Market Roundup
- BOJ Kuroda expects to meet price target of 2% by around next fiscal year
- BOJ maintains short-term interest rate target of -0.1%, pledges to guide 10-yr bond yields around 0%.
- Output gap improving, but inflation still low
- Japan Mar real wages, total cash earnings fall to lowest since Jun’15
- Japan Mar inflation-adjusted real wages -0.8% y/y
- Japan Mar total cash earnings -0.4% y/y
- Australia Mar retail sales m/m -0.1% vs forecast +0.3%; last -0.2%
- Australia Mar retail trade m/m +0.1% vs forecast +0.4%; last +0.7%
- Australia's Big Four banks look to cut costs as challenges rise
- China sets yuan midpoint 6.9037/dollar, the weakest level since Apr 10.
- As China's battle with leverage begins to bite, risk bites back
- IMF says Asia facing risks from rise in protectionism
- South Koreans vote for new leader after months of political vacuum
- UK Apr like-for-like retail sales +5.6% yy vs -1.0% in Mar - BRC
Economic Data Ahead
- (0245 ET/0645 GMT) France Mar Budget Balance, last -21.50 billion
- (0400 ET/0800 GMT) Italy Mar Retail Sales SA m/m, last -0.3%
- (0400 ET/0800 GMT) Italy Mar Retail Sales NSA y/y, last -1.0%
Key Events Ahead
- (0400 ET/0800 GMT) Netherlands 5Y E2.500 billion auction
- (0500 ET/0900 GMT) Austria 10Y E0.550 billion auction
- (0500 ET/0900 GMT) Austria 30Y E0.550 billion auction
- (1200 ET/1600 GMT) German finmin Wolfgang Schaeuble attends Townhall event in Berlin.
FX Beat
DXY: The dollar rose to a 2-month high versus the Japanese yen as markets priced in a Federal Reserve rate hike in June. The greenback against a basket of currencies traded flat at 99.15, having hit a low of 98.50 on Monday, it’s lowest since Nov. 10. FxWirePro's Hourly Dollar Strength Index stood at 29.39 (Neutral) by 0500 GMT.
EUR/USD: The euro steadied after easing from a six-month high in the previous session, as fading worries over political populism and signs of improving economic conditions in Europe boosted investor confidence. The European currency traded 0.1 percent up at 1.0929, having touched a high of 1.1021 on Monday, its highest since Nov. 09. FxWirePro's Hourly Euro Strength Index stood at 5.99 (Neutral) by 0400 GMT. Investors now await U.S. JOLTS job opening, wholesale inventories data, and series of Fed officials' speeches, amid a lack of economic data from the Eurozone. Immediate resistance is located at 1.0943 (5-DMA), a break above targets 1.0987. On the downside, support is seen at 1.0897 (61.8% retrace of 1.0820 and 1.1021), a break below could drag it near 1.0862 (78.6% retrace).
USD/JPY: The dollar rallied above the 113.00 handle to a fresh 2-month high, despite less hawkish comments from the Fed officials Bullard and Mester delivered overnight. Moreover, mild positive treasury yields and ongoing bullish consolidative phase in the dollar index supported the bid tone around the major. The major traded 0.1 percent up at 113.28, hovering towards a peak of 113.38 hit earlier in the session, its highest since Mar. 17. FxWirePro's Hourly Yen Strength Index stood at -137.26 (Highly Bearish) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of U.S. JOLTS job opening, wholesale inventories data and FOMC member Kaplan and Fed Rosengren speech. Immediate resistance is located at 113.50, a break above targets 114.00. On the downside, support is seen at 112.61 (5-DMA), a break below could take it near 112.09 (May 5 Low).
GBP/USD: Sterling gained, reversing some of its previous session losses, as investors attention shifted on this week's Bank of England meeting and a domestic election campaign. The British pound was also supported by upbeat British Retail Consortium like-for-like retail sales for April, which came in stronger than expectations at 5.6 percent. Sterling trades 0.1 percent up at 1.2954, having hit a high of 1.2987 on Monday, its highest since Sept. 30. FxWirePro's Hourly Sterling Strength Index stood at 160.93 (Highly Bullish) by 0400 GMT. Investors’ attention will remain on the U.S. JOLTS job opening, wholesale inventories figures, as the UK economic calendar remained absolutely data empty. Immediate resistance is located at 1.3000, a break above could take it near 1.3120 (Sept. 22 High). On the downside, support is seen at 1.2900 (Apr 5 Low), a break below targets 1.2830. Against the euro, the pound traded flat at 84.38 pence, having hit a 1-week high of 84.29 earlier in the day.
