Market Roundup
- UK PM May ready to compromise as Brexit letter heads for Brussels, No 10 anxious to avoid acrimonious divorce after setting Article 50 process in motion – Financial Times.
- Fed Gov Powell – Fed still in wait-and-see stance regarding Trump policies, fiscal policy changes not factored into Fed outlook, balance sheet to be allowed to shrink when appropriate – Reuters.
- Japan business lobby Keidanren issues fresh Brexit warning, calls for deeper consideration as some German companies reveal plans for shift from UK – FT.
- BoJ Policy Board Sato – Labor reform must accompany monetary easing –Reuters.
- BoJ trims purchase of 3-5 year JGBs in market operations – Reuters.
- Japan February retail sales +0.1% y/y, +0.5% forecast.
- Toshiba approves US Westinghouse unit Chapter 11 filing – Nikkei.
- Moody’s – China economy faces heightened risks from potential future property downturn – Reuters.
- Fitch - Australia home loan rate rises cool lending, risks to banks remain.
Economic Data Ahead
- (0245 ET/0645 GMT) France Mar consumer confidence index, 100.0 forecast; last 100.0.
- (0300 ET/0700 GMT) Sweden Mar consumer confidence index, 104.0 forecast; last 104.5.
- (0300 ET/0700 GMT) Sweden Mar manufacturing confidence index, 117.0 forecast; last 117.7.
- (0400 ET/0800 GMT) Switzerland Mar investor sentiment index; last 19.4.
- (0400 ET/0800 GMT) Switzerland Feb UBS consumption indicator; last 1.43.
- (0400 ET/0800 GMT) Italy Mar consumer confidence index, 106.6 forecast; last 106.6.
- (0400 ET/0800 GMT) Italy Mar Mfg business confidence index, 106.0 forecast; last 106.3.
- (0430 ET/0830 GMT) Great Britain Feb money supply M4; last +0.9% AR forecast.
- (0430 ET/0830 GMT) Great Britain Feb mortgage approvals, 69.9k forecast; last 69.93k.
- (0430 ET/0830 GMT) Great Britain Feb mortgage lending, GBP3.45 bln forecast; last GBP3.38 bln.
- (0430 ET/0830 GMT) Great Britain Feb consumer credit, GBP1.30 bln forecast; last GBP1.42 bln.
- (1000 ET/1400 GMT) United States Feb NAR pending home sales, +2.4% m/m forecast; last -2.8%, index 106.4.
Key Events Ahead
- N/A Frankfurt OMFIF meeting, Chicago Fed Evans to speak 14:20.
- N/A BoE Salmon speaks at London FX industry event.
- N/A Norway NOK4 bln 1.75% 2027 NST-479 government bond auction.
- (0500 ET/0900 GMT) Italy E6.5 bln 6-month BOT auction.
- (0530 ET/0930 GMT) ECB 3-month LTRO, E30.5 bln allotment forecast, E2.7 bln maturing.
- (0635 ET/1035 GMT) Riksbank DepGov Floden speaks at Stockholm seminar.
- (0800 ET/1200 GMT) UK PM May House of Commons Q&A session.
- (0800 ET/1200 GMT) Finland max E1 bln zero% 2023 government bond auction.
- (1130 ET/1530 GMT) Boston Fed Rosengren speaks at Boston Economic Club.
- (1315 ET/1715 GMT) SF Fed Williams speaks at New York Forecasters Club.
- (1350 ET/1750 GMT) ECB ChiefEcon Praet speaks at Frankfurt symposium.
FX Beat
DXY: The dollar gained across the board on better-than-expected U.S. economic data, while investors shook off disappointment about President Trump's failed healthcare bill. The greenback against a basket of currencies traded up at 99.81, having hit a low of 98.89 on Monday, its lowest since Nov. 11. FxWirePro's Hourly Dollar Strength Index stood at 81.99 (Slightly Bullish) by 0500 GMT.
EUR/USD: The euro steadied above the 1.0800 handle after retreating from a 4-1/2 month high in the previous session as strong gains seen in EUR/GBP cross in the wake of the British pound sell-off supported the major. The European currency traded 0.02 percent up at 1.0815, having touched a high of 1.0905 on Monday, its highest since Nov. 11. FxWirePro's Hourly Euro Strength Index stood at 68.31 (Bullish) by 0400 GMT. Investors now await Fed officials' speeches and U.S. pending home sales figures, amid a lack of relevant data from the Eurozone docket. Immediate resistance is located at 1.0850, a break above targets 1.0920. On the downside, support is seen at 1.0783 (10-DMA), a break below could drag it near 1.0759 (38.2% retrace of 1.0525 and 1.0905).
USD/JPY: The dollar rose, extending gains from the previous session, as better-than-expected U.S. economic data backed expectations for more U.S. interest rate hikes this year. However, concern about Britain's impending exit from the European Union triggered a fresh bout of risk aversion, supporting the safe-haven Japanese yen. The major traded 0.03 percent up at 111.16, drifting away from a low of 110.10 touched on Monday, its lowest since Nov. 18. FxWirePro's Hourly Yen Strength Index stood at -27.71 (Neutral) by 0400 GMT. Investors’ will continue to track overall market sentiment, ahead of FOMC members Evan, William and Federal Reserve Bank of Boston President Eric Rosengren's speeches. Immediate resistance is located at 111.50, a break above targets 112.15 (61.8% retracement of 115.50 and 110.10). On the downside, support is seen at 110.50, a break below could take it near 110.00.
