Market Roundup
- Macron and Le Pen to contest French run-off, early results put independent centrist top in first round vote with 23.8% – Financial Times.
- Investors cheer France vote as far-right vs far-left clash averted.
- North Korea - preparing nuclear test, ready to strike US aircraft carrier.
- Trump’s big announcement on tax to be broad principles.
- TsySec Mnuchin – Trump tax plan may produce some short-term budget issues, urges IMF to enhance FX surveillance.
- Wall Street gears up for busiest earnings week in years.
- IMF deletes anti-protectionism pledge, keep currency commitments.
- IMF/Mexico Carstens – All IMF member aligned on need for free, fair trade.
- Japan Fin Min Aso – Voices support for free trade, pushes back on US call for Scrutiny of currency moves.
- BOJ trims purchases of 3-5 year JGBs to Y320 mln from Y350 bln.
- Fears of weak renminbi fuel Chinese household forex demand – Financial Times.
- PBOC DepGov Yi Gang – SDR market not sufficiently liquid – Xinhua.
- CFTC IMM CTA data - USD net longs up in latest week, EUR net shorts largest since mid-March, GBP and JPY shorts down however.
- BoC Gov Poloz – New housing measures should dampen demand.
- ECB/Austria CB Nowotny – ECB to set post-’17 policy in H2 – Profil.
- Fitch cuts Italy sovereign rating to BBB, weak growth, large govt debt.
Economic Data Ahead
- (0400 ET/0800 GMT) Germany April Ifo business climate index, 112.5 eyed; last 112.3.
- (0400 ET/0800 GMT) Germany April Ifo current conditions index, 119.2 eyed; last 119.3.
- (0400 ET/0800 GMT) Germany April Ifo expectations index, 106.0 eyed; last 105.7.
- (0600 ET/1000 GMT) UK April CBI trends survey – orders index, 5.0 eyed; last 8.0.
- (0830 ET/1230 GMT) US March Chicago Fed national activity index; last 0.34.
- (1030 ET/1430 GMT) US April Dallas Fed mfg business index; last 16.9.
Key Events Ahead
- N/A Buba Dombret speaks at Stuttgart event.
- (0600 ET/1000 GMT) Italy E1.5-2 bln 2018 CTZ, E0.75-1.25 bln 0.1/1.25% 2022/32 BTPei sales.
- (0700 ET/1100 GMT) Belgium E1.8-2.5 bln 0.2% and 0.8% 2023 and 2027 OLO auctions.
- (0850 ET/1250 GMT) France E2.4-3.4/0.7-1.3/0.7-1.3 bln 3/6/12-month BTF note auctions.
- (0920 ET/1320 GMT) ECB/Ireland CB Lane, FinMin Noonan speak at Dublin CB event.
- (1130 ET/1530 GMT) Minny Fed Kashkari in Los Angeles question-answer session.
- (1345 ET/1745 GMT) Czech CB ViceGov Hamlp in London discussion.
FX Recap
USD: The dollar index slumped 0.8 percent to 99.179, though its losses were mitigated as the greenback gained against the perceived safe-haven yen.
EUR/USD: The euro pared gains after scaling a five-month high against the dollar on Monday after the centrist candidate won the first round of the French presidential election, reducing the risk of an anti-establishment shock in the final round. The euro was up 1.1 percent at $1.0844 by midday in Asia after earlier rising as high as $1.0940, highest since Nov. 10. Pair made intraday high at 1.0918 and low at 1.0820 marks. Immediate resistance was seen at $1.0953 level. A daily close below 1.0812 will drag the parity down towards 1.0557 levels.
USD/JPY: The yen falls to 110.51 mark against U.S. dollar and was currently trading around 110.14 marks. A sustained close above 109.48 is required to take the parity higher towards 110.92, 111.45, 112.19, 113.72, 115.37 and 117.42 marks. Alternatively, a daily close below 109.48 will drag the parity down towards 108.13 levels.
GBP/USD: The pound was trading marginally lower against U.S. dollar. Short term bias remains slightly bearish till the time pair holds key resistance at 1.2860 levels. A sustained close above 1.2806 will take the parity towards key resistance around 1.2903 marks. Alternatively, current downside movement will take the parity towards 1.2660 marks.
AUD/USD: The Aussie initially rose to a one-week high of $0.7600 on the greenback but gave up some of the early gains to hold at $0.7556. Pair made intraday high at $0.7586 and low at $0.7539 marks. Immediate resistance was seen at $0.7610 and support was seen at $0.7515 marks.
NZD/USD: The New Zealand dollar was largely unchanged at $0.7031 but hit its highest in three weeks on the yen.
Equities Recap
Japan’s Nikkei was trading around 1.29 percent higher at 18,861 points.
Hong Kong’s Hang seng was trading 0.18 percent lower at 23,998 points.
Australia’s S&P ASX200 was trading around 0.04 percent higher at 5,855 marks.
South Korea’s Kospi was trading 0.15 percent higher at 2,168.33 points.
Shanghai composite index to open down 0.3 pct at 3,164.25 points and China's CSI300 index to open down 0.3 pct at 3,458.23 points.
Taiwan’s market was trading 0.03 percent lower at 9,714.93 points.
India’s NSE Nifty was trading around 0.46 percent higher at 9,161.65 points and BSE Sensex was trading at 0.44 percent higher at 29,493.82 points.
Commodities Recap
Oil prices recovered ground on Monday following last week's big losses, driven by expectations that OPEC will extend a pledge to cut output to cover all of 2017, although a relentless rise in U.S. drilling capped gains. U.S. West Texas Intermediate (WTI) crude oil futures added 26 cents, or 0.5 percent, by 0401 GMT, but were still below the $50 mark pierced on Friday at $49.88 a barrel. Brent crude futures rose 30 cents, or 0.6 percent, to $52.26 per barrel.
Gold hits lowest in nearly two weeks on Monday after centrist candidate Emmanuel Macron won the first round of French presidential election, boosting stocks and sparking a sell-off in the safe-haven bullion. Spot gold was down 0.7 percent at $1,275.46 per ounce by 0342 GMT, after falling to a low of $1,265.90 earlier in the session. U.S. gold futures were down nearly 1 percent at $1,277.30 an ounce.
Treasuries Recap
New Zealand government bonds eased sending yields about 5 basis points higher across the curve.
Australian government bond futures slipped, too, with the three-year bond contract down 2 ticks at 98.160. The 10-year contract fell 5 ticks to 97.385.
The benchmark 10-year U.S. Treasury yield rose to 2.308 percent in Asian trade, up from Friday's U.S. close of 2.236 percent.
