving economic releases from the US and Canada. Technical levels to watchA follow-through selling pressure, leading to a subsequent break below 1.2730 level now seems to accelerate the fall and drag the pair further towards testing 100-day SMA support near the 1.2700 region.  On the flip side, any recovery attempts beyond 1.2775-80 immediate hurdle is likely to confront resistance near the 1.2800 handle and is followed by 50-day SMA barrier near the 1.2825 region.
 

Jan von Gerich, Analyst at Nordea Markets, suggests that headwinds for higher oil prices have already started to emerge, but given the tightened physi

Jan von Gerich, Analyst at Nordea Markets, suggests that headwinds for higher oil prices have already started to emerge, but given the tightened physical balance and the uncertain supply conditions, it will probably take some more time for these headwinds to bring prices lower.Key Quotes“The global economy has been losing momentum, as has been illustrated e.g. by the global manufacturing PMI. Also the higher oil prices are already taking their toll on oil demand growth. The International Energy Agency (IEA) revised their demand growth forecast lower last week in response to higher prices.” “US shale production still has room to respond. While US production is already growing at a record pace, it has not been able to stop the rise in prices. Infrastructure constraints (e.g. pipeline capacity) have acted as a brake to further production growth, and it will take some time to tackle these issues.” “In addition, even if geopolitical tensions persist, at least there should be more certainty about their consequences, while Saudi Arabia has promised to ensure adequate supply. After all, much higher prices are not in the interest of the Saudis either, as higher prices dampen demand and accelerate the search for alternatives.” “As a result, prices will probably peak towards the autumn, and fall back again towards the end of the year.” “Financial markets see the increase in prices as a temporary phenomenon. In fact, while the futures curve has been in backwardation (lower prices longer out) for quite some time, the slope has steepened, as short-term prices have risen more than long-term ones.”

The US Dollar Index (DXY), which gauges the buck vs. its main competitors, manages to revert part of the initial drop to session lows and is now flirt

The index met decent support in the 93.30 region earlier in the day.Yields of the US-10 year note eased from tops near 3.08%.Next of relevance for USD will be tomorrow’s FOMC minutes.The US Dollar Index (DXY), which gauges the buck vs. its main competitors, manages to revert part of the initial drop to session lows and is now flirting with the positive territory in the 93.55/60 band.US Dollar looks to FOMCAfter bottoming out in the 93.30 region during early trade, the greenback found some dip-buyers and is now lifting the index back to the mid-93.00s. The greenback seems to have now decoupled from the performance of yields in the key US 10-year note, which are retreating to the 3.06% region after briefly testing highs around 3.08%. Easing tensions in the US-China trade talks and diminishing geopolitical effervescence have been also collaborating with the up move in the buck to levels last seen in December 2017 just above 94.00 the figure (Monday), where it seems to have met some sellers. Looking ahead, the FOMC minutes will be published tomorrow, preceding the speech by Chief J.Powell on Friday.US Dollar relevant levelsAs of writing the index is losing 0.04% at 93.51 and a breakdown of 93.29 (low May 22) would target 93.16 (10-day sma) en route to 93.12 (low May 18). On the flip side, the next up barrier is located at 94.03 (2018 high May 21) followed by 94.22 (monthly high Dec.11 2017) and then 94.27 (high Oct.5 2017).

GBP has been relatively weak in the last month as it has fallen since mid-April as BoE rate hike expectations for May were extinguished, explains Greg

GBP has been relatively weak in the last month as it has fallen since mid-April as BoE rate hike expectations for May were extinguished, explains Greg Gibbs, Analyst at Amplifying Global FX Capital. Key Quotes“The decline was in line with the weaker EUR and broad gains in the USD.” “In recent days, GBP may have been dragged lower by the weaker EUR related to Italian political risk.  However, it also appears to have been undermined by some homegrown UK political risk related to an internal Tory government Brexit debate.” “We sense an opportunity to buy the GBP brewing on the basis that domestic inflation pressure is building and is likely to bring BoE rate hikes back on the agenda, and home-grown political risk may fade.”

   •  Reports that Savona will lead Italian economy ministry prompts some aggressive selling.    •  Downside remains limited amid a follow-through US

   •  Reports that Savona will lead Italian economy ministry prompts some aggressive selling.
   •  Downside remains limited amid a follow-through USD slide and oversold conditions.
The EUR/USD pair faded an early European session bullish spike and quickly retreated around 50-pips from to an intraday high level of 1.1830. The pair initially was seen building on its overnight recovery move from 6-month lows and benefitted from the ongoing US Dollar profit-taking slide. The up-move, however, ran out of steam, with continued political uncertainty in Italy capping additional gains. The latest leg of sharp fall over the past hour or so could be news reports that Paolo Savona, an 81-year-old economist and former minister with Euro-skeptic views, will be designated the Minister of the Economy and Finance.  The downfall, so far, has been limited and the pair has managed to hold its neck above an intraday low level of 1.1756, touched earlier during the Asian session. Moreover, near-term oversold conditions also seemed to hold traders back from placing aggressive bets ahead of Wednesday's important releases, including the flash version of Euro-zone PMI prints and the latest FOMC meeting minutes.Technical levels to watchBulls might try and defend immediate support near mid-1.1700s, below which the pair is likely to slide back towards retesting the 1.1710-1.1700 important support. On the upside, any meaningful up-move back above the 1.1800 handle is likely to confront strong resistance near the 1.1840-50 supply zone, which if cleared could assist the pair to dart back towards reclaiming the 1.1900 round figure mark.
 

Jakob Christensen, Chief Analyst at Danske Bank, now sees the cross dropping to the 4.20 region in a 6-month horizon. Key Quotes “The zloty has been

Jakob Christensen, Chief Analyst at Danske Bank, now sees the cross dropping to the 4.20 region in a 6-month horizon.Key Quotes“The zloty has been hit harder recently than we expected by a combination of weakening emerging market sentiment, dovish NBP and renewed uncertainty about Polish/EU relations”. “The EUR/PLN broke out of the 4.18-4.23 range. We think the EU uncertainty may fade over time and EM sentiment will improve and see a renewed PLN strength over time. As a result, we see the spot EUR/PLN rate falling to 4.24 and 4.20 over 1M and 3M (previously 4.20 and 4.18). We still expect the strong growth and rise in inflation to give support to the zloty and therefore target the EUR/PLN at 4.16 in 6M and 4.10 in 12M”.

Jan von Gerich, Analyst at Nordea Markets, notes that oil prices have been on an uptrend for most of the past year, and the rise in prices seems to ha

Jan von Gerich, Analyst at Nordea Markets, notes that oil prices have been on an uptrend for most of the past year, and the rise in prices seems to have only accelerated in the past one and a half months as Brent reached the USD 80 per barrel level last week, the highest since 2014.Key Quotes“The rise in prices has been supported by a multitude of factors Strong global economy has supported oil demand growth An agreement by OPEC and several non-OPEC countries on limiting production, in effect since late 2016 Oil inventories have fallen from high to more normal levels Actual or expected supply disruptions in Iran and Venezuela, among others” “The momentum in the oil price remains strong, and prices are likely to continue their march higher in the coming months. The geopolitical tensions are unlikely to fade quickly. For example, the consequences of the Iranian situation remain very uncertain. To recap, the US is reimposing heavy sanctions on the country, including doing business in Iran and trading with the country.” “While some were calling for limited changes to the oil markets as a consequence of the US withdrawal from the Iran deal, as European countries have said to keep the nuclear deal alive, the warning by the French Total of a pull-out from Iran illustrates that effects will go beyond US companies.” “Higher prices are also supported by seasonality. The oil price often rises during the summer, especially in the August holiday season in the US, as gasoline demand increases.” “As a result, oil prices could easily climb to somewhere around USD 90 per barrel by the autumn, but reaching the USD 100 level would probably require bigger supply disruptions and further strong growth in the global economy.”

The EUR/GBP currency cross is trading at around 0.8770 down 0.13% this Tuesday. The EUR/GBP will likely take its cue from the UK data on Wednesday wi

The next market-mover is likely going to be the UK’s inflation data on Wednesday.The Bank of England (BoE)’s policymakers comments earlier in the day were rather dovish as the BoE remains data dependent for further rate hikes. The EUR/GBP currency cross is trading at around 0.8770 down 0.13% this Tuesday. The EUR/GBP will likely take its cue from the UK data on Wednesday with the Consumer Price Index (CPI), Retail Price Index and Producer Price Index (PPI) for the month of April. As the BoE is data-dependant a stronger than expected reading in inflation should support the British pound against the euro.   Earlier in the European session, the Bank of England’s officials testified on the economic and inflation outlook before the Parliament’s Treasury Select Committee (TSC). Without any surprises, the comments were rather dovish and cautious. Indeed, BoE’s Governor Carney said that it is "right to wait for more data" and that “households, businesses understand that rates are likely to rise at a gentle pace” as well as “guidance BoE gives is conditional on the economic outlook” he also added. What this means is that the BoE is data-dependant for further rate hikes decisions, that is why Wednesday's inflation data is likely going to be rather important. Meanwhile, the complex political situation in Italy looms in the background for the euro currency. In fact, the main Italian stock-market index (FTSE MIB) gapped down this Monday while the Italian 2 year debt yield rose to their highest level since 2015.  Traders will also look on Wednesday at the preliminary Eurozone and German Markit PMI (Purchasing Managers' Index) monthly Composite, Manufacturing, and Services reports for May as well as the preliminary German Gross Domestic Product for May as well. A better-than-expected reading can somewhat support EUR. EUR/GBP 4-hour chart The EUR/GBP currency cross trend is rather neutral as it is pinched between the 100-period and 200-period simple moving average (SMA) on the 4-hour time-frame. Supports are priced in at 0.8740 demand zone and at 0.8712 swing low while resistances are seen at the 0.8789 high of the day and at the 0.8844 swing high. 

Russia Unemployment Rate came in at 4.9% below forecasts (5%) in April

Mexico Retail Sales (YoY) came in at 1.2%, above expectations (0.8%) in March

Mexico Retail Sales (MoM): 0.9% (March) vs previous 1.6%

United States Redbook index (YoY) dipped from previous 4.9% to 3.2% in May 18

United States Redbook index (MoM) dipped from previous 0.8% to 0% in May 18

   •  The ongoing USD pull-back keeps exerting downward pressure on Tuesday.    •  The pair seemed unaffected by risk-on mood/an uptick in the US bon

   •  The ongoing USD pull-back keeps exerting downward pressure on Tuesday.
   •  The pair seemed unaffected by risk-on mood/an uptick in the US bond yields.
After an initial uptick to 0.9990 level, the USD/CHF pair met with some fresh supply and has now dropped to near 3-week lows.  The US Dollar extended its retracement slide from a five-month high set yesterday and was seen as one of the key factors behind the pair's intraday slide of over 40-pips from session tops.  Currently trading around mid-0.9900s, the pair seemed unaffected by a goodish pickup in the European equity markets, which tends to dent the Swiss Franc's safe-haven appeal.  Even a modest uptick in the US Treasury bond yields, albeit lacked any strong conviction, did little to influence the price-action, with the USD price-dynamics acting as an exclusive driver of the pair's momentum through the mid-European session. Tuesday’s thin US economic docket, highlighting the release of Richmond manufacturing index is unlikely to provide any meaningful impetus as investors wait for the release of latest FOMC meeting minutes on Wednesday.Technical levels to watchA follow-through retracement below 0.9940-35 immediate support is likely to accelerate the fall towards the 0.9900 handle, which if broken might continue dragging the pair further towards 0.9850-45 support area.  On the upside, the 0.9990-1.0000 area now seems to have emerged as an immediate hurdle, above which the pair is likely to make a fresh attempt towards retesting the 1.0050-55 supply zone.
 

The GBP is reported to be down on Monday on snap election speculation and as with previous news about political turmoil in the Tory government, this a

The GBP is reported to be down on Monday on snap election speculation and as with previous news about political turmoil in the Tory government, this appears to be more hype than fact, according to Greg Gibbs, Analyst at Amplifying Global FX Capital.Key Quotes“PM May’s government has survived since the July 2017 election, delivering so far on a Brexit ‘Divorce bill’, a transition period, and now there is debate over the Tory position regarding the thorny issue of trade relations and how it could work with the Ireland/Northern Ireland border.” “The stability of the government is always in question when there are disparate views in the UK parliament.  But May represents the balanced view trying to find a working solution to Brexit with the EU Remainers to her left and the Hard Brexiters to her right.” “There are no clear alternative leaders that could pull the Tories together to take on the Labour opposition. The Hardliners to her right risk losing to Labour and control of parliament if they rebel and force a split in the Tory party. In which case ,a soft Brexit or no Brexit outcome comes into play.” “The more likely scenario is that Tories move forth led by May and find a way forward to negotiate a deal with the EU.  As such, any bouts of weakness in the GBP related to fear of a collapse in government are probably buying opportunities.” “The GBP is still historically cheap, bearing the scars of the Brexit vote; we view it gradually clawing its way back.”

Canada Wholesale Sales (MoM) came in at 1.1%, above forecasts (0.6%) in March

On 10 June, the Swiss vote on a fundamental monetary reform and the probability of a “yes” may be underestimated, as was the case with the Brexit refe

On 10 June, the Swiss vote on a fundamental monetary reform and the probability of a “yes” may be underestimated, as was the case with the Brexit referendum, according to analysts at ING.Key Quotes“The short-term impact of a “yes” would be great uncertainty but, in the longer term, Vollgeld could hurt the economy, have important redistributive consequences and greatly increase the role of the state in the economy. The CHF will suffer from a “yes” in the short run, but conservative monetary policy and safe haven status may be a CHF positive in the longer run.”“Implications for the Swiss franc of a “yes” to Vollgeld In the short run, the uncertainty of re-wiring the monetary and banking system in Switzerland would probably be negative for the CHF. Wider credit spreads and more limited access to credit should pose headwinds to an economy already suffering persistently low inflation. Some models put EUR/CHF fair value at 1.50 and we would say the uncertainty could see EUR/CHF rise above 1.30 from near 1.20 today. The situation over the longer term could be entirely different however. Spooked by the prospect of helicopter money, negative equity and the inability to reduce money supply when needed, the SNB may prefer a conservative monetary policy, limiting the creation of CHF. Moreover, the prospect that every Swiss franc would be held at and backed by the SNB could, once the dust has settled, deliver a more positive re-assessment of the CHF as a safe haven currency.”

   •  A follow-through USD profit-taking helps stage a goodish rebound.    •  Remerging Brexit concerns keep a lid on any meaningful up-move.  The G

   •  A follow-through USD profit-taking helps stage a goodish rebound.
   •  Remerging Brexit concerns keep a lid on any meaningful up-move. 
The GBP/USD pair stalled its recovery move just ahead of the key 1.3500 psychological mark and quickly retreated around 40-pips from session tops.  The pair was seen building on its overnight modest rebound from sub-1.3400 level and got an additional boost from a follow-through US Dollar profit-taking slide. Further gains, however, remained capped amid reemerging Brexit concerns, which has been a key overhang for the British Pound in the recent past. Meanwhile, the pair had a rather muted reaction to mixed comments by the BoE MPC members at the testimony on the inflation and economic outlook before the Parliament’s Treasury Select Committee (TSC) this Tuesday. The pair now seems to be finding some support near mid-1.3400s as investors now start repositioning for this week's important UK macro releases, including the latest consumer inflation figures and month retail sale data.  This along with the latest FOMC meeting minutes, coupled with speeches by influential FOMC members and the release of US durable goods might assist investors to determine the pair's next leg of directional move.Technical levels to watchAny subsequent retracement is likely to find support near the 1.3435-30 region, below which the pair is likely to slide back towards retesting the 1.3400 handle before eventually heading further lower in the near-term. On the upside, momentum back above 1.3475 level might continue to confront some resistance ahead of the 1.3500 handle, which if cleared might trigger a short-covering bounce towards 1.3555-60 supply zone.
 

