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Even though there were no major catalysts from the U.S. economy during the New York session, the dollar was able to pare its intraday losses to close positive across the board.

  • ECB member Coeure: Rates to remain at current level for extended period
  • U.S. and China’s ZTE working on a deal
  • U.S. Commerce Secretary Wilbur Ross: China tariffs would only have a small effect on U.S. economy
  • Ross: U.S. to impose EU steel tariffs if there’s no deal by June 1
  • Ross: Key NAFTA issues still a work in progress
  • FOMC member Bullard: Fed has taken steps to control inflation
  • Bullard: No need to invert yield curve with aggressive rate hikes
  • Bullard: Non-uniform currencies like bitcoin have failed in the past

Major Events/Reports:

ECB’s Coeure talks rates

ECB Executive Board Member Benoit Coeure dashed hopes of seeing the central bank hike interest rates anytime soon as he clarified that tightening might have to wait a bit longer even after the QE program ends.

Furthermore, he noted that the extra moolah pumped into the system thanks to the ECB’s bond purchase program could wind up limiting monetary policy action in the future.

“[T]here is a risk that, under the current framework, some short-term market rates would not respond fully to changes in our key interest rates or, even if they would, that a continued dispersion of short-term rates would adversely impact the transmission of our monetary policy stance.”

Easing trade war concerns?

In his testimony in Washington, U.S. Commerce Secretary Wilbur Ross spoke about ongoing trade concerns, particularly when it comes to NAFTA and China.

On the latter, he pointed out that not all trade deficits are the same and that China hasn’t complied with WTO rules. He also reiterated that the country has committed intellectual property theft but added that the Trump administration hopes to reach a fair deal with China.

Meanwhile, the Wall Street Journal reported that the U.S. and China’s ZTE are working on an agreement. Market watchers hope that this could convince both countries to refrain from imposing sanctions that would likely wind up having global ramifications.

Risk appetite lifts stocks

U.S. equity indices were in a pretty good mood to start the week as all three ended in positive territory:

  • Dow 30 index is up 68.24 points to 24,899.41 (+0.27%)
  • S&P 500 index is up 2.41 points to 2,730.13 (+0.09%)
  • Nasdaq is up 8.43 points to 7,411.32 (+0.11%)

Gold returned some of its safe-haven luster while crude oil ticked slightly higher:

  • Gold is down $3.80 to $1,314.40 per troy ounce (-0.30%)
  • WTI crude oil advanced to $71.03 per barrel (+0.10%)

U.S. bond yields are up, likely on optimistic forecasts for the April U.S. retail sales report due soon.

  • 5-year yield is up to 2.860% (+0.29%)
  • 10-year yield is up to 2.999% (+0.13%)
  • 30-year yield is up to 3.128% (+0.03%)

Major Market Mover(s):

USD

The scrilla recovered from its slide in the earlier trading session thanks to easing trade war jitters and positive expectations for the U.S. retail sales release this week.

USD/JPY climbed from a low of 109.41 to a high of 109.80, USD/CHF rebounded to a high of 1.0015, EUR/USD retreated to 1.1923, and GBP/USD is down to 1.3555.

EUR

The shared currency lost some of its edge after ECB member Coeure mentioned that they’re not quite thinking of hiking rates just yet.

EUR/JPY retreated from 131.35 to a low of 130.77, EUR/GBP is down to the .8800 handle, EUR/AUD dipped from 1.5882 to 1.5843, and EUR/CAD fell to 1.5273.

Watch Out For:

  • 1:30 am GMT: RBA monetary policy meeting minutes (Read about the actual RBA announcement here!)
  • 1:40 am GMT: RBA Assistant Gov Debelle’s testimony
  • 2:00 am GMT: Chinese fixed asset investment y/y (dip from 7.5% to 7.4% expected)
  • 2:00 am GMT: Chinese industrial production y/y (gain from 6.0% to 6.4% expected)
  • 2:00 am GMT: Chinese retail sales y/y (dip from 10.1% to 10.0% expected)