Market Roundup
- US exempts S.Korea from steel tariffs, revises free trade deal - S.Korea
- Mnuchin: Trump not afraid of a trade war with China -Fox News
- U.S. sends China to-do list to reduce trade imbalance - WSJ
- Trump considers expelling some Russian diplomats over poison attack –source
- Brexit delivers longer blow to bank sentiment than global crisis -survey
- UK parliament must have power to stop 'No Deal' Brexit, says opposition Labour
- Incoming RBNZ chief signals no change in bias after employment added to mandate
- New Zealand posts monthly trade surplus in Feb as 'stink bugs' slow imports
- Former Catalan leader Puigdemont detained in Germany
- Speculators' net short dollar bets at highest in over a year -CFTC, Reuters
Economic Data Ahead
- No major economic data releases
Key Events Ahead
- N/A BoE's Andy Haldane Town hall event in partnership with Age Scotland in Edinburgh, Scotland
- (0500 ET/0900 GMT) IMF's Christine Lagarde speaks on "Strengthening the Euro Area Architecture" in the Europe Lecture series organized by the German Institute for Economic Research (Deutsches Institut für Wirtschaftsforschung – DIW) in Berlin
- (0530 ET/0930 GMT) Bundesbank's Jens Weidmann holds a speech about "New Impetus for Europe" in Vienna
- (0630 ET/1030 GMT) Austrian cenbank chief Ewald Nowotny and Bundesbank President Jens Weidmann speak in Vienna
- (0700 ET/1100 GMT) Swedish cenbank's Cecilia Skingsley visits Handelsbanken in Sodertalje to talk about the current monetary policy in Sodertalje, Sweden
- (0900 ET/1300 GMT) Presentation by ECB's Daniele Nouy of the ECB Annual Report on supervisory activities 2017 to the European Parliament's Economic and Monetary Affairs Committee in Brussels, Belgium
- (1230 ET/1630 GMT) New York Fed's William Dudley speaks on regulatory reform at the U.S. Chamber of Commerce in Washington
- (1630 ET/2030 GMT) Cleveland Fed’s Loretta Mester speaks before an event hosted by Princeton University's Julis-Rabinowitz Center for Public Policy and Finance in Princeton, New Jersey
- (1910 ET/2310 GMT) Fed Vice Chair for Supervision Randal Quarles speaks on "The Roles of Consumer Protection and Small Business Access to Credit in Financial Inclusion" before the Operation HOPE Global Forums 2018 annual meeting in Atlanta
FX Beat
DXY: The dollar index slumped to an over 1-month low as escalating trade tensions between the United States and China triggered concerns about global growth. The greenback against a basket of currencies 0.1 percent down at 89.44, having touched a low of 89.35 earlier on Thursday, its lowest since Feb. 20. FxWirePro's Hourly Dollar Strength Index stood at -86.37 (Slightly Bearish) by 0500 GMT.
EUR/USD: The euro rose, extending previous session gains, as the greenback eased after U.S. President Donald Trump moved to impose tariffs on Chinese goods. In a letter last week, the United States asked China to cut the tariff on U.S. autos, purchase more U.S.-made semiconductors and grant U.S. firms access to the Chinese financial sector. The European currency traded 0.1 percent up at 1.2368, having touched a high of 1.2387 on Thursday, its highest since Mar. 14. FxWirePro's Hourly Euro Strength Index stood at -43.49 (Neutral) by 0400 GMT. Investors’ attention will remain on the Dallas Fed Manufacturing Index, Chicago Fed National Activity Index, and Fed officials' speech, amid a lack of economic data from the Eurozone docket. Immediate resistance is located at 1.2412 (Mar 14 High), a break above targets 1.2446 (Mar. 8 High). On the downside, support is seen at 1.2325 (10-DMA), a break below could drag it lower 1.2285 (Mar. 22 Low).
USD/JPY: The dollar rebounded after falling to a fresh 16-month low earlier in the day on lingering fears of a global trade war and caution towards political developments in Japan. The United States agreed to exempt South Korea from steel tariffs, instead of imposing a quota on steel imports, while South Korea in return said it would improve access for U.S. automakers under the bilateral free trade deal. The major was trading 0.2 percent up at 104.95, having hit a low of 104.62 earlier, its lowest since Nov. 2016. FxWirePro's Hourly Yen Strength Index stood at 139.26 (Highly Bullish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the Dallas Fed Manufacturing Index, Chicago Fed National Activity Index, and Fed officials' speech. Immediate resistance is located at 105.41 (61.8% retracement of 106.64 and 104.62), a break above targets 105.72 (5-DMA). On the downside, support is seen at 104.50, a break below could take it lower 104.05.
