Market Roundup
- Japan government nominates reflationists to BoJ Policy Board to replace dissenters Kiuchi, Sato, both Goushi Kataoka and Hitoshi Suzuki hail from MUFJ Group, Kataoka has written on tax barriers, Suzuki market experience.
- Moody's - Japan economic momentum building on the back of rising exports, expected fiscal support.
- Japan FinMin Aso – To discuss broad economic framework with US, not bilateral FTA – Reuters.
- US CommSec Ross – Eager to boost trade relations with Japan – Reuters.
- US TsySec Mnuchin concedes US tax reform slowed by healthcare blow – FT.
- US Feb net overall capital inflow $19.3 bln, Jan rev $121.2 bln, prelim $110.4 bln, foreign holdings of US Treasuries -$13.5 bln, Jan -$7.2 bln, China holdings $1.060 trln vs Jan $1.051 trln, Japan $1.115 trln vs $1.103.
- FOMC ViceChair Fischer – Sees no repeat of taper tantrum this time around, balance sheet plan won’t affect Fed policy – Reuters.
- China Q1 non-financial outbound direct investment -48.8% y/y to $20.54 bln, March only -30.1% to $7.11 bln.
- China March home prices +0.6% m/m, +11.3% y/y, Feb +0.3%, +11.8%.
- RBA April meeting minutes – Steady rates consistent with growth-inflation targets, boxed-in by soft jobs, hot housing, rising AUD would complicate economic adjustment.
- Foreign holdings of NZ government debt in March off to 59.0%, Feb 60.0%.
- Clock ticking on consumer-led UK recession – James Saft, Reuters Column.
- UK Weetabix to be sold by China interests to US Post Holdings for $1.76 bln - Financial Times.
Economic Data Ahead
- (0830 ET/1230 GMT) United States Mar housing starts, 1.25 mln AR forecast; last 1.29 mln, +3.0% m/m.
- (0830 ET/1230 GMT) United States Mar building permits, 1.25 mln AR forecast; last 1.22 mln, -6.0% m/m.
- (0915 ET/1315 GMT) United States Mar industrial production, +0.5% m/m forecast; last +0.1%.
- (0915 ET/1315 GMT) United States Mar capacity utilization, 76.2% forecast; last 75.9%.
Key Events Ahead
- N/A Spain 3/9-mo t-bill, France 3/6/12-mo BTF, ESM 6-mo bill auctions.
- (0530 ET/0930 GMT) Netherlands E1-2 bln 3/6-month DTC auctions.
- N/A IMF/World Bank Spring meetings in Washington, DC, World Economic Outlook.
- (0830 ET/1230 GMT) Canada international securities transactions data.
- (0900 ET/1300 GMT) KC Fed George speaks at New York Bard College conference.
- (1245 ET/1645 GMT) BoC DepGov Wilkins speaks in Toronto.
FX Beat
DXY: The dollar steadied versus the Japanese yen as U.S. Treasury Secretary Steven Mnuchin's comments were seen countering those of the president, who last week said the dollar was too strong. The dollar against a basket of currencies traded flat at 100.31, having hit a low of 100.00 the day before, its lowest since Mar. 30. FxWirePro's Hourly Dollar Strength Index stood at 12.22 (Neutral) by 0500 GMT.
EUR/USD: The euro rose, extending previous session gains, as the greenback eased on lingering worries about North Korea and the coming French presidential elections. The European currency traded 0.1 percent up at 1.0648, having touched a high of 1.0677 last week, its highest since Apr. 6. FxWirePro's Hourly Euro Strength Index stood at 102.02 (Highly Bullish) by 0400 GMT. Investors now await the U.S. housing starts, building permits, and industrial production, as Eurozone's economic calendar remains absolutely data empty. Immediate resistance is located at 1.0677 (Apr. 13 High), a break above targets 1.0698 (21-DMA). On the downside, support is seen at 1.0600, a break below could drag it near1.0569 (Apr. 10 Low).
USD/JPY: The dollar steadied, pulling away from five-month lows versus the yen, boosted by comments from U.S. Treasury Secretary Steven Mnuchin and higher debt yields. The major traded 0.1 percent up at 109.02, having touched a low of 108.13 the day before, its lowest since Nov. 15. FxWirePro's Hourly Yen Strength Index stood at 37.80 (Neutral) by 0400 GMT. Investors’ will continue to digest U.S. Treasury Secretary Steven Mnuchin's comments, ahead of the U.S. housing starts, building permits, industrial production and capacity utilization. Immediate resistance is located at 109.44 (61.8 % retrace of 111.57 and 108.13), a break above targets 109.85 (50.0% 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 advanced, extending gains for the third consecutive session, amid fresh U.S. dollar selling across the board. The major trades 0.04 percent up at 1.2566, hovering towards a high of 1.2595 touched on Monday, its highest since Mar. 28. FxWirePro's Hourly Sterling Strength Index stood at 50.83 (Bullish) 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 1.2600, a break above could take it near 1.2640. On the downside, support is seen at 1.2507 (38.2% retrace of 1.2365 and 1.2595), a break below targets 1.2479 (21-DMA). Against the euro, the pound traded flat at 84.71 pence, having hit a 7-week high of 84.53 in the previous session.