GBP/USD: Sterling tumbled to a fresh 1-week low below the 1.2400 handle as investors gear up for the historic Article 50 triggering during London hours. The major trades 0.3 lower at 1.2412, having hit a low of 1.2376 earlier in the session, its lowest since Mar. 21. FxWirePro's Hourly Sterling Strength Index stood at -95.38 (Slightly Bearish) by 0400 GMT. Investors’ focus will stay on UK consumer credit and Mortgage Approvals data, ahead of the triggering of the Article 50 by the UK PM Theresa May. Immediate resistance is located at 1.2497 (5-DMA), a break above could take it near 1.2531 (Mar. 23 High). On the downside, support is seen at 1.2361 (50.0% retrace 1.2108 and 1.2615), a break below targets 1.2201 (61.8% retrace). Against the euro, the pound traded 0.3 percent lower at 87.09 pence, having hit a low of 87.34 earlier, its lowest since Mar 17.
AUD/USD: The Australian dollar trimmed gains after rising to a 6-day high earlier in the session as renewed buying interest seen behind the greenback, in response to upbeat U.S. macro data and hawkish Fedspeaks hurt Aussie bulls sentiment. Moreover, underlying weakness seen in the base metals, particularly copper continued to weigh on the major. The pair trades 0.1 percent up at 0.7640, having hit an early high of 0.7657, it’s highest since Mar. 23. FxWirePro's Hourly Aussie Strength Index stood at 101.02 (Highly Bullish) by 0500 GMT. Investors will continue to track broad based market sentiment, ahead of FOMC members speeches. Immediate support is seen at 0.7620 (21-DMA), a break below targets 0.7577 (Feb 2 Low). On the upside, resistance is located at 0.7668 (10-DMA), a break above could take it near 0.7700.
NZD/USD: The New Zealand dollar tumbled to a 5-day low as the greenback gained after solid data backed expectations for more U.S. interest rate hikes this year. The Kiwi trades 0.16 percent down at 0.7003, hovering away from a peak of 0.7090 touched last week, it’s strongest since Mar. 2. FxWirePro's Hourly Kiwi Strength Index was at -25.42 (Neutral) by 0500 GMT. Investors’ will continue to track overall market sentiment, ahead of U.S. pending home sales figures and Fed speeches. Immediate resistance is located at 0.7030 (10-DMA), a break above could take it over 0.7070. On the downside, support is seen at 0.6975 (Mar. 17 Low), a break below could drag it near 0.6950.
Equities Recap
Asian shares rose following overnight gains on the Wall Street, while the greenback pulled away from 4-1/2 month lows as upbeat U.S. economic data backed expectations for more U.S. interest rate hikes this year.
MSCI's broadest index of Asia-Pacific shares outside Japan added 0.2 percent.
Tokyo's Nikkei rallied 0.04 percent to 19,210.92 points, Australia's S&P/ASX 200 index rose 0.82 percent to 5,869.10 points and South Korea's KOSPI was trading 0.12 percent up at 2,165.89 points.
Shanghai composite index edged up 0.18 percent to 3,258.67 points, while CSI300 index was trading 0.30 percent higher at 3,480.29 points.
Hong Kong’s Hang Seng was trading 0.50 percent higher at 24,325.98 points. Taiwan shares shed 0.2 percent at 9,856.25 points.
Commodities Recap
Crude oil prices rose, extended gains for the fourth straight session, supported by supply disruptions in Libya and OPEC-led output reductions. International benchmark Brent crude was trading 0.35 percent up at $51.51 per barrel by 0409 GMT, having hit a high of $51.85 the prior day, its strongest since Mar. 21. U.S. West Texas Intermediate crude gained 0.25 percent to $48.56 a barrel, after rising as high as $48.72 in the previous session, its highest since Mar. 21.
Gold prices eased, extending losses from the previous session, as the dollar steadied after positive economic data from the United States boosted expectations of further interest rate hikes by the Federal Reserve this year. Spot gold was down 0.2 percent at $1,248.34 per ounce at 0414 GMT, having hit a high of $1,260.90 on Monday, its highest its Feb. 27. U.S. gold futures slipped 0.6 percent to $1,248.2.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.421 percent higher by 0.013 bps, while 5-year yield was 0.008 bps up at 1.975 percent.
The Australian bonds slumped, tracking softness in the U.S. counterpart. Also, broad gains in equities led to the slide in the country’s money market. The yield on the benchmark 10-year Treasury note jumped 3 basis points to 2.74 percent, the yield on 15-year note also climbed a little over 2-1/2 basis points to 3.12 percent and the yield on short-term 2-year also traded 1 basis point higher at 1.76 percent.
The New Zealand bonds slid at the time of closing, tracking rout in the global bond market amid a session that witnessed data of little economic significance and as investors moved away from safe haven assets amid gains in riskier classes including equities and oil. The yield on the benchmark 10-year bond jumped 4 basis points to 3.25 percent at the time of closing, the yield on 7-year note climbed 3 basis points to 2.84 percent while the yield on short-term 2-year note also traded 2 basis points higher at 2.17 percent.
The Canadian government bond prices fell across the yield curve, with the 2-year down 2 Canadian cents to yield 0.741 percent, after earlier falling to its lowest yield since Feb. 8, while the 10-year price fell 18 Canadian cents to yield 1.627 percent. The spread between Canadian and U.S. 10-year yields matched its widest since March 2.
