Market Roundup
- China hits U.S. goods with tariffs as 'sparks' of trade war fly
- China diplomat says any new U.S. tariffs to draw 'same proportion' response - state TV
- Trump declares DACA 'dead,' urges Congress to act on border
- Trump to nominate Muzinich as Treasury deputy secretary -White House
- BoJ Tankan price expectations survey - +0.8% y/y in year, +1.1% in 3/5 years
- Japan Inflation expectations tepid, stalling, BoJ target 2%
- Australia central bank holds rates at 1.5 pct
- Australia manufacturers report strength in new orders -PMI surveys
Economic Data Ahead
- (0345 ET/0745 GMT) Italy Mar Markit/ADACI Mfg PMI, 55.40 eyed, 56.80 last
- (0350 ET/0750 GMT) France Mar Markit/Mfg PMI, 53.60 eyed, 53.60 last
- (0355 ET/0755 GMT) Germany Mar Markit/BME Mfg PMI, 58.40 eyed, 58.40 last
- (0400 ET/0800 GMT) Eurozone Mar Markit Mfg Final PMI, 56.6 eyed, 56.6 last
- (0430 ET/0830 GMT) Great Britain Mar Markit/CIPS Mfg PMI, 54.70 eyed, 55.20 last
Key Events Ahead
- (0300 ET/0700 GMT) Spain's Budget Minister Cristobal Montoro will present 2018 budget at Parliament - Madrid
- (0500 ET/0900 GMT) Governor of Bank of Spain Luis Maria Linde to open conference and also takes part in panel discussion on completing the banking union - Madrid
- (0930 ET/1330 GMT) Fed's Minneapolis President Neel Kashkari participates in a moderated question-and-answer session at the Regional Economic Indicators Forum - Duluth, Minnesota
- (1030 ET/1430 GMT) Participation by ECB executive board member Yves Mersch in a panel discussion at a joint Banco de España/IMF conference "Spain - From Recovery to Resilience" – Madrid
- (1630 ET/2030 GMT) Federal Reserve Board Governor Lael Brainard speaks on "Financial Stability" before an event hosted by the New York University Stern Center for Global Economy and Business - New York
FX Beat
DXY: The dollar index eased as mounting U.S.-China trade tensions stirred up concerns for the global growth outlook. The greenback against a basket of currencies trades 0.1 percent down at 89.94, having touched a high of 90.18 on Thursday, its highest since Mar. 21. FxWirePro's Hourly Dollar Strength Index stood at -89.73 (Slightly Bearish) by 0500 GMT.
EUR/USD: The euro rose, reversing some of its previous session losses, ahead of German retail sales report, which is expected to rise at 0.8 percent month-on-month, a rebound from the previous period's -0.7 percent contraction. Investors will also look out for Eurozone Markit Manufacturing PMI, which is likely to come in at 56.6 for March, an identical reading to February's report. The European currency traded 0.1 percent up at 1.2309, having touched a high of 1.2476 last week, its highest since Feb. 16. FxWirePro's Hourly Euro Strength Index stood at -77.23 (Slightly Bearish) by 0500 GMT. Investors’ attention will remain on German retail sales, Markit Manufacturing PMIs for Spain, Italy, France, Germany, and Eurozone, ahead of FOMC members Kashkari and Brainard's speech. Immediate resistance is located at 1.2326 (5-DMA), a break above targets 1.2373 (Mar. 23 High). On the downside, support is seen at 1.2283 (Mar. 29 Low), a break below could drag it lower 1.2258 (Mar. 19 Low).
USD/JPY: The dollar steadied after falling to a 5-day low in the prior session, amid increasing trade tensions between the U.S. and China after China imposed their own set of tariffs on U.S. goods over the weekend. Investors’ attention will also remain on FOMC members Kashkari and Brainard's speech at 13:30 GMT and at 20:30 respectively. The major was trading 0.1 percent up at 105.95, having hit a high of 107.01 on Wednesday, its highest since Mar. 13. FxWirePro's Hourly Yen Strength Index stood at 68.91 (Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the FOMC members Kashkari and Brainard's speech. Immediate resistance is located at 106.64 (Mar. 21 High), a break above targets 107.05 (Mar. 9 High). On the downside, support is seen at 105.67 (Mar. 19 Low), a break below could take it lower 105.45 (Mar. 7 Low).
GBP/USD: Sterling extended gains for the third straight session, as developments in Brexit negotiations and growing expectations that the Bank of England could soon raise interest rates were viewed as broadly positive for Britain. However, the massive current account deficit and Brexit uncertainty limited the upside in the British pound. The major traded 0.1 percent up at 1.4056, having hit a low of 1.4011 last week, it’s lowest since Mar. 21. FxWirePro's Hourly Sterling Strength Index stood at -8.48 (Neutral) by 0500 GMT. Investors’ focus will remain on UK Manufacturing PMI, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.4091 10-DMA), a break above could take it near 1.4171 (Mar. 23 High). On the downside, support is seen at 1.3982 (Mar 20 Low), a break below targets 1.3931 (Feb. 20 Low). Against the euro, the pound was trading 0.05 percent up at 87.54 pence, having hit a low of 87.97 pence last week, it’s lowest since Mar 20.