A multitude of factors has helped push the oil price higher and the rise is set to continue in the coming months, but prices will probably fall again

A multitude of factors has helped push the oil price higher and the rise is set to continue in the coming months, but prices will probably fall again towards the end of the year, according to Jan von Gerich, Analyst at Nordea Markets.Key Quotes“The further rise in prices seen since then does not change the growth outlook materially. While oil exporters and importers will naturally be impacted differently, the sensitivities of most economies to oil prices have fallen. What is more, the negative impact for the global economy stemming for higher prices has moderated, as oil producers increasingly spend their additional oil revenue instead of saving it.” “There will naturally be a clear impact on headline inflation, but this should not be overplayed either. In the Euro area, assuming a USD 80 per barrel oil price and the current FX rate, the positive impact from energy inflation would increase headline inflation by a further 0.2 percentage points by June, and ease thereafter.” “There should not be any big impact on central bank policies either. In the Euro area, the focus is clearly on core inflation, and higher energy prices do not change that picture. The ECB has made it clear that it needs to see a sustained upward trend in core inflation before it is ready to change the monetary policy setup. Higher headline inflation is not sufficient, as was illustrated as recently as last year, when headline inflation touched 2%.” “In the US, the Fed has usually looked through energy-induced spikes in headline inflation and concentrated more on the possible drag on growth. This time the Fed has put more emphasis on the symmetric nature of its inflation target, which implies it is prepared to let inflation run at least modestly above the 2% target. Temporary swings in headline inflation should not be any problem for the Fed. This was illustrated e.g. in 2008, when a jump in headline CPI to above 5% did not stop the Fed’s rate cutting cycle.”

Inflation, Retail Sales and the Producer Price Index for April are scheduled on Wednesday and should give GBP/JPY a directional move.  As expected Bo

The Producer Price Index for April is scheduled on Wednesday and should give GBP/JPY a directional move. inflation, Retail SalesAs expected, BoE officials were dovish and cautious in their testimony before the Parliament’s Treasury Select Committee, earlier in Europe.The GBP/JPY cross is trading at around 149.19 up 0.08% this Tuesday.  GBP/JPY found an intraday low at 148.76 in Asia then rose to the 149.72 level in early Europe ahead of the UK’s Inflation Report Hearings. The cross is now retracing its advance and is trading in the 149.20 region.  Earlier in the European session, the Bank of England (BOE) policymakers testified on the inflation and economic outlook before the Parliament’s Treasury Select Committee (TSC). As expected the comments were dovish and cautious.  In fact, the UK Central Bank Governor Carney said “households, businesses understand that rates are likely to rise at a gentle pace,” and that “it is right to wait for more data.” In other words, the BoE is data-dependant for further rate hikes decisions.  Looking ahead, investors will be on the lookout for the barrage of data on Wednesday with the Consumer Price Index (inflation), Producer Price Index and Retail Sales Price Index for April. In Japan, the Nikkei Purchasing Managers' Index (PMI) is slated at 00:30 on Wednesday but this piece of data is likely going to be overshadowed by the UK data dump later on in the day.  In Asia, Bank of Japan's Governor Haruhiko Kudora said he would exit the current ultra-loose monetary policy if the inflation picks up in Japan while Bank of Japan Deputy Governor Masazumi Wakatabe said: “my feeling now is that we can achieve our inflation target with the current policy.” Although the comments are slightly hawkish in nature, the market has not reacted to them as the BoJ has made multiple times such remarks without any actual follow-through.GBP/JPY 4-hour chart The GBP/JPY currency cross is trading in a bullish channel above its 50 and 100-period simple moving averages (SMA) but below its 200-period SMA suggesting a mild upward bias. Resistances are priced in at the 149.50 and 150.00 swing highs followed by the 150.50 psychological level. To to the downside, investors should likely meet resistance at the 149.00 handle and at the 148.18 swing low.

Analysts at Nomura are forecasting nominal export growth of 6.7% y-o-y, 9.5% m-o-m in April for Japanese economy while estimating a trade surplus (ori

Analysts at Nomura are forecasting nominal export growth of 6.7% y-o-y, 9.5% m-o-m in April for Japanese economy while estimating a trade surplus (original series) of JPY344.9bn and a seasonally adjusted trade surplus of JPY272.3bn. Key Quotes“Nominal exports in the first 20 days of April increased by 10.0% y-o-y (compared with 5.8% in the first 20 days of March) and nominal imports grew by 12.7% (compared with 9.9% in the first 20 days of March).” “The first 20 days of April included one more business day than the same period a year earlier and the remainder of April included one less business day. We believe growth in nominal exports and imports in April as a whole is likely to be lower than that for the first 20 days of the month, as the year-on-year difference in the number of business days is likely to boost growth in the first 20 days and weigh on growth for the remainder of the month.” “Adjusting our April nominal import/export estimates for corporate goods price index data for April (2.2% y-o-y), import prices (5.0%) and seasonal factors gives us our forecasts for real exports of 2.8% m-o-m and for real imports of 1.9%. If our forecasts are realized, full-month exports and imports will have risen by 1.5% and 0.6%, respectively, from the January-March average. Real exports (GDP-basis) rose 0.6% q-o-q in January-March (2.2% in October-December 2017), the growth rate slowed due to the effects of slower growth in overseas economies. However, we expect the April data to suggest that this weakness is temporary.”

The generalized softer tone around the greenback is now prompting USD/JPY tp drop to the 111.00 neighbourhood, all amidst a narrow trading range. USD

The pair trades within a familiar range around the 111.00 handle.US 10-year yields testing session tops around 3.08%.FOMC minutes, ECB minutes next salient events later in the week.The generalized softer tone around the greenback is now prompting USD/JPY tp drop to the 111.00 neighbourhood, all amidst a narrow trading range.USD/JPY upside capped near 111.20After recording fresh multi-month peaks near 111.40 at the beginning of the week, spot has now sparked a correction lower and returns to the 111.00 neighbourhood, where it seems to have found some decent contention. The down move in the pair comes despite yields of the key US 10-year reference managed to rebound and test the 3.08% level, or daily highs, which acted as quite a tough hourly barrier as of late. Governor H.Kuroda said in early trade that the central bank could signal some exit plans from the ultra loose monetary policy stance once prices pick up. In the meantime, the FOMC minutes due tomorrow should be the salient event this week along with the speech by Fed’s J.Powell on Friday.USD/JPY levels to considerAs of writing the pair is losing 0.09% at 110.96 and a break below 110.21 (200-day sma) would target 109.74 (21-day sma) en route to 108.64 (low May 4). On the other hand, the next hurdle lines up at 111.39 (high May 21) would open the door to 111.50 (high Jan.18) and finally 113.39 (2018 high Jan.8).

In view of Greg Gibbs, Analyst at Amplifying Global FX Capital, investor enthusiasm for Eurozone assets, equity and bonds, may remain weaker than it w

In view of Greg Gibbs, Analyst at Amplifying Global FX Capital, investor enthusiasm for Eurozone assets, equity and bonds, may remain weaker than it was earlier in the year when the market was seeing a strong recovery, lifted by global demand. Key Quotes“At that time political stability in the Eurozone was not questioned, and there was little concern over trade relations with the US.  A rising EUR was considered an essential component of the return from Eurozone assets, and there was much attention on progress in ECB policy towards QE exit.” “The outlook for Eurozone assets may no longer appear to be so robust.  And there are risk elements that point to a possible extension of ECB QE policy, and/or concern that an end to QE policy could unsettle assets in Italy and the periphery.” “As such, we are more inclined to sell into rallies in the EUR for the time being.”

   •  Fails to capitalize on early up-move, despite the ongoing USD retracement.    •  A goodish pickup in the US bond yields seemed to prompt some f

   •  Fails to capitalize on early up-move, despite the ongoing USD retracement.
   •  A goodish pickup in the US bond yields seemed to prompt some fresh selling.
The NZD/USD pair surrendered a major part of its early gains to over one-week tops and has now moved on the brink of drifting into negative territory. The pair built on last week's recovery move from 5-month lows but failed to capitalize on the early up-move and ran into some resistance near the 0.6975 region.  A combination of supportive factors, namely the ongoing US Dollar profit taking slide and the prevalent positive trading sentiment around commodity space, did little to provide any fresh bullish impetus.  Meanwhile, a goodish pickup in the US Treasury bond yields now seemed to have prompted some fresh selling around higher-yielding currencies - like the Kiwi and is turning out to be an exclusive driver of the pair's slide since the early European session.  

It would now be interesting to see if bulls are able to regain their dominant position or the retracement slide points to a resumption of the pair's prior depreciating slide amid empty US economic docket.Technical levels to watchAny subsequent retracement is likely to find support near the 0.6910-0.6900 region, below which the pair could head back towards YTD lows support near the 0.6860-50 area.  On the flip side, the 0.6975-80 region now seems to have emerged as an immediate resistance, which if cleared should assist the pair to build on its momentum back above the key 0.70 psychological mark.
 

   •  USD extends overnight corrective slide and helps regain some positive traction.    •  Reviving safe-haven demand provides an additional boost a

   •  USD extends overnight corrective slide and helps regain some positive traction.
   •  Reviving safe-haven demand provides an additional boost and remains supportive.
   •  A renewed uptick in the US bond yields might now seem to cap any further gains.
Gold reversed an early dip to intraday lows near $1288 and is currently placed near session tops, around the $1295-96 region. The US Dollar struggled to build on its early uptick and was now seen extending overnight corrective slide from YTD tops. With investors looking past the latest optimism over the US-China trade relations, a modest USD profit-taking slide was eventually seen benefitting dollar-denominated commodities - like gold.  This coupled with the prevalent cautious sentiment around European equity markets underpinned demand for traditional safe-haven assets and further collaborated to the precious metal's attempted recovery move.  Meanwhile, a modest uptick in the US Treasury bond yields capped any additional gains for the non-yielding yellow metal, with bulls struggling to make it through a one-week-old resistance near the $1297 region.  Hence, it would be prudent to wait for a strong follow-through buying interest before confirming that the commodity might have bottomed out in the near-term. Moving ahead, this week's release of the latest FOMC meeting minutes, along with Fedspeaks would be closely scrutinized for clues over the central bank's near-term monetary policy outlook and might eventually help determine the commodity's next leg of directional move.Technical levels to watchMomentum beyond $1296-97 area is likely to lift the metal back above the $1300 handle towards retesting the very important 200-day SMA barrier near the $1307 region. On the flip side, the $1286-85 region might continue to protect the immediate downside, which if broken is likely to accelerate the fall further towards $1277 intermediate support en-route its next major support near the $1270-68 region.
 

Greg Gibbs, Analyst at Amplifying Global FX Capital, suggests that the US economy is in a better position to benefit from higher oil prices due to its

Greg Gibbs, Analyst at Amplifying Global FX Capital, suggests that the US economy is in a better position to benefit from higher oil prices due to its growing energy sector. Key Quotes“Already it seems business investment in the sector will help support overall US manufacturing.  Recent US regional manufacturing surveys have been strong.  We should expect this to play out in the Richmond Fed and Markit PMI this week.” “We might also see improvement in the Eurozone PMI after its fall over the first four months of the year. As Draghi noted in his April press conference, some of the decline appears to be driven by temporary factors – cold weather, strikes, and the timing of Easter.  This may help the EUR recover in the near term." “The Eurozone is increasingly dependent on oil imports and thus may see higher oil prices as a factor dampening economic confidence.  Higher oil prices will add to inflation, but the ECB is likely to view much of this impact as transitory and thus not a reason to speed up QE exit.” “However, the EU’s efforts to retain trading relations with Iran may result in the use of EUR in the place of the USD to trade in oil.  At the margin, this may result in demand for EUR over the USD.”  

The European Commission, which negotiates on behalf of the 28 EU members, cleared the way on Tuesday for the bloc to begin free trade talks with Austr

The European Commission, which negotiates on behalf of the 28 EU members, cleared the way on Tuesday for the bloc to begin free trade talks with Australia and New Zealand in an effort to counter the intensifying trade tensions with the US, Reuters reports. The EU is likely to reach comprehensive agreements with both countries, although with caveats about opening up EU markets to farm produce such as butter and beef.

Allan von Mehren, Chief Analyst at Danske bank, believes the pair could slip back to the 6.20 area within a year’s view. Key Quotes “We look for a m

Allan von Mehren, Chief Analyst at Danske bank, believes the pair could slip back to the 6.20 area within a year’s view.Key Quotes“We look for a moderate slowdown in China as the housing market is set to slow further and export growth also softens. We expect growth to decline to around 6½% from 6.9% in 2017”. “We look for Chinese money market rates to ease further in 2018 following a big rise in 2017 as liquidity was tightened. M1 growth has fallen quite sharply due to the monetary policy and we expect PBoC to ease the foot a bit further from the break. PBoC has cut the Reserve Requirement Ratio to free up some liquidity recently. As US money market rates is set to rise, relative rates will move in favour of the USD”. “We look for the main driver of USD/CNY to continue to be the overall USD development. We keep our forecast of a decline in USD/CNY to 6.20 in 12M”.

In its latest monthly economic report, the German central bank – Bundesbank (Buba), highlighted the following key points: German economic growth pick

In its latest monthly economic report, the German central bank – Bundesbank (Buba), highlighted the following key points: German economic growth picking up again in Q2. Economic boom to continue. But underlying momentum has likely slowed. Demand still very favorable despite recent decline in orders. Company investments are set to increase further. Business sentiment signals economy won't reach high growth rates recorded last year.

The GBP/USD pair is seen experiencing good two-way price-movements in the European session, as markets digest the dovish and cautious remarks from the

Dovish BOE-speaks and stalled USD selling knocked-off Cable to mid-1.34s.Focus shifts to the UK CPI report due tomorrow for next direction.The GBP/USD pair is seen experiencing good two-way price-movements in the European session, as markets digest the dovish and cautious remarks from the key Bank of England (BOE) policymakers following their testimony on the inflation and economic outlook before the Parliament’s Treasury Select Committee (TSC). Cable’s recovery ran into resistance just shy of the 1.3500 barrier that knocked off the rates back towards the midpoint of the 1.34 handle. The spot managed to find fresh buyers ahead of the last, now reverting to the upper band of today’s trading range near 1.3475 levels. The downside in the major remained short-lived, as the US dollar continues its corrective move lower across the board, despite the 10-year Treasury yields attempting a bounce from weekly lows at 3.050%. Moreover, the pound also remains underpinned by the rally in oil prices while the recent Brexit optimism also keeps the recovery-mode intact in GBP/USD, as Brexit talks resume for the first time since the UK PM Theresa May met with her European Union (EU) counterparts and offered a compromise on customs. Looking ahead, “investors this week will also confront the release of latest UK consumer inflation figures and monthly retail sales data. This along with the release of latest FOMC meeting minutes and the US durable goods orders will further help investors determine the pair's next leg of the directional move,” FXStreet’s Analyst, Haresh Menghani wrote.GBP/USD Technical LevelsAccording to Slobodan Drvenica at Windsor Brokers, “Bearish signal would be generated on a repeated close below 1.3451/42 pivots, which would open the way towards higher base at 1.33 zone (Dec 2017). Conversely, bears could be delayed on close above 1.3451, but close above 10SMA (1.3503) is needed to confirm and expose next strong barrier at 1.3560 (200SMA). Res: 1.3482; 1.3503; 1.3560; 1.3589 Sup: 1.3412; 1.3390; 1.3354; 1.3302.”

