Market Roundup
- US Treasury – No major trading partner met all three thresholds for enhanced engagement on currency manipulation in ’16 under ’88 law, China, Japan, South Korea, Taiwan, Germany and Switzerland to remain on monitoring list.
- Trump – Why would I call China a currency manipulator when they are working with us on the North Korean problem? – Twitter, Reuters.
- Asian economies escape manipulator tag but expect more pressure on trade - Reuters.
- CFTA IMM CTA data – USD net longs rebound from five-week low, JPY net shorts lowest since Dec, 34.7k contracts, EUR shorts up to 18.9k, GBP shorts up.
- PBOC advisor Fan Gang – Eyes potential cuts to RRR – Yicai magazine.
- China Q1 GDP +6.9% y/y, +6.8% forecast, growth best since Q3 ’15, consumption accounted for 77.2% of growth, 3.34 mln new urban jobs created, net exports accounted for 4.5% of GDP, capital formation 18.3%.
- China Q1 fixed asset investment +9.2% y/y, +8.8% forecast, private-sector +7.7%.
- China Q1 property investment Q4 ’16 +10.0%.
- China March industrial output +7.6% y/y, +6.3% forecast, best since December.
- China March retail sales +10.9% y/y, +9.6% forecast.
- South Korea - North Korea attempts but fails to launch missile - Reuters.
- US NSA McMaster – All options on table for North Korea – Reuters.
- French presidential race tightens further as vote looms – Reuters.
Economic Data Ahead
- (0830 ET/1230 GMT) United States Apr Empire State manufacturing index, 15.0 forecast; last 16.4.
- (1000 ET/1400 GMT) United States Apr NAHB housing market index, 70.0 forecast; last 71.0.
Key Events Ahead
- Australia-New Zealand, Hong Kong, most of Europe closed for Easter Monday.
- (0215 ET/0615 GMT) BoJ Gov Kuroda speaks at Tokyo trust association annual meeting.
- (1600 ET/2000 GMT) US Treasury int’l securities April flow data (TIC report).
FX Beat
DXY: The dollar fell to a 5-month low versus the yen as soft U.S. economic data and worries over North Korea and coming French elections hurt investor sentiment. The dollar against a basket of currencies traded 0.1 percent lower at 100.40, having hit a low of 100.01 on Thursday, its lowest since Mar. 30. FxWirePro's Hourly Dollar Strength Index stood at -16.47 (Neutral) by 0500 GMT.
EUR/USD: The euro steadied above the 1.0600 handle as the greenback declined in the wake of rising geopolitical tensions over North Korea and upcoming French Presidential elections. The European currency traded 0.1 percent up at 1.0618, having touched a high of 1.0677 on Thursday, its highest since Apr. 6. FxWirePro's Hourly Euro Strength Index stood at -103.76 (Highly Bearish) by 0400 GMT. Investors now await the U.S. housing price index and New York manufacturing index, as Eurozone's economic data calendar remains absolutely data empty. Immediate resistance is located at 1.0641 (78.6% retrace of 1.0905 and 1.0569), a break above targets 1.0677 (Apr 13 High). On the downside, support is seen at 1.0600, a break below could drag it near1.0569 (Apr. 10 Low).
USD/JPY: The dollar declined to a five-month low as rising geopolitical risks over North Korea and regional tensions over U.S. President Donald Trump's tough rhetorical line with Pyongyang boosted the safe-haven Japanese yen's demand. The major traded 0.3 percent down at 108.26, having touched a low of 108.13 earlier in the day, its lowest since Nov. 15. FxWirePro's Hourly Yen Strength Index stood at 121.43 (Highly Bullish) by 0400 GMT. Investors’ will continue to digest North Korea's failed missile launch, ahead of the U.S. NAHB housing price index and New York manufacturing index. Immediate resistance is located at 108.86 (78.6 % retrace of 111.57 and 108.13), a break above targets 109.44 (61.8% retrace). On the downside, support is seen at 108.00, a break below could take it near 107.77 (Nov. 15 Low).
