Market Roundup
• China's Xi renews pledges to open economy, cut tariffs this year as U.S. trade row deepens.
• Trump welcomes Xi's vow to further open China's economy.
• U.S. Mar PPI Final Demand YY, 3.0%, 2.9% forecast, 2.8% previous.
• U.S. Mar PPI Final Demand MM, 0.3%, 01% forecast, 0.2% previous.
• U.S. Mar PPI exFood/Energy YY, 2.7%, 2.6% forecast, 2.5% previous.
• U.S. Mar PPI exFood/Energy MM, 0.3%, 0.2% forecast, 0.2% previous.
• U.S. Mar NFIB Business Optimism Index, 104.70, 107.60 previous.
• U.S. Feb Wholesale Invt(Y),R MM, 1.0%, 0.9% forecast, 1.1% previous.
• CA Mar House Starts, Annualized, 225.2k, 218.0k forecast, 229.7k previous, 231.0k revised.
• CA Feb Building Permits MM, -2.6%, 5.6% previous, 5.2% revised,
• ECB can lift deposit rate to get hikes rolling – Nowotny.
• With Syria in focus, Trump cancels trip to Latin America.
Looking Ahead - Economic Data (GMT)
• 10 Apr 23:50 Japan Feb Machinery Orders YY, 0.0% forecast, 2.9% previous
• 10 Apr 23:50 Japan Feb Machinery Orders MM, -2.5% forecast, 8.2% previous
• 10 Apr 23:50 Japan Mar Corp Goods Price YY, 2.0% forecast, 2.5% previous
• 10 Apr 23:50 Japan Mar Corp Goods Price MM, -0.1% forecast, 0.0% previous
• 10 Apr 23:50 Japan Mar Bank Lending YY, 2.1% previous
• 11 Apr 01:30 China Mar PPI YY, 3.2% forecast, 3.7% previous
• 11 Apr 01:30 China Mar CPI YY, 2.6% forecast, 2.9% previous
• 11 Apr 01:30 China Mar CPI MM, -0.5% forecast, 1.2% previous
• 11 Apr 00:30 Australia Apr Consumer Sentiment, 0.2% previous
Looking Ahead - Events, Other Releases (GMT)
• 10 Apr 22:30 Atlanta Fed President Raphael Bostic speaks about fair housing at Harvard University - Cambridge, Massachusetts
• 11 Apr 10:30 ECB Governing Council member Ardo Hansson speaks - Frankfurt
• 11 Apr 11:00 Speech by the ECB President Mario Draghi followed by Q&A session with winners of the Generation Euro Students’ Award (GESA) - Frankfurt
• 11 Apr 13:00 ECB Board member Pentti Hakkarainen participates in a panel discussion on "Risks of International Fragmentation" at the 2018 European Bank Executive Committee Forum - Brussels
• 11 Apr 14:40 ECB supervisor Ignazio Angeloni participates in a panel discussion on "The Future of Europe" at the 2018 European Bank Executive Committee Forum - Brussels
• 11 Apr 16:00 Swedish central bank deputy governor Cecilia Skingsley, talks about digitfal currencies - Sweden
• 11 Apr 16:00 Swedish Central Bank Deputy Governor Cecilia Skingsley describes Riksbank's inquiry into the so-called e-krona in light of the decreasing usage of banknotes and coins - Stockholm
• 11 Apr 18:00 U.S. Federal Reserve's Federal Open Market Committee (FOMC) will release minutes from its March 20-21 policy meeting - Washington
Currency Summaries
EUR/USD is likely to find support at 1.2300 levels and currently trading at 1.2355 levels. The pair has made session high at 1.2374 and hit lows at 1.2321 levels. The euro jumped higher against US dollar on Tuesday after bond yields rose and European stocks gave up some gains after a top European Central Bank policymaker said the bank might raise its sub-zero deposit rate before normalising monetary policy.Ewald Nowotny told that the ECB's 2.55 trillion-euro ($3.1 trillion) bond-buying programme would be wound down by the end of this year, paving the way for the bank's first rate rise since 2011. Euro zone borrowing costs rose by 1 to 3 basis points across the board. The yield on Germany's 10-year Bund, the benchmark for the bloc, rose to a five-day high of 0.525 percent before settling at 0.52 percent at the close. The euro rose as high as $1.2378 and was up slightly on the day. Overall, yields are still a good distance from the year's highs; Germany's 10-year Bund for example had climbed as high as 0.81 percent in February.Meanwhile, risk appetite increased on Tuesday after Xi set a positive tone for easing U.S.-Chinese trade tensions. He promised to open the country's economy further and lower import tariffs on products including cars. The dollar index, which measures the greenback against a basket of six major currencies, remained close to a nearly two-week low, and was down 0.23 percent at 89.632. The euro was up 0.28 percent at 1.2355.
