Forex today kicked-off the week on an upbeat tone, with the risk-on moods underpinned by the surprisingly positive Australian election outcome and Indian election exit polls. The AUD/USD pair gapped up 30-pips and rallied to 0.6940 levels after the incumbent Liberal National Coalition parted returned for the second-term. The Australian stocks also cheered the election outcome and hit the highest levels since December 2007.
The USD/JPY pair also extended Friday’s rally and hit two-week tops at 110.32, as the Yen buyers were left unimpressed by the solid Japanese Q1 GDP report. However, further gains were limited the mixed tone in the Asian equities amid ongoing US-Iran rift and China trade concerns.
Meanwhile, the Kiwi traded tracked the AUD rally while firmer oil prices also helped the antipodean head back towards the 0.6540 level. Among other commodities, gold futures on Comex traded modestly flat near USD 1276, with the recovery capped by higher Treasury yields and US equity futures.
Amongst the European currencies, the EUR/USD pair remained vulnerable near 1.1150 levels while the Cable failed to sustain the bounce above the 1.27 handle heading into the Brexit deal vote scheduled later this week.
Main Topics in Asia
Australia's surprise election result: Population votes for the status quo fiscal policy (Updated)
Trump threatens Iran in a Tweet: "... that will be the official end of Iran"
U.S. President Trump: Will not let Iran have nuclear weapons - Fox
Japan's Quarter 1 Gross Domestic Product 0.5% beats estimates of 0.0%
Sources: USTR Lighthizer to meet Japan economy minister for talks on May 24 – Reuters
OPEC and allied oil producers to continue limiting supplies - RTRS
PBOC sets Yuan reference rate at weakest level in five months
USD/INR technical analysis: INR to cheer exit polls projecting comfortable BJP victory
Asian stocks flash mixed signals amid global political plays
Key Focus Ahead
We have a relatively quiet start to a big week ahead, with the EUR calendar offering a couple of second-tier macro-economic news, including the Germany Producer Price Index and Eurozone Current Account data dropping in at 0600 GMT and 0900 GMT respectively.
Meanwhile, the NA calendar remains data-dry, except for the Chicago Fed National Acitvity Index that will be released at 1230 GMT. The Canadian markets remained closed in observance of Victoria Day. Therefore, a slew of the speeches by the following central bankers will dominate against the backdrop of looming US-China trade concerns.
- 1630 GMT: BOE’s Broadbent.
- 1705 GMT: Fed’s Clarida.
- 2300 GMT: Fed Chair Powell.
EUR/USD: Focus this week is on Eurozone PMIs
EUR/USD hit a 2.5-week low of 1.1153 in Asia and could drop to the psychological level of 1.10 in the near-term if the Eurozone preliminary PMIs, due this Thursday, miss expectations, accentuating growth concerns.
GBP/USD struggles to hold recent recovery amid Brexit pessimism
Growing probabilities of PM May’s another failure to let her Brexit proposal through the parliament weigh on the recent GBP/USD pullback. Traders may now concentrate on political development surrounding the UK PM Theresa May’s Brexit proposal.
Week Ahead: European Elections, OPEC+ meeting & Fed Minutes
This is LCG’s look ahead to the week beginning May 20th. We discuss European elections, the OPEC+ meeting including Saudi Arabia and Russia this weekend and Federal Reserve minutes.
GBP/USD Forecast: PM Boris Johnson? Bears like it and the fall is not over yet
Politics remain in the spotlight, and the upcoming week could see new indicative votes in parliament. The pound will also likely respond to the leadership contest in the Conservative Party.
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