Market Roundup
- “Remain” 15 points ahead of “leave” in Brexit poll – Telegraph ORB poll.
- Japan FinMin Aso – G7 to discuss currencies, Japan attaching utmost import to FX stability, global uncertainties, cooperation needed but each country must adopt monetary-fiscal policies suiting each situation - Reuters.
- Negative Japan GDP data seen factoring into tax hike delay – Nikkei.
- Japan to struggle to oversome G7 rift on yen, fiscal policy – Reuters.
- Japan GDP due tomorrow to show negative q/q growth in Q1, +0.3% AR – Nikkei.
- US March Tsy int’l capital flow data (TIC) – net overall capital flow -$98.3 bln, Feb rev +$31.7 bln, foreign holdings of US Tsys +$23.6 bln vs Feb +$9.9 bln, China holdings end-March $1.245trln, Japan $1.137 trln.
- UK April job vacancies -9% m/m, -27% y/y on Brexit worries, higher minimum wage – Indeed.
- RBA May 3 meeting minutes – Board considered keeping OCR on hold, concluded ease would help inflation return to target, lower AUD assisting economy, higher AUD complicate this, outlook for trading partners revised down.
- Investors surge back into Aussie property market as election looms – Domain.
- RBNZ Q1 1-year inflation expectations 1.22%, 2-year 1.64%, picking up.
Economic Data Ahead
- (0315 ET/0715 GMT) Switzerland Apr producer/import prices; last unch m/m, -4.7% y/y.
- (0400 ET/0800 GMT) Italy Mar trade balance – global/EU; last E3.86 bln, E1.25 bln surpluses.
- (0430 ET/0830 GMT) Great Britain Apr CPI, +0.3% m/m, +0.5% y/y forecast; last +0.4%, +0.5%.
- (0430 ET/0830 GMT) Great Britain Apr – core, +0.2% m/m, +1.4% y/y forecast; last +0.6%, +1.5%.
- (0430 ET/0830 GMT) Great Britain Apr RPI, +0.3% m/m, +1.5% y/y forecast; last +0.4%, +1.6%, RPIX same.
- (0500 ET/0900 GMT) EZ Mar trade balance, E22.5 bln surplus forecast; last E19.0 bln surplus.
- (0830 ET/1230 GMT) United States Apr CPI, +0.3% m/m, +1.1% y/y forecast; last +0.1%, +0.9%, index 238.13.
- (0830 ET/1230 GMT) United States Apr – core, +0.2% m/m, +2.1% y/y forecast; last +0.1%, +2.2%, index 246.10.
- (0830 ET/1230 GMT) United States Apr real weekly earnings; last +0.2% m/m.
- (0830 ET/1230 GMT) United States Apr housing starts, 1.13 mln AR forecast; last 1.09 mln, -8.8% m/m.
- (0830 ET/1230 GMT) United States Apr building permits, 1.13 mln AR forecast; last 1.08 mln, -8.6% m/m.
- (0915 ET/1315 GMT) United States Apr industrial output, +0.3% m/m forecast; last -0.6%.
- (0915 ET/1315 GMT) United States Apr capacity utilization, 75.0% forecast; last 74.8%.
- (1130 ET/1530 GMT) United States Apr Cleveland Fed CPI; last +0.2%.
Key Events Ahead
- (0345 ET/0745 GMT) ECB ChiefEcon Praet speaks at Brussels EC public hearing.
- (0440 ET/0840 GMT) Spain 3 and 9-month treasury bill auctions.
- (0530 ET/0930 GMT) ECB zero% 7-day refi, E51 bln allotment forecast, E51.44 bln maturing.
- (0540 ET/0940 GMT) Netherlands E1.0-2.0 bln 3 and 6-month DTC auctions.
- (0850 ET/1250 GMT) France E3.1-3.5/1.1-1.5/0.6-1.0 bln 3/6/12-month BTF note auctions.
- (1145 ET/1545 GMT) ECB Nouy speaks in Lisbon.
- (1225 ET/1625 GMT) SF Fed Williams, Atlanta Fed Lockhart in Washington, DC panel discussion.
- (1315 ET/1715 GMT) Dallas Fed Kaplan at Midland community forum.
FX Beat
USD: The dollar index, against a basket of currencies, was nearly flat at 94.472, within the range of a 3-week high of 94.845 touched on Friday.
EUR/USD: The euro trades at 1.1328, away from its 2-week low of 1.1283 touched on Friday. The pair trades between a thin range of 1.1310 -1.1332. The greenback declined on Monday after the Federal Reserve Bank of New York stated that its Empire State Manufacturing Index for the month of May has dropped 9.02 points. Markets now await Eurozone's trade balance figures and series of economic data from the U.S. including Consumer Price Index for further cues on the pair. Immediate resistance is seen at 1.1348 (5-DMA), break above will take the pair to 1.1397. On the lower side, support is located at 1.1301 (Previous Session Low).
