EQUITIES
Shares in Asia-Pacific were mostly higher on Monday trade. The Japan’s Nikkei 225 rising 0.34%. The mainland Chinese stocks were also higher, with the Shanghai composite up about 0.24%. The Australia’s S&P/ASX 200 edged 0.21% higher, the Singapore’s FTSE Straits Times Index added 0.27%, and the India’s S&P BSE Sensex index advanced 0.47%.
Meanwhile, in Hong Kong, the Hang Seng index edged 0.28% lower, and the South Korea’s KOSPI declined 0.32%
In Europe with markets closed in Germany, Switzerland, Denmark, Norway, Belgium, and Austria for the Whit Monday public holiday.
OIL
Oil prices edged higher as investors assessed further signs the U.S. is recovering from the pandemic against progress in talks to revive an Iranian nuclear deal that may spur increased global crude supply.
The Brent crude futures traded at $66.99 per barrel, and U.S. crude futures traded at $64.03 per barrel.
On Friday, the Brent closed at $66.44 while WTI ended at $63.58 per barrel.
CURRENCIES
Against a basket of currencies, the US dollar had steadied at 89.975 after hitting its lowest since January at 89.646 on Friday. The benchmark 10-year Treasury yields held to 1.623%.
Minutes from the Fed’s April policy meeting released last week showed a sizable minority of policymakers wanted to discuss tapering bond purchase on worries that pouring more money to an economy on the mend could stoke inflation.
Cryptocurrencies was hurt in part by China's crackdown on mining and trading of the largest cryptocurrency as part of ongoing efforts to prevent speculative and financial risks.
The volatility in Bitcoin left it vulnerable to a selloff as investors rushed to the exits en masse, seeing it down 50% from its all-time high. The cryptocurrency was last trading at $35,237. Ether down 5% on day.
GOLD
The concern of inflation, softer dollar, and the volatility of cryptocurrencies put gold back into favour.
The spot gold rose to trade at $1,884.80 an ounce and added to $1,886.30 per ounce for gold futures. Previously closed at $1,880.70 and $1,876.70, respectively.
Palladium rose to $2,718 per ounce, silver was steady at $27.68, while platinum edged 0.1% lower to $1,161.
ECONOMIC OUTLOOK
Asian and European shares got off to a cautious start on Monday as investors awaited key U.S. inflation readings for guidance on monetary policy, while Bitcoin tried to steady after being hammered on news of China's crackdown on mining and trading of the cryptocurrency.
After surveys of the global PMI activity out on Friday showed spectacular growth, all eyes will be on U.S. personal consumption and inflation figures this week. A high reading for the core inflation figures would ring alarms and could revive talk of an early tapering by the US Federal Reserve.
The U.S. central bank has pledged to keep interest rates low until the economy reaches full employment, and inflation hits 2% and is on track to "moderately" exceed that level for some time.
To date, number of confirmed worldwide cases for COVID-19 pandemic has surpassed 167.17 million, recording more than 3.46 million fatality globally.
TECHNICAL OUTLOOK
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 109.317 and 109.542.
- Support line of 108.592 and 108.368.
Commentary/ Reason:
The US dollar was idling on the yen at 108.780, pinned between support at 108.59 and resistance around 109.31.
The pair was trading rangebound as it was trapped between a high of 109.783 hit after a strong U.S. inflation data and a low of 108.34 in the wake of soft U.S. payrolls data, both touched earlier this month.
The 10-year T-note yield on Monday meanwhile fell, which further weakened the dollar’s interest rate differentials. While a lower yield was bearish for the dollar, concerns about increasing COVID-19 cases continue to weigh on Asian foreign exchange trading.
The USD/JPY is tracing the trendline higher as oscillations reach higher lows, confirming a bullish bias. The trendline will remain a key support level for the pair. U.S. dollar weakness is preventing the rally from gaining momentum. Momentum indicators have flattened in neutral/bullish territory.
