Market Review - 18/05/2019  03:38GMT  

Dollar gains broadly on upbeat U.S. consumer confidence and yields

The greenback went through a volatile session and ended higher across the board on Friday and for the week as U.S. equities recovered after gap-down open together with a strong rebound in U.S. Treasury yields after U.S. consumer sentiment jumped to a 15-year high in early May on growing confidence over the economy's outlook. The British pound extend its recent losing streak and fell to a 4-month low as Brexit talks between U.K. Conservative Party and opposition Labour Party collapsed.  
Versus the Japanese yen, although dollar initially gained to this week's high at 110.03 in Asian morning, price met renewed selling and dropped to 109.56 at European open on renewed U.S.-China trade tension and then to session lows at 109.50 at New York open. However, the pair staged a strong rebound on recovery in U.S. Treasury yields as well as U.S. equities, price later rallied to 110.18 after release of upbeat U.S. consumer confidence and last traded at 110.07 near the close.  
Bloomberg news reported China may have no interest in continuing trade negotiations with the U.S. now, as it sees little "sincerity" in U.S. President Donald Trump's recent approach, according to commentaries run by state media outlets Friday.   
If the U.S. doesn't make any new moves that truly show sincerity, then it is meaningless for its officials to come to China and have trade talks, according to Taoran Notes, a WeChat blog run by state-owned Economic Daily. The article was later carried by state-run Xinhua News Agency and the People's Daily, the Communist Party's mouthpiece.   
The single currency went through a roller-coaster ride. Although euro recovered to 1.1184 in European morning, price fell to 1.1159 ahead of European parliamentary elections as well as Italy's continued budget concerns before rebounding to 1.1181 (Reuters) at New York open after White House confirmed six-month delay on imports of imported cars and parts. However, the pair then dropped to a near 2-week low at 1.1156 in New York morning on usd's strength and later hit 1.1155 ahead of the close.  
The British pound initially fell to 1.2783 at Asian open and despite recovering to 1.2795, renewed selling emerged and later knocked cable down to 1.2737 in Europe after cross-party Brexit talks collapsed together with concerns over consequences of UK-EU divorce after PM May's likelihood of resignation. The pair later ratcheted lower to a 4-month low at 1.2714 in New York session due to broad-based usd's strength.  
Reuters reported Brexit talks between Prime Minister Theresa May's Conservatives and the opposition Labour Party are about to close without an agreement, the BBC said on Friday.   
May and Labour leader Jeremy Corbyn will now move to a second phase, aimed at agreeing on a process for parliamentary votes designed to find a consensus, the BBC said.   
Reuters reported there is no chance of getting British parliamentary approval for all aspects of Brexit by the end of July, the leader of the opposition Labour Party said on Friday after talks with the government collapsed.  
In other news, Reuters then reported Italian Deputy Prime Minister Luigi Di Maio said on Friday he was not worried over possible EU sanctions in case of violation of fiscal rules, as he was confident European leadership would change after May 26 European elections.   
Di Maio also said the government had no intention to take the country's public debt to 140% of GDP.  
On the data front, Reuters reported euro zone prices rose by 1.7 percent in April, EU statistics agency Eurostat confirmed on Friday, while slightly revising upwards its estimates for core inflation.   
Eurostat said consumer prices in the 19-nation euro zone were 1.7 percent higher year-on-year, the same level as the flash estimate published on May 3, from 1.4 percent in March.  
Month-on-month, euro zone prices increased by 0.7 percent, as markets had expected, from 1.0 percent in March.  
The core indicator watched closely by the ECB for its monetary policy decisions, which excludes volatile energy and food prices, rose to 1.4 percent in April on the year from 1.0 percent in March.   
That compared with a flash estimate of 1.3 percent.   
Data to be released this week :  
Japan GDP, industrial production, capacity utilization, Germany producer prices, EU current account, and U.S. Chicago national activity index on Monday.  
Japan all industry activity index, UK CBI trends survey, New Zealand GDT price index, U.S. redbook, existing home sales, and EU consumer confidence on Tuesday.  
New Zealand retail sales, Japan machinery orders, exports, imports, trade balance, UK CPI, RPI, PPI input prices, PPI output prices, PSNB, PSNCR, U.S. MBA mortgage application, FOMC minutes, and Canada retail sales on Wednesday.  
Australia manufacturing PMI, services PMI, Japan Nikkei manufacturing PMI, France ILO unemployment rate, business climate, Markit manufacturing PMI, Markit services PMI, Germany GDP, Markit manufacturing PMI, Markit services PMI, Ifo business climate, Ifo current conditions, Ifo expectations, Swiss industrial production, EU Markit manufacturing PMI, Markit services PMI, Canada wholesale trade, and U.S. building permits, initial jobless claims, Markit manufacturing PMI, Markit services PMI, new home sales, KC Fed manufacturing index on Thursday.  
New Zealand imports, trade balance, exports, Japan national CPI, UK BBA mortgage approvals, retail sales, CBI distributive trades, and U.S. durable goods, durables ex-transport, durables ex-defense on Friday.  

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