Market Roundup
- U.S. escalates China trade showdown with tariffs on $50 billion in imports
- China commerce ministry condemns U.S. tariffs, will take countermeasures
- Any NAFTA deal in principle would focus on auto rules -sources
- Fed watching for financial shocks as risks build -Brainard
- National Guard part of Trump's Mexico border strategy -White House
- Trump sticks by EPA chief as lawmakers call for resignation
- Australia Feb retail sales 0.6% m/m, 0.3% eyed, 0.2% last
- China March services growth eases to 4-month low, confidence dips - Caixin PMI
- China's home prices expected to rise in 2018 on falling inventories - Rtrs Poll
- Japan March services PMI 50.9, growth slowest in 17 mos, Feb 51.7, new orders ebb
- Japan March composite PMI falls to 51.3 vs 52.2 in Feb
Economic Data Ahead
- (0400 ET/0800 GMT) Italy Feb Unemployment Rate, 11% eyed, 11.1% last
- (0430 ET/0830 GMT) Great Britain Mar Markit/CIPS Cons PMI, 50.8 eyed, 51.4 last
- (0500 ET/0900 GMT) EZ Mar HICP Flash YY, 1.4% eyed, 1.1% last
- (0500 ET/0900 GMT) EZ Mar HICP ex F&E Flash YY, 1.3% eyed, 1.2% last
- (0500 ET/0900 GMT) EZ Feb Unemployment Rate, 8.5% eyed, 8.6% last
- (0600 ET/1000 GMT) Italy Q4 ISTAT Public Deficit/GDP, 2.10% last
Key Events Ahead
- (0945 ET/1345 GMT) Fed's James Bullard makes a presentation at the Arkansas Bankers Association & Arkansas State Bank Department's Day with the Commissioner - Little Rock, Arkansas
- (1100 ET/1500 GMT) Fed's Loretta Mester speaks on "Diversity in Economics" before the Central State University Leaders, Executives, Entrepreneurs and Directors (LEED) program - Wilberforce, Ohio
FX Beat
DXY: The dollar index eased as escalating worries over U.S.-China trade tensions could dent the global economy and U.S. growth. The greenback against a basket of currencies trades down at 90.19, having touched a high of 90.28 on Tuesday, its highest since Mar. 21. FxWirePro's Hourly Dollar Strength Index stood at 6.34 (Neutral) by 0600 GMT.
EUR/USD: The euro rose after falling to a near 2-week low in the previous session on a survey that showed the euro zone's manufacturing boom faltered for a third month in March. Investors now await the preliminary Eurozone consumer price index, which is expected to show the cost of living edged higher to 1.4 percent year-on-year in March, compared to1.1 percent in February. The European currency traded 0.1 percent up at 1.2279, having touched a low of 1.2253 the day before, its lowest since Mar. 21. FxWirePro's Hourly Euro Strength Index stood at -37.17 (Neutral) by 0500 GMT. Investors’ attention will remain on Eurozone consumer price index, ahead of the U.S. ADP employment change, Markit Services PMI, FOMC members Bullard and Mester's speech. Immediate resistance is located at 1.2300 (5-DMA), a break above targets 1.2373 (Mar. 23 High). On the downside, support is seen at 1.2253 (Apr. 3 Low), a break below could drag it lower 1.2239 (Mar. 20 Low).
USD/JPY: The dollar eased after rising to a 6-day high earlier in the day, after the Trump administration raised the stakes in a growing trade showdown with China, announcing 25 percent tariffs on some 1,300 industrial technology, transport, and medical products. Traders’ attention will also remain on the U.S. payrolls data and comments by Federal Reserve Chairman Jerome Powell later this week that should help determine the greenback's direction. The major was trading 0.05 percent down at 106.54, having hit a high of 106.65 earlier, its highest since Mar. 29. FxWirePro's Hourly Yen Strength Index stood at -30.27 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. ADP employment change, Markit Services PMI, FOMC members Bullard and Mester's speech. Immediate resistance is located at 106.93 (Mar. 29 High), a break above targets 107.29 (Mar. 13 High). On the downside, support is seen at 106.10 (21-DMA), a break below could take it lower 105.67 (Mar. 19 Low).
GBP/USD: Sterling rallied, extending gains for the third straight session, as data released on Tuesday showed British manufacturing gaining momentum, which boosted expectations of an interest rate rise next month. Investors now shift their focus on the UK PMI Construction index for March, which is expected to decelerate to 50.8 from 51.4 in February. The major traded 0.2 percent up at 1.4076, having hit a high of 1.4096 earlier, it’s highest since Mar. 29. FxWirePro's Hourly Sterling Strength Index stood at 3.38 (Neutral) by 0500 GMT. Investors’ focus will remain on UK Construction PMI, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.4171 (Mar. 23 High), a break above could take it near 1.4200 (Mar. 28 High). On the downside, support is seen at 1.4012 (Mar 30 Low), a break below targets 1.3982 (Mar. 20 Low). Against the euro, the pound was trading 0.1 percent up at 87.19 pence, having hit a low of 87.97 pence last week, it’s lowest since Mar 20.
