Market Roundup
• Fed’s Rosengren backs shrinking bond portfolio ‘earlier’ and very gradually; Fed should shed bonds ‘relatively soon’
with little effect on rate hikes.
• Fed’s Rosengren: ‘Quite likely’ asset purchases necessary in future economic downturns.
• Fed’s Rosengren: Ideally Fed does not have to manipulate yield curve with the balance sheet.
• Fed’s Beige Book: More firms said they experienced higher labor turnover rates and more difficulty retaining workers.
• ECB’s Coeure: Not at all worried about future of EZ; Not much discussion today about adding to ECB balance sheet.
• ECB’s Coeure: Personally don’t see risks as tilted to downside; We see prospect for normalization, we are serious
about guidance.
• ECB’s Coeure: Taking support away would change picture; Still have to be convinced that return of inflation to 2% is
sustainable.
• ECB’s Praet: Time has not yet come to tighten policy; Not yet convincing signs of upward inflation pressure.
• ECB’s Praet: Euro area recovery gaining momentum; May be some upside risks to forecasts for Euro area economy.
• ECB’s Praet: Sees ‘upside risk’ in very short term; Longer term risks ‘still tilted to downside’; Sees high political uncertainty.
• British PM May: Is confident has plan to win successful deal in EU talks.
• Former UK Finance Minister Osborne says he won’t run in June general election.
• IMF belives China has sufficient buffers to weather any change in global financial conditions- Official.
• Brazil’s Central Bank Chief Goldfajn says considers current pace of easing to be appropriate
Looking Ahead - Economic Data (GMT)
• 20:45 New Zealand Q1 CPI q/q forecast 0.8% prior 0.4%
• 20:45 New Zealand Q1 CPI y/y forecast 2.0% prior 1.3%
• 21:00 Japan Apr Reuters Tankan DI no forecast prior 25
• 21:50 Japan Weekly Foreign bond/stock investments
• 21:50 Japan Mar Trade Balance forecast JPY575.8b prior JPY813.4b
• 21:50 Japan Mar Exports y/y forecast 6.7% prior 11.3%
• 21:50 Japan Mar Imports y/y forecast 10.4% prior 1.2%
Looking Ahead - Events, Other Releases (GMT)
• 20:30 Japan Finance Minister Aso will speak at Columbia University event
Currency Summaries
EUR/USD is likely to find support at 1.0646 levels and currently trading at 1.0711 levels. The pair has made session high at 1.0723 and hit lows at 1.0699 levels. The euro declined from a 3-week high against the dollar on Wednesday as dollar recovered after dropping to a three-week low against a basket of major currencies amid a repricing of expectations of U.S. Federal Reserve rate increases and concerns about U.S. President Donald Trump's ability to deliver a promised fiscal boost. U.S. rate repricing, on the back of weaker-than-expected economic data, and worries about the Trump administration's ability to achieve tax and fiscal reforms, had hurt the greenback in recent weeks. The dollar index, which measures the greenback against a basket of six major currencies, was up 0.26 percent at 99.757. It fell to a low of 99.465, its lowest since March 28, on Tuesday. The euro had reached a near-three-week high against the dollar on Tuesday but declined to trade at 1.0709 in the late US session.
GBP/USD is supported in the range of 1.2652 levels and currently trading at 1.2776 levels. It reached session high at 1.2858 and dropped to session low at 1.2771 levels. Sterling edged lower against the dollar on Tuesday as traders remained cautious on backing more gains into a weekend liable to be dominated by the first round of French elections. Investors braced for the coming French election. Four days before the first round of the presidential election in France, just a few points separate the top four candidates, including two who oppose the euro - the far-right's Marine Le Pen and the far left's Jean-Luc Melenchon. Sterling had hit six-month peak against the dollar on Tuesday after British Prime Minister Theresa May called an early general election. May's snap call for election was widely seen as a move to consolidate her party's majority in the parliament and give her more solid backing in separation talks with the European Union. Sterling was last down 0.20 percent at $1.2776.
USD/CAD is supported at 1.3437 levels and is trading at 1.3489 levels. It has made session high at 1.3490 and lows at 1.3413 levels. The Canadian dollar extended its losses against its U.S. counterpart on Wednesday, by hitting its weakest level in more than a month as prices for oil, a major Canadian export, fell sharply. The slide in the value of the loonie came as oil declined almost 4 percent lower after EIA data showed a surprising build in U.S. gasoline inventories and rising U.S. crude output undercutting efforts by other countries to reduce a global glut. U.S. crude stocks fell 1 million barrels in the latest week, the U.S. Energy Information Administration said, a smaller draw than expected. Gasoline stocks posted a counter-seasonal build of 1.5 million barrels, despite heavier refining activity. The move, which added to a sharp fall in the previous session, handed the loonie its weakest close since March 14. The Canadian dollar was last trading at C$1.3480 to the greenback, or 74.18 U.S. cents, much weaker than the Bank of Canada's Tuesday close of C$1.3381, or 74.73 U.S. cents.
USD/JPY is supported around 116.50 levels and currently trading at 117.53 levels. It peaked to hit session high at 117.82 and made session lows at 117.27 levels. The U.S. dollar initially gained against Japanese yen on Wednesday but lost some ground as political uncertainty stemming from the first round of the French presidential election this weekend and tensions over North Korea increased demand for safe haven Japanese yen. U.S. Vice President Mike Pence said Washington would work with its allies and China to put economic and diplomatic pressure on North Korea but added America would defeat any attack with an "overwhelming response. With no major economic releases due this week investors are focused on the French elections, U.S. tensions with North Korea and any new indications on when the Trump administration is likely to undertake tax and fiscal reforms.
Equities Recap
European shares recovered on Wednesday from their biggest one-day loss in five months, as a rebound in banking stocks and some positive first-quarter results outweighed weakness in oil and gas stocks.
UK's benchmark FTSE 100 closed down by 0.3 percent, FTSEurofirst 300 ended the day up by 0.19 percent, Germany's Dax ended up by 0.2 percent, France’s CAC finished the day up by 0.4 percent.
The S&P 500 and Dow closed lower and the Nasdaq advanced on Wednesday as investors digested the latest round of earnings, while a drop in oil prices weighed on the energy sector.
Dow Jones closed down by 0.58 percent, S&P 500 ended down 0.18 percent, Nasdaq finished the day up by 0.24 percent.
Treasuries Recap
U.S. Treasury yields rose on Wednesday as traders awaited a catalyst for direction, after a rally on Tuesday sent yields to five-month lows prompted by concerns about the French election and rising geopolitical tensions.
Benchmark 10-year notes dropped 8/32 in price to yield 2.21 percent. The 10-year yield fell as low as 2.165 percent on Tuesday and has tumbled from a high of 2.63 percent reached on March 14.
Commodities Recap
Gold fell 1 percent on Wednesday as the dollar and stocks gained, though tensions over North Korea and upcoming French and UK elections underpinned demand in the safe-haven asset.
Spot gold fell as low as $1,275.73 per ounce, and was last trading down 0.8 percent at $1,279.54 by 3:24 p.m. EDT (1924 GMT).U.S. gold futures settled down 0.8 percent at $1,283.40.
Oil fell to a two-week low on Wednesday, after a surprising build in U.S. gasoline inventories and a rise in domestic crude output that is partially offsetting cutbacks by other countries trying to reduce a global glut.
U.S. crude futures settled down $1.97 to $50.44 a barrel, a 3.8 percent drop, the biggest one-day decline since March 8. Brent crude settled down 3.6 percent, or $1.96 a barrel, to $52.93.
