Market Roundup
- Wall St goes into reverse as risk appetite fades, JPY and Treasuries rally while oil pares early advance – Financial Times.
- Signs point away from Trump labeling China currency manipulator – Reuters.
- After weak March sales, concerns rise over US auto market outlook – Reuters.
- ICI - US taxable bond funds reel in cash for 17th straight week - Reuters.
- Japan PM Abe, Trump agree North Korea missile launch serious threat - Reuters.
- Kuroda likely favorite for new BoJ term if willing – Reuters.
- MoF flow data week-ended Apr 1 – Japanese buy net Y335.4 bln foreign stocks, Y1.0998 bln bonds, sell Y8.4 bln bills; foreign investors buy net Y584.5 bln Japanese stocks, Y890.0 bln JGBs, sell Y3.0159 trillion bills.
- China March Caixin services PMI 52.2, 6-month low, Feb 52.6.
- China SAFE - FX market relatively stable, cross-border flows more balanced.
- China NAES - Service sector to account for 72% of China GDP by ’30 – Xinhua.
- ADB – Developing Asia ’17 growth likely weakest in 16 years, +5.7% eyed, China growth forecast upped small, India cut small – Reuters, Nikkei.
- RBA DepGov Debelle – Capital inflows to slow as JNG projects transition -MNI.
Economic Data Ahead
- (0200 ET/0600 GMT) Germany Feb industrial orders, +4.0% m/m eyed; last -7.4%.
- (0315 ET/0715 GMT) Switzerland Mar CPI, +0.5% y/y eyed; last +0.5% m/m, +0.6% y/y.
- (0730 ET/1130 GMT) United States Mar Challenger layoffs; last 36.96k.
- (0830 ET/1230 GMT) United States w/e initial jobless claims, 250k eyed; last 258k.
Key Events Ahead
- N/A Berlin bank conference, Buba Weidmann, EU Dijsselbloem et al to attend.
- N/A Norges Bank Gov Olsen, DepGov Nicolaisen speak in Oslo.
- (0300 ET/0700 GMT) ECB Pres Draghi/ChfEcon PraetIrish CB Lane speak at ECB Frankfurt event.
- (0430 ET/0830 GMT) Spain E3.5-4.5 bln 1.4/1.5/4.7% 2020/27/41 Bono auctions.
- (0430 ET/0830 GMT) Spain E0.5-1 bln 1.8% 2024 index-linked Bono auction.
- (0450 ET/0850 GMT) France E7-8 bln 1.0% and 1.5% 2027 and 2031 OAT auctions.
- (0845 ET/1245 GMT) ECB VP Constancio speaks at Valletta seminar.
- (0900 ET/1330 GMT) SF Fed Williams in Frankfurt moderated debate.
- (1000 ET/1400 GMT) Ireland CB ChiefEcon Garland speaks in Dublin.
- N/A US Pres Trump, China Pres Xi summit in Florida (till tomorrow)
FX Beat
DXY: The dollar declined versus the euro and the yen as investors remained cautious ahead of talks between U.S. president Donald Trump and his Chinese counterpart Xi Jinping. The greenback against a basket of currencies traded down at 100.49, having hit a high of 100.73 on Tuesday, its highest since Mar. 16. FxWirePro's Hourly Dollar Strength Index stood at 10.27 (Neutral) by 0400 GMT.
EUR/USD: The euro gained, reversing some of its previous session losses, as the greenback eased ahead of a potentially tense meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping. The European currency traded up at 1.0674, rebounding from a low of 1.0633 touched on Wednesday, its lowest since Mar. 15. FxWirePro's Hourly Euro Strength Index stood at 39.13 (Neutral) by 0300 GMT. Investors now await ECB monetary policy meeting accounts, ahead of U.S. unemployment claims and FOMC member William's speech. Immediate resistance is located at 1.0691 (78.6% retrace of 1.0905 and 1.0634), a break above targets 1.0737 (61.8% retrace). On the downside, support is seen at 1.0633 (Previous Session Low), a break below could drag it near 1.0600.
USD/JPY: The dollar slumped, extending losses for the fifth consecutive session, as caution over the impending U.S.-China summit and geopolitical concerns boosted the safe-haven Japanese yen's appeal. Investors wary ahead of the summit because of Trump's constant criticism of China's economic policies. The major traded 0.15 percent down at 110.50, hovering towards a low of 110.26 touched on Tuesday, its lowest since Mar. 28. FxWirePro's Hourly Yen Strength Index stood at 113.70 (Highly Bullish) by 0400 GMT. Investors’ will continue to track overall market sentiment, ahead of U.S. unemployment claims, FOMC Williams speech, and Trump-Xi Jinping meeting. Immediate resistance is located at 111.00 (61.8 % retrace of 112.19 and 110.26), a break above targets 111.45 (38.2% retrace). On the downside, support is seen at 110.26 (Apr 4 Low), a break below could take it near 110.00.
