Market Roundup
- Japan Q1 GDP +0.4% q/q, +1.7% AR, +0.1% and +0.2% eyed, private consumption +0.5% q/q vs +0.2% eyed, external demand contribution +0.2%, domestic +0.2%, housing investment -0.8%, CAPEX -1.4%, -0.8% eyed, GDP deflator +0.9% y/y, Q1 GDP up at best pace since Q1 ’15, CAPEX off fall worst since Q2 ’15.
- Japan growth strategy assumes sales tax hike next year – Reuters.
- Japan EconMin Ishihara – Economy to remain in moderate recovery trend, consumption rebounding, some weaknesses still, offshore growth risks.
- ChiefCabSec Suga – GDP data confirms success in battle against deflation, consumption still on weak side, effects of last sales tax hike – Reuters.
- Japan PM Abe to meet coalition partner Komeito head to talk sales tax hike.
- Japan LDP Yamamoto – US Fed absolutely against FX intervention, would agree to monetary easing – Reuters.
- China April new home prices +6.2% y/y, March +4.9%, Beijing +18.3%, Shanghai +28.0%, March +16.0% and +25.0%.
- Trump planning to dismantle Obama’s Wall Street reform law – Reuters.
- Dallas Fed Kaplan – Gradual recovery for US oil patch – Reuters.
- RBA AsstGov Debelle – China should continue to pursue gradual fin’l reform.
- Australia Q1 wage price index +0.4% q/q, +2.1% y/y, +0.5% and +2.2% eyed, growth slowest on record, keep OCR cut window open.
- New Zealand Q1 PPI inputs -1% q/q, outputs -0.2%, lower fuel cited.
Economic Data Ahead
- (0430 ET/0830 GMT) Great Britain Apr claimant count, 4.3k eyed; last 6.7k.
- (0430 ET/0830 GMT) Great Britain Mar ILO unemployment, 5.1% eyed; last 5.1%.
- (0430 ET/0830 GMT) Great Britain Mar average earnings – 3-mo avge, +1.7%, y/y eyed; last +1.8%.
- (0430 ET/0830 GMT) Great Britain Mar - ex-bonus, +2.3% y/y eyed; last +2.2%.
- (0500 ET/0900 GMT) Eurozone Apr inflation – final, unch m/m, -0.2% y/y eyed; flash +1.2%, -0.2%.
- (0500 ET/0900 GMT) Eurozone Apr – ex-food/energy, unch m/m, +0.7% y/y eyed; flash +1.3%, +1.0%.
Key Events Ahead
- N/A ECB Governing Council, Riksbank Executive Board meetings.
- N/A Italy’22 inflation-linked EUR benchmark.
- N/A Sweden SEK700, 300 mln 0.125% 2026, 2032 index-linked bond auctions.
- (0315 ET/0715 GMT) Norges Bank InvMgr Slyngstad lecture in Stavanger.
- (0400 ET/0800 GMT) ECB/BdF Villeroy presents annual economic survey, press conference.
- (0530 ET/0930 GMT) Germany E4 bln 0.5% 2026 Bund, UK GBP1.5 bln 4.25% 2036 Gilt auctions.
- (0540 ET/0940 GMT) Portugal E1.25-1.5 bln 6 and 12-month bill auctions.
- (0630 ET/1030 GMT) ESM E1.5 bln 6-month bill auction.
- (0830 ET/1230 GMT) Canada securities transactions data.
- (1400 ET/1800 GMT) FOMC April 26-27 meeting minutes.
- (1500 ET/1900 GMT) BoE Chief Econ Haldane London dinner speech.
FX Beat
USD: The dollar index, against a basket of currencies trades 0.2 percent higher at 94.764, on speculations that U.S. Federal Reserve could raise the interest rates as early as June.
EUR/USD: The euro trades 0.2 percent lower at 1.1284, as improved risk appetite conditions boosted the greenback. The major touched a session low of 1.1276. The greenback rose after housing starts and industrial production rebounded strongly in the month April, further increasing the prospects for an early rate hike. Looking ahead, markets will closely watch eurozone's consumer price index figures for the month of April, ahead of FOMC minutes release. Immediate resistance is located at 1.1271 (Apr 27 Low), break below could drag the pair to 1.1256. On the higher side, resistance is seen at 1.1348, break above will take it to 1.1357 (10-DMA).