The upbeat tone around the single currency remains well and sound today, lifting EUR/USD to fresh daily highs in the 1.1830 region. EUR/USD supported

The pair is flirting with daily highs in the 1.1830 region.Spot gains further upside traction on weaker greenback.US 10-year yields are approaching the 3.08% level.The upbeat tone around the single currency remains well and sound today, lifting EUR/USD to fresh daily highs in the 1.1830 region.EUR/USD supported near 1.1700Fresh dip buyers around the shared currency appeared around yesterday’s multi-month lows in the 1.1700 neighbourhood, motivating spot to regain the 1.1800 milestone and beyond. The greenback, on the other side, drops to fresh 3-day lows in the 93.35/30 band, extending the leg lower after clinching fresh 2018 peaks above 94.00 the figure at the beginning of the week. Absent releases in Euroland and the US calendars, market participants should continue to look to risk appetite trends for near term direction, while initial jitters regarding the populist coalition government in Italy appear somewhat mitigated.EUR/USD levels to watchAt the moment, the pair is gaining 0.25% at 1.1821 facing the next up barrier at 1.1842 (10-day sma) followed by 1.1943 (21-day sma) and finally 1.1996 (high May 14). On the downside, a breach of 1.1717 (2018 low May 21) would aim for 1.1700 (psychological level) and then 1.1553 (monthly low Nov. 7 2017).

United Kingdom CBI Industrial Trends Survey - Orders (MoM) came in at -3, below expectations (2) in May

An anomaly that was in the financial markets, namely the negative correlation between US interest rates (US-Japan interest rate spread) and USD/JPY, s

An anomaly that was in the financial markets, namely the negative correlation between US interest rates (US-Japan interest rate spread) and USD/JPY, started to disappear in April, according to analysts at Nomura.Key Quotes“We attribute the anomaly to (1) concerns that the expansionary fiscal policies of the US Trump administration might amplify economic volatility, (2) uncertainty over the sustainability of the US fiscal deficit and government debt, (3) concerns that US monetary policy might be a step behind overheating in the economy or a pick-up in inflation in the US, (4) uncertainty over protective US trade policy, and (5) heightened expectations for early normalization of monetary policy by the BOJ.” “We think factors remain that could get in the way of ending the anomaly, including (1) concern that global economic growth momentum could decline in general owing to maturation of the economic cycle, (2) concerns that US trade demands on China could take on geopolitical overtones including deterring Chinese hegemony, (3) the possibility that recent increases in crude oil prices and the appreciation in the yen could boost expectations, via expectations for a pick-up in inflation, for the BOJ to normalize monetary policy, and (4) concerns that the accumulation of debt could become a problem in emerging nations or that credit concerns could emerge in response to higher US interest rates and a rise in the US dollar.”

Greg Gibbs, Analyst at Amplifying Global FX Capital, suggests that an issue that may dampen a quick or full recovery in the EUR is the risk of increas

Greg Gibbs, Analyst at Amplifying Global FX Capital, suggests that an issue that may dampen a quick or full recovery in the EUR is the risk of increasing tension between the US and the EU over Iran sanctions and trade. Key Quotes“EU companies will face sanctions from the US if they continue to do business with Iran.  And disagreement over the Iran deal may exacerbate a brewing argument over trade.” “Now that the US administration has extracted some concessions from China on trade and moved negotiations onto a more extended timeline, it could turn its attention to pressuring Europe to reduce its trade surplus with the US.” “The ECB has highlighted a possible trade war as a downside risk for the Eurozone economy.  Any increase in tensions between the US and the EU may be seen as undermining business confidence and delaying ECB QE exit.”

Reuters reports comments from the BOE hawk Michael Saunders, as he testifies before the Treasury Select Committee (TSC). Labour market will continue

Reuters reports comments from the BOE hawk Michael Saunders, as he testifies before the Treasury Select Committee (TSC). Labour market will continue to tighten. Does not think labour market has overheated yet. Jobless rate will fall more than the MPC base case. Views that Q1 weakness is erratic or may be revised away. Brexit will probably have a moderate negative impact in the long run. Inflation impact of Sterling's drop is starting to fade.

In opinion of Karen Jones, Head of FICC Technical Analysis at Commerzbank, the Aussie Dollar could extend the rebound to the 0.7630/0.7700 band. Key

In opinion of Karen Jones, Head of FICC Technical Analysis at Commerzbank, the Aussie Dollar could extend the rebound to the 0.7630/0.7700 band.Key QuotesAUD/USD has recently based at .7413 and has eroded the 38.2% retracement at .7568. This has completed a small base and we would allow for a deeper corrective phase to .7630/.7700. The March low is at .7643”. “Below .7413 lie the next lower May 2017 lows at .7373/.7330. Longer term we look for a move to the 2001-2018 uptrend line at .7156”.

The greenback, tracked by the US Dollar Index, is trading on the defensive for another session, testing lows in the 93.30 region. US Dollar upside ca

The index met increasing selling pressure on Tuesday.Yields of the US 10-year note climb to daily highs near 3.08%.DXY continues to correct lower following Monday’s YTD tops.The greenback, tracked by the US Dollar Index, is trading on the defensive for another session, testing lows in the 93.30 region.US Dollar upside capped above 94.00After recording fresh multi-month peaks above 94.00 the figure on Monday, USD-sellers stepped in and dragged the index to today’s lows in the 93.35/30 band. The offered tone remains well and sound around the buck during the first half of the week amidst some consolidation in yields of the US 10-year reference above the key 3.0% level. Furthermore, USD remains so far underpinned by the divergence in monetary policy between the Federal Reserve and the rest of its peers, while the economic growth gap between the US and the main economies of the world also add to the idea of a stronger buck. Nothing scheduled in the US docket today, while all the attention remains on tomorrow’s FOMC minutes and the speech by Chief J.Powell on Friday.US Dollar relevant levelsAs of writing the index is losing 0.18% at 93.39 and a breakdown of 93.15 (10-day sma) would aim for 93.12 (low May 18) and finally 92.58 (21-day sma). On the flip side, the next up barrier is located at 94.03 (2018 high May 21) followed by 94.22 (monthly high Dec.11 2017) and then 94.27 (high Oct.5 2017).

More comments flowing in from the Bank of England (BOE) Governor Carney, as he continues to testify before the UK Parliament. Don't think much of the

More comments flowing in from the Bank of England (BOE) Governor Carney, as he continues to testify before the UK Parliament. Don't think much of the lost Q1 growth due to poor weather will be made up.Expect to report more on neutral level of the UK interest rates in August inflation repo. Monetary policy committee (MPC) has had "rigorous" discussion of publishing interest rate path, majority of MPC not in favour. If BOE published rate path, might feel committed to follow through for reasons of credibility even if no longer economically appropriate.

   •  The ongoing USD profit-taking prompts some additional selling on Tuesday.    •  Bullish oil prices underpin Loonie and further collaborate to t

   •  The ongoing USD profit-taking prompts some additional selling on Tuesday.
   •  Bullish oil prices underpin Loonie and further collaborate to the downfall.
The USD/CAD pair remained under some selling pressure for the second consecutive session and extended overnight slide from the 1.2900 neighborhood. The pair on Monday retreated over 100-pips from an intraday high level of 1.2890, with a combination of negative factors continuing to exert downward pressure through the early European session on Tuesday. After an initial uptick, the US Dollar extended its retracement slide from YTD tops and did little to lend any support. This coupled with the ongoing upsurge in crude oil prices underpinned the commodity-linked currency - Loonie and further collaborated to the pair's offered tone.  The pair has now dropped to its immediate support near mid-1.2700s, over one-week lows, which if broken should pave the way for further near-term depreciating slide ahead of this week's important releases of the latest FOMC meeting minutes and the US durable goods orders. Technical levels to watchSustained weakness below the above-mentioned support, leading to a subsequent drop below 1.2730 level, is likely to accelerate the fall towards 100-day SMA support near the 1.2700-1.2695 region. On the flip side, any recovery attempt is likely to confront immediate resistance near 1.2785 level, with is followed by the 1.2800 handle and 50-day SMA barrier near the 1.2820-25 region.
 

The Bank of England (BOE) policymaker Ramsden is on the wires now, via Reuters, making comments at his testimony before the Treasury Select Committee

The Bank of England (BOE) policymaker Ramsden is on the wires now, via Reuters, making comments at his testimony before the Treasury Select Committee (TSC), with the key headlines found below. I'm more skeptical than Vlieghe about giving more detailed rate path guidance. Giving more detailed rate hike guidance would risk getting lost in translation, misinterpreted as promises.

The bulls remain unstoppable, now pushing WTI (oil futures on NYMEX) closer towards the $ 73 mark, having refreshed the highest levels since November

Bulls continue to derive support from falling Venezuela output and Iran concerns.WTI looks to regain $ 73 while Brent tests the 80 psychological barrier. The bulls remain unstoppable, now pushing WTI (oil futures on NYMEX) closer towards the $ 73 mark, having refreshed the highest levels since November 2014. The barrel of WTI resumes its march higher, having consolidated briefly around the $ 72.50 level earlier today. Oil continues to find support from the looming concerns over supply disruption that could arise amid falling Venezuela’s crude output following a disputed presidential election while potential US sanctions on Iran also adds to the bullish tone seen around the black gold. The US Secretary of State Pompeo toughened the US’ stance on Iran and made a list of sweeping demands on the OPEC’s third-largest oil producer. Markets now await the US weekly crude stockpiles report due to be released by the American Petroleum Institute (API) later on Tuesday for fresh trading opportunities.WTI Technical LevelsAccording to Peter Rosenstreich, Swissquote Bank’s Head of Market Strategy, “Crude oil is increasing further, breaking 72 psychological level. The road is wide opened for further rise. The bullish pattern started in mid- February 2018 is strengthening. Hourly support and resistance are given at 65.56 (17/04/2018 low) and 73.56 (28/11/2014 high). The technical structure suggests further short-term upward moves. In the long-term, crude oil has recovered after its sharp decline last year. However, we consider that further weakness is very likely.”  

Following the comments from the Bank of England (BOE) MPC member Vlieghe, the UK central bank Governor Carney is up on the rostrum now, testifying on

Following the comments from the Bank of England (BOE) MPC member Vlieghe, the UK central bank Governor Carney is up on the rostrum now, testifying on inflation and the economic outlook before Parliament's Treasury Select Committee (TSC).Key Headlines:The economy did not evolve in line with February forecast. Guidance BOE gives is conditional on the economic outlook. Households, businesses understand that rates are likely to rise at a gentle pace. Q1 slowdown likely due to idiosyncratic and temporary factors. It is right to wait for more data. Interest rate volatility in short-term markets is very low by historic standards.  

Finland's Central Bank Governor Erkki Liikanen, speaking at the Finnish parliament, said that it will take time before core inflation supports inflati

Finland's Central Bank Governor Erkki Liikanen, speaking at the Finnish parliament, said that it will take time before core inflation supports inflation development.  The comments did little to assist the shared currency to build on its recovery attempt, with the EUR/USD pair quickly retreating over 20-pips from session tops touched in the last hour.

Spain 9-Month Letras Auction: -0.368% vs -0.452%

Spain 3-Month Letras Auction up to -0.502% from previous -0.598%

Continuing with his testimony before the Treasury Committee, in London, the BoE's external MPC Member Gertjan Vlieghe was further noted saying:    • 

Continuing with his testimony before the Treasury Committee, in London, the BoE's external MPC Member Gertjan Vlieghe was further noted saying:    •  His central projection is one/two 0.25% rate increases will be needed per year.
   •  This will be over a three-year forecast period.
   •  Says his central forecast is slightly above the rates path in May's inflation report.
   •  Long-run impact of Brexit is not BOE's main concern.
   •  The BOE is though concerned with domestic reactions to Brexit vote.
   •  Unwinding of asset purchases likely to take place when rates have moved up sufficiently that they can be used effectively in either direction.
   •  Risks to productivity growth over the next few years are probably skewed to the downside of BoE's 1% forecast.
   •  US trade tariffs have been too small to have a material effect on UK economy.
   •  Even if additional US trade measures discussed so far are implemented, it would probably still not have a material effect on the UK.

United Kingdom Public Sector Net Borrowing came in at £6.23B below forecasts (£7.1B) in April

The BoE's external MPC Member Gertjan Vlieghe, at his testimony before the Treasury Committee, in London, was noted saying that Brexit uncertainty is

The BoE's external MPC Member Gertjan Vlieghe, at his testimony before the Treasury Committee, in London, was noted saying that Brexit uncertainty is having a dampening effect on some of the economy.Additional quotes:   •  Interest rates will go up very gradually over the next few years.
   •  Doesn't believe he has a big difference with the central view of the MPC.

According to the latest headline flashing on the wires, China's Finance Ministry confirmed to cut import duty on car to 15% and tariffs for some auto

According to the latest headline flashing on the wires, China's Finance Ministry confirmed to cut import duty on car to 15% and tariffs for some auto parts to 6% effective from 1st July.  The official confirmation comes amid easing US-China trade tensions and might be seen as a positive development towards avoiding a full-blown trade war between the world's two largest economies.

The Norwegian Krone could face some selling pressure in the very near term, noted Aila Mihr, Analyst at Danske Bank. Key Quotes “While domestic data

The Norwegian Krone could face some selling pressure in the very near term, noted Aila Mihr, Analyst at Danske Bank.Key Quotes“While domestic data has been on the weak side, the SEK move alongside higher oil prices has sent EUR/NO K to the low end of the 9.47-9.75 range”. “With Norway out on Monday, yesterday’s price action is likely to reflect renewed foreign NOK buying interest. Today, it will be key to see whether domestic importers will utilise the move lower, as we know that 9.50 has triggered EUR/NOK buying interest previously”.

According to Richard Franulovich, Research Analyst at Westpac, the outlook for the US economy this year is not especially contentious – the economy is

According to Richard Franulovich, Research Analyst at Westpac, the outlook for the US economy this year is not especially contentious – the economy is near full employment, business and consumer confidence are at multi decade highs and tax cuts are washing over the economy.Key Quotes“The median FOMC forecast is for a solid above trend 2.7% growth rate in 2018. Private sector forecasters agree, the latest Bloomberg median forecast at 2.8%.” “The median FOMC and private sector projection for 2019 and 2020 are in broad alignment too, both calling growth to ease, the FOMC 2019 and 2020 median at 2.4% and 2.0% respectively, while the Bloomberg median is 2.5% and 1.9% respectively.” “The outlook for 2019 and 2020 is however arguably more contentious than these medians imply.” “Influential Fed centrists Williams (soon to be NY Fed President) and Dallas President Kaplan have weighed in on the debate. Last week they both reiterated an upbeat message for 2018 but sounded curiously cautious thereafter. Kaplan cautioned that the tax boost would fade in 2019, slowing growth to 1.75%-2.0% in 2020, putting him at the lower end of the central tendency.” “Williams did not speak to 2019 specifically but did note that the “tax cuts are front-loaded” and that optimism about r-star is misplaced.” “In a similar vein, the relentless easing in US financial conditions has come to an end as well. US financial conditions are not tight, but the mix of choppy equity values in recent weeks, wider credit spreads, higher mortgage rates, yield curve flattening, a higher in the USD and higher LIBOR-OIS wholesale funding rates have all finally produced a measurable turning point in US financial conditions.” “Labour productivity seems to be linked to growth in the US capital stock too. Any lift in the supply side potential of the US economy stemming from tax cuts would imply a more enduring positive growth impact than the aforementioned studies too.” “A lower growth baseline for 2019/2020 versus 2018 fits the signal from the modest tightening in financial conditions and various studies that point to a fading fiscal boost in these years. That said there is a plausible wide range of outcomes.”

