Market Overview

US markets closed mildly higher overnight as investors were relieved that US President Donald Trump's first budget plan contained no surprise. DJIA closed up 43.08 pts, or 0.21% at 20937.91. S&P 500 gained 4.4 pts or 0.18% to close at 2398.42. Nikkei follows in Asian session and is trading up 100 pts at the time of writing. US 10 year yield also ended up 0.031 at 2.285. Dollar recovered as markets firmed up their expectation of a June Fed hike. Fed fund futures are pricing in 83.1% chance of that. In other markets, gold dips mildly but is holding above 1250 handle for the moment. WTI crude oil's recent surge is still in progress and is holding above 51.50. Focus will turn to FOMC minutes and BoC rate decision today.

Euro remains firm against most major currencies but is outshone by commodity currencies today. Solid economic data from Eurozone lifts sentiments with major European indices trading higher at the time of writing. US futures also point to higher open. Meanwhile, Dollar and Sterling remain the weakest major currencies for the week. The Greenback will need something drastic from either US President Donald Trump or FOMC minutes to halt it's decline against Euro and Swiss Franc. In other markets, gold is trading flat in tight range around 1260. WTI crude oil is losing some upside momentum but stays firm around 51.

Euro stays firm against Dollar and Sterling in Asian session but is losing some momentum against commodity currencies. Strength of the common currency is built upon optimism on Eurozone's economic outlook. And Euro will look into a string of data for further strength today, including PMIs and German IFO business climate. Meanwhile, Sterling stays as the weakest major currency as markets UK election and Brexit negotiation with EU are both approaching. Dollar, on the hand, stays soft too and didn't follow the rebound in stocks and yield. US President Donald Trump's first budget will also be a major focus today but it's unlikely to be inspirational.

Sterling trades broadly lower today on UK politics news. Prime Minister Theresa May's Conservatives was originally having over 20pts lead over Labour back when May announced the snap election back in April. But according to the latest Survation telephone poll, the lead halved to 9% only. The poll put Conservatives on 43% while Labour at 34%. The election is seen as an important step for May to gain solid mandate for Brexit negotiation. And a less than satisfactory result could weaken May's position.

Dollar recovers broadly in a quiet Asian session today but momentum is very week so far. The economic calendar is rather light today and trading might remain subdued. Nonetheless, volatility could build up again as the week goes with some key events scheduled. The list includes US budget proposal, FOMC minutes, BoC rate decision, Eurozone sentiment data, OPEC meeting, etc. While for now, some consolidations could be seen, the greenback will more likely extend recent fall ahead, than not. In other markets, Gold retreats mildly but is staying solid above 1250 handle. WTI crude oil extends recent rise and is on course for 53.76/55.24 resistance zone

Dollar was sold off broadly last week as sentiments were rocked by political turmoil in the White House, regarding US President Donald Trump's alleged intervention in FBI investigation. Selloff in equities triggered massive safe haven flows into Swiss Franc and Japanese Yen. But Euro followed closely as political risks in the Eurozone faded and on ECB expectations. Commodity currencies performed poorly in spite of the rally in oil and gold price. Aussie and Kiwi ended the week as two of the weakest major currencies, just next to Dollar. Sterling and Canadian Dollar were among the weakest batch too but showed a turnaround as oil broke 50 handle. Political uncertainty in US is set to continue as former FBI director James Comey, fired by US President Donald Trump earlier this month, agreed to testify in open session before the Senate Intelligence Committee. Dollar is vulnerable to more selling against Euro and Yen.

Euro extends recent rally against dollar today with EUR/USD hitting as high as 1.1188 so far. The common currency continues to draw support from expectation of a hawkish twist in ECB's June meeting. Also, based on recent solid economic data, there is realistic chance of upward revisions in the central bank's staff projections to be released at that meeting. Indeed, Euro's strength is even clearer considering that fact that it now overtakes Yen as the second strongest major currency for the week, following Swiss Franc. On the other hand, Dollar's recovery was weak and short lived as it's also back under some selling pressure against Sterling.