AUD/USD: The Australian dollar rebounded from near 4-month lows after the Reserve Bank of Australia left its cash rate at 1.5 percent, a widely expected decision and sounded optimistic about faster economic growth in 2018. The economy's core inflation has stayed below the RBA's target band of 2-3 percent for more than two years, while unemployment has remained around 5.5 percent despite growing job creation over 2017. The Aussie trades 0.3 percent up at 0.7682, having hit a low of 0.7643 on Thursday; it’s lowest since Dec. 21. FxWirePro's Hourly Aussie Strength Index stood at 101.78 (Slightly Bullish) 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 0.7725 (Mar. 19 high), a break above could take it near 0.7757 (Mar. 27 High).
NZD/USD: The New Zealand dollar retreated after slumping to a 5-day low earlier in the session on nervousness around the outlook for global growth amid escalating U.S.-China trade tensions. China has imposed extra tariffs of up to 25 percent on 128 US products in response to U.S. duties on imports of aluminum and steel. The Kiwi trades 0.3 percent up at 0.7233, having touched a low of 0.7188 on Thursday, its lowest level since Mar. 21. FxWirePro's Hourly Kiwi Strength Index was at 90.82 (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 0.7254 (21-DMA), a break above could take it near 0.7274 (Mar. 24 High). On the downside, support is seen at 0.7203 (Mar 28 Low), a break below could drag it below 0.7176 (Mar 20 Low).
Equities Recap
Asian shares declined, while the greenback slumped against a basket of currencies amid escalating trade tensions and worries over the fading outlook for global growth.
MSCI's broadest index of Asia-Pacific shares outside Japan tumbled 0.4 percent.
Tokyo's Nikkei declined 0.5 percent to 21,292.29 points, Australia's S&P/ASX 200 index eased 0.1 percent to 5,751.90 points and South Korea's KOSPI slumped 0.3 percent to 2,436.03 points.
Shanghai composite index declined 1.1 percent to 3,127.14 points, while CSI300 index was trading 0.8 percent down at 3,853.29 points.
Hong Kong’s Hang Seng was trading 0.2 percent lower at 30,031.15 points. Taiwan shares shed 0.6 percent to 10,821.53 points.
Commodities Recap
Crude oil prices rose as increasing Russian output and expectations of a reduction in Saudi Arabian crude prices were counter set by a potential slowdown in U.S. production. International benchmark Brent crude was trading 0.4 percent up at $67.76 per barrel by 0440 GMT, having hit a low of $67.49 the day before, its lowest since Mar. 21. U.S. West Texas Intermediate was trading 0.4 percent up at $63.09 a barrel, after rising as high as $62.84 earlier, its strongest since Mar. 20.
Gold prices declined after gaining a more than 1 percent in the previous session, as mounting global trade tensions boosted demand for the safe-haven metal. Spot gold was down 0.2 percent at $1,338.19 per ounce as of 0445 GMT, after rising 1.3 percent on Monday, recording its biggest one-day percentage rise in a week. U.S. gold futures eased 0.1 percent to $1,345.70 an ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.740 percent higher by 0.009 bps, while 5-year yield was 0.013 bps up at 2.562 percent.
The Japanese government bonds gained after the country’s 10-year auction was perceived softer than the prior auction, with the yield rate bid at 0.03 percent, compared to 0.061 percent in the previous auction. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell nearly 1-1/2 basis points to 0.03 percent, the yield on the long-term 30-year note also slumped 1-1/2 basis points to 0.72 percent and the yield on short-term 2-year traded tad lower at -0.13 percent.
The Australian short-term government bonds eased on the first trading day of the week, with buying limited ahead of the Reserve Bank of Australia April monetary policy decision. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 1/2 basis point to 2.600 percent, the yield on the long-term 30-year note climbed 1-1/2 basis points to 3.194 percent and the yield on short-term 2-year jumped 2-1/2 basis points to 2.045 percent.
The New Zealand government bonds closed mixed Tuesday amid a muted trading session that witnessed no data of any major economic significance. The yield on New Zealand’s benchmark 10-year Treasury note, which moves inversely to its price, rose 1/2 basis point to 2.74 percent, the yield on the long-term 30-year note slid 1/2 basis point to 3.34 percent and the yield on short-term 2-year closed 1-1/2 basis points higher at 1.89 percent.
The Canadian government bond prices were lower across the yield curve, with the two-year down 1.2 Canadian cents to yield 1.784 percent and the 10-year falling 19 Canadian cents to yield 2.116 percent. On Thursday, the 10-year yield touched its lowest intraday since Jan. 4 at 2.073 percent.