Cable’s stance remains offered as long as it trades below 1.3890, suggested Karen Jones, Head of FICC Technical Analysis at Commerzbank. Key Quotes

Cable’s stance remains offered as long as it trades below 1.3890, suggested Karen Jones, Head of FICC Technical Analysis at Commerzbank.Key QuotesGBP/USD has sold off to the 55 week ma which lies at 1.3400 and is our initial downside target. We note the 13 count and extreme caution is warranted. We have some support at 1.3302/20, the mid December low and we look for this to hold the initial test”. “Currently intraday Elliott wave counts are pointing to a 1.3580/1.3660 move. The March low lies at 1.3712. Rallies are expected to remain capped by the 1.3890 55 day moving average and while below here the market will remain directly offered”. “Below 1.3300 will trigger losses to the 1.3040 October low”.

In light of CME Group’s preliminary data for GBP futures markets, open interest rose by more than 3.3K contracts on Monday from Friday’s final 184,547

In light of CME Group’s preliminary data for GBP futures markets, open interest rose by more than 3.3K contracts on Monday from Friday’s final 184,547 contracts. Volume followed suit, up by around 16.2K contracts yesterday.GBP/USD met strong support at 1.34Cable continues to recover after falling to fresh multi-month lows in levels just below 1.3400 the figure at the beginning of the week. The rebound has been accompanied by rising both open interest and volume, allowing for a continuation of the up move to 1.3658 (September 2017 top), which should be the first relevant hurdle.

Treasury Secretary Mnuchin indicated over the weekend that the proposed $150bn US tariffs on Chinese imports would be postponed while trade negotiatio

Treasury Secretary Mnuchin indicated over the weekend that the proposed $150bn US tariffs on Chinese imports would be postponed while trade negotiations continue, points out the research team at Nomura.Key Quotes“His comments followed a two-day round of talks between US and Chinese officials and lowered the likelihood of an initial round of tariffs being imposed, helping to partially defuse US-China tensions over the near term.” “Separately, Mnuchin said yesterday that President Trump would be willing to accept a “skinny” NAFTA 2.0, i.e., an agreement that did not require Congressional approval if the current negotiations do not go as planned. A more limited NAFTA 2.0 would need to involve only changes to the current agreement that can be enacted by presidential proclamation and do not affect federal statutory law. Historically, changing rules of origin or certain tariff rates has been done by the executive branch without Congressional approval. However, relying on executive branch authority alone would likely significantly reduce the scope of any “skinny” NAFTA agreement changes.”

   •  A sudden fall in the USD prompts some follow-through short-covering move.    •  Further gains likely to remain capped amid continued Italian po

   •  A sudden fall in the USD prompts some follow-through short-covering move.
   •  Further gains likely to remain capped amid continued Italian political uncertainty.
After an initial dip to 1.1757, the EUR/USD pair caught some fresh bids and was now seen building on overnight rebound from 6-month lows. The pair's latest leg of sharp uptick over the past hour or so, further beyond the 1.1800 handle, could be solely attributed to a sudden fall witnessed around the US Dollar. Despite some renewed uptick in the US Treasury bond yields, the greenback failed to preserve early gains and was seen as one of the key factors prompting some additional short-covering move for the second consecutive session. The up-move, however, lacked any strong bullish conviction amid continued political uncertainty in Italy. This coupled with the latest US-China trade optimism and expectations of faster Fed monetary policy tightening cycle might further contribute towards capping any meaningful up-move.  Hence, it would be prudent to wait for a strong follow-through buying before confirming that the pair might have bottomed out in the near-term and the up-move is backed by some genuine buying, and not solely driven by short-covering.    •  EUR rebound may be limited - AmpGFXThere isn't any major market-moving economic data due for release on Tuesday and hence, the USD price-dynamics might continue to act as an exclusive driver of the pair's momentum. Technical levels to watchA follow-through buying interest has the potential to continue lifting the pair towards 1.1845-50 supply zone, above which the momentum could further get extended towards reclaiming the 1.1900 handle. On the flip side, any meaningful retracement back below the 1.1800 handle now seems to find strong support near the 1.1765 level, which if broken would pave the way for an extension of the pair's near-term bearish trajectory.
 

Andreas Wallström, Analyst at Nordea Markets, notes that Sweden’s unemployment increased to 6.3% in April, which is in line with the Riksbank’s foreca

Andreas Wallström, Analyst at Nordea Markets, notes that Sweden’s unemployment increased to 6.3% in April, which is in line with the Riksbank’s forecast but way above the government’s target.Key QuotesThe outcome is, however, fully in line with the Riksbank’s forecast at 6.3% on average for Q2.”“Employment stayed unchanged over the month, while we had expected a modest increase. Labour supply rose in line with expectations.” “All in all, the report was healthy although not super strong. The continued low unemployment rate (likely below the natural rate) may give the Riksbank faith in higher wage growth. So far, however, wage growth has been modest and we don’t foresee any noticeable increase going forward.” “The government’s goal of reaching the lowest unemployment rate in the EU remains distant.”

Lan Shen, Economist at Standard Chartered, points out that their China SMEI reading shows that activity at SMEs is picking up pace in May as the headl

Lan Shen, Economist at Standard Chartered, points out that their China SMEI reading shows that activity at SMEs is picking up pace in May as the headline SMEI reading edged up to 58.3 from 58.0 in April, and the growth momentum index strengthened to 15.0 from 11.6.Key Quotes“The ‘current performance’ sub-index advanced 0.5ppt to 60.2, while the ‘expectation’ sub-index stayed flat at 62.0, suggesting resilient performance in May and a stable outlook for the coming months. SMEs in the services industry and in southern China outperformed during the month.” “The new orders reading for SMEs increased in May, suggesting a demand recovery in the busy season. Trade tensions between China and the US seem to have had little impact on export orders. As a result, production activity accelerated further and capacity usage increased. The labour market remained tight.” “The credit conditions sub-index rose 0.5ppt to 52.8 in May, thanks to an improvement in surplus cash. With tighter regulations squeezing off-balance-sheet lending, credit demand remained stronger than supply, compressing bank credit extension to SMEs and lifting lending rates.”

Aila Mihr, Analyst at Danske Bank, noted the fair value for the cross should be around the 10.25 area. Key Quotes “The Riksbank Jansson’s comments w

Aila Mihr, Analyst at Danske Bank, noted the fair value for the cross should be around the 10.25 area.Key Quotes“The Riksbank Jansson’s comments were a bit all over the place yesterday: on the one hand he said that SEK is ‘not the motor’ for inflation; on the other that the krona is ‘important’ for inflation. Somewhat contradicting but maybe one should interpret him like this: the krona cannot be the motor for inflation in the longer term, though in the short term (now) it is important; at least, the latter rhymes with the Riksbank’s normal phrase, i.e. ‘the krona must not appreciate too fast’. “The knee-jerk reaction to the plethora of flashes was to send EUR/SEK lower; this made sense as it was less cautious wording than we have been used to from the ‘SEK tamer in command’. That said, it would be premature from their point of view to let go of the krona, given that underlying inflation is still muted. Our short-term models suggests that EUR/SEK is close to fair value at around 10.25”.

In opinion of Karen Jones, Head of FICC Technical Analysis at Commerzbank, the pair’s stance is cautious, while a rebound is likely. Key Quotes “EUR

In opinion of Karen Jones, Head of FICC Technical Analysis at Commerzbank, the pair’s stance is cautious, while a rebound is likely.Key QuotesEUR/USD has sold off to the December 2017 low where it is holding. It has not yet closed below its 78.6% retracement at 1.1767 and we note the 13 count, all of which suggest extreme caution and a likely rebound. The market stays immediately offered below the accelerated downtrend at 1.1853 but will have very little impact while below the 1.1996 14th May high”. “A close below 1.1712 will target the 1.1616 May 2016 high and then the 1.1553 November low with the 200 week ma at 1.1442 our ultimate goal”. “The 200 day ma at 1.2021 guards the 1.2092 September 2017 high and the 1.2155 March low and while capped here we maintain an immediate bearish bias”.

According to advanced figures for EUR futures markets from CME Group, investors added more than 5.5K contracts to their open interest positions on Mon

According to advanced figures for EUR futures markets from CME Group, investors added more than 5.5K contracts to their open interest positions on Monday from Friday’s final 513,951 contracts. In the same line, volume increased by almost 9.7K contracts.EUR/USD squeeze higher could re-test 1.2000/21EUR/USD is adding to yesterday’s gains and extending the rebound after hitting December’s low in the 1.1720/10 band. The rally appears to have further legs amidst rising open interest and volume, a bullish signal that could prompt spot to re-visit the 1.20 neighbourhood.

   •  Resurgent USD demand prompts some fresh selling on Tuesday.    •  Sliding US bond yields/cautious mood helps limit further downside. Gold stru

   •  Resurgent USD demand prompts some fresh selling on Tuesday.
   •  Sliding US bond yields/cautious mood helps limit further downside.
Gold struggled to build on overnight rebound from fresh YTD lows and came under some renewed selling pressure on Tuesday. After yesterday's pull-back, the US Dollar demand picked up pace on Tuesday and was seen as one of the key factors prompting some fresh selling around dollar-denominated commodities - like gold. Further downside, however, remained cushioned amid a weaker tone around the US Treasury bond yields, which helped the non-yielding yellow metal to hold its neck just above multi-month lows touched in the previous session.  This coupled with the prevalent cautious mood, as depicted by a subdued opening across European equity markets, underpinned the precious metal's safe-haven appeal and might also contribute towards limiting any further downside, at least for the time being. Looking at the broader picture, the commodity has been oscillating within a broader trading range, possibly waiting for the next big catalyst before the next leg of directional move. Hence, it would be prudent to wait for a decisive break through the near-term consolidation phase before positioning for the commodity's near-term trajectory.Technical levels to watchImmediate support remains near the $1285 region, which if broken decisively is likely to accelerate the fall towards $1277 intermediate level en-route $1270-68 strong support. On the upside, the $1295-97 region might continue to act as an immediate resistance, above which a bout of short-covering could lift the commodity back above the $1300 handle towards retesting the very important 200-day SMA, currently near the $1307 region.
 

In the UK, public sector borrowing data along with CBI selling prices survey will be released and in addition, another round of Brexit negotiations is

In the UK, public sector borrowing data along with CBI selling prices survey will be released and in addition, another round of Brexit negotiations is also due to start in Brussels and Governor Carney will testify before the parliament’s Treasury Committee, points out the research team at Rabobank.Key Quotes“It has not been an easy few months for the Bank of England’s MPC. Having signaled in February that “monetary policy would need to be tightened somewhat earlier and by a somewhat greater extent”, policy makers had to retreat to a more cautious position in May after a spate of disappointing UK economic data. While economists still see scope for a rate hike in August, the money market is yet to be convinced, but almost everyone would agree that better data is needed before the MPC can act on policy.” “Today, Governor Carney along with his fellow MPC members Ramsden, Saunders and Vlieghe will be present at a parliamentary hearing. Some questions on the Bank’s communications strategy are likely, but ahead of a week that contains key data on UK CPI inflation and retail sales, the market will be watching for any signs that strengthen the case for an August rate rise.”  

US State Secretary Mike Pompeo laid out 12 'basic requirements' to Iran for sanctions relief, including a halt to all uranium enrichment and its balli

US State Secretary Mike Pompeo laid out 12 'basic requirements' to Iran for sanctions relief, including a halt to all uranium enrichment and its ballistic missile programme, notes the research team at Danske Bank.Key Quotes“The demands drew swift rebuff from Iran's president Rouhani and the EU's foreign policy chief, indicating the lingering tensions about the future of the Iran nuclear deal.”

Sweden Unemployment Rate came in at 6.8%, above forecasts (6.6%) in April

Analysts at Nomura suggest that public finances and CBI industrial trends survey data are going to be the key economic releases for today’s session.

Analysts at Nomura suggest that public finances and CBI industrial trends survey data are going to be the key economic releases for today’s session.Key Quotes“Headline public sector net borrowing (ex-public sector banks) was £42.6bn in fiscal year 2017-18, over £7bn less than expected by the Office for Budget Responsibility six months ago.” “CBI industrial trends survey: The activity balances of this survey have generally slowed since the turn of the year, but remain positive. However, a solid reading on output expectations last month could be supportive for this week’s survey.”

Bloomberg quoted unnamed sources with the knowledge of the matter, as saying that China is said to cut the import duty on passenger cars to 15 percent

Bloomberg quoted unnamed sources with the knowledge of the matter, as saying that China is said to cut the import duty on passenger cars to 15 percent from 23 percent. This comes after some unnamed sources said that the US-China trade deal is likely to include a pledge to remove tariffs on US agricultural products.

   •  Renewed USD buying does little prompt any fresh selling.    •  Bulls seemed to track a weaker tone around the US bond yields.    •  This week’

   •  Renewed USD buying does little prompt any fresh selling.
   •  Bulls seemed to track a weaker tone around the US bond yields.
   •  This week’s important releases would set the near-term tone. 
The AUD/USD pair held on to its mildly positive tone for the third consecutive session, with bulls now eyeing a move further beyond the 0.7600 handle. The pair built on previous session's strong upsurge and seemed rather unaffected by some renewed pickup in the US Dollar demand. A softer tone around the US Treasury bond yields helped offset USD strength and remained supportive of a modest uptick around higher-yielding currencies - like the Aussie. Meanwhile, a subdued action around commodity space, especially copper, which tends to influence the commodity-linked Australian Dollar, did little to influence the price-action and hinder the pair's ongoing recovery move.  It would now be interesting to see if the pair is able to build on the momentum further beyond the 0.7600 handle as market participant now look forward to the release of latest FOMC meeting minutes. This along with speeches by influential FOMC member would be closely scrutinized for clues about the central bank's near-term monetary policy outlook, which might eventually help determine the pair's next leg of directional move.Technical levels to watchOn a sustained move beyond the 0.7600 handle, the pair is more likely to extend the recovery move towards its next major hurdle near the 0.7650-55 region. On the flip side, any meaningful retracement seems to find some fresh buying near the 0.7570 level and is followed by support near the 0.7540 region.
 

The European Union (EU) Trade Commissioner Cecilia Malmstrom was on the wires now, via Reuters, speaking in Brussels on the US metal tariffs issue. K

The European Union (EU) Trade Commissioner Cecilia Malmstrom was on the wires now, via Reuters, speaking in Brussels on the US metal tariffs issue.Key Headlines:US should end metal tariffs threat. Any US quotas on EU metals must respect trade flows.

Analysts at Nomura suggest that the recent recovery in USD/JPY will be a relief for the BOJ, but they do not think the current level will be strong en

Analysts at Nomura suggest that the recent recovery in USD/JPY will be a relief for the BOJ, but they do not think the current level will be strong enough to accelerate core CPI inflation meaningfully.Key Quotes“It will need to overshoot to 120 or above in order for the BOJ to change its policy stance. At this level of USD/JPY, the BOJ is unlikely to change its policy stance in order to stop it appreciating further. It will take external headwinds, such as 1) broader risk-off moves and 2) a more dovish Fed, to stop the USD/JPY appreciation trend.”