USD/JPY: The Japanese yen trades 0.2 percent lower at 109.28, having declined to a low of 109.09 in the previous session. The yen touched an early high of 108.88 as sentiment soured after the Chinese stocks extended losses. Markets will closely watch U.S. CPI, industrial production and housing data, which are likely to provide insights on the strength of the U.S. economic recovery and further indications on the timing of the Fed's first interest rate hike in 2016. The major trades between a tight range of 108.88 - 109.10. Immediate support is located at 108.75 (20-DMA), break below could drag the pair to 108.46 (Previous Session Low). On the higher side, resistance is seen at 109.10 (Session High).
GBP/USD: Sterling rose 0.6 percent to trade at 1.4484, after declining to a 3-week low of 1.4332 in the previous session ahead of Britain's June 23 referendum on European Union membership. The major was facilitated by a report that showed the "remain" camp held a 15-point lead over its "leave" rivals in Britain's EU referendum campaign. The pair continues to rise, hovering towards an early high of 1.4493 and pulling away from a 3-wwek low of 1.4332. Immediate resistance is located at 1.4493 (Session High), break above could take the pair to 1.4529 (May-12 High). On the lower side, support is seen at 1.4388 (May-10 Low). Against the euro, the pound trades 0.6 percent higher at 78.08 pence.
AUD/USD: The Australian dollar gained 1 percent after minutes of the Reserve Bank of Australia's May policy meeting appeared less dovish than some investors had expected. The Aussie trades 0.8 percent higher at 0.7351, having touched an early high of 0.7366 and pulling away from a low of 0.7244 struck in the previous session. Markets will continue ride higher on the RBA minutes amid a risk-environment driven by higher global equities and oil prices rally. Looking ahead, U.S. economic data, including the CPI figures will be closely watched for further cues. Immediate resistance is located at 0.7379 (MAy-12 High), break above will take the pair to 0.7402. On the lower side, support is seen at 0.7282 (Session Low).
NZD/USD: The New Zealand dollar followed its fellow antipodean, rising to a high of 0.6840 from a low of 0.6746 struck in the previous session. The kiwi came under fresh selling pressure after the RBNZ kept inflation expectations reading for Q2 at 1.6 percent, reversing gains to trade at 0.6804, however, 0.2 percent up in the session, supported by ongoing rally in the oil prices. Markets attention will remain on U.S. CPI and industrial production data, ahead of Fonterra’s fortnightly dairy action result. Immediate resistance is located at 0.6847 (May-12 High), break above could take the pair to 0.6862. On the lower side, support is seen at 0.6778 (Session Low).
USD/CNY: The yuan pared early losses to remain steady against the dollar. The PBoC set the midpoint rate at 6.5200 per dollar, 0.22 percent firmer than the previous fix 6.5343.The spot market opened at 6.5181 per dollar and was trading at 6.5199, while the offshore yuan was trading 0.31 percent softer than the onshore spot at 6.5402 per dollar.
Equities Recap
Asian shares bounced from a 2-month low following a rebound in technology stocks and oil price gains bolstered Wall Street.
MSCI's broadest index of Asia-Pacific shares outside Japan ticked up 0.1 percent, extending the recovery from its 2-month low set on Friday.
Shanghai composite index trades flat, Hong Kong's Hang Seng index was trading 0.8% higher. Taiwan stocks ended up 0.9 pct at 8,140.48 points.
Australia's S&P/ASX 200 index gained 0.67 pct at 5,394.70 points, Tokyo's Nikkei advanced 1.13 pct at 16,652.80 and Seoul shares edged down 0.04 pct.
Commodities Recap
Oil futures rose for a second straight session, with U.S. crude hitting a 6-month high, as the market focused on supply disruptions that prompted Goldman Sachs to issue a bullish assessment on near-term prices. Brent crude futures were at $49.37 a barrel, while U.S. West Texas Intermediate futures were up 50 cents at $48.22 a barrel at 0648 GMT. They hit $48.28 earlier in the session, the highest since November.
Gold prices edged up, however the safe-haven metal's gains were capped by a firmer dollar and as Asian shares recovered from 2-month lows. Spot gold rose 0.1 percent to $1,275.90 per ounce at 0649 GMT, while U.S. gold futures rose 0.32 percent to $1,278.30.
Treasuries Recap
The 10-year U.S. treasury yield stood at 1.749 percent versus previous close of 1.753 percent.
Japanese government bond prices declined as buoyant Tokyo stocks and an overnight retreat by U.S. Treasuries put safe-haven debt under mild pressure. The benchmark 10-year JGB yield rose half a basis point to minus 0.110 percent. June 10-year futures lost 0.04 point to 151.91.
Australian government bond futures declined sharply, with the 3-year bond contract off 8 ticks to 98.390. The 10-year contract shed 6 ticks to 97.7150 in a bearish flattening of the curve.
The 20-year contract slipped 5 ticks to 97.0900. The 2-year cash bond yield rose to 1.6 percent, having touched a record low of 1.5 percent on Monday.
New Zealand government bonds eased, sending yields 3.5 basis points higher at the long end of the curve.
Canadian government bond prices were lower across the maturity curve, with the benchmark 10-year declining 33 Canadian cents to yield 1.311 percent, while the 2-year price down 3 Canadian cents to yield 0.567 percent.
