Market Roundup
- RBNZ holds rates at 1.75%, retains neutral bias
- RBNZ gov: Need to see pick-up in inflation to consider tightening
- RBNZ assistant gov: Inflation expectations unchanged, rate bias neutral
- New Zealand Apr food prices -0.8%, last -0.3%; index up 0.2% y/y
- Japan's Mar c/a surplus Y2.9 trillion vs forecast Y2.6 trillion, Feb surplus Y2.8136 trillion
- Japanese net sellers of foreign bonds, Y4.2559 tln - MoF
- Foreigners bought a net Y241.5 billion stocks for the w/e May 6 - MoF
- Japan Apr bank loans continue to show steady rise, +3% y/y, last +3%
- BoE's Carney likely to stress virtue of patience before policy tightening
- Moody's downgrades 6 Canadian banks on rising private-sector debt
Economic Data Ahead
- (0315 ET/0715 GMT) Switzerland Apr CPI, +0.5% y/y, +0.2% m/m eyed; last +0.6%, +0.2%
- (0430 ET/0830 GMT) Great Britain Mar Manufacturing Output y/y, +3.0%, +0.0% m/m eyed; last +3.3%, -0.1%
- (0430 ET/0830 GMT) Great Britain Mar Industrial Output, -0.3% m/m, +2.1% y/y eyed; last -0.7%, +2.8%
- (0430 ET/0830 GMT) Great Britain Mar Goods Trade Bal. Non-EU (GBP), -3.40 billion eyed; last -3.75 billion
- (0430 ET/0830 GMT) Great Britain Mar Construction O/P Vol, +2.8% y/y, +0.3% m/m eyed; last +0.5%, -1.7%
- (0430 ET/0830 GMT) Great Britain Mar Goods Trade Balance (GBP), -11.80 billion eyed; last-12.46 billion
- (0700 ET/1100 GMT) Great Britain BOE May QE Corp, 10 billion eyed; last 10 billion
- (0700 ET/1100 GMT) Great Britain BOE May Bank Rate, 0.25% eyed; last 0.25%
- (0700 ET/1100 GMT) Great Britain BOE May QE Gilts (GBP), 435 billion eyed; last 435 billion
Key Events Ahead
- N/A BoE rate decision, publication of the minutes of its meeting and release of its inflation report
- N/A G7 finance ministers meet in southern Italy
- (0300 ET/0700 GMT) Meeting of the executive board of the Riksbank
- (0300 ET/0700 GMT) ECB VP Vitor Constancio speaks in Frankfurt
- (0330 ET/0730 GMT) SNB Chairman Thomas Jordan, finmin Ueli Maurer speaks at Private banking event
- (0500 ET/0900 GMT) Italy 3Y E2.500 billion auction
- (0500 ET/0900 GMT) Italy 7Y E2.250 billion auction
- (0500 ET/0900 GMT) Italy 27Y E1.250 billion auction
- (0500 ET/0900 GMT) Italy 30Y E1.250 billion auction
- (0625 ET/1025 GMT) Fed's Dudley speaks on "Benefits and Challenges from Globalization" in Mumbai, India
- (1135 ET/1535 GMT) ECB's Mario Draghi, Benoit Coeure participate in G7 finmins, central bank governors meeting
- (1230 ET/1630 GMT) ECB chief economist Peter Praet speaks in Heidelberg
- (1230 ET/1630 GMT) IMF Chief Economist Maurice Obstfeld gives speech at Geneva Graduate Institute
FX Beat
DXY: The dollar slipped after rising to a fresh 8-week high against the yen following a retreat in the treasury yields across the curve. The greenback against a basket of currencies traded 0.06 percent up at 99.68, having hit a high of 99.72 on Wednesday, it’s highest since Apr. 21. FxWirePro's Hourly Dollar Strength Index stood at 120.84 (Highly Bullish) by 0500 GMT.
EUR/USD: The euro edged up, halting its four-day losing streak as the greenback eased after rising to a 2-1/2 week high in the previous session. On Wednesday, European Central Bank President Mario Draghi confirmed that the ECB was not in a rush to raise interest rates or wind down the ECB's 2.3 billion euro bond-buying programme. The European currency traded up at 1.0871, having touched a low of 1.0853 the day before, its lowest since Apr. 27. FxWirePro's Hourly Euro Strength Index stood at -33.25 (Neutral) by 0400 GMT. Investors’ attention will remain on Eurozone's Economic Bulletin, ahead of U.S. producer price index, unemployment benefits data and Fed officials' speech. Immediate resistance is located at 1.0912 (10-DMA), a break above targets 1.0950. On the downside, support is seen at 1.0850, a break below could drag it near 1.0820 (21-DMA)/1.0800.