Greg Gibbs, Analyst at Amplifying Global FX Capital, suggests that they are not convinced that this is the right time to turn risk-averse on Italy as

Greg Gibbs, Analyst at Amplifying Global FX Capital, suggests that they are not convinced that this is the right time to turn risk-averse on Italy as after the initial shock of a populist Italian coalition government that wants to increase deficit spending on social handouts and challenge EU fiscal rules, it remains to be seen how far it will go.Key Quotes“They have complained of being “blackmailed” by the selloff in Italian assets.  And indeed the weaker equity and bond markets should convince them to proceed cautiously with policies that may threaten euro membership or ongoing support from the ECB’s Asset Purchase Plan.” “As such, it is possible to see a rebound in Italian assets and the EUR if the new government does proceed cautiously. Furthermore, to the extent that there is capital flight from Italy, much of it may go to other European assets, resulting in little net outflow from the EUR.” “The Italian 10-year yield spread over bunds has risen to a high since mid-2017, when Italian yields were retreating from the political uncertainty generated by the failed Constitutional referendum in December 2016.” “We should also expect a higher level of risk premium to remain in Italian assets, which feeds through to somewhat lower business confidence and less certain expectations that the ECB will exit QE from September.  As such, if there is a rebound in the EUR, it may be limited and short-lived.”

   •  Reviving safe-haven prompts some follow-through long-unwinding trade.    •  Downside remains limited amid some renewed pickup in the USD demand

   •  Reviving safe-haven prompts some follow-through long-unwinding trade.
   •  Downside remains limited amid some renewed pickup in the USD demand. 
   •  Easing US-China trade tensions/Fed rate hike expectations remain supportive.
The USD/JPY pair quickly reversed early dip to an intraday low level of 110.84 and is now looking to build on its momentum back above the 111.00 handle.  The pair extended overnight retracement slide from over 4-month tops and was further weighed down by a negative trading sentiment around equity markets, which was seen underpinning the Japanese Yen’s safe-haven demand.  The corrective slide, however, remained shallow and the pair quickly bounced back above the 111.00 handle. Against the backdrop of easing US-China trade tensions, expectations that the Fed might be forced to raise interest rates aggressively continued underpinning the US Dollar and helped limit any immediate sharp downside. Moving ahead, the latest FOMC meeting minutes, along with speeches by influential FOMC members and the release of US durable goods orders will influence the USD price dynamics and eventually provide some fresh directional impetus to the major.Technical outlookOmkar Godbole, Analyst and Editor at FXStreet writes, “the USD/JPY pair may have a tough time scaling the long-term descending trendline hurdle and risks falling back to 200-day moving average (MA) located at 110.18, courtesy of overbought conditions (daily RSI), bearish RSI divergence in 4-hour chart and short-term topping pattern in the 10-year treasury yield.”
 

The Corriere della Sera, an Italian daily newspaper, reported headlines citing that Italy's President Mattarella could pick a premier-designate (new P

The Corriere della Sera, an Italian daily newspaper, reported headlines citing that Italy's President Mattarella could pick a premier-designate (new PM) either tomorrow or on Thursday.  No further details are mentioned on the same. Also Read: Italy: Growing concerns about fiscal plans – Danske Bank

The latest survey from accountants KPMG showed on Tuesday, Chief Executive Officers of the British companies feel more downbeat on the UK growth outlo

The latest survey from accountants KPMG showed on Tuesday, Chief Executive Officers of the British companies feel more downbeat on the UK growth outlook for the next few years, in the wake of looming Brexit concerns. KPMG surveyed 150 chief executives in Britain as part of its wider annual survey of 1,300 company bosses around the world.Key Findings:“Just 38 percent of chief executive officers think revenue will rise by 2 percent or more per year over the next three years, down from 47 percent in 2017 and 58 percent in 2016’s survey. Instead, 61 percent of company heads said they expected growth of between zero and 2 percent per year, up from 54 percent last year. Overall, KPMG’s report chimed with other business surveys that depict a muted outlook for businesses in the years ahead. While the KPMG report showed companies in the United States, France and Japan had become more confident in the economic growth prospects of their countries, the opposite was true of Britain, Germany, Italy and Spain.”

In view of Karen Jones, Head of FICC Technical Analysis at Commerzbank, the pair should meet initial contention in the 110.00 area. Key Quotes “USD/

In view of Karen Jones, Head of FICC Technical Analysis at Commerzbank, the pair should meet initial contention in the 110.00 area.Key QuotesUSD/JPY is approaching the 112.21 2015-2018 downtrend. We note the 111.39 mid-January high, the 13 counts on the intraday charts and we now note the TD perfected set up on the daily chart and we are alert to the idea that this will hold the initial test and provoke a correction lower”. “Initial support lies at 110.00 – the accelerated uptrend - ahead of the recent low at 108.65 (4 th May low) and the 107.90 mid-February high”.

Italian stocks bonds declined and bond yields soared yesterday due to growing concerns of the coalition's fiscal plans, notes the research team at Dan

Italian stocks bonds declined and bond yields soared yesterday due to growing concerns of the coalition's fiscal plans, notes the research team at Danske Bank.Key Quotes“Giuseppe Conte, a law professor with no political experience, has been chosen as prime minister to head the new an Italian Five Star-League coalition government. He will have a tough job in managing the fractious coalition with a razor-thin majority in the Senate. His first task will be to assemble a cabinet, likely including Five Stars' Luigi Di Maio as Minister of Labour and Economic Development and Matteo Salvini of the League as Interior Minister.” “The new cabinet will still require approval by President Mattarella, but in the absence of further hurdles, a new government could go before parliament for a vote of confidence by early next week.” “Rating agency Fitch already warned on Monday that the populist coalition posed a risk to Italy's credit profile. President Mattarella also expressed concerns about state finances and Italians' savings, calling for a meeting with parliament leaders today.”  

Iran’s Foreign Minister Mohammad Javad Zarif wrote on his official Twitter account late-Monday, the US was repeating “the same wrong choices” after US

Iran’s Foreign Minister Mohammad Javad Zarif wrote on his official Twitter account late-Monday, the US was repeating “the same wrong choices” after US Secretary of State Pompeo demanded sweeping changes in the country’s foreign and nuclear policies, Reuters reports. Zarif tweeted: “U.S. diplomacy sham is merely a regression to old habits: imprisoned by delusions & failed policies—dictated by corrupt Special Interest—it repeats the same wrong choices and will thus reap the same ill rewards. Iran, meanwhile, is working with partners for post-US JCPOA solutions.”       

Analyst at Danske Bank Aila Mihr suggested the pair could now look to stabilize around the 1.1800 neighbourhood. Key Quotes “EUR/USD touched Decembe

Analyst at Danske Bank Aila Mihr suggested the pair could now look to stabilize around the 1.1800 neighbourhood.Key QuotesEUR/USD touched December lows yesterday aft er the combination of USD support from rates and EUR downside form Italian government worries continued to weigh”. “For now, the US cyclical position warrants USD strength but we do not see the Italy issue as an FX market game changer as notably a euro exit does not form part of the coalition talks”. “Focus this week will be whether the relative cyclical positions of the US versus the eurozone will be upheld when PMIs are released and the central bank takes this on in the Fed versus ECB minutes”. “In the absence of further cyclical divergence, we expect EUR/USD to settle in a range around 1.18 (our 1M forecast) near term as positioning is now markedly lighter on longs; the next key technical support is around 1.1678 (10-Nov high)”.

Nomura’s heat-map of high-frequency data indicates the recoveries in investment and consumption have continued, with the services sector following sui

Nomura’s heat-map of high-frequency data indicates the recoveries in investment and consumption have continued, with the services sector following suit for the Indian economy.Key Quotes“Early indicators for April suggest a moderation in consumption demand but a slight recovery in net exports.” “The Nomura Composite Leading Index, which has a one-quarter lead over non-agricultural GDP growth, increased sharply to 101.2 in Q2 from 100.7 in Q1 and 99.5 in Q4, suggesting the V-shaped cyclical recovery will continue until mid-2018.” “In line with these data, we expect GDP growth to average 7.7-7.8% in H1 2018, up from 7.2% in Q4. We expect growth to slow to an average of 7.1% in H2 2018 on tighter financial conditions, rising oil prices and slower activity ahead of the general elections.” “The Nomura Economic Surprise Index for India declined due to negative data surprises and has now reached the lower bound of +/-1sd. Given its mean reverting nature, positive data surprises appear more likely in coming months.” “The Nomura RBI Policy Signal Index (NRPSI) rose to 0.10 in May from 0.01 in April, implying a higher probability of tightening due to rising crude oil prices and higher core inflation; although the index remains in the no-change zone. If crude oil prices remain at these levels, the NRPSI would cross the threshold of 0.2 in coming months.” “In our base case (55% probability), we expect the Reserve Bank of India (RBI) to leave the policy rate unchanged but change its stance from ‘neutral’ to ‘withdrawal of accommodation’ on 6 June, followed by 25bp rate hike in each of August and October. June remains a close call; we assign a 40% probability to the RBI pre-emptively hiking by 25bp in June, followed by another 25bp hike in August.”

The GBP/USD is still trading near recent lows, testing near 1.3420 just ahead of the London market session. The Sterling sunk to a new low for 2018 o

Sterling continuing to lose ground against the Greenback as inflation, Brexit talks hit on Tuesday.GBP bulls have been waiting patiently for some good news out of the UK that they can buy.The GBP/USD is still trading near recent lows, testing near 1.3420 just ahead of the London market session. The Sterling sunk to a new low for 2018 on Monday as Brexit concerns continue to plague the Pound. Risk assets across broader markets rallied on Monday following headlines that the US and China have agreed to avoid any further tariffs while they continue trade negotiations, but the GBP couldn't capitalize on the market rally and continued to slump. GBP/USD trying to hang onto 1.34 ahead of UK inflation as Brexit talks resume Tuesday brings inflation reports for the UK's economy at 09:00 GMT, and traders are hoping that early 2018's downturn is set to end, after consistently sour economic data knocked the Bank of England (BoE) off-track for a May rate hike. Brexit talks are also set to resume today, and positive headlines regarding headway on the EU's customs union and ongoing border concerns could give the Sterling some much-needed lift against the US DOllar.GBP/USD levels to watchAs FXStreet's Chief Analyst Valeria Bednarik noted on the GBP/USD's technical stance, "the pair has gained downward traction short-term, now developing below a mild bearish 20 SMA in the 4 hours chart. The Momentum indicator hovers within negative levels, turning south above its daily low, while the RSI indicator is steady at 33, favoring another leg lower in the pair during the upcoming sessions." Support levels:  1.3390 1.3355 1.3320 Resistance levels: 1.3445 1.3490 1.3520  

After a bullish attempt to the 1.1800 region lacked of follow through, EUR/USD has now returned to the 1.1770/80 band where some support appears to ha

The pair fades the bull run to the 1.18 handle earlier in the session.The greenback found support in the mid-93.00s so far.Markets focused on Italy, US-China trade talks, risk trends.After a bullish attempt to the 1.1800 region lacked of follow through, EUR/USD has now returned to the 1.1770/80 band where some support appears to have emerged.EUR/USD looks to Italy, risk trendsAfter bottoming out near the 1.1700 handle on Monday – or fresh cycle lows – spot managed to regain some attention and closed the first day in the positive territory after five consecutive pullbacks. Some profit taking around the greenback after the US Dollar clinched fresh YTD tops beyond 94.00 the figure yesterday allowed the pair to reclaim some ground lost. In the meantime, EUR appears fragile as the formation of a populist government in Italy prompted some concerns to emerge, particularly on the fiscal front. The new government is expected to face a vote of confidence next week while the new cabinet should be ready in the next hours. Furthermore, large long positions held by the speculative community keep EUR vulnerable to further declines, leaving the door open for a potential re-test of yesterday’s lows. Nothing expected data wise today, while the focus of attention remains on the FOMC minutes tomorrow and the ECB minutes on Thursday.EUR/USD levels to watchAt the moment, the pair is losing 0.09% at 1.1780 and a breakdown of 1.1717 (2018 low May 21) would target 1.1700 (psychological level) en route to 1.1553 (monthly low Nov. 7 2017). On the flip side, the next resistance aligns at 1.1842 (10-day sma) seconded by 1.1943 (21-day sma) and finally 1.1996 (high May 14).

The Hungarian central bank is announcing its rate decision today and with headline inflation still remaining below the central bank's 3.0% target, ana

The Hungarian central bank is announcing its rate decision today and with headline inflation still remaining below the central bank's 3.0% target, analysts at Danske Bank do not see any imminent changes in its dovish stance.Key Quotes“We believe the strong economic growth will eventually drive up inflation, leading to a change in policy by the central bank at some point in late 2018.”

Bank of Japan (BoJ) Governor Kuroda has had a busy day on Tuesday, with multiple representatives from Japan's central bank making a series of headline

Bank of Japan (BoJ) Governor Kuroda has had a busy day on Tuesday, with multiple representatives from Japan's central bank making a series of headlines and delivering talking points across a broad range of areas. Japan has been largely supportive of the cryptocurrency movement, and digital currencies in general, but the BoJ's Kuroda noted that European and US central banks are particularly loathe to begin issuing digital currencies for use by the general public, noting that various problems with issuing cryptos were discussed at the recent G20 and BIS meetings. These particular problems include the impact on financial intermediation, as well as cybersecurity and ensuring financial system stability.

Forex today witnessed the US dollar consolidating yesterday’s corrective slide from five-month tops of 94.05 reached versus its six major peers. Despi

Forex today witnessed the US dollar consolidating yesterday’s corrective slide from five-month tops of 94.05 reached versus its six major peers. Despite, broad-based US dollar weakness and 10-year Treasury yields at weekly lows, most majors failed to benefit, as political tensions continued to weigh down on the investors’ sentiment. The Euro remained pressured by the Italian political drama while the pound traded cautiously ahead of the Bank of England’s (BOE) inflation report hearings and fresh Brexit talks. The Antipodeans were on the defensive amid moderate risk-aversion seen in the Asian equities. The Yen was the top performer, having knocked-off the USD/JPY pair back below the 111 handle. On the commodities front, gold prices traded just shy of the $ 1290 mark while both crude benchmarks trade little changed near multi-year tops.Main topics in Asia US Fed's Kashkari: slack might still be in economyMinneapolis Federal Reserve President Neel Kashkari gave some comments during a Q&A session where he highlighted the economy's potential slack as wages remain supressed. Fed's Kashkari: Cryptos have become a "farce" - Bloomberg President of the Minneapolis Federal Reserve Neel Kashkari, following statements made earlier, made comments to Bloomberg regarding cryptocurrencies and how easy it is to create new cryptos. North Korea summit on 'shaky ground' - Reuters As reported by Reuters, US President Trump is will be meeting with South Korean leader Moon Jae-in in an attempt to apply pressure ahead of the now-tentative US-North Korea summit. UK executives increasingly downbeat on growth - Reuters As reported by Reuters, a survey from KPMG accountancy firm shows that UK executives are increasingly downbeat on the UK's economic growth trajectory. BoJ’s Kuroda: Japan real rates are negative The Bank of Japan (BoJ) Governor Kuroda is back on the wires now, via Reuters, this time speaking on real interest rates. BoJ’s Wakatabe: ‘My feeling now is that we can achieve price target with current policy’ Following the comments delivered by the Bank of Japan (BoJ) Governor Kuroda, headlines from the Japanese central bank’s Deputy Governor Wakatabe are seen crossing the wires now … US 10-year yield hit one-week low of 3.05 percent The yield on the benchmark 10-year treasury note fell to 3.05 percent in Asia - the lowest level since May 15 and down 7.8 basis points from the recent 7-year high of 3.128 percent. Sources: US-China deal to include pledge to remove tariffs on US agricultural products - Reuters Reuters quoted unnamed sources, as saying that the potential US-China deal could include a pledge to remove tariffs on the US agricultural products. EU's Dombrovskis: Italy must pursue a responsible fiscal policy Valdis Dombrovskis, a Latvian politician and the current European Commission Vice-President for the Euro and Social Dialogue, has reportedly said that Italy must follow a prudent budget policy. Key Focus aheadWe have another light EUR calendar today, despite full markets returning while US-China trade developments, Italian political environment and Brexit talks will continue to drive the market sentiment.  Meanwhile, the GBP traders could also receive some trading impetus from the BOE MPC member Vlieghe’s speech and second-liner UK macro data viz. public sector net borrowings and CBI industrial order expectations. Also, in focus will be the inflation report hearings of the BOE Governor and MPC members before the Parliament's Treasury Select Committee at 0900 GMT.  The NA docket also remains relatively data-light, as attention turns towards FOMC meeting minutes for fresh dollar trades. All eyes also remain on the Oil and Petroleum Exporting Countries’ (OPEC) Joint OPEC-Non-OPEC Ministerial Monitoring Committee (JMMC) meeting, which will be held later this week in St. Petersburg, Russia.    EUR/USD: Bullish hammer, Italian risks could keep a lid on gains The bullish candlestick pattern and the oversold conditions as indicated by the 14-day relative strength index (RSI) indicate scope for a rally above the immediate resistance located at 1.1822 (May 9 high). GBP/USD trying to hang onto 1.34 ahead of UK inflation as Brexit talks resume A fresh round of Brexit talks begins today, and positive headlines from the negotiations could send the GBP higher, while continued loggerheads over Northern Ireland borders, UK sovereignty, or the EU customs union could open up further downside weakness for the Pound. Tuesday also sees Inflation Report Hearings beginning at 09:00 GMT. Gold: watch for signs of a reversal between $ 1,275 and $ 1,263 – Goldman Sachs Goldman Sachs’ analysts are out with their technical outlook on gold, indicating where to watch for a reversal after the prices breached the crucial $ 1,302 support.

