North Korea suspends talks with South

1. Media suggest that during today’s Asian morning North Korea announced the suspension of the Inter-Korean negotiations.
2. Main reason cited were the join S.Korea-US military exercises which were considered as a provocation.
3. North Korea’s move casts doubts also on the Kim-Trump meeting on June 12th in Singapore, marking a serious retreat to the warming ties trend.
4. Further escalation could set the progress of denuclearization in jeopardy and strengthen safe havens.

US Dollar strengthens as 10 year treasury yield surpasses 3%

1. The greenback strengthened against a number of major currencies, as the US 10 year bond yield broke the 3% level once again.
2. The yield had surpassed once again the 3% hurdle, near the end of April, causing the US Dollar to rally, however yesterday it hit a seven year high (since July 2011) reaching 3.095%.
3. Analysts consider that the rise in the 10 year benchmark Treasury bond yield added to the US Dollar’s relative yield appeal against higher risk and higher yielding rivals.
4. Should the yield continue to rise we could see the USD strengthening and vice versa.

Today’s other economic highlights

• Germany: Final HICP for April, Survey: +1.4% yoy Prior:+1.4% yoy, 06:00 (GMT), could weaken the EUR
• Eurozone: HICP for April, Survey: +1.2% yoy Prior:+1.2% yoy, 09:00 (GMT), could weaken the EUR
• US: Housing starts for April, Survey: 1.310m Prior: 1.319, 12:30 (GMT), neutral for USD
• Industrial Production for April, Survey: +0.6% mom Prior: +0.5% mom, 13:15 (GMT), could support the USD
• EIA Crude Oil Stocks, Survey: -1.467m Prior:-2.197m, 14:30 (GMT), could support oil prices
• Speakers: ECB’s President Mario Draghi, ECB’s Coeure, ECB’s Praet FOMC member Bostic and BoC’s deputy governor Schembri speak.

IronFX Daily Report ‘May 16th’