Dollar recovered mildly as markets calmed down from US President Donald Trump's political turmoil. But the greenback is still set to end the week as the weakest major currency. DOW also recovered overnight by adding 56.09 pts, or 0.27% to close at 20663.02 after suffering -372.8 pts loss on Wednesday. S&P 500 was up 8.69 pts or 0.37%, NASDAQ up 43.89 pts or 0.73%. 10 year yield also pared some loss and ended up 0.017 at 2.233, but was well off this month's high at 2.423. Gold retreats mildly after hitting as high as 1265 and is back below 1250 handle. WTI crude oil extended recent rise to 49.88 and is set to take on 50 handle today. In the currency markets, Swiss Franc and Japanese Yen remain the strongest ones on global risk aversion. That's closely followed by Euro as the third strongest, on optimism over Eurozone economy and anticipate of a hawkish twist in June ECB meeting. Commodity currencies are indeed generally weak with Kiwi and Aussie trading as the second and the third weakest ones.

Dollar is attempting a recovery today but stays weak against Japanese Yen. Risk aversion remains the main theme in the global financial markets with all major European indices trading in red at the time of writing. US futures also point to lower open. Upbeat economic data from US provide little support to the greenback as traders stay deeply concerned with US President Donald Trump's political turmoil. Initial jobless claims dropped 4k to 232k in the week ended May 13, better than expectation of 240k. That's also the lowest level in more than 28 years since 1973. Claims has now stayed below 300k handle for 115 straight week, longest stretch since 1970. Continuing claims dropped 22k to 1.9m in the week ended May, lowest since 1988. Continuing claims also stayed below 2m level for the fifth straight week. Philly Fed survey rose to 38.8 in May, beating expectation of 18.5.

The financial markets are rocked as US President Donald Trump's political turmoil intensified. DOW dropped sharply by -372.82 pts, or -1.78% to close at 20606.93 overnight, the worst day since last September. S&P 500 lost -43.64 pts, or -1.82% to close at 2357.03. NASDAQ fell -158.63 pts, or -2.57% to close at 6011.24. Treasury yield also tumbled sharply with 10 year yield losing -0.113 to close at 2.216. Dollar is deeply and broadly sold off with the dollar index hitting as low as 97.33. Gold surges on Dollar weakness and breaches 1260 handle, comparing to last week's low at 1214.3. In the currency markets, Swiss Franc and Japanese Yen are trading as the strongest major currencies for the week on safe haven flow. But Euro is not far behind as the third strongest one.

Dollar's selloff continues today as markets are in deep concerned with US President Donald Trump's political turmoil. The situation worsens after a report that Trump has intervened in FBI investigation on national security adviser Michael Flynn. House Oversight Committee chair Jason Chaffetz, a Republican, requested FBI to hand over all records of correspondence between form FBI director James Comey and Trump, by May 24. Chaffetz tweeted that "@GOPoversight is going to get the Comey memo, if it exists. I need to see it sooner rather than later. I have my subpoena pen ready." Meanwhile, Russian President Vladimir Putin offered to provide US Congress with a record of Trump's meeting with Russian officials, just after firing Comey. It's reported that Trump passed highly sensitive classified information to Russia at the meeting.

Euro's rally extends in the Asian session today as optimism continues. In particular, EUR/USD reaches new six months high as the greenback is troubled by political turmoil in Washington. But we'd like to point out that Dollar's weakness is mainly centered against Euro, Swiss Franc and Yen. GBP/USD is held steady in range below 1.2987 resistance. While Aussie and Canadian are helped by commodity and energy prices, movements in AUD/USD and USD/CAD since last week are so far corrective looking. We'd continue to view the current theme in the markets as Euro strength rather than Dollar weakness.

Euro surges broadly today as incoming economic data is in line with a brighter outlook. Some attributes that rally in Euro to the weakness of Dollar. The greenback is pressured as the markets are getting more doubtful on US President Donald Trump's implementation of economic policy. For the very least, he is constantly being distracted by other issues, like currently, his firing of former FBI director James Comey and subsequent sharing of sensitive information with Russia. But it should be noted that both DAX and FTSE 100 hits record highs today. The moves in the markets are clearly driven by optimism. Released in US, housing starts dropped to 1.17m annualized rate in April while building permits dropped to 1.23m.