Asia shares turned largely lower in Tuesday's trading, with Japan's Nikkei 225 index down into 22,960.00 after hitting a new three and a half month hi

Asia equities are recoiling as a Greenback rebound leeches cash out of emerging markets.Monday's rally could prove short-lived as inflation concerns resume taking the top off of risk assets.Asia shares turned largely lower in Tuesday's trading, with Japan's Nikkei 225 index down into 22,960.00 after hitting a new three and a half month high on Monday of 23,044.00. Equities in Asia recoiled following Monday's broad market rally as the US Dollar strengthened, sapping flows from emerging markets and renewed inflation pressures for the US economy put pressure on inflation expectations as traders anticipate further rate hikes from the US Fed this year; the concerns ate away at the week's early recovery fueled by headlines that the US and China are improving their relationship, with both countries agreeing to avert any further tariffs as the two countries continue trade negotiations. The Nikkei index is currently down 0.12% for Tuesday, while Australia's ASX has declined nearly 0.75%, with Shanghai's Composite off 0.40%. Hong Kong's Hang Seng index has escaped the pullback unscathed for now, and is up 0.60% on the day.Nikkei levels to watchWhile the Nikkei punched in a fresh high and crossed over the major 23,000.00 resistance level, the equity index couldn't hold the territory, and is falling back somewhat. The 23,000.00 major handle constrained prices last December, and a bearish turnaround from here to could easily fall to 21,500.00 and hit the 50.0 Fibo retracement level, assuming support from the 200-day SMA at 21,700.00 fails to hold.

GBP/JPY is down for the third straight session and is currently trading below 149.00, largely due to a drop in the USD/JPY pair. The Japanese Yen pic

GBP/JPY is down for the third straight session, has established another lower high on the daily chart.Weaker-than-expected UK inflation data, due tomorrow, could yield deeper losses.GBP/JPY is down for the third straight session and is currently trading below 149.00, largely due to a drop in the USD/JPY pair. The Japanese Yen picked up a bid in Asia, tracking the drop in the US 10-year treasury yield to one week low of 3.05 percent. Meanwhile, GBP/USD is trading flat lined just above the 1.34 mark. The GBP/JPY's decline from 150.00 (May 18 high) to 148.77 (Asian session low) has established another lower high on the daily chart, which indicates the bears have gained strength ahead of tomorrow's UK inflation release. An above-forecast UK CPI reading could help the oversold GBP/USD regain some poise and hence could yield a rally in the GBP / JPY pair. On the other hand, a weaker-than-expected print would only bolster the impact of the already bearish technical set up in the GBP/JPY pair.GBP/JPY Technical LevelsAs of writing, the pair is trading at 148.84. A close below the 10-day MA of 148.77 would mean the rally from the May 8 low of 147.05 has ended. The support is seen at 148.18 (May 16 low), 147.05 (May 8 low), and 146.97 (Nov. 28 low). Meanwhile, resistance is lined up at 149.36 (200-day MA), 149.84 (50-day MA), and 150.48 (100-day MA).    

South Korea’s state news agency, Yonhap, reports Seoul's top security official, as saying that the North Korea-US summit will be held as scheduled des

South Korea’s state news agency, Yonhap, reports Seoul's top security official, as saying that the North Korea-US summit will be held as scheduled despite fresh tensions on the Korean Peninsula. Chung Eui-yong, chief of the presidential National Security Office, noted: "We believe there is a 99.9 percent chance the North Korea-U.S. summit (set for June 12 in Singapore) will be held as scheduled. But we're just preparing for many different possibilities." He commented aboard Air Force One bound for Washington, where President Moon Jae-in is to hold a summit with US President Donald Trump later today.           

In the week ending 15 May, leveraged fund positioning turned short EUR again after two weeks, notes the research team at Nomura. Key Quotes “The sho

In the week ending 15 May, leveraged fund positioning turned short EUR again after two weeks, notes the research team at Nomura.Key Quotes“The short position stood at 9%, low compared to the one-year high of 27% in mid-May 2017. Asset managers continued to position long EUR, now at 48% of outstanding contracts.” “JPY: Leveraged funds built up net longs to 10% (from 0% the previous week); the oneyear high is 30%, recorded in early April. Asset managers also remained net long at 28%.” “AUD & CAD: Leveraged fund AUD positioning was reduced to neutral from a long of 20% the previous week. CAD shorts were extended to 60% from 52% the prior week. The one-year high of CAD short positioning is 69%, recorded in late May 2017.” “USD: Leveraged funds turned long USD at 1% for the first time since early January, while the previous week saw USD shorts at 3%.”

WTI crude oil continues to inch closer to 73.00 after Monday's market recovery saw oil touch into new multi-year highs, and WTI is trading close to it

Oil set to continue Monday's bounce into fresh multi-year highs.US oversupply isn't hampering prices as geopolitical concerns take center stage.WTI crude oil continues to inch closer to 73.00 after Monday's market recovery saw oil touch into new multi-year highs, and WTI is trading close to its highs near 72.40. Crude oil bumped higher on Monday as broader markets rallied following headlines that the US and China have agreed to hold off on any further tariffs while the two countries continue trade negotiations. With the US-China trade tensions cooling off for now, markets reacted favorably, with risk assets and commodities recovering, with crude oil marking in new highs. Despite oil bouncing on trade headlines, US supplies continue to plug supply lines, and if energy traders' focus shifts from geopolitical tensions to supplies, then Wednesday's API Weekly Crude Stock figures due at 20:30 GMT could knock crude lower if the figure comes in higher than the previous reading of 4.854 million barrels.WTI levels to watchWith crude oil's steady rise from February's low at 57.88, WTI has lifted over 25% and the technical charts are steadily running out of resistance points to hamper prices. Supports sit at May's low near 66.80 and the last swing low of 61.80, while the next resistance point could begin to form up near the 161.8 Fibonacci expansion level near 75.70.

Valdis Dombrovskis, a Latvian politician and the current European Commission Vice-President for the Euro and Social Dialogue, has reportedly said that

Valdis Dombrovskis, a Latvian politician and the current European Commission Vice-President for the Euro and Social Dialogue, has reportedly said that Italy must follow a prudent budget policy.  His comments come after Italy elected a populist government.  Italy, the third largest nation and the second modest indebted nation of the monetary union, will be governed by eurosceptic parties, who want to cut taxes drastically and reduce pension cuts again. 

Analysts at Nordea Markets explain that last week was another week of Riksbank backtracking, on the heels of the SEK sell-off that they created by wri

Analysts at Nordea Markets explain that last week was another week of Riksbank backtracking, on the heels of the SEK sell-off that they created by writing that "it is important that the krona exchange rate develops in a way compatible with inflation stabilising close to the target" at the April meeting.Key Quotes“The Krona is still 1.5% weaker than anticipated by the Riksbank in April, indicating that EUR/SEK can drop to 10.15 without any notable bearing for the Riksbank (given how they have sounded in recent weeks).”“In Norway, the Q1 GDP report was almost completely in line with Norges Bank’s projection of 0.6% growth q/q in the mainland economy, bolstering the case for a rate hike in September. But even despite higher oil prices and prospects of a Norwegian rate hike, we tend to think that it is too early to expect the next round of NOK strengthening around the corner.”“June is usually a very weak season for NOK, so we rather consider opportunities to go short NOK in a week or two from now.”  

Analysts at Nomura note that following high-level talks in Washington, China and the US released a joint statement on Saturday indicating that they re

Analysts at Nomura note that following high-level talks in Washington, China and the US released a joint statement on Saturday indicating that they reached an agreement to “substantially” reduce the US trade deficit with China by “substantially” increasing its purchases of US goods and services, especially for energy and agricultural products.Key Quotes“We believe making a commitment to significantly increase imports from the US is the best strategy for China, which needs to deleverage while delivering stable growth.” “Increasing imports should have a limited impact on China’s growth, while opening China to foreign goods, services and investment will, on the whole, serve China well. Any impact on current account balance might also smaller than commonly expected.” “Strategy implications? On FX, this de-escalation of Sino-US trade tensions – along with continued foreign portfolio inflows into under-owned RMB-denominated financial assets in a stable macro environment – suggests there is room for RMB to outperform. Against the current backdrop of broad USD strength, we express our bullish RMB view through long CNY against a CFETS basket and long CNH against SGD.”

Reuters quoted unnamed sources, as saying that the potential US-China deal could include a pledge to remove tariffs on the US agricultural products.

Reuters quoted unnamed sources, as saying that the potential US-China deal could include a pledge to remove tariffs on the US agricultural products. The sources said that the deal could also include the pledge to import more US agricultural products.

Analysts at Nordea Markets point out that since 2016 the deviations between USD/CAD and commodity prices have been driven by a running adjustment of t

Analysts at Nordea Markets point out that since 2016 the deviations between USD/CAD and commodity prices have been driven by a running adjustment of the NAFTA risk premia.Key Quotes“USD/CAD has traded substantially above a commodity based fair-value, every time NAFTA has filled a lot in the media coverage, while the CAD rally in the summer of 2017 was accompanied by a pause in the NAFTA headlines.”“Heading into a week of loads of NAFTA-headlines, would you then prefer to be long or short the CAD? We think that USD/CAD could see more upside, albeit USD/CAD is now again clearly trading with a NAFTA risk premium.”  

The EUR/USD created a bullish hammer on Monday as it recovered from the low of 1.1717 and closed at the daily highs above 1.1790. The bullish candles

EUR/USD created a bullish hammer on Monday, awaits confirmation (positive follow-through). Italian political risks could cap upside in the EUR/USD pair. The EUR/USD created a bullish hammer on Monday as it recovered from the low of 1.1717 and closed at the daily highs above 1.1790. The bullish candlestick pattern and the oversold conditions as indicated by the 14-day relative strength index (RSI) indicate scope for a rally above the immediate resistance located at 1.1822 (May 9 high). However, the upside will likely be capped by Italian political uncertainty. As per latest reports, Italy is close to forming a populist government, hence the 10-year Italian-German bond yield spread may continue to rise in the EUR negative manner.   The data calendar is light today, hence the pair remains at the mercy of the Italy-German yield spread and US-German yield spread.EUR/USD Technical LevelsA positive close today, i.e. a positive follow-through to yesterday's bullish hammer candle would confirm a short-timer bullish reversal and open doors for a sustained move above 1.1841 (10-day MA), above which a major resistance is seen at 1.1915 (Jan. 9 low). On the other hand, a break below 1.1750 (Friday's low) would expose support lined up at 1.1717 (yesterday's bullish hammer candle low) and 1.17 (psychological support).  

The Bank of Japan (BoJ) Governor Kuroda is back on the wires now, via Reuters, this time speaking on real interest rates. Key Points: Japan real rat

The Bank of Japan (BoJ) Governor Kuroda is back on the wires now, via Reuters, this time speaking on real interest rates.Key Points:Japan real rates are negative. The natural rate of interest is likely to be around zero. The negative real interest rate is having sufficient simulative effect on the economy.

The GBP/USD is still consolidating Monday's move that saw the Sterling flub against the US Dollar, and the pair is currently trading near 1.3425 ahead

Sterling puts in an unenthusiastic bounce after hitting a new 2018 low.Brexit talks, inflation reading could help or hurt for Tuesday.The GBP/USD is still consolidating Monday's move that saw the Sterling flub against the US Dollar, and the pair is currently trading near 1.3425 ahead of Tuesday's London session. The Sterling dropped into 1.3390 on Monday, a new low for 2018, and the bounce back has been limited, but the GBP/USD has managed to hang onto the 1.3400 level for now.Downside is still present, but upside potential existsA fresh round of Brexit talks begins today, and positive headlines from the negotiations could send the GBP higher, while continued loggerheads over Northern Ireland borders, UK sovereignty, or the EU customs union could open up further downside weakness for the Pound. Tuesday also sees Inflation Report Hearings beginning at 09:00 GMT; overall inflation is expected to hold steady compared to the previous period at 2.5% while core inflation is expected to contract slightly from 2.3% to 2.2%. GBP/USD could stage surprise recovery with Brexit and CPI in focusGBP/USD levels to watchA bullish correction might be ripe for the picking if GBP bulls can get themselves off of the sidelines, and as FXStreet's Chief Analyst Valeria Bednarik noted on the GBP/USD's technical stance: "the pair has gained downward traction short-term, now developing below a mild bearish 20 SMA in the 4 hours chart. The Momentum indicator hovers within negative levels, turning south above its daily low, while the RSI indicator is steady at 33, favoring another leg lower in the pair during the upcoming sessions." Support levels:  1.3390 1.3355 1.3320 Resistance levels: 1.3445 1.3490 1.3520                              

The USD/JPY pair is on the retreat, tracking the decline in the US 10-year treasury yield and due to overbought conditions. As of writing, the pair i

USD/JPY turned red, hit a session low of 110.86 tracking the drop in the 10-year US Treasury yield.The daily relative strength index (RSI) shows overbought conditions.The USD/JPY pair is on the retreat, tracking the decline in the US 10-year treasury yield and due to overbought conditions. As of writing, the pair is trading at 110.93, having a hit a session low of 110.84 a few minutes ago. The retreat from the overnight high of 111.39 could be associated with the drop in the 10-year treasury yield to a one-week low of 3.05 percent.   The pullback in the US dollar and yield does not come as a surprise as the 10-year yield had created a bearish outside-day candle on Friday, signaling the rallies in yields and US dollar are due for a correction. Further, the 14-day relative strength index shows the pair is most overbought in over a year. Hence the probability of a deeper pullback in the USD / JPY pair is high.USD/JPY Technical LevelsAcceptance below 110.60 (Friday's doji candle low) would expose the 200-day MA lined up at 110.18 and support at 110.00 (psychological level). Meanwhile, resistance is seen at 111.07 (session high) would open up upside towards 111.39 (previous day's high) and 111.65 (Oct. 16 low).  