AUD/USD: The Australian dollar rallied to a 1-week peak after data showed domestic retail sales rebounded, suggesting that consumer spending likely added to growth last quarter and also contributed to economic growth. The economy's retail sales climbed 0.6 percent in February from an upwardly revised 0.2 percent gain in January, beating expectations of a 0.3 percent rise. The Aussie trades 0.2 percent up at 0.7700, having hit a high of 0.7716 earlier; it’s highest since Mar. 27. FxWirePro's Hourly Aussie Strength Index stood at 7.55 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7643 (Mar. 29 Low), a break below targets 0.7600. On the upside, resistance is located at 0.7743 (Mar. 23 high), a break above could take it near 0.7783 (Mar. 22 High).
NZD/USD: The New Zealand dollar surged to an over 1-week peak as global dairy prices declined for a fourth consecutive time at a fortnightly auction as production in New Zealand showed signs of recovery after weak levels earlier in the season. The Global Dairy Trade Price Index eased 0.6 percent, with an average selling price of $3,477 per tonne, in the auction held at midnight, after slumping 1.2 percent at the previous sale. The Kiwi trades 0.4 percent up at 0.7284, having touched a high of 0.7296 earlier, its highest level since Mar. 27. FxWirePro's Hourly Kiwi Strength Index was at 99.25 (Slightly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7303 (Mar. 27 High), a break above could take it near 0.7334 (Mar. 15 High). On the downside, support is seen at 0.7238 (10-DMA), a break below could drag it below 0.7176 (Mar 20 Low).
Equities Recap
Asian shares consolidated within narrow ranges, while the greenback eased as escalating U.S.-China trade tensions left investors reluctant to take big positions.
MSCI's broadest index of Asia-Pacific shares outside Japan traded flat.
Tokyo's Nikkei surged 0.3 percent to 21,353.88 points, Australia's S&P/ASX 200 index gained 0.2 percent to 5,761.40 points and South Korea's KOSPI slumped 1.4 percent to 2,407.79 points.
Shanghai composite index rose 0.3 percent to 3,146.32 points, while CSI300 index was trading 0.3 percent up at 3,874.17 points.
Hong Kong’s Hang Seng was trading 0.8 percent lower at 29,937.50 points.
Commodities Recap
Crude oil prices declined on expectations for a build-up in U.S. crude inventories, however, Russian government comments on prospects for stepping up cooperation with OPEC to coordinate output cuts limited the downside. International benchmark Brent crude was trading 0.4 percent down at $67.90 per barrel by 0423 GMT, having hit a low of $67.49 on Monday, its lowest since Mar. 21. U.S. West Texas Intermediate was trading 0.4 percent up at $63.31 a barrel, after falling as low as $62.84 on Monday, its weakest since Mar. 20.
Gold prices rose, reversing previous session losses, as the dollar eased amid escalating trade tensions between the United States and China. Spot gold gained 0.2 percent at $1,334.95 per ounce as of 0425 GMT, after touching a low of $1,321.12 on Friday, its lowest since Mar. 21. U.S. gold futures eased 0.1 percent to $1,336.30 an ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.780 percent lower by 0.002 bps, while 5-year yield was 0.003 bps down at 2.599 percent.
The Japanese government bonds traded narrowly mixed as investors remained sidelined in a muted session that witnessed data of little economic significance. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, hovered around 0.02 percent, the yield on the long-term 30-year note fell 1 basis point to 0.71 percent and the yield on short-term 2-year traded tad higher at -0.13 percent.
The Australian government bonds slumped following higher-than-expected February retail sales data, pushing the interest rate sensitive 2-year Note yield to its highest since January 31. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 2-1/2 basis point to 2.632 percent, the yield on the long-term 30-year note climbed 3-1/2 basis points to 3.221 percent and the yield on short-term 2-year also jumped 3-1/2 basis points to 2.077 percent.
The New Zealand government bonds slumped at the time of closing after investors have largely shrugged-off the decline in dairy prices at the latest GlobalDairyTrade (GDT) price auction held overnight. The yield on New Zealand’s benchmark 10-year Treasury note, which moves inversely to its price, jumped 5 basis points to 2.79 percent, the yield on the long-term 20-year note surged 3-1/2 basis points to 3.37 percent and the yield on short-term 2-year too closed 3-1/2 basis points higher at 1.93 percent.
The Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries. The two-year dipped 3 Canadian cents to yield 1.795 percent and the 10-year declined 23 Canadian cents to yield 2.143 percent. On Friday, the 10-year yield touched its lowest intraday since Jan. 4 at 2.073 percent.