AUD/USD: The Australian dollar tumbled, halting its 4-day winning streak, as minutes of the central bank's April meeting reinforced views that interest rates would stay low for longer. Moreover, weaker prices of iron ore added to the ongoing weakness the major. The Aussie trades 0.4 percent lower at 0.7556, having hit a peak of 0.7610 in the previous session, it’s highest since Apr. 4. FxWirePro's Hourly Aussie Strength Index stood at -99.42 (Slightly Bearish) by 0400 GMT. Investors will continue to digest dovish RBA minutes, ahead of series of U.S. economic data. Immediate support is seen at 0.7540 (50.0% retrace of 0.7471 and 0.7610), a break below targets 0.7520. On the upside, resistance is located at 0.7600, a break above could take it near 0.7640 (Apr. 3).
NZD/USD: The New Zealand dollar eased after hitting a two-week high in the previous session as downbeat China’s home prices data weakened investor risk sentiment. However, heavy selling in the AUD/NZD cross offered some support to the Kiwi. The major trades 0.05 percent lower at 0.7006, having touched a high of 0.7036 on Monday, its strongest since Mar. 30. FxWirePro's Hourly Kiwi Strength Index was at 43.58 (Neutral) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of U.S. macro fundamental drivers. Immediate resistance is located at 0.7036 (Previous Session High), a break above could take it near 0.7050. On the downside, support is seen at 0.6988 (5-DMA), a break below could drag it near 0.6974 (10-DMA).
Equities Recap
Asian shares declined as escalating tensions over North Korea weighed on market sentiment, while the greenback slightly rebounded on the U.S. Treasury Secretary's comments in support of a stronger currency.
MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.3 percent.
Tokyo's Nikkei advanced 0.31 percent to 18,411.82 points, Australia's S&P/ASX 200 index fell 0.99 percent to 5,831.30 points and South Korea's KOSPI gained 0.13 percent at 2,148.24 points.
Shanghai composite index edged up 0.01 percent to 3,222.17 points, while CSI300 index was trading 0.18 percent higher at 3,486.30 points.
Hong Kong’s Hang Seng was trading 0.85 percent lower at 24,056.48 points. Taiwan shares rose 0.3 percent to 9,746.46 points.
Commodities Recap
Crude oil prices declined to a fresh 1-week low after a U.S. government report indicated rising production. International benchmark Brent crude was trading 0.3 percent down at $55.27 per barrel by 0413 GMT, having hit a low of $55.23 earlier in the day, its weakest since Apr. 10. U.S. West Texas Intermediate fell 0.3 percent to $52.56 a barrel, after declining as low as $52.49 earlier, its lowest since Apr. 10.
Gold prices plunged after rising to a five-month high in the previous session, however, geopolitical tensions over North Korea supported the safe-haven metal. Spot gold 0.1 percent down at $1,283.11 per ounce by 0417 GMT, after advancing to $1,295.38 in the prior session, its highest since Nov. 9. U.S. gold futures were down 0.5 percent at $1,285.50.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.248 percent lower by 0.004 bps, while 5-year yield was 0.001 bps down at 1.775 percent.
The Australian government bonds plunged after a long Easter holiday, following mixed signals from the Reserve Bank of Australia’s (RBA) April monetary policy meeting minutes. The yield on the benchmark 10-year Treasury note jumped 3 basis points to 2.50 percent, the yield on the 15-year note climbed 2-1/2 basis points to 2.89 percent and the yield on short-term 2-year traded little above 1 basis point at 1.63 percent.
The New Zealand bonds gained tracking firmness in the U.S. counterpart and as investors are curiously eyeing the country’s consumer price inflation (CPI) for the first quarter of this year, scheduled to be released on April 20 for further direction in the debt market. The yield on the benchmark 10-year bond slumped 1 basis point to 2.99 percent, the yield on 7-year note also slipped nearly 1 basis point to 2.68 percent and the yield on the short-term 2-year note too traded 1 basis point lower at 2.14 percent.
The Canadian government bond prices turned flat to lower across the maturity curve, with the two-year ending down half a Canadian cent to yield 0.731 percent and the benchmark 10-year off 17 Canadian cents to yield 1.514 percent. The Canadian two-year bond was yielding 47 basis points less than its U.S. counterpart, with the spread the narrowest since late February.
