Market Roundup
- Yield curve flattens, is a Trump recession looming? - Seeking Alpha.
- US VP Pence – Working with allies to put pressure on NoKorea – Reuters.
- US military considers shooting down NoKorea missile tests – Guardian.
- Fitch – US tightening, trade risks weigh on APAC growth outlook.
- China eases yuan outflow controls in sign of recovered confidence – South China Morning Post.
- Australia March Westpac/MI leading index 97.57, trend deviation +1.17%, February 97.49, +1.14%.
- New Zealand March BNZ/BNZ PSI +0.3 point to 59.0, second highest in 18-months.
- New Zealand Fonterra GDT price index +3.1%, volumes up too at latest auction.
- New Zealand tightens immigration rules in “kiwi-first: crackdown – Reuters.
- ECB rate hike would help reduce German current account surplus – Funke.
Economic Data Ahead
- (0500 ET/0900 GMT) Eurozone Mar inflation, +0.5% m/m, +1.5% y/y forecast; last +0.4%, +1.5%.
- (0500 ET/0900 GMT) Eurozone Mar – ex-food/energy, +1.3% m/m, +0.7% y/y forecast; last +0.3%, +0.9%.
- (0500 ET/0900 GMT) Eurozone Feb trade balance, E16.2 bln surplus forecast; last E600 mln deficit.
Key Events Ahead
- (0300 ET/0700 GMT) Riksbank executive board meeting.
- (0400 ET/0800 GMT) ECB/Estonia CB Hansson presents latest FSR.
- (0530 ET/0930 GMT) Germany E1 bln 2.5% 2044 Bund auction.
- (0540 ET/0940 GMT) Portugal E1-1.25 bln 3 and 11-month treasury bill auctions.
- (0700 ET/1100 GMT) UK PM May takes questions in House of Commons.
- N/A IMF/World Bank/G20 Spring meetings in Washington, DC.
- (0800 ET/1200 GMT) ECB Coeure speaks at New York roundtable discussion.
- (0900 ET/1300 GMT) FDIC Hoenig speaks at New York Bard College Levy Institute conference.
- (1000 ET/1400 GMT) ECB ChiefEcon Praet speaks at Levy Institute conference.
- (1230 ET/1630 GMT) Boston Fed Rosengren speaks at New York Levy Institute conference.
- (1300 ET/1700 GMT) BoC DepGov Wilkins in IMF roundtable discussion.
- (1400 ET/1800 GMT) Fed Beige Book.
- (1830 ET/2230 GMT) Japan FinMin Aso speaks at Columbia University.
FX Beat
DXY: The dollar steadied after declining to multi-week lows versus its major peers amid increasing geopolitical tensions. The dollar against a basket of currencies traded 0.1 percent up at 99.60, having hit a low of 99.47 the day before, its lowest since Mar. 28. FxWirePro's Hourly Dollar Strength Index stood at -53.37 (Bearish) by 0500 GMT.
EUR/USD: The euro eased after rising to a near 3-week high in the previous session, as investors remained nervous ahead of the French presidential election. French opinion polls indicated that far-right leader Marine Le Pen and centrist Emmanuel Macron qualifying next Sunday for the May 7 run-off, however, the gap with conservative Francois Fillon and far-leftist Jean-Luc Melenchon has been tightening. The European currency traded 0.1 percent down at 1.0718, retreating from a high of 1.0736 touched on Tuesday, its highest since Mar. 30. FxWirePro's Hourly Euro Strength Index stood at 67.20 (Bullish) by 0500 GMT. Investors now await Eurozone's trade balance and consumer price index, amid a lack of data from the U.S. docket. Immediate resistance is located at 1.0750, a break above targets 1.0800. On the downside, support is seen at 1.0701 (78.6% retrace of 1.0569 and 1.0736), a break below could drag it near 1.0673 (61.8% retrace).
USD/JPY: The dollar steadied after falling to a five-month low on Monday, as investors continued to examine U.S.-Japan economic talks for clues to the future direction of U.S. trade policy under President Donald Trump. However, presidential elections in France and escalating tensions between the United States and North Korea supported safe-haven assets. The major traded 0.1 percent up at 108.58, having touched a low of 108.13 earlier in the week, its lowest since Nov. 15. FxWirePro's Hourly Yen Strength Index stood at -88.63 (Slightly Bearish) by 0400 GMT. Investors’ will continue to track ongoing geopolitical developments, as U.S. economic calendar remains absolutely data empty. Immediate resistance is located at 108.86 (78.6 % retrace of 111.57 and 108.13), a break above targets 109.44 (61.8% retrace). On the downside, support is seen at 108.10, a break below could take it near 107.77 (Nov. 15 Low).