While oil prices and Canadian Dollar took headlines, it's indeed the Euro that's the outstanding one in the early part of the week. The common currency resumed recent rally against dollar is back above 1.1 handle. Markets are getting more optimistic that subsiding political risks in the Eurozone clear up uncertainties over economic outlook. And recent solid economic data also pointing to better momentum in the recovery. If the developments continue, it's more likely that finally see the start of the end of ECB's stimulus after the current asset purchase program ends at the end of the year. But for sure, it's still too early to confirm anything, at least not before new staff economic projections from ECB to be published in June.

The surge in oil price is the main focus today after Saudi Arabia and Russia agreed to extend production cut. WTI crude oil is now having 50 handle back in sight. Meanwhile, rise in oil price takes FTSE 100 to new record high at 7460.20. DAX also follow to record high at 12832.29. But both indices cannot ride on the initial strength and quickly pare back gains. Nonetheless, in the forex markets, commodity currencies follow and trade broadly higher. USD/CAD's dip is now putting near term support at 1.3534 in focus. Elsewhere in the FX markets, Euro strengthens clearly against Dollar, Sterling and Yen.

The forex markets open the week rather steadily. New Zealand Dollar trades mildly higher after better than expected retail sales data. Canadian Dollar is also lifted mildly by rebound in oil price, which sees WTI back at 48.60, comparing to this month's low at 43.76. The Japanese Yen shows little reaction to another missile launch by North Korea while markets await the result of an emergency UN security meeting. Euro also shows little reaction to German CDU's win in an important state election. Meanwhile, UK is stepping up its rhetoric ahead of the Brexit negotiation. The focus of the week, though, will be on data from UK, Eurozone, Canada and Australia.

There are a couple of developments to note in the forex markets last week. Firstly, Dollar ended as the strongest major currencies as markets firmed up the expectation of a June hike by Fed. However, the greenback tumbled sharply against Euro and Swiss Franc before close after weaker than expected inflation data. The dollar index was rejected from 55 day EMA and closed lower at 99.19. That was also accompanied by steep decline in 10 year yield which closed at 2.335. Overall development suggests that the greenback would turn weaker against Euro again as the post French election pull back ends.

Dollar weakens broadly in early US session after disappointment from economic data. While the greenback is still trading at the strongest major currency for the week at the time of writing, it could end the week mixed. Headline CPI slowed to 2.2% yoy in April, down from 2.4% yoy, and missed expectation of 2.3% yoy. Core CPI slowed to 1.9% yoy, down from 2.0% yoy and missed expectation of 2.0% yoy. Headline retail sales rose 0.4%, below consensus of 0.6%. Ex-auto sales rose 0.2%, also below consensus of 0.5%. Elsewhere, Eurozone industrial production dropped -0.1% mom in March. German GDP rose 0.6% qoq in Q1. CPI was finalized at 2.0% yoy in April. Japan M2 rose 4.3% yoy in April, New Zealand business NZ manufacturing index dropped to 56.8 in April.

Dollar remains the strongest major currency for the week as markets await a bunch of key economic data from US. The list include CPI which is expected to slowed to 2.3% yoy in April. Core CPI is expected to be unchanged at 2.0% yoy. Retail sales is expected to show 0.6% growth while ex-auto sales would show 0.5% rise. U of Michigan consumer sentiment and business inventories will also be released.

Sterling drops sharply after BoE left monetary policies unchanged as widely expected. The updated projections are mixed at best. And more importantly, they were based on the assumption of a "smooth" Brexit, which isn't clearly defined by the central bank. Markets are clearly unhappy with the announcement and the pound suffers steep selloff. Focus will now be on 1.2830 in GBP/USD and a firm break there will indicate near term reversal. On the other hand, the greenback is trying to extend this week's rebound against Euro after solid economic data including PPI and jobless claims. But momentum in Dollar is unconvincing so far. New Zealand Dollar remains the weakest one after RBNZ disappointment.