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Thin trade main markets observe Bank holidays; Italy uncertainty continues – EUR new May lows

May 29, 2018 | Market Updates

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18:00 EUR M3 Money Supply (Med)

US markets – observed Memorial Day on Monday.

Europe – Thinner trade as British markets observed Spring Bank holiday. Other European indexes traded lower as trader’s dealt with continuing turmoil in Italy and North Korean – US summit developments. Italian stocks closed 2% lower due to political uncertainty. The DAX finished 74.55 points lower and the CAC finished 33.62 points lower.

The leader of Italy’s largest political party called for the country’s president to be impeached after choosing to veto a choice for economy minister. Luigi Di Maio of the anti-establishment Five Star Movement said President Sergio Mattarella had prompted an “institutional crisis” by rejecting eurosceptic candidate Paolo Savona. No major political group has been able to form a majority in Italy since elections in March, leaving the euro zone’s third-largest economy without a government.

Genmab ended at the bottom of the European benchmark after the Danish biotech company announced it would stop some of its lung cancer trials. Shares of the company slumped 20 percent on the news.

Oil – ended off lows but closed lower for a 5th straight session. USOUSD plunged during the Asian session hitting 65.749. Buyers did return during the Asian session closing 81 cents off lows. Two key output issues continue to hurt buyers, Saudi Arabia as well as top producer Russia said on Friday they were discussing raising oil production by some 1 million bpd. Surging U.S. crude production also showed no sign of abating as drillers continue to expand their search for new oil fields to exploit.

U.S. energy companies added 15 rigs looking for new oil in the week ended May 25, bringing the rig-count to 859, the highest level since 2015, in a strong indicator that American crude production will continue to rise. This morning price is trading 56 cents higher.

Forex – with the two main interbank markets trading light due to holiday’s trade last night was thinner than normal. The USDCAD added 32 pips and at one stage traded 60 pips higher hitting 1.3021. Political instability in Italy continued to drive the EUR lower, the EURUSD and EURJPY gave up good Asian session rallies to finish at new monthly lows. The AUDUSD also succumb to USD strength giving up its lead to finish lightly in the red.

Gold ended the session just over $2 lower. Buyers are seeing some signs of support from 1296 – 1296.97. Bitcoin has continued to drift lower over the last 4 sessions. The declines have been small in range, price currently trading at 7115.

Good trading from Eightcap.

Sources; CNBC All times are AEST

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