Here are the latest developments in global markets:
- FOREX: Stronger US long-term Treasury yields continued to underpin the dollar during the early European afternoon, sending dollar/yen slightly above the 110 key-level before a slip to 109.90 (+0.23%). The US dollar index pulled back from an almost two-week peak of 92.80 touched on Monday but was set to complete a second green day in a row, last trading at 92.75 (+0.18%). The greenback will be looking for direction from US retail sales later in the session. Pound/dollar fell initially to 1.3522 in the wake of a mixed employment report but managed to pare some of its losses afterwards inching up to 1.3540 (-0.08%). The data showed a larger-than-expected employment increase in March but wage growth moderated from the previous month. The unemployment rate remained unchanged at 4.2%. Following disappointing German ZEW economic sentiment and Eurozone industrial production readings, euro/dollar dropped to an intra-day low of 1.1910 and remained around that level thereafter. In antipodean currencies, aussie/dollar extended losses towards 0.7514 (-0.13%) after touching a two-week high of 0.7537 earlier in the session, while kiwi/dollar managed to recover earlier losses, climbing to 0.6919 (+0.01%). Dollar/loonie slipped marginally to 1.2810 (-0.01%). Meanwhile, dollar/lira recorded a fresh high of 4.3969 (+0.43%) after Turkish President Recep Tayyip Erdogan said he intends to take greater control and take more responsibility for monetary policy if he wins the country’s elections next month.
- STOCKS: European stocks were moving mixed at 1000 GMT. The pan-European STOXX 600 was up by 0.05%, while the blue-chip Euro STOXX 50 was down by 0.08%. In Germany, the DAX eased by 0.14%, while the French CAC 40 rose by 0.07%. In Italy, the FTSE MIB 100 was up by 0.10%, while the British FTSE 100 traded higher by 0.21%. The Spanish IBEX 35 traded lower by 0.32%. Turning to the US, futures tracking the Dow Jones, S&P 500, and Nasdaq 100 were all in negative territory, pointing to a lower open today after facing a sharp buying interest in the previous days.
- COMMODITIES: West Texas Intermediate (WTI) crude oil and Brent climbed to $71.13 (+0.24%) and $78.69 (+0.56%) per barrel respectively as persisting geopolitical tensions between Iran and the US continued to support oil prices. In precious metals, gold dropped to $1,309.38 (-0.23%) per ounce on the back of the rising dollar despite escalating tensions in Gaza.
Day ahead: US retail sales in focus; oil eyes API weekly crude oil report
Tuesday’s economic calendar will be a little bit busy for the remainder of the day, with US data dominating the session.
At 1230 GMT, the US Census Bureau is scheduled to release retail sales figures, bringing fresh volatility to the strengthening dollar which faced significant buying pressure today on the back of rising US long-term Treasury yields as well as easing trade tensions. Particularly analysts expect retail sales to slow down for the third consecutive month in April, increasing by 0.3% m/m after rising by 0.6% in the prior month. Higher oil prices and an unusually cold weather could have curbed consumption during the month. In case of a negative surprise in the data, optimism for a fourth-rate hike by the Fed this year could fade, driving the dollar subsequently lower. On the other hand, better-than-expected numbers could provide further gains to the greenback.
At the same time, the New York Fed will be publishing its Empire State Manufacturing survey for the month of May, while a few hours later at 1400 GMT readings on business inventories and NAHB housing prices are expected to attract attention as well.
Elsewhere, global dairy prices delivered at a tentative time out of New Zealand are expected to challenge the kiwi, whereas, in oil markets, investors will be waiting for the American Petroleum Institute to report on US crude oil stocks for the week ending May 11.
Trade headlines will remain in focus as China’s top economic aid to President Xi Jinping will be holding talks with the US Treasury Secretary Steven Mnuchin this week. This comes a day after Trump ordered his officials to assist the Chinese Telecom company ZTE to “get back into business”. Note that American companies were banned from selling their products to the company for the past seven years.
Developments around the 2015 Iranian nuclear deal would also attract interest, with EU foreign policy chief Federica Mogherini and the foreign ministers of Britain, France, and Germany gathering today to discuss the topic.
As of today’s, public appearances, a number of Fed policymakers are set to make comments. At 1200 GMT, Dallas Fed President Robert Kaplan (non-voting FOMC member in 2018) will be talking on “Energy, Trade, and Economic Growth”. Later at 1710 GMT San Francisco Fed President John Williams will be speaking at 1710 GMT. Moreover, the Senate Banking Committee will be holding a hearing on the nominations of Richard Clarida as member and vice chairman of the Federal Reserve Board of Governors, and Michelle Bowman as a member of the Federal Reserve Board of Governors at 1400 GMT.
At 1150 GMT, preliminary figures on GDP growth as well as data on GDP consumption and capital expenditure components out of Japan are expected to move the yen, while the aussie is also anticipated to face some volatility after the release of the Australian Westpac consumer sentiment and wage growth index at 0030 GMT and 0130 GMT respectively.