Market Roundup
- China's yuan slips to 7th place in global trade finance - SWIFT
- China continue to relax foreign investment rules for auto industry
- Moody's cuts Hong Kong to AA2 from AA1; outlook stable
- People's Daily: Moody's China cut "illogical", overstates debt
- China defends tariffs on sugar imports; to maintain fairer trade
- New Zealand forecasts NZ$1.62 bln budget surplus from last NZ$473 mln
- New Zealand nudges up domestic bond issuance forecast by NZ$1 bln
- BOJ's Sakurai rules out near-term hike in yield target
- MoF flow data: Japanese again good buyers of foreign bonds in latest week
- MoF flow data: Foreign investors add to JGB, Japanese bill portfolios
- BOK: Local economy growth to be higher than expected
- U.S. warship challenges Beijing's claims in the South China Sea
- Fed's Evans sees serious policy miss on U.S. inflation
Economic Data Ahead
- (0300 ET/0700 GMT) Spain Q1 GDP, 0.8% q/q, 3.0% y/y eyed; last 0.8%, 3.0%
- (0400 ET/0800 GMT) Italy Mar Industrial Orders m/m SA, last 5.3%
- (0400 ET/0800 GMT) Italy Mar Industrial Orders y/y NSA, last 7.8%
- (0430 ET/0830 GMT) Great Britain Q1 GDP 2nd Release, 2.1% y/y, 0.3% q/q eyed; last 2.1%, 0.3%
Key Events Ahead
- (0400 ET/0800 GMT) RBA's Guy Debelle speaks at the Launch of the FX Global Code
- (1400 ET/1800 GMT) ECB's Constancio speaks at ISEG
FX Beat
DXY: The dollar extended losses across the board as the Federal Reserve's latest policy meeting minutes appeared less hawkish. The greenback against a basket of currencies traded 0.1 percent down at 96.95, drifting towards a low of 96.80 hit on Tuesday, it’s lowest since Nov. 9. FxWirePro's Hourly Dollar Strength Index stood at -57.06 (Bearish) by 0500 GMT.
EUR/USD: The euro rose, extending previous session gains as the dollar was on the defensive after the Federal Reserve's last policy meeting minutes dampened hopes for an aggressive string of U.S. interest rate hikes. The European currency traded 0.2 percent up at 1.1241, having touched a high of 1.1268 on Tuesday, its highest since Nov. 9. FxWirePro's Hourly Euro Strength Index stood at 77.87 (Slightly Bullish) by 0400 GMT. Investors’ attention will remain on the U.S. unemployment benefits claims data, preliminary wholesale inventories, goods trade balance and FOMC officials’ speech, as Eurozone's economic calendar remains absolutely data empty. Immediate resistance is located at 1.1268 (May 23 High), a break above targets 1.1300. On the downside, support is seen at 1.1176 (78.6% retracement of 1.0839 and 1.1267), a break below could drag it near 1.1104 (61.8% retrace)/1.1000.
USD/JPY: The dollar steadied after declining from a 1-week high against the Japanese yen as the Federal Reserve minutes dampened some of the more hawkish policy expectations in the market. The major traded up at 111.62, having touched a high of 112.12 the prior day, its highest since May 17. FxWirePro's Hourly Yen Strength Index stood at -87.64 (Slightly Bearish) by 0400 GMT. Investors’ will continue to digest less hawkish FOMC minutes, ahead of U.S. unemployment benefits claims data, preliminary wholesale inventories, goods trade balance, and FOMC member Brainard’s speech. Immediate resistance is located at 112.34 (21-DMA), a break above targets 113.00. On the downside, support is seen at 111.39 (61.8% retracement of 110.23 and 112.12), a break below could take it near 110.95 (38.2% retrace).
GBP/USD: Sterling edged up, climbing back towards the 1.300 handle as the US dollar slumped across the board following the release of the FOMC minutes. Investors now cautiously await the second estimate of the Q1 UK gross domestic product, which is expected to come in at 0.3 percent Q/Q and 2.1 percent Y/Y, in line with estimates. Sterling trades 0.1 percent up at 1.2983, hovering towards a high of 1.3047 hit last week, its strongest since Sept. 29. FxWirePro's Hourly Sterling Strength Index stood at -112.16 (Highly Bearish) by 0400 GMT. Markets attention will remain on UK GDP second release Q1 figures, ahead of the U.S fundamental drivers. Immediate resistance is located at 1.3033 (May 23 High), a break above could take it over 1.3050. On the downside, support is seen at 1.2931 (21-DMA), a break below targets 1.2900. Against the euro, the pound traded 0.1 percent down at 86.55 pence, having hit a 1-1/2 month low of 86.74 on Tuesday.