GBP/USD: Sterling steadied after rising in the previous session on the back of better-than-expected UK services data, which eased some fears over the health of the economy. The major trades flat at 1.2477, having hit a low of 1.2419 on Tuesday, its lowest since Mar. 30. FxWirePro's Hourly Sterling Strength Index stood at -28.90 (Neutral) by 0400 GMT. Investors’ attention will remain on U.S. economic data and Trump-Xi Jinping meeting amid a lack of relevant data from the UK docket. Immediate resistance is located at 1.2500, a break above could take it near 1.2555 (Apr 3 High). On the downside, support is seen at 1.2440, a break below targets 1.2400. Against the euro, the pound traded 0.1 percent down at 85.51 pence, having hit a low of 85.89 the day before, its lowest since Mar 31.
AUD/USD: The Australian dollar tumbled to a fresh 4-week low after the Caixin data released in China showed the pace of expansion in the service sector activity surprisingly slowed in March. Chinese Caixin Services PMI came in at 52.2 in March versus previous 52.6 and estimates of 53.2. Moreover, dovish comments from the RBA earlier this week continued to weigh on market sentiment. The Aussie trades 0.3 percent down at 0.7542, having hit a low of 0.7532 earlier in the session, it’s lowest since Mar. 10. FxWirePro's Hourly Aussie Strength Index stood at -74.33 (Bearish) by 0400 GMT. Investors will continue to digest downbeat Chinese service data, ahead of U.S. economic data and FOMC member speech. Immediate support is seen at 0.7525 (Mar-8 Low), a break below targets 0.7500. On the upside, resistance is located at 0.7588 (38.2% retrace of 0.7679 and 0.7532), a break above could take it near 0.7623 (62.8% retrace).
NZD/USD: The New Zealand dollar rose, rebounding from a 3-week low touched in the previous session as the greenback eased ahead of the U.S.-China summit. However, downside surprise delivered by the Chinese services PMI data limited the upside in the major. The Kiwi trades 0.1 percent higher at 0.6974, retreating from a low of 0.6935 hit on Wednesday, its weakest since Mar. 15. FxWirePro's Hourly Kiwi Strength Index was at 5.28 (Neutral) by 0400 GMT. Investors’ will continue to track overall market sentiment, ahead of U.S. macro fundamental drivers and Xi-Trump summit. Immediate resistance is located at 0.6993 (21-DMA), a break above could take it near 0.7022 (Apr 4 High). On the downside, support is seen at 0.6951 (Mar 7 Low), a break below could drag it near 0.6910.
Equities Recap
Asian shares slumped as risk appetite faded ahead of a meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping and on signs the Federal Reserve might start paring its asset holdings later this year.
MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.8 percent.
Tokyo's Nikkei fell 1.7 percent to 18,538.24 points, Australia's S&P/ASX 200 index eased 0.6 percent to 5,841.50 points and South Korea's KOSPI was trading 0.6 percent down at 2,147.66 points.
Shanghai composite index edged up 0.1 percent to 3,273.76 points, while CSI300 index was trading 0.05 percent lower at 3,502.10 points.
Hong Kong’s Hang Seng was trading 0.6 percent lower at 24,255.26 points. Taiwan shares shed 0.6 percent at 9,888.38 points.
Commodities Recap
Crude oil prices edged up after easing from a 1-month high in the previous session, as efforts led by OPEC to cut output boosted market sentiment. International benchmark Brent crude was trading 0.2 percent up at $54.07 per barrel by 0342 GMT, having hit a high of $55.06 on Wednesday, its strongest since Mar. 8. U.S. West Texas Intermediate crude rose 0.08 percent to $50.84 a barrel, after rising as high as $51.86 the day before, its highest since Mar. 8.
Gold prices edged down, extending previous session losses, while investors appetite for risky assets such as equities faded ahead of a meeting between U.S. President Donald Trump and his Chinese counterpart. Spot gold fell 0.1 percent to $1,254.19 per ounce by 0350 GMT, having hit a high of $1,261.07 on Tuesday, its highest since March 27. U.S. gold futures climbed as much as 1 percent to $1,260.80 and were last up 0.7 percent at $1,257.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.335 percent lower by 0.022 bps, while 5-year yield was 0.019 bps down at 1.848 percent.
The Australian bonds jumped as investors covered previous short positions amid modestly lower equities that further lent support to the bond market. The yield on the benchmark 10-year Treasury note slumped 4-1/2 basis points to 2.58 percent, the yield on 15-year note plunged 4 basis points to 2.96 percent and the yield on short-term 2-year traded 3-1/2 basis points lower at 1.67 percent.
The New Zealand bonds traded modestly lower as investors cashed in profits toward the end of the trading week. The yield on the benchmark 10-year bond rose 1/2 basis point to 3.12 percent, the yield on 7-year note remained nearly flat at 2.75 percent and the yield on short-term 2-year note also traded 1/2 basis point higher at 2.12 percent.
The Canadian government bond prices were slightly lower across the yield curve, with the two-year down 2 Canadian cents to yield 0.749 percent and the 10-year falling 5 Canadian cents to yield 1.588 percent. On Tuesday, the 10-year yield touched its lowest in four months at 1.545 percent.