USD/JPY: The dollar slightly eased after rising to an 8-week high earlier in the session on the back of risk-on in the equities and hawkish Fed speech. However, Trump's dismissal of his FBI chief raised investors' concerns that the controversial move would lead to political turmoil and derail U.S. stimulus steps and tax reform. The major traded 0.05 percent down at 114.24, having touched an early peak of 114.36, its highest since Mar. 15. FxWirePro's Hourly Yen Strength Index stood at -82.63 (Slightly Bearish) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of U.S. producer price index unemployment benefits report and Fed Evan's speech. Immediate resistance is located at 114.36 (Session High), a break above targets 114.88. On the downside, support is seen at 113.32 (5-DMA), a break below could take it near 113.00.
GBP/USD: Sterling consolidated between narrow ranges near the 1.2950 handle as investors cautiously awaited the Bank of England inflation report and policy meeting. Moreover, stalled USD buying across the board amid a retreat in the treasury yields across the curve also aided the recovery in the cable. Sterling trades flat at 1.2940, having hit a high of 1.2987 on Monday, its highest since Sept. 30. FxWirePro's Hourly Sterling Strength Index stood at 63.92 (Bullish) by 0400 GMT. Investors’ attention will remain on the UK manufacturing and industrial production data, ahead of BoE inflation report and policy decisions. 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 down at 84.01 pence, having hit a 3-week high of 83.82 the day before.
AUD/USD: The Australian dollar declined, reversing most of its previous session gains, despite better risk environment fuelled by higher oil prices and firmer Asian indices. The Aussie trades 0.2 percent lower at 0.7344, having hit a low of 0.7328 on Tuesday, it’s weakest since Jan. 1. FxWirePro's Hourly Aussie Strength Index stood at 39.52 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of the U.S economic releases and Fed speeches. Immediate support is seen at 0.7300, a break below targets 0.7266 (Dec 16 Low). On the upside, resistance is located at 0.7376 (78.6 retracements of 0.7556 and 0.7328), a break above could take it near 0.7414 (61.8% retrace).
NZD/USD: The New Zealand dollar tumbled to an 11-month low after the Reserve Bank of New Zealand kept policy steady at a record low 1.75 percent and sounded less optimistic on the economy. RBNZ Assist. Gov. John McDermott stated that underlying inflation expectations had not changed substantially from three months ago and the central bank has a neutral bias on interest rates. The Kiwi trades 1.3 percent down at 0.6832, having touched a low of 0.6817 earlier, its weakest since Jun. 03. FxWirePro's Hourly Kiwi Strength Index was at -50.29 (Bearish) by 0500 GMT. Investors’ will continue to digest RBNZ policy decision and Assist. Gov. McDermott's comments, ahead of the U.S. economic data and Fed speeches. Immediate resistance is located at 0.6846 (78.6% retracement of 0.6950 and 0.6817), a break above could take it near 0.6868 (61.8% retrace). On the downside, support is seen at 0.6817 (Session Low), a break below could drag it near 0.6800.
Equities Recap
Asian shares advanced as strong gains in oil prices boosted energy shares, while the dollar edged down from 8-week high against the Japanese yen.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3 percent, while MSCI's global stock benchmark was slightly higher.
Tokyo's Nikkei gained 0.4 percent to 19,978.19 points, Australia's S&P/ASX 200 index eased 0.01 percent to 5,875.30 points and South Korea's KOSPI rose 0.9 percent at 2,289.67 points.
Shanghai composite index edged down 0.9 percent to 3,022.56 points, while CSI300 index was trading 0.6 percent lower at 3,315.59 points.
Hong Kong’s Hang Seng was trading 0.2 percent higher at 25,062.77 points. Taiwan shares added 0.3 percent to 10,001.48 points.
Commodities Recap
Crude oil prices rose, extending previous session gains, as a fall in U.S. crude inventories and a more severe than expected cut in Saudi supplies to Asia boosted market sentiment. International benchmark Brent crude was trading 0.3 percent up at $50.41 per barrel by 0411 GMT, having hit a high of $50.60 on Wednesday, its strongest since May. 4. U.S. West Texas Intermediate rallied 0.4 percent at $47.52 a barrel, after rising as high as $47.75 the day before, its highest since May. 3.
Gold prices steadied just above an eight-week low hit earlier this week, as the U.S. dollar continued to decline against the Japanese yen amid geo-political tensions. Spot gold was up 0.1 percent at $1,219.32 per ounce by 0421 GMT, having hit a low of $1,214.13 on Tuesday, its lowest since Mar 15. U.S. gold futures also gained 0.2 percent to $1,220.70 an ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.398 percent lower by 0.012 bps, while 5-year yield was 0.008 bps down at 1.929 percent.
The Australian government bonds rallied as investors covered previous short positions before the end of the trading week and also tracking U.S. Treasuries. The yield on the benchmark 10-year Treasury note fell nearly 1 basis point to 2.66 percent, the yield on 15-year note slipped 1/2 basis point to 3.07 percent and the yield on short-term 2-year also traded 1-1/2 basis points lower at 1.69 percent.
The New Zealand government bonds rose, sending yields 8 basis points lower on the short end of the curve.