The AUD/USD is trading flat into Tuesday's Asia session, cycling just beneath the 0.7600 major level. The Aussie pumped higher against the Greenback

The Aussie can't seem to get the bull run continuing into Tuesday, waffling the Asia session.Data-free Tuesday sees traders looking forward to Wednesday's Lowe speech.The AUD/USD is trading flat into Tuesday's Asia session, cycling just beneath the 0.7600 major level. The Aussie pumped higher against the Greenback on Monday as broader markets rallied following headlines that the US and China have set aside their differences, at least for now, and have agreed to put any further tariffs while the two countries continue trade negotiations. Markets have reacted positively to the news, with commodities and other riskier assets rallying into the new week. Tuesday sees the AUD struggling to maintain the positive flow, and the AUD/USD is struggling to develop bullish momentum in the Asia markets. With little data on the economic calendar for Australia today, Aussie traders are already looking to Wednesday's speech from Reserve Bank of Australia (RBA) head Philip Lowe. The RBA Governor delivers a speech at 08:00 GMT at the Australia-China Relations Institute in Sydney, where he will be discussing China's economy and financial markets, and its inter-woven relationship with Australia. China has been the subject of frequent trade headlines lately, and extra focus could be on Lowe's talking points.AUD/USD levels to watchFXStreet's Valeria Bednarik, on the Aussie's technical stance, which is showing signs of some bullish momentum but still sees risks ahead: "the pair is currently trading a couple of pips above the 38.2% retracement of its latest weekly slump, and presents a bullish short-term stance in the 4 hours chart, as the price is also well above its 20 and 100 SMA, while technical indicators entered positive territory, now losing partially its upward momentum, but far from changing course. The current level is key and if it is clearly broken, the recovery can extend up to 0.7660, the 61.8% retracement of the mentioned decline." Support levels: 0.7520 0.7470 0.7435   Resistance levels: 0.7590 0.7625 0.7660

China Central TV carried a story titled "Blockchain Cryptocurrency Bubble Accumulates”, in which it warned on the crypto bubble. Key Points: A crypt

China Central TV carried a story titled "Blockchain Cryptocurrency Bubble Accumulates”, in which it warned on the crypto bubble.Key Points:A cryptocurrency investor who has lost tens of millions of Yuan since the start of the year with mistimed bets on Bitcoin. "In actuality, this isn't the first time that Yang Chao has speculated on coins," said the report. "Prior to the banning of ICO's and cryptocurrency trading platforms, his losses already exceeded 2 million Yuan." "Yang said that investors like himself are far from few in number...the main reason that he invests in cryptocurrencies is that the prices undergo large-scale fluctuations.”

“The US fiscal outlook is not good,” Goldman’s chief economist Jan Hatzius said in a note on Sunday. The investment bank sees deficit ballooning to $2

“The US fiscal outlook is not good,” Goldman’s chief economist Jan Hatzius said in a note on Sunday. The investment bank sees deficit ballooning to $2.05 trillion (7 percent of GDP) by 2028, according to CNBC and sees recession risk.  

The US-based Fitch Ratings said in its latest report, “stable-to-higher commodity-price assumptions are driving market expectations for further improv

The US-based Fitch Ratings said in its latest report, “stable-to-higher commodity-price assumptions are driving market expectations for further improvement in the aggregate credit profile of Australia's top-100 listed non-financial corporates (Fitch ASX100 portfolio) over the financial years ending June 2018 to 2019 (FY18-FY19).”Additional Findings:“Higher overall EBITDA stemming from the favorable commodity price environment is likely to be sufficient to offset a projected rise in overall capex and dividends, Aggregate net debt/EBITDA leverage for the Fitch ASX100 portfolio over FY18-FY19 is projected to fall by 0.25 turns to 1.1x, after falling by 0.50 turns over FY16-FY17 to 1.3x. The metals and mining sector dominates the Fitch ASX100 portfolio, representing 47% of aggregate EBITDA generation in FY17, and hence is largely responsible for the projected improvement in overall average leverage. Overall, the report places 74 of Australia's top-100 listed non-financial corporates in credit-positive zones, where EBITDA growth is projected to exceed the increase in net debt over FY17-FY19. The projections are based on Bloomberg consensus estimates (BEst).” 

The yield on the benchmark 10-year treasury note fell to 3.05 percent in Asia - the lowest level since May 15 and down 7.8 basis points from the recen

The US 10-year yield fell to one-week low despite easing US-China tensions.Short-term top in place, the Friday's bearish outside-day candle indicates.The yield on the benchmark 10-year treasury note fell to 3.05 percent in Asia - the lowest level since May 15 and down 7.8 basis points from the recent 7-year high of 3.128 percent. The US and China decided not to impose punitive tariffs and thus put a bid under the risky assets. The Dow Jones Industrial Average (DJIA) rallied almost 300 points yesterday. However, the risk-on action has not had a positive impact on the yields. Treasury prices usually dip and yields rally during risk-on and vice versa. The drop in the yield amid risk-on action only adds credence to the bearish outside-day candle seen in the 10-year yield's daily chart and indicates scope for a deeper pullback, possibly below the 3 percent mark.

Following the comments delivered by the Bank of Japan (BoJ) Governor Kuroda, headlines from the Japanese central bank’s Deputy Governor Wakatabe are s

Following the comments delivered by the Bank of Japan (BoJ) Governor Kuroda, headlines from the Japanese central bank’s Deputy Governor Wakatabe are seen crossing the wires now: “My feeling now is that we can achieve price target with current policy. May need to shift policy if changes in economic conditions make current policy inappropriate.”

The fading US-China trade tensions put a bid under the NZD, pushing the NZD/USD to a seven-day high of 0.6958. Further, the turnaround in the EUR/USD

The NZD picked up a bid on easing US-China trade tensions.Kiwi closed above the 10-day moving average (MA).The pullback in the treasury yields also works in favor of the NZD/USD bulls.The fading US-China trade tensions put a bid under the NZD, pushing the NZD/USD to a seven-day high of 0.6958. Further, the turnaround in the EUR/USD (from 1.1717 to 1.1791) and the resulting broad-based USD weakness may have helped the NZD/USD pair gain altitude. Moreover, the 10-year treasury yield created a bearish outside-day candle on Friday, signaling the rallies in the yields and the USD are due for a correction. As of writing, the currency pair is trading at 0.6950. Kiwi closed above the 10-day MA yesterday, signaling the sell-off from the April 13 high of 0.7395 has ended. The spot may continue to gain altitude if the risk-on mood in the equities remains intact. NZD/USD Technical LevelsThe immediate resistance is seen at 0.6985 (May 2 low), which, if breached, would expose resistance at 0.7114 (200-hour MA) and 0.7052 (May 4 high). On the downside, support is lined up at 0.6919 (4-hour 50MA), 0.6871 (support on 4-hour chart), and 0.6851 (May 15 low).  

More comments flowing in from the Bank of Japan (BoJ) Governor Kuroda, via Reuters, as he continues to speak on the central bank’s monetary policy pro

More comments flowing in from the Bank of Japan (BoJ) Governor Kuroda, via Reuters, as he continues to speak on the central bank’s monetary policy programme.Key Headlines:No change to BoJ’s commitment of hitting price goal at the earliest date possible. There is no set ceiling to BoJ’s monetary base. Don’t expect the average duration of BoJ’s JGB holdings to change much.

The GBP/JPY is sinking in early Tokyo trading, touching into 148.75 as the Sterling continues to stumble against the Japanese Yen. The Yen is gaining

Yen pops on BoJ musings about interest rates.Sterling looking for a break ahead of UK inflation reports.The GBP/JPY is sinking in early Tokyo trading, touching into 148.75 as the Sterling continues to stumble against the Japanese Yen. The Yen is gaining traction in early Tuesday trading following comments from the Bank of Japan's (BoJ) Governor Kuroda that highlighted the central bank's concern about the long-term impacts and effects of low rates on the Japanese economy. Traders are reading into the comments and allowing postulation of the BoJ unexpectedly tightening their fiscal policy, driving the JPY higher. Tuesday sees Inflation Hearings for the UK, beginning at 09:00 GMT, and the Sterling will be poised for stiff reactions after Public Sector Borrowing figures hit at 08:30 GMT, which are expected to come in at a £7.000 billion increase, far higher than the previous reading of £-0.262 billion. The Sterling has been pummeled lately by consistently bad economic figures, and GBP bulls are looking for a break.GBP/JPY levels to watchAs FXStreet's Flavio Tosti noted about the GBP/JPY, "the currency cross is trading in a bullish channel above its 50 and 100-period simple moving averages (SMA) but below its 200-period SMA suggesting a mild upward bias. Resistances are seen at the 149.50 and 150.00 swing highs followed by the 150.50 psychological level. To to the downside, investors will likely meet resistance at the 149.00 handle and at the 148.18 swing low."

Goldman Sachs’ analysts are out with their technical outlook on gold, indicating where to watch for a reversal after the prices breached the crucial $

Goldman Sachs’ analysts are out with their technical outlook on gold, indicating where to watch for a reversal after the prices breached the crucial $ 1,302 support.Key Quotes:“Gold broke below 1,302 support after having held the level for over a week. The break of 1,302 opened downside risks to 1,275-1,263. This area includes the trend across the lows since July as well as a 5th wave target from April. This should, in theory, be an ideal location to watch for signs of a reversal. From a wave perspective, getting to 1,275-1,263 could mean completing an expanding flat from January. As such, it will be important to observe whether the recovery from that point onwards takes on an impulsive nature. An expanding flat is a continuation pattern, which in this context means an eventual resumption of the underlying uptrend. View: Target/turn neutral, consider bullish exposure between 1,275 and 1,263.”  

The AUD/JPY witnessed an inverse head-and-shoulders breakout on Monday as subsiding US-China trade tensions put a bid under the risk assets. The bull

AUD/JPY daily chart shows inverse head-and-shoulders breakout.100-day moving average (MA) hurdle is capping upside in Asia.The AUD/JPY witnessed an inverse head-and-shoulders breakout on Monday as subsiding US-China trade tensions put a bid under the risk assets. The bullish breakout indicates the sell-off from the January 23 high of 89.07 has ended and has opened the doors to rally above 86.00 (target as per the measured height method). However, as of writing, the pair is struggling to cut through the 100-day MA of 84.17 in a convincing manner. A break higher will likely happen on the back of a sustained rally in the risky assets. As of writing, the S&P 500 futures are trading flat to negative.AUD/JPY Technical LevelsMultiple daily closes above 84.17 (100-day MA) would allow a rally to 85.63 (200-day MA), above which a major resistance is seen at 85.80 (61.8% Fib R of Jan-Mar drop). On the downside, support is seen at 83.50 (5-day MA), 82.92 (10-day MA), 82.60 (21-day MA).   

German Economy Minister Altmaier was on the wires earlier today, via Reuters, as he expressed his take on the US withdrawal from Iran’s deal while spe

German Economy Minister Altmaier was on the wires earlier today, via Reuters, as he expressed his take on the US withdrawal from Iran’s deal while speaking with Passauer Neue Presse newspaper. Altmaier noted: "We will help where we can, but there is no way of completely averting the consequences of this unilateral withdrawal." Separately, Germany’s Finance Ministry came out with a report around 2200 GMT, presenting an optimistic outlook on the German economy.

The Bank of Japan (BOJ) Governor Kuroda on Tuesday shared his take on the undesirable effects of a prolonged low period of low-interest rates.  Kurod

The Bank of Japan (BOJ) Governor Kuroda on Tuesday shared his take on the undesirable effects of a prolonged low period of low-interest rates.  Kuroda said holding interest rates low for a long time could push down household income and hence could weigh on consumption. However, the central banker still favors persistent easing as the inflation remains well below the 2 percent target. 

The AUD/NZD is backing into the 1.0900 handle during the early Asia trading session, after the Aussie rose against the Kiwi in Monday's action. The A

Aussie climbing as broader markets rally on trade headlines.A quiet early week for the Antipodeans sees a lacking data docket for Tuesday.The AUD/NZD is backing into the 1.0900 handle during the early Asia trading session, after the Aussie rose against the Kiwi in Monday's action. The Aussie was the big gainer yesterday after markets opened the new week with a risk recovery, as the cool-down between the US and China over tariffs brought risk appetite back. The US and China have agreed to hold off on any more tariffs while they continue to negotiate on trade, and markets have taken the news as largely positive, sending risk assets higher as safe havens sunk. Tuesday sees little action on the economic calendar, with the Aussie not seeing any important releases until the Reserve Bank of Australia's (RBA) head, Philip Lowe, delivers a speech at 08:00 GMT Wednesday, while the NZD is also on the backburner until Wednesday at 22:45 GMT with NZ Trade Balance figures.AUD/NZD levels to watchThe AUD is continuing to recover against the Kiwi, climbing from April's low of 1.0488 to test the waters near the 200-day SMA, currently sitting just below at 1.0880. After facing a downturn in early May to 1.0655, the AUD/NZD is now nearing resistance at the 61.8 Fibo level of 1.0985. There is a confluence between the 200-day SMA and the 50.0 Fibonacci retracement of the pair's major decline from 1.1290 that began in October of 2017, 1.0890 could rotate to provide support if bulls can manage to deliver enough momentum to close over the area.

The People's Bank of China (PBOC) set the Yuan reference rate at 6.3799 vs previous day's fix of 6.3852. 

The People's Bank of China (PBOC) set the Yuan reference rate at 6.3799 vs previous day's fix of 6.3852. 

Bank of Japan (BOJ) Governor Kuroda said on Tuesday that the Japanese economy is expanding moderately but the momentum to achieve the central bank's i

Bank of Japan (BOJ) Governor Kuroda said on Tuesday that the Japanese economy is expanding moderately but the momentum to achieve the central bank's inflation target of 2 percent lacks steam. Key quotes (Source: Reuters)Japan's economy expanding moderately. Economy sustaining momentum to achieve BOJ's price goal but that momentum lacks steam. Still some distance to achieving price goal. Must be mindful of uncertainties on economic, price outlook. Appropriate to continue current easing persistently. Wages, consumption slowly picking up.  

As reported by Reuters, a survey from KPMG accountancy firm shows that UK executives are increasingly downbeat on the UK's economic growth trajectory.

As reported by Reuters, a survey from KPMG accountancy firm shows that UK executives are increasingly downbeat on the UK's economic growth trajectory.Key quotes"Just 38 percent of chief executive officers think revenue will rise by 2 percent or more per year over the next three years, down from 47 percent in 2017 and 58 percent in 2016’s survey. Instead, 61 percent of company heads said they expected growth of between zero and 2 percent per year, up from 54 percent last year. A Bank of England survey of companies published last week showed investment intentions in services firms had weakened slightly, reflecting uncertainty around the terms of Britain’s departure from the European Union, due in March 2019. “A return to territorialism” was ranked as the biggest threat to growth by British company bosses, the survey showed."

Analysts at Nomura offered their model's projection for today's fix in USD/CNY. Key Quotes: "Our model1 projects the fix to be 133 pips lower than t

Analysts at Nomura offered their model's projection for today's fix in USD/CNY.Key Quotes:"Our model1 projects the fix to be 133 pips lower than the previous fix (6.3719 from 6.3852) and 169 pips lower than the previous official spot USD/CNY close of 6.3888. The basket implied change is 219 pips lower than the previous official spot USD/CNY close (6.3669 from 6.3888)."