AUD/USD: The Australian dollar tumbled to four-month lows as downbeat retail sales figures reinforced expectations of steady interest rates in near term. The economy's retail sales declined 0.1 percent in March, against estimates of a gain of 0.3 percent. The Aussie trades 0.4 percent lower at 0.7354, having hit a fresh low of 0.7352, it’s weakest since Nov. 1. FxWirePro's Hourly Aussie Strength Index stood at -130.50 (Highly Bearish) by 0500 GMT. Investors will continue to digest downbeat domestic data, ahead of Australia's federal budget, U.S economic releases, and Fed speeches. Immediate support is seen at 0.7350, a break below targets 0.7311 (Nov 21 Low). On the upside, resistance is located at 0.7400 (23.6 retracements of 0.7556 and 0.7352), a break above could take it near 0.7429 (38.2% retrace).
NZD/USD: The New Zealand dollar eased, giving up some of its previous session gains, as the Reserve Bank of New Zealand is likely to stand pat at its policy review on May 11, following a rate cut in November last year. However, the downside was limited by expectations that the central bank might take on a slightly more hawkish stance from its current neutral bias on Thursday. The Kiwi trades 0.1 percent down at 0.6902, having touched a low of 0.6839 last week, its weakest since Jun. 03. FxWirePro's Hourly Kiwi Strength Index was at -30.12 (Neutral) by 0500 GMT. Investors’ will continue to track overall market sentiment, ahead of the U.S. economic data. Immediate resistance is located at 0.6940 (May 2 High), a break above could take it near 0.6983 (May 3 High). On the downside, support is seen at 0.6888 (Previous Session Low), a break below could drag it near 0.6860.
Equities Recap
Asian shares edged down following a flat close on Wall Street, as investors hunted for the next catalyst after France's presidential election.
MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.2 percent, while the MSCI World index dropped about 0.1 percent.
Tokyo's Nikkei eased 0.1 percent to 19,882.55 points, Australia's S&P/ASX 200 index fell 0.59 percent to 5,837.60 points and South Korea's KOSPI climbed 2.30 percent at 2,292.76 points.
Shanghai composite index edged down 0.3 percent to 3,068.33 points, while CSI300 index was trading 0.5 percent lower at 3,341.03 points.
Hong Kong’s Hang Seng was trading 0.4 percent higher at 24,680.12 points. Taiwan shares shed 0.2 percent to 9,915.48 points.
Commodities Recap
Crude oil prices edged down as concerns over slowing demand and a continuous rise in U.S. crude output weakened the impact of hopes that OPEC-led production cuts could be extended. International benchmark Brent crude was trading 0.1 percent down at $49.34 per barrel by 0428 GMT, having hit a low of $46.63 last week, its weakest since Nov. 29. U.S. West Texas Intermediate fell 0.1 percent to $46.42 a barrel, after declining as low as $43.73 on Friday, its lowest since Nov. 15.
Gold prices gained, however, remained close to seven-week lows touched in the previous session as demand for safe-haven assets weakened in the wake of France's presidential election. Spot gold was up 0.2 percent at $1,227.72 per ounce at 0432 GMT, having hit a low of $1,220.82 the day before, its lowest since Mar 16. U.S. gold futures advanced 0.1 percent to $1,228.20 an ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.379 percent higher by 0.004 bps, while 5-year yield was 0.001 bps up at 1.901 percent.
The Australian government bonds remained flat, tracking U.S. Treasuries as investors shrugged off lower-than-expected retail sales for the month of March, released earlier today. The yield on the
benchmark 10-year Treasury note remained flat at 2.69 percent, the yield on 15-year note hovered around 3.10 percent while the yield on short-term 2-year traded 1-1/2 basis points lower at 1.74 percent.
The New Zealand bonds ended Tuesday’s session on a mixed note as investors wait to watch the Reserve Bank of New Zealand’s monetary policy decision, scheduled to be unveiled on May 11. At the time of closing, the yield on the benchmark 10-year bond fell 1 basis point to 3.12 percent, the yield on 7-year note also slipped 1 basis point to 2.78 percent while the yield on short-term 2-year note traded 1-1/2 basis point higher at 2.12 percent.
The Canadian government bond prices were lower across the yield curve, with the two-year price down half a Canadian cents to yield 0.709 percent and the 10-year falling 42 Canadian cents to yield 1.590 percent.