USD/JPY: The Japanese yen edged down to 109.28, having touched an intra-day high of 108.72 against the dollar. The yen gained after data showed Japan's economy expanded at the fastest pace in a year in the first quarter. Japan's economy grew by an annualized 1.7 percent in the first quarter, surpassing the median market forecast for a 0.2 percent increase and rebounding from a 1.1 percent decline in the previous quarter. The greenback rose to an early high of 109.38, extending its recovery above the 109 level. Markets will now focus on FOMC April meeting minutes, which will provide insights on the Fed’s interest rates outlook. The pair faces resistance at 109.38 (Session High), break above could take the pair to 109.65 (Previous Session High). On the down side, support is seen at 108.52 (10-DMA).
GBP/USD: Sterling trades 0.1 percent lower at 1.4437, hovering towards session low of 1.4431. It rose to 1.4523 overnight after a pair of polls showing the "In" camp well ahead of the "Out" campaign of Britain's June 23 referendum on European Union membership, however, the gains were later reduced by lower-than-expected U.K. inflation data. Investor’s attention will remain on the U.K's employment and earnings data for further cues on the pair. Immediate support is seen at 1.4419 (5-DMA), break below could drag the pair to 1.4395. On the upside, resistance is located at 1.4476 (20-DMA). Against the euro, the pound trades at 78.16, having touched a low of 78.31 earlier in the session.
AUD/USD: The Australian declined 0.5 percent to 0.7286, reversing some of the previous session's gains on the Reserve Bank of Australia's May policy meeting minutes. The Aussie slipped to 0.7279, from an early high of 0.7330 and off from a peak of 0.7366 touched on Wednesday. It was weighed down by rising expectations the Fed may raise rates later this year. Markets now await for the FOMC minutes due later in the day ahead of the Australian employment report due tomorrow fro further momentum. Immediate support is seen at 0.7253 (May -13 Low), break below will take the pair to 0.7244. On the higher side, resistance is located at 0.7336 (10-DMA).
NZD/USD: The New Zealand dollar dropped 0.2 percent to 0.6789 after two days of gains. The kiwi came under pressure on speculation that U.S. interest rates could rise as early as June. It was also weighed down by downbeat New Zealand's PPI figures. The Input Producer Price Index declined 1.0% in the March quarter, against markets consensus of 0.3 percent rise in the first quarter. The Output PPI fell 0.2% in the first quarter, versus market expectations of 0.4 percent rise. The major will be driven by the broader market sentiment. Immediate support is seen at 0.6780 (Session Low), break below could take the pair to 0.6755. On the higher side, resistance is located at 0.6842 (Previous Session High).
Equities Recap
Asian shares weakened after rising U.S. inflation and comments from Federal Reserve officials raised the prospects of an interest rate hike as early as June.
MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.8 percent.
Shanghai Composite index lost 1.2 percent and CSI 300 slipped 0.9 percent. Hong Kong's Hang Seng also declined 1.2 percent.
Australia's S&P/ASX 200 index slumped 0.68 pct at 5,359.40 points, while Tokyo's Nikkei was flat at 16,644.69, with Seoul shares closed down 0.67 pct
Commodities Recap
Oil prices were trading near 2016 highs, as supply disruptions and output cuts continued to tighten the market. International Brent crude futures were trading at $49.31 per barrel at 0621 GMT, while U.S. West Texas Intermediate crude futures were unchanged at $48.31 a barrel.
Gold prices declined as the dollar rose after Federal Reserve officials talked up the prospect of U.S. interest rate increases this year. Spot gold was trading 0.4 percent down at $1,271.90 per ounce at 0625 GMT.
Treasuries Recap
The 10-year U.S. treasury yield stood at 1.772 percent versus previous close of 1.759 percent.
Australian government bond futures edged up, with the 3-year bond contract 1 tick higher at 98.410. The 10-year contract added 2 ticks to 97.7250, while the 20-year contract gained half a tick to 97.0750.
New Zealand government bonds eased, sending yields 2.5 basis points higher at the long end of the curve.
Canadian government bond prices were mixed across the maturity curve, with the benchmark 10-year off 3 Canadian cents to yield 1.317 percent and the 2-year down 3.5 Canadian cents to yield 0.583 percent, while 20-year and 30-year bond prices fell. The Canada-U.S. two-year bond spread was 2.6 basis points more negative at -24.8 basis points, its largest gap since March 29, while the 10-year spread was 1.2 basis points more negative at -45.5 basis points as Canadian government bonds outperformed.
