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Forex today witnessed the US dollar consolidating yesterday’s corrective slide from five-month tops of 94.05 reached versus its six major peers. Despite, broad-based US dollar weakness and 10-year Treasury yields at weekly lows, most majors failed to benefit, as political tensions continued to weigh down on the investors’ sentiment. The Euro remained pressured by the Italian political drama while the pound traded cautiously ahead of the Bank of England’s (BOE) inflation report hearings and fresh Brexit talks.

The Antipodeans were on the defensive amid moderate risk-aversion seen in the Asian equities. The Yen was the top performer, having knocked-off the USD/JPY pair back below the 111 handle.

On the commodities front, gold prices traded just shy of the $ 1290 mark while both crude benchmarks trade little changed near multi-year tops.

Main topics in Asia

US Fed’s Kashkari: slack might still be in economy

Minneapolis Federal Reserve President Neel Kashkari gave some comments during a Q&A session where he highlighted the economy’s potential slack as wages remain supressed.

Fed’s Kashkari: Cryptos have become a “farce” – Bloomberg

President of the Minneapolis Federal Reserve Neel Kashkari, following statements made earlier, made comments to Bloomberg regarding  cryptocurrencies  and how easy it is to create new cryptos.

North Korea summit on ‘shaky ground’ – Reuters

As reported by Reuters, US President Trump is will be meeting with South Korean leader Moon Jae-in in an attempt to apply pressure ahead of the now-tentative US-North Korea summit.

UK executives increasingly downbeat on growth – Reuters

As reported by Reuters, a survey from KPMG accountancy firm shows that UK executives are increasingly downbeat on the UK’s economic growth trajectory.

BoJ’s Kuroda: Japan real rates are negative

The Bank of Japan (BoJ) Governor  Kuroda  is back on the wires now, via Reuters, this time speaking on real interest rates.

BoJ’s Wakatabe: ‘My feeling now is that we can achieve price target with current policy’

Following the comments delivered by the  Bank of Japan (BoJ) Governor Kuroda, headlines from the Japanese central bank’s Deputy Governor Wakatabe are seen crossing the wires now “¦

US 10-year yield hit one-week low of 3.05 percent

The yield on the benchmark 10-year treasury note fell to 3.05 percent in Asia – the lowest level since May 15 and down 7.8 basis points from the recent 7-year high of 3.128 percent.

Sources: US-China deal to include pledge to remove tariffs on US agricultural products – Reuters

Reuters quoted unnamed sources, as saying that the potential US-China deal could include a pledge to remove tariffs on the US agricultural products.

EU’s Dombrovskis: Italy must pursue a responsible fiscal policy

Valdis Dombrovskis, a Latvian politician and the current European Commission Vice-President for the Euro and Social Dialogue, has reportedly said that Italy must follow a prudent budget policy.  

Key Focus ahead

We have another light EUR calendar today, despite full markets returning while US-China trade developments, Italian political environment and Brexit talks will continue to drive the market sentiment.  Meanwhile, the GBP traders could also receive some trading impetus from the BOE MPC member Vlieghe’s speech and second-liner UK macro data viz. public sector net borrowings and CBI industrial order expectations. Also, in focus will be the inflation report hearings of the BOE Governor and MPC members before the Parliament’s Treasury Select Committee at 0900 GMT.  

The NA docket also remains relatively data-light, as attention turns towards FOMC meeting minutes for fresh dollar trades. All eyes also remain on the Oil and Petroleum Exporting Countries’ (OPEC) Joint  OPEC-Non-OPEC  Ministerial Monitoring Committee  (JMMC) meeting, which will be held later this week in St. Petersburg, Russia.    

EUR/USD: Bullish hammer, Italian risks could keep a lid on gains

The bullish  candlestick  pattern and the oversold conditions as indicated by the 14-day relative strength index (RSI) indicate scope for a rally above the immediate  resistance  located at 1.1822 (May 9 high).

GBP/USD trying to hang onto 1.34 ahead of UK inflation as Brexit talks resume

A fresh round of Brexit talks begins today, and positive headlines from the negotiations could send the GBP higher, while continued loggerheads over Northern Ireland borders, UK sovereignty, or the EU customs union could open up further downside weakness for the Pound. Tuesday also sees Inflation Report Hearings beginning at 09:00 GMT.

Gold: watch for signs of a reversal between $ 1,275 and $ 1,263 – Goldman Sachs

Goldman Sachs’ analysts are out with their technical outlook on  gold, indicating where to watch for a reversal after the prices breached the crucial $ 1,302 support.