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Easing tensions over the US-China trade dispute boosted the appetite for risk assets across the financial markets in Asia at the start of a brand new week. Across the fx board, the US dollar extended its upsurge and posted fresh five-month highs versus its main competitors.

The Yen emerged the weakest in Asia, having faced double-whammy amid risk-on markets profile. The Kiwi extended loses below the 0.69 handle following New Zealand’s retail sales miss while the Aussie bucked the trend and advanced above 0.7500 levels, tracking higher copper and oil prices. The common currency and pound were sold-off into broad-based US dollar strength while political drama continued to drive the sentiment around both the currencies.

Main topics in Asia

US’ Mnuchin, Lighthizer deliver conflicting messages on China – WSJ

As reported by The Wall Street Journal, this weekend saw mixed messages from the US Treasury Secretary Steven Mnuchin and the US Trade Representative Robert Lighthizer regarding the US-China trade standoff.

NZ: Weaker retail spending numbers – Westpac

Satish Ranchhod, Senior Economist at Westpac, explains that it was a soft start to the year for New Zealand’s retail spending as after adjusting for price changes, retail spending was essentially flat over the March quarter.

US fiscal outlook has some alarming points – Goldman Sachs

Goldman Sachs’ analysts delivered a weekend note on the United States’ fiscal outlook, which carries some worrisome projections looking forward.

US stock futures jump, Nikkei flashes green on easing US-China trade tensions

US stock futures picked up a bid on Monday as China and US agreed to halt imposing punitive import tariffs.

Japan’s trade surplus with the US rose 4.7 percent in April

Japan logged a trade surplus of JPY 615.7 billion with the US in April – up 4.7 percent year-on-year as exports rose 4.3 percent year-on-year in April, faster than a 0.2 percent annual increase in March, according to Reuters.  

Venezuela’s Nicolas Maduro wins the presidential election – Bloomberg

Bloomberg is out with the breaking  news, citing that Venezuela’s Nicolas Maduro wins the presidential election for another six-year term.

5-Star, League want ECB to forgive €250 billion of Italy debt                              

The anti-establishment 5-Star Movement and far-right Northern League plan to ask  the European Central Bank (ECB) to forgive €250 billion of Italian debt.

Nicole Sturgeon to “restart” the debate on Scottish independence in the coming weeks

Scotland’s Prime Minister Nicola Sturgeon  has said she will “restart” the debate on  Scottish independence  in the coming weeks, according to The Independent.  

Key Focus ahead

Most major European markets remain closed today in observance of Whit Monday, leaving the fx pairs at the mercy of the US dollar dynamics and broader market sentiment. However, the ECB Financial Stability Review and Bundesbank monthly report will offer some trading incentives to the market. The NA session also remains data-quiet, with Canada on Victoria Day holiday while the US docket has nothing to report, except for a slew of speeches by the FOMC members Bostic, Kashkari and Harker.

Also, in focus remains the Oil and Petroleum Exporting Countries’ (OPEC) Joint  OPEC-Non-OPEC  Ministerial Monitoring Committee  (JMMC) meeting, which will be held later on Monday.  

EUR/USD closed below 76.4% Fib despite oversold conditions, focus on Italy

The  EUR/USD  closed below 1.1790 – 38.2 percent Fibonacci retracement on Friday and dipped to a fresh four-month low of 1.1744, despite the oversold conditions as shown by the RSI.

GBP/USD stumbles below 1.3450, Sterling bulls on the back foot ahead of Wednesday’s inflation hearing

The week is starting off on a quiet note for the Sterling, although  Wednesday will be bringing Inflation Report Hearings at 08:00 GMT, followed by Retail Sales on Thursday.  

A test of the breakouts

This week should be all about contesting and consolidating last week’s significant breakouts in 10 year UST,  EURUSD, USDJPY and  Oil  Prices.

The week ahead data preview: eyes on FOMC minutes – Nomura

Analysts at Nomura explained their outlook for the week’s key events coming up.