GBP/USD: Sterling edged down after rising as much as 2.2 percent against the dollar in the previous session to its highest levels since early-October on British Prime Minister Theresa May's announcement for an early parliamentary election in June. The major trades 0.14 percent down at 1.2825, having hit a high of 1.2901 on Tuesday, its highest since Oct. 3. FxWirePro's Hourly Sterling Strength Index stood at 151.76 (Highly Bullish) by 0400 GMT. Investors’ attention will remain on the developments around the UK’s elections, amid a lack of fundamental triggers from both the UK and US docket. Immediate resistance is located at 1.2900, a break above could take it near 1.2946 (Oct. 10). On the downside, support is seen at 1.2774 (23.6% retrace of 1.2365 and 1.2901), a break below targets 1.2700. Against the euro, the pound traded flat at 83.57 pence, having hit a high of 82.99 in the previous session, its strongest since July 22.
AUD/USD: The Australian dollar declined, extending previous session's losses as cautious RBA meeting minutes coupled with a slump in iron ore prices, amid rising glut worries continued to weigh on the major. The Aussie trades 0.4 percent lower at 0.7527, having hit a peak of 0.7610 on Monday, it’s highest since Apr. 4. FxWirePro's Hourly Aussie Strength Index stood at -110.19 (Highly Bearish) by 0500 GMT. Investors will continue to track broad based market sentiment, in absence of any major market moving economic releases. Immediate support is seen at 0.7520, a break below targets 0.7504 (23.6% retrace of 0.7471 and 0.7610). On the upside, resistance is located at 0.7581 (Apr. 14 High), a break above could take it near 0.7610 (Apr. 17 High).
NZD/USD: The New Zealand dollar rallied to an over 3-week high, in the wake of overnight weakness in the greenback and better-than-expected New Zealand fundamentals. The economy's performance of services index for March rose to 59.0 versus the previous reading of 58.8, while Global Dairy Trade price index showed an increase in dairy prices for the third time in a row. The Kiwi trades 0.03 percent up at 0.7042, having touched a high of 0.7052 earlier, its strongest since Mar. 27. FxWirePro's Hourly Kiwi Strength Index was at 56.02 (Bullish) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of the EIA U.S. crude inventories report. Immediate resistance is located at 0.7052 (Session High), a break above could take it near 0.7090. On the downside, support is seen at 0.7021 (78.6% retrace of 0.6909 and 0.7052), a break below could drag it near 0.7001 (21-DMA).
Equities Recap
Asian shares slumped as upcoming presidential elections in France and escalating tensions between the United States and North Korea triggered risk-off sentiment across the board.
MSCI's broadest index of Asia-Pacific shares outside Japan dell 0.6 percent to the lowest since mid-March.
Tokyo's Nikkei advanced 0.26 percent to 18,466.17 points, Australia's S&P/ASX 200 index fell 0.54 percent to 5,804.90 points and South Korea's KOSPI declined 0.37 percent at 2,140.61 points.
Shanghai composite index edged down 1.21 percent to 3,157.34 points, while CSI300 index was trading 0.94 percent lower at 3,429.70 points.
Hong Kong’s Hang Seng was trading 0.62 percent lower at 23,776.49 points. Taiwan shares shed 1.1 percent to 9,639.94 points.
Commodities Recap
Crude oil prices declined to a near 2-week low as increasing U.S. supplies weighed on market sentiment while a fall in Saudi crude exports was offset by rising production in the country. International benchmark Brent crude was trading 0.1 percent down at $54.73 per barrel by 0408 GMT, having hit a low of $54.59 the day before, its weakest since Apr. 6. U.S. West Texas Intermediate fell 0.1 percent to $52.28 a barrel, after declining as low as $52.07 on Tuesday, its lowest since Apr. 7.
Gold prices eased as the greenback rebounded slightly from a three-week low hit in the previous session, however, geopolitical concerns about North Korea and nervousness ahead of the French presidential election supported to the safe-haven metal. Spot gold fell 0.2 percent to $1,286.38 per ounce as of 0418 GMT, after rising to its highest since early November at $1,295.38 on Monday. U.S. gold futures were down 0.4 percent at $1,288.80.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.182 percent higher by 0.003 bps, while 5-year yield was 0.004 bps up at 1.714 percent.
The Australian 10-year government bond yields dived to over 5-month low on rising global tensions and geopolitical uncertainties amid losses in riskier assets. The yield on the benchmark 10-year Treasury note plunged 4-1/2 basis points to 2.45 percent, the yield on 15-year note also slumped 4-1/2 basis points to 2.85 percent and the yield on short-term 2-year traded nearly 4 basis points lower at 1.60 percent.
The New Zealand bonds modestly gained 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. The yield on the benchmark 10-year bond fell 1 basis point to 2.93 percent, the yield on 7-year note slipped 1/2 basis point to 2.64 percent and the yield on short-term 2-year note slumped 2-1/2 basis points to 2.12 percent.
The Canadian government bond prices were higher across a flatter maturity curve, with the two-year price up half a Canadian cent to yield 0.729 percent and the benchmark 10-year rising 69 Canadian cents to yield 1.478 percent. That was the 10-year's lowest yield since November.