GBP/USD: Sterling rose, extending previous session gains as the greenback tumbled across the board following the North Korean nuclear issue. The major trades 0.1 percent up at 1.2535, hovering towards a high of 1.2575 touched on Thursday, its highest since Mar. 28. FxWirePro's Hourly Sterling Strength Index stood at 11.81 (Neutral) by 0400 GMT. Investors’ attention will remain on the U.S. macro fundamental drivers, amid a lack of economic data from the UK docket. Immediate resistance is located at 1.2560, a break above could take it near 1.2600. On the downside, support is seen at 1.2494 (38.2% retrace of 1.2365 and 1.2575), a break below targets 1.2465. Against the euro, the pound traded 0.1 percent up at 84.70 pence, having hit a 7-week high of 84.17 earlier in the session.
AUD/USD: The Australian dollar rallied for the fourth consecutive session following series of upbeat Chinese economic data. The Chinese GDP growth, industrial growth, fixed asset investment and retail sales, all surpassed estimates, easing concerns over the growth of China's economy. The Aussie trades 0.2 percent higher at 0.7588, having hit a peak of 0.7595 on Thursday, it’s highest since Apr. 4. FxWirePro's Hourly Aussie Strength Index stood at 75.34 (Slightly Bullish) by 0500 GMT. Investors will continue to digest Chinese economic data, ahead of U.S. Empire State Manufacturing Index and NAHB housing price index. Immediate support is seen at 0.7548 (61.8% retrace of 0.7471 and 0.7595), a break below targets 0.7533 (50.0% retrace). On the upside, resistance is located at 0.7603 (21-DMA), a break above could take it near 0.7640 (Apr. 3).
NZD/USD: The New Zealand dollar advanced to an over 2-week high following upbeat Chinese economic releases and broad weakness in the U.S. dollar. However, the bulls struggled to extend the upside, as tumbling oil prices and risk-off sentiment failed to boost the pair, amid holiday-thinned markets. The Kiwi trades 0.3 percent higher at 0.7021, having touched an early high of 0.7032, its strongest since Mar. 30. FxWirePro's Hourly Kiwi Strength Index was at 112.62 (Highly Bullish) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of U.S. macro fundamental drivers. Immediate resistance is located at 0.7032 (Session High), a break above could take it near 0.7050. On the downside, support is seen at 0.6978 (5-DMA), a break below could drag it near 0.6950.
Equities Recap
Asian shares slumped in holiday-thinned trade as worries over North Korea and coming French elections prompted investors to rush towards safe haven assets.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.1 percent.
Tokyo's Nikkei eased 0.13 percent to 18,312.93 points and South Korea's KOSPI gained 0.6 percent at 2,146.84 points.
Shanghai composite index tumbled 1.08 percent to 3,211.02 points, while CSI300 index was trading 0.5 percent lower at 3,467.25 points. Taiwan shares fell 0.2 percent to 9,716.40 points.
Commodities Recap
Crude oil prices declined to a 1-week low after the three-day Easter break, on signs the United States is continuing to increase output, weakening OPEC efforts to support prices. International benchmark Brent crude was trading 0.4 percent down at $55.42 per barrel by 0413 GMT, having hit a low of $55.29 earlier in the day, its weakest since Apr. 10. U.S. West Texas Intermediate fell 0.3 percent to $52.73 a barrel, after declining as low as $52.61 earlier, its lowest since Apr. 10.
Gold prices rallied to a five-month high as the dollar declined as investors sought safe-haven assets in the wake of rising geopolitical tensions over North Korea. Spot gold rose 0.3 percent at $1,290.83 per ounce as of 0423 GMT, after hitting its highest since early November at $1,295.38. U.S. gold futures were up 0.4 percent at $1,293.30.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.207 percent lower by 0.021 bps, while 5-year yield was 0.026 bps down at 1.732 percent.
The Chinese sovereign bonds sunk as investors moved away from safe-haven assets, following higher-than-expected gross domestic product (GDP) during the first quarter of the year. The yield on the benchmark 10-year bonds jumped 3-1/2 basis points to 3.39 percent, the long-term 30-year bond yield climbed 2 basis points to 3.80 percent and the yield on the short-term 2-year bonds bounced nearly 4 basis points to 3.09 percent.