USD/JPY has been parked around 111 the figure and between a low of 110.92 and 111.05 highs, currently trading at 110.92 at the time of writing.  USD/

USD/JPY: stuck around 111 the figure in between break outpoints.USD/JPY: Bank of Japan Governor Kuroda will be in the Japanese parliament today.USD/JPY has been parked around 111 the figure and between a low of 110.92 and 111.05 highs, currently trading at 110.92 at the time of writing.  USD/JPY penetrated 111 the figure on the trade relief headlines yesterday and climbed to test the111.39 and 100% fibo level in European trade. However, the dollar ran out of steam in NY and the pair made a session low of 110.95.  Forex today: dollar mixed, DXY pulls back from multi-month highs 94.05USD/JPY awaits further impetusUSD/JPY is now resting-up and a period of consolidation can be expected while markets await further developments on the geopolitical front. However, the Bank of Japan Governor Kuroda will be in the Japanese parliament today from 0100GMT, albeit likely singing the same tune as per norm. USD/JPY levelsUSDJPY: The short term momentum indicators look rather heavyThe breakout points are down at 110.19, where the 200 D SMA is located and 111.50, a barrier level ahead of 112.20/40. Valeria Bednarik, chief analyst at FXStreet explained that the downside potential is limited, particularly considering that the pair continues developing well above bullish 100 and 200 SMA:  "The 4 hours chart shows that the pair lost upward Momentum, with the indicator having turned sharply lower from overbought levels and now nearing its mid-line, and the RSI indicator also pulling back, currently at 61." 

Influential Fed centrists Williams (soon to be NY Fed President) and Dallas President Kaplan last week reiterated an upbeat message for 2018 but sound

Influential Fed centrists Williams (soon to be NY Fed President) and Dallas President Kaplan last week reiterated an upbeat message for 2018 but sounded curiously cautious thereafter. Key Quotes:"Kaplan cautioned that the tax boost would fade in 2019, slowing growth to 1.75%-2.0% in 2020, putting him at the lower end of the central tendency." "Williams did not speak to 2019 specifically but did note that the “tax cuts are front-loaded” and that optimism about r-star is misplaced, noting, “I’m conscious that the fundamental drivers that govern r-star are lower than we’ve seen in the past” (i.e. demographics, productivity growth and the demand for safe assets)." "Against that Fed Governor Quarles has noted that tax cuts could drive supply side improvements and raise r-star."

As reported by Reuters, US President Trump is will be meeting with South Korean leader Moon Jae-in in an attempt to apply pressure ahead of the now-te

As reported by Reuters, US President Trump is will be meeting with South Korean leader Moon Jae-in in an attempt to apply pressure ahead of the now-tentative US-North Korea summit.Key quotes"Moon’s White House visit was originally arranged as a meeting to fine-tune a joint strategy for dealing with North Korean leader Kim Jong Un but has instead become more of a crisis session after Pyongyang last week threatened to pull out of the planned June 12 summit in Singapore. Moon’s government led efforts to resume dialogue with North Korea and gave enthusiastic accounts of its encounters with Kim, spurring Trump to accept an offer of a first-ever meeting between U.S. and North Korean presidents. But the White House was caught off-guard when, in a dramatic change of tone, North Korea last week condemned the latest U.S.-South Korean air combat drills, suspended North-South talks and threw into doubt the summit with Trump if Pyongyang was pushed toward “unilateral nuclear abandonment.” Trump has insisted he remains committed to the summit, but Vice President Mike Pence warned on Monday that the president was still willing to walk away from the meeting, telling Fox News that North Korea should not attempt to seek concessions for promises it did not intend to keep."

The AUD/JPY pair is trading near 84.15 in the overnight session, after lifting steadily on Monday. The Aussie was one of the big winners in the broad

Aussie takes a ride higher as markets recover on trade talk cool-down.Tuesday brings little action to the table with nothing slated for the data dockets.The AUD/JPY pair is trading near 84.15 in the overnight session, after lifting steadily on Monday. The Aussie was one of the big winners in the broad-market recovery for the new week, and the AUD gained 1.14% on Monday against the Yen. A notable stand-down in the trade spat between the US and China has seen risk appetite surge back this week, dragging risk assets and commodities higher. The two countries have agreed, at least for now, to hold off on any further tariffs while they continue trade negotiations. Traders are largely heralding the move as a positive, and the safe-haven Yen is walking back across the board as traders scoop up riskier assets. Tuesday is a quiet day for the economic calendar, and both the Aussie and the Yen are data-free until early Wednesday, with Japan's Nikkei manufacturing PMI at 00:30 GMT, and Australian Construction Work Done at 01:30 GMT.AUD/JPY levels to watchs FXStreet's own Ross Burland noted earlier, "the aforementioned 100-D SMA guards 84.35, 85.50 and the 200-D SMA at 85.65 opens 86.20. RSI heads towards 70, still with room to go supporting the bullish bias. To the downside, 83.32 guards 83 the figure before a breakdown to 82.40, (50-D SMA)."

Treasury Secretary Mnuchin indicated over the weekend that the proposed $150bn US tariffs on Chinese imports would be postponed while trade negotiatio

Forex today continued to recover from the risk-off trade sentiment environment that had been building up over these recent week's.A mixed dollar and a heavy setting for EM-FX and the proxies through Commodity FX, notably in the Aussie and Canadian dollar. Treasury Secretary Mnuchin indicated over the weekend that the proposed $150bn US tariffs on Chinese imports would be postponed while trade negotiations continue. Today, in a television interview on CNBC, Mnuchin said that meaningful progress was made in the latest China trade talks. Separately, Mnuchin also said that President Trump would be willing to accept a “skinny” NAFTA 2.0, i.e., an agreement that did not require Congressional approval if the current negotiations do not go as planned. With such positive headlines crossing the wires, commodity currencies led the way.  The US dollar traded mixed between 93.5120-94.0580 while the US 10's traded in the low end of the 3.05-3.08% range overnight. The 2's were perkier, rising with risk sentiment from 2.55% to 2.57%. The dollar was buoyed by sentiment for continued Fed hikes while the Fed fund futures yields continued to predict a rate hike in June as a 100% certain and plus at least one other by year end. However, from today's Fed chatter, there seems that there is no rush to raise interest rates and some Federal Reserves officials, well, at least in the case of Fed's Harker, favour pausing once the Fed reaches a neutral position. As for other currencies, starting with the euro, Italian politics have been a drag and could well continue to anchor recovery attempts from out of the doldrums of the 1.17 handle and lowest levels since November 2017. However, as the session moved into the early Asia session, the 100-hr SMA was pierced as a last defence for the 1.18 handle, reversing the five-month low at 1.1717 as the dollar loses steam.  It could well be an uphill battle for the bulls from here though, with the ratification of Italy’s populist/extremist coalition all but done and fears that investors will cast their minds back to the political strife the eurozone project has lived through over the years; there are already signs that nerves are spilling over to Portugal whose benchmark 10 year bond yield jumped 12bp on the coattails of Italy's 10-year Italian bond yield. ( Italy's 10-year Italian bond yield also jumped by some margin, 16bp to 2.39%; a week ago it was just 1.93%. Sterling was trading on the defence in European trade and switch offensive in the NY session as the dollar buckled at the highs of 94.05 in late London. The pound had otherwise been hurt by fears around a UK snap election, sparked by a Sunday Times article - (note that the bookies are quoting odds between 2/1 for a UK election before year-end). Cable, however, bottomed at 1.3390 and bulls made their intentions from the off in N Y, rallying to 1.3438 the session high before moving into a chop between there and 1.3404 - closing at 1.3430. The cross rallied to half a penny above recent lows as investors pared back the long speculative positions in the pound, playing catch up with the recent shift in sentiment for the BoE and economic performances. A high of 0.8784 was made from a European low of 0.8738, closing at 0.8780. USD/JPY rose from the 110.82 pre-Asian resistance on the trade relief headlines and toppled defence through the lower quarter of the 11 handle, capped ahead of sighted barrier option level at 111.50, making a high of 111.39 in European trade (the 100% fibo). However, the bid was faded back to below the 111 handle in NY and the pair made a session low of 110.95. As for the Aussie, both a shift in trade sentiment and M&A news were supportive while commodities perked up on a softer dollar in the US session. Both oil and copper bounced although iron ore took a step back. AUD/USD rallied from 0.7502 and made a high of 0.7587. The Kiwi, on the other hand, was still bleeding in early European trade from retail sale's volumes climbing at the slowest pace in five years for the first quarter.  The pair picked up from a low of 0.6883 and rallied to 0.6930, taking a break there before making a session high in NY at 0.6950.Key notes from US session:Funda-FX wrap: trade lighter on holiday closures in Europe, global trade front main themeKet events ahead:Analysts at Westpac offered their outlook for the key events ahead today: "Australia’s calendar is quiet again, ahead of tomorrow’s Q1 construction data and speech by RBA governor Lowe. Asian data releases are second tier. Bank of England officials Carney, Ramsden, Saunders and Vlieghe appear before the UK Parliament’s Treasury Committee. In the US, we will see the Richmond Fed’s May business survey, expected to rebound to +8 after April’s strange slide to -3, which followed several months of strong readings."

President of the Minneapolis Federal Reserve Neel Kashkari, following statements made earlier, made comments to Bloomberg regarding cryptocurrencies a

President of the Minneapolis Federal Reserve Neel Kashkari, following statements made earlier, made comments to Bloomberg regarding cryptocurrencies and how easy it is to create new cryptos.Key quotes"The barrier to entry to creating a new cryptocurrency is zero. If you can dupe enough people to buy it, you can pretend that you've launched something, and you can say, look, I'm a billionaire, because I sold you one, and I own the other 999 million of them, so that means I'm a billionaire. So, it's become a farce. I'm seeing more noise and more fraud than I'm seeing anything useful. Does that mean it's always going to be a farce? No. There will probably be a shakeout, and maybe a handful of these things will end up surviving."

In their monthly report, the German Finance Ministry is presenting a bullish outlook, optimistic that the first quarter's contraction is coming to an

In their monthly report, the German Finance Ministry is presenting a bullish outlook, optimistic that the first quarter's contraction is coming to an end.Key highlightsThe German Finance Ministry noted that the German economy is in a strong 'upswing', even though 2018's first quarter performance was worse than late 2017, as output clocked in for Q12 at 0.3%, below the previous quarter's 0.6%. The slowdown was pinned on temporary factors, and now "macroeconomic conditions, which remain favourable, and current economic indicators suggest the economic upturn will continue."

Minneapolis Federal Reserve resident Neel Kashkari gave some comments during a Q&A session where he highlighted the economy's potential slack as wages

Minneapolis Federal Reserve President Neel Kashkari gave some comments during a Q&A session where he highlighted the economy's potential slack as wages remain supressed.Key highlightsThe labor market might still have some slack in it. Wages growth still hasn't picked up. The economy must be allowed to continue to strengthen. Kashkari is watching the yield curve for signs of economic faltering. Yield curve could completely flatten by the end of the year.

Greg Gibbs, Founder, Analyst, & PM, amplifying Global FX Capital Pty Ltd explained both the EUR and GBP have taken a beating in the last month.   Key

Greg Gibbs, Founder, Analyst, & PM, amplifying Global FX Capital Pty Ltd explained both the EUR and GBP have taken a beating in the last month.  Key Quotes:"The EUR is near key support and may recover somewhat as risk aversion related to Italy eases and Q2 economic reports recover.   However, we see the bounce as limited with Italian political risk set to linger and the potential for growing trade and political tensions with the US.   Higher oil prices should also boost confidence in the US economy over the Eurozone.  We have more confidence in a recovery in the GBP.   PM May is likely to resist the latest bout of political turmoil and progress has been made in Brexit planning and negotiations. BoE rate hike expectations are likely to come back into focus."

The AUD/USD is trading on the high side, testing near 0.7585 in the early overnight session. Monday saw the Aussie bounce against the Greenback as br

Aussie joins the broader market in a recovery rally as trade tensions ebb and risk appetite swings back.The early week is continuing quietly for the Aussie, nothing on the docket for Tuesday.The AUD/USD is trading on the high side, testing near 0.7585 in the early overnight session. Monday saw the Aussie bounce against the Greenback as broader FX markets saw a healthy resurgence of risk appetite. Commodities crept higher and took commodity-based currencies with them, such as the AUD, which is now up around 2.3% from May's low of 0.7412 against the US Dollar. This week sees a significant reduction in risk aversion, with traders coming out of their shells as trade tensions between the US and China begin to subside, at least for now. Both countries have agreed to put any further tariff action "on hold" while trade negotiations continue, and markets are recovering after months of fear surrounding a possible trade war between the world's two largest economies. Tuesday is a thin showing for the AUD on the economic calendar, and the action will have to wait until Wednesday, when the Governor of the Reserve Bank of Australia (RBA), Philip Lowe, delivers a speech at 08:00 GMT.AUD/USD levels to watchFXStreet's Valeria Bednarik, on the Aussie's technical stance, which has turned moderately bullish for the short-term: "the pair is currently trading a couple of pips above the 38.2% retracement of its latest weekly slump, and presents a bullish short-term stance in the 4 hours chart, as the price is also well above its 20 and 100 SMA, while technical indicators entered positive territory, now losing partially its upward momentum, but far from changing course. The current level is key and if it is clearly broken, the recovery can extend up to 0.7660, the 61.8% retracement of the mentioned decline." Support levels: 0.7520 0.7470 0.7435   Resistance levels: 0.7590 0.7625 0.7660

Analysts at Westpac explained that the improvement in risk sentiment seen in Asia after the US backed off its threatened tariffs on Chinese imports ex

Analysts at Westpac explained that the improvement in risk sentiment seen in Asia after the US backed off its threatened tariffs on Chinese imports extended to US trade, with equities posting sharp gains. Key Quotes:"Commodity currencies led the way, with oil and copper bouncing though iron ore took a step back." "EUR/USD initially made a five-month low at 1.1717 but reversed in NY trade as the US dollar lost steam, to 1.1790. European equities mostly did not join the risk-on mood, with Italy partly to blame. The ratification of Italy’s populist/extremist coalition is all but done. Concerns over the potential fiscal blowout risks from their core policies caused Milan shares to close -1.5% and Italian government bonds to sell off further. The 10 year Italian bond yield jumped 16bp to 2.39%; a week ago it was just 1.93%. The nerves spilled over to Portugal, whose benchmark 10 year bond yield jumped 12bp. AUD outperformed the majors, starting its rally in early London from 0.7505 and extending gains through the NY session to 1% on the day, printing three-week highs around 0.7585. NZD also bounced, from 0.6885 to 0.6950, having fallen earlier on the soft NZ retail sales data. AUD/NZD rose from 1.0890 to 1.0928, keeping the month-old rally intact. USD/JPY reversed from a four-month high at 111.40 to 111.00, perhaps weighed by the US 10yr treasury yield which edged down from 3.08% to 3.06%. 2yr yields were perkier, rising with risk sentiment from 2.55% to 2.57%. Fed fund futures yields continued to predict a rate hike in June (100% chance), plus at least another by year end. There was no major data to report on, but we heard from Fed speakers. Harker said the economy was doing well and expected two more rate hikes this year, and Bostic said the Fed is close to its two goals, while dove Kashkari said the Fed should not hike too quickly because wage growth is slow."

Analysts at Nomura noted that there were no key economic indicators were released today, but offered a key 'Trade' update. Key Quotes: "Treasury Sec

Analysts at Nomura noted that there were no key economic indicators were released today, but offered a key 'Trade' update.Key Quotes:"Treasury Secretary Mnuchin indicated over the weekend that the proposed $150bn US tariffs on Chinese imports would be postponed while trade negotiations continue." "His comments followed a two-day round of talks between US and Chinese officials and lowered the likelihood of an initial round of tariffs being imposed, helping to partially defuse US-China tensions over the near term." "Separately, Mnuchin said today that President Trump would be willing to accept a “skinny” NAFTA 2.0, i.e., an agreement that did not require Congressional approval if the current negotiations do not go as planned." "A more limited NAFTA 2.0 would need to involve only changes to the current agreement that can be enacted by presidential proclamation and do not affect federal statutory law." "Historically, changing rules of origin or certain tariff rates has been done by the executive branch without Congressional approval. However, relying on executive branch authority alone would likely significantly reduce the scope of any “skinny” NAFTA agreement changes."