GBP/USD is supported in the range of 1.4122 levels and currently trading at 1.4175 levels. It reached session high at 1.4186 and dropped to session low at 1.4142 levels. Sterling firmed against the dollar on Tuesday after the dollar fell and a top policymaker said the Bank of England should press ahead with an interest rate hike to curb inflation. Economists expect the Bank of England to raise rates in May and the comments by policymaker Ian McCafferty along with strong housing survey data this week offered further encouragement. A broadly weak dollar and a transition deal Britain signed last month to cover a 21-month period after it leaves the European Union have lifted the pound since the Brexit vote in 2016 sent the currency plummeting. McCafferty, one of two policymakers on the nine-member Monetary Policy Committee who voted for a rate rise last month, told Reuters in an interview that wage growth might prove stronger than most of his colleagues thought, adding to pressure on inflation that is running above the BoE's target. Sterling edged higher after McCafferty's interview was published and hit a day's high of $1.4188 against the dollar before easing back slightly. The pound, one of the best performing currencies this year, has rallied more than 1.5 percent in the last three trading sessions. Market watchers say a successful break above the $1.4252 line would put sterling on track to test a 2018 high of $1.4346 hit in late January.
USD/CAD is supported at 1.2522 levels and is trading at 1.2608 levels. It has made session high at 1.2668 and lows at 1.2585 levels. The Canadian dollar strengthened to a six-week high against its U.S. counterpart on Tuesday as higher oil and stock prices signaled easing investor concerns about an escalating U.S.-China trade row.Investor optimism grew that a trade dispute between the United States and China might be resolved without greater damage to the global economy after President Xi Jinping promised to open China's economy further and lower import tariffs on products including cars. Canada's commodity-linked economy could be hurt if global trade slows. Gains for the loonie came after the Bank of Canada said in a report on Monday that Canadian companies remained optimistic about sales growth despite trade uncertainties.Last week, stronger-than-expected domestic jobs data and investor optimism over a deal to revamp the North American Free Trade Agreement helped boost the loonie by 0.9 percent.The Canadian government said it was considering all options on the Trans Mountain pipeline expansion, including a possible investment of public funds to ensure construction goes ahead. The Canadian dollar was last trading 0.9 percent higher at C$1.2608 to the greenback. The currency touched its strongest level since Feb. 26 at C$1.2586.
AUD/USD is supported around 0.7711 levels and currently trading at 0.7763 levels. It hit session high at 0.7767 and made session lows at 0.7730 levels. The Australian dollar surged higher against dollar on Tuesday as investors wagered conciliatory-sounding comments from Chinese President Xi Jinping could lessen the risk of a trade war with the United States. The Aussie dollar rose around a third of a cent on a firm U.S. dollar to reach $0.7762, its highest in two weeks. The gains came after Xi used a keynote speech to repeat a long-standing pledge to open China's markets and allow more foreign investment in the Asian giant. He also defended free trade and promised to reduce import tariffs. Xi's comments prompted a largely positive reaction in financial markets, which have been rattled on fears that tit-for-tat U.S.-China tariffs will escalate into a full-scale trade war that would threaten global growth. Australia has lot to lose from global trade tensions given as its a commodity-producing, export-heavy country and highly leveraged to world growth.China is also Australia's largest single export market and the Aussie is often used as a liquid proxy by investors expressing views on the country's outlook. Domestic data was overshadowed but showed Australian business conditions eased back from record highs in March.
Equities Recap
European shares rose on Tuesday after Chinese President Xi Jinping promised to cut import tariffs, fuelling optimism that a trade war between his country and the U.S. could be averted.
UK's benchmark FTSE 100 closed by up by 0.9 percent, the pan-European FTSEurofirst 300 ended the day up by 0.84 percent, Germany's Dax ended up by 1.1 percent, France’s CAC finished the day up by 0.9 percent.
U.S. stocks climbed on Tuesday as investor concerns about rising trade tensions between the United States and China eased after Chinese President Xi Jinping promised to cut import tariffs.
Dow Jones closed up by 2.08 percent, S&P 500 ended up by 1.79 percent, Nasdaq finished the day up by 1.67 percent.
Treasuries Recap
U.S. Treasury yields rose on Tuesday, sparked by a rally in stocks after a friendlier tone from Chinese President Xi Jinping helped ease trade tensions and following data showing a pick-up in U.S. inflation at the producer level.
In late trading, the U.S. 10-year yields were up slightly at 2.802 percent, from 2.789 percent late on Monday.
U.S. 30-year yields rose to 3.023 percent, from Monday's 3.017 percent.On the front end of the curve, U.S. 2-year yields edged up to 2.315 percent, compared with 2.286 percent on Monday.U.S. 3-year yields rose to 2.444 percent, from Monday's 2.419 percent.
Commodities Recap
Gold prices rose on Tuesday, hitting their highest in nearly a week as the U.S. dollar weakened and investors awaited potential U.S. action against suspected use of chemical weapons in Syria.
Spot gold was up 0.4 percent at $1,341.29 an ounce by 1:35 p.m. EDT (1735 GMT), its highest since April 4.June U.S. gold futures settled up $5.80, 0.4 percent, at $1,345.90 per ounce.
Oil prices surged more than 3 percent on Tuesday as investors grew more confident the United States and China would resolve their trade dispute without damaging the global economy, while Middle East tensions and a weak dollar also supported prices.
Brent crude futures jumped $2.39, or 3.5 percent, to settle at $71.04 a barrel. This was its largest single-day percentage gain since September. In post-settlment trading, Brent hit $71.34, its highest since December 2014.West Texas Intermediate crude futures gained 3.3 percent, or $2.09, to settle at $65.51 a barrel.