AUD/USD: The Australian dollar consolidated near multi-week highs as the U.S. dollar eased after the Federal Reserve signaled a gradual approach on raising U.S. interest rates. The Aussie trades 0.05 percent up at 0.7503, hovering towards a high of 0.7517 hit on Tuesday, it’s strongest since May. 3. FxWirePro's Hourly Aussie Strength Index stood at 46.50 (Neutral) by 0500 GMT. Investors will continue to track broad based market sentiment, ahead of the U.S economic releases. Immediate support is seen at 0.7476 (78.6% retracement of 0.7328 and 0.7517), a break below targets 0.7444 (61.8% retrace). On the upside, resistance is located at 0.7528 (Apr 12 High), a break above could take it near 0.7550.
NZD/USD: The New Zealand dollar steadied after rising to a near 2-month in the previous session on New Zealand Finance Minister Steven Joyce's announcement that the government predicted to post a bigger-than-forecast budget surplus in 2017 and plans to invest the extra cash in infrastructure to fuel the growing economy. The Kiwi trades flat at 0.7041, having touched a peak of 0.7058 on Wednesday, its strongest since May 27. FxWirePro's Hourly Kiwi Strength Index was at 103.24 (Highly Bullish) by 0500 GMT. Investors’ will continue to digest domestic budget announcement, ahead of U.S. economic data. Immediate resistance is located at 0.7058 (Previous Session High), a break above could take it near 0.7072 (Mar 22 High). On the downside, support is seen at 0.7006 (78.6% retracements of 0.6818 and 0.708), a break below could drag it till 0.6966 (61.8% retrace).
Equities Recap
Asian markets rallied as oil prices advanced ahead of an expected extension to output cuts, while the greenback eased following the release of the Federal Reserve's last policy meeting minutes.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.3 percent.
Tokyo's Nikkei rose 0.4 percent to 19,826.32 points, Australia's S&P/ASX 200 index gained 0.1 percent to 5,776.80 points and South Korea's KOSPI added 0.9 percent to 2,339.18 points.
Shanghai composite index gained 0.8 percent to 3,088.59 points, while CSI300 index was trading 1.2 percent up at 3,465.71 points.
Hong Kong’s Hang Seng was trading 0.7 percent higher at 25,624.78 points. Taiwan shares added 0.6 percent to 10,108.49 points.
Commodities Recap
Crude oil prices rose by more than one percent ahead of an OPEC meeting that is expected to extend output cuts into 2018. International benchmark Brent crude was trading 1.0 percent up at $54.37 per barrel by 0412 GMT, having hit a high of $54.59 the day before, its strongest since Apr. 19. U.S. West Texas Intermediate gained 0.8 percent to $51.71 a barrel, after rising as high as $51.89 earlier, its highest since Apr. 19.
Gold prices rose, extending previous session gains, while the dollar eased after minutes of the Federal Reserve's last policy meeting dampened hopes for an aggressive string of U.S. interest rate hikes. Spot gold was 0.1 percent up at $1,258.97 per ounce by 0416 GMT, having touched a near 3-week high last week. U.S. gold futures were up 0.3 percent at $1,256.8 an ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.255 percent lower by 0.011 bps, while 5-year yield was 0.014 bps down at 1.787 percent.
The Australian bonds sharply rebounded, tracking firmness in the U.S. counterpart after reading the Federal Open Market Committee (FOMC) meeting minutes, which met market expectations. The yield on the benchmark 10-year Treasury note plunged 4-1/2 basis points to 2.44 percent, the yield on 15-year note slumped 5 basis points to 2.85 percent and the yield on short-term 2-year traded nearly 3-1/2 basis points lower at 1.59 percent.
The New Zealand bonds closed on the upside following a global debt market rout after the Federal Open Market Committee (FOMC), signalled in its meeting minutes that central bank remains on a gradual approach to raise interest rates and reduce its bond reinvestment. At the time of closing, the yield on the benchmark 10-year bond remained flat at 2.88 percent, the yield on 7-year note fell 1 basis point to 2.53 percent and the yield on the short-term 2-year note too remained 1 basis point lower at 1.95 percent.
The Canadian government bond prices were mixed across a flatter yield curve as investors also weighed minutes from the latest policy-setting meeting of the Federal Reserve. The two-year dipped 2.5 Canadian cents to yield 0.716 percent and the 10-year climbed 29 Canadian cents to yield 1.482 percent. The gap between Canada's 2-year yield and its U.S. equivalent narrowed by 4.3 basis points to a spread of -57.3 basis points, its smallest gap since May 1, as shorter-dated Canadian bonds underperformed.