GBP/USD: Sterling extended gains above the 1.4100 handle after Britain agreed with the European Union on a 21-month transition period following its exit from the bloc next year and investors got some clarity over a possible Bank of England interest rate hike in May. Last week, the BoE reinforced the view that borrowing costs will rise in May but repeated that rate hikes would remain gradual. The major traded 0.2 percent up at 1.4157, having hit a high of 1.4216 on Thursday, it’s highest since Feb. 2. FxWirePro's Hourly Sterling Strength Index stood at 59.75 (Bullish) by 0400 GMT. Investors’ focus will remain on UK BBA mortgage approvals, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.4233 (Jan 31 High), a break above could take it near 1.4278. On the downside, support is seen at 1.4079 (5-DMA), a break below targets 1.4010 (10-DMA). Against the euro, the pound was trading 0.1 percent up at 87.38 pence, having hit a high of 86.68 pence on Thursday, it’s highest since June 2016.
AUD/USD: The Australian dollar rose above the 0.7700 handle, as investors risk-sentiment improved after South Korea won a reprieve from U.S. steel tariffs, rekindling hopes that a global trade war might not materialize. The Aussie trades 0.2 percent up at 0.7722, having hit a high of 0.7783 on Thursday; it’s highest since Mar. 16. FxWirePro's Hourly Aussie Strength Index stood at -92.21 (Slightly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7678 (Mar. 20 Low), a break below targets 0.7653 (Dec. 21 Low). On the upside, resistance is located at 0.7767 (61.8% retracement of 0.7916 and 0.7672), a break above could take it near 0.7796 (50.0% retracement).
NZD/USD: The New Zealand dollar rose to an over 1-week peak after domestic trade balance data reported an expected surplus figure of NZD 217 million in February. The major also found support after the Reserve Bank of New Zealand was tasked with reaching full employment in a new policy pact with the government and achieve its mandate of 1-3 percent inflation goal. The Kiwi trades 0.5 percent up at 0.7278, having touched a high of 0.7281 earlier, its highest level since Mar. 15. FxWirePro's Hourly Kiwi Strength Index was at 73.51 (Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7307 (23.6% retracement of 0.7354 and 0.7153), a break above could take it near 0.7354 (Mar 14 High). On the downside, support is seen at 0.7220 (5-DMA), a break below could drag it below 0.7176 (Mar 20 Low).
Equities Recap
Asian shares extended losses for the fourth straight session, while the dollar eased to a 16-month low against the yen on worries of a full-blown trade war between the United States and China.
MSCI's broadest index of Asia-Pacific shares outside Japan tumbled 0.2 percent.
Tokyo's Nikkei declined 0.6 percent to 20,488.30 points, Australia's S&P/ASX 200 index eased 0.5 percent to 5,792.60 points and South Korea's KOSPI rose 0.3 percent to 2,424.65 points.
Shanghai composite index declined 1.6 percent to 3,102.50 points, while CSI300 index was trading 1.6 percent down at 3,842.84 points.
Hong Kong’s Hang Seng was trading 0.7 percent lower at 30,100.42 points. Taiwan shares shed 0.1 percent to 10,809.40 points.
Commodities Recap
Crude oil prices declined, after rising to multi-week peak earlier in the day as concerns of a looming trade dispute between the United States and China weighed on market sentiment. International benchmark Brent crude was trading 0.3 percent up at $70.27 per barrel by 0452 GMT, having hit a high of $70.95 earlier, its highest since Jan. 29. U.S. West Texas Intermediate was trading 0.6 percent down at $65.57 a barrel, after rising as high as $66.52, its strongest since Jan 25.
Gold prices rose to a 5-week high as the threat of a trade war between the United States and China drove investors to seek safety in safe-haven assets. Spot gold edged up 0.1 percent to $1,347.86 per ounce at 0458 GMT, having hit a high of $1,350.73 an ounce earlier, its highest since Mar. 7. U.S. gold futures for April delivery fell 0.2 percent to $1,346.70 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.839 percent higher by 0.013 bps, while 5-year yield was 0.015 bps high at 2.623 percent.
The Japanese government bonds remained flat during Asian session as trade war tensions continued to hover around investors’ sentiments, albeit at a softer pace than at the start of last week. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, hovered around 0.02 percent, the yield on the long-term 30-year note also remained flat at 0.74 percent and the yield on short-term 2-year too traded steady at -0.15 percent.
The Australian government bond yields edged lower as investors moved their funds to high yielding alternative assets like equities. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 1 basis point to 2.667 percent, the yield on the long-term 30-year note climbed 1-1/2 basis points to 3.266 percent and the yield on short-term 2-year up 1/2 basis point to 2.048 percent.
The New Zealand government bonds closed higher as investors have largely shrugged-off the better-than-expected trade balance data for the month of February amid global trade war tensions that continued to mount. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 3 basis points to 2.80 percent, the yield on 20-year plunged 3-1/2 basis points to 3.32 percent while the yield on short-term 2-year closed 2 basis points lower at 1.91 percent.
