Market Roundup
- EUR/USD inched up by +0.2%, USD/JPY surged by +0.6%, GBP/USD also rose by +0.15%, USD/CAD +0.4%, and AUD/USD slid by 0.52%.
- DXY -0.1%, DAX -0.1%, FTSE +0.2%, Copper +0.6%, Gold -0.3%.
- A day of low-level data releases will probably leave the FX market in a 'hangover' consolidation mode after the volatile "risk-on" euphoric start to the week on the back of the French election results. While on French politics, an interesting move yesterday by Le Pen to temporarily stand down as NF party leader to focus on the presidency campaign and stand as a "free" agent.
- CAD hits 4-month lows as US announces new duties on Canadian lumber.
- U.S. sets 20 pct duties on Canadian softwood lumber.
- EUR/USD edges back towards Mon's 5-month 1.0940 high. 1.0852-1.0894
- Gold eases in French election afterglow; North Korea woes limit losses.
- Germany IFO business climate rose to 112.90 from previous flashes of 112.40.
- German government lifts 2017 growth forecasts to 1.5 pct.
- ECB says Brussels wants "too tight" limit to its power over banks.
- Japan central bank governor says G20, IMF accepts the monetary policy.
- BoJ Kuroda: Currencies were not debated at the meeting.
Economic Data Week Ahead
- (0830 ET/1230 GMT) U.S. advanced GDP Q/Q seems to have slowed in the Q1; the data from the Commerce Department is expected to show on Friday. Gross domestic product is likely to have dropped to 1.3 pct from 2.1 pct in the previous quarter.
- (1000 ET/1400 GMT) The Conference Board's Consumer Confidence Index is expected to have dropped in April, a month after it hit its highest since December 2000.
- Canadian GDP data is due to be released on Friday; a report that is likely to display the economy grew by 0.1 pct in February. While that will mark a step down from January's strong 0.6 pct pace, analysts still expect the economy is on track for a solid first quarter. On Wednesday, a report is expected to show retail sales stalled in February after a surprisingly strong January.
- The UK Q1 GDP data is scheduled to be announced on Friday that is likely to print at 0.4 pct, a shrink of a tad below from previous 0.6 pct.
- ECB monetary policy meeting for minimum bid rate and asset purchasing programme is scheduled on Thursday.
Key Events Ahead
- (09:55 ET - 13:55 GMT) - Redbook Weekly Same-Store Sales Index previous +2.3% y/y.
- (10:00 ET - 14:00 GMT) - FHFA Home Price Index (Feb) previous +5.7% y/y.
- (10:00 ET - 14:00 GMT) - Case-Shiller 20-City House Price Index (Feb) mkt +5.7% y/y, previous +5.7% y/y.
- (11:00 ET - 15:00 GMT) - Consumer Confidence (Apr), previous 125.6.
- (11:00 ET - 15:00 GMT) - New Home Sales (Mar), previous 592k SAAR.
- (11:00 ET - 15:00 GMT) - Richmond Fed Manufacturing Index.
- (11:00 ET - 15:00 GMT) - Richmond Fed Services Index.
- (11:30 ET - 15:30 GMT) - Dallas Fed Texas Service Sector Outlook Survey (Apr) previous 13.2.
- (11:30 ET - 15:30 GMT) - Dallas Fed Services Revenues Index (Apr) previous 15.2.
FX Beat
DXY: For today, after yesterday’s gap down the candle, the dollar bulls have managed to recover the losses upto the current 99.15 levels. Technically, the index has shown a minor jump from the low of 98.88 made yesterday. It is currently trading around 99.15 0.03% higher (while articulating).
On the higher side, near term resistance is around 99.40 (23.6% retracement of 101.34 and 98.79) and any break above will take the index till 100.03 (Apr 21st high)/100.55 (55- EMA). The near-term major support is around 98.80 and any break below will drag the index down till 98.
While the FxWirePro currency strength index for the dollar was unchanged but has been little feeble as the euro surged on earlier Monday in Asia after a predictable outcome for the French elections that led to a runoff between centrist Emmanuel Macron and far-right leader Marine Le Pen., despite relinquishing its gain.
EUR/USD: The euro continued its gains to the current 1.0882 levels in earlier today from yesterday’s 1.0865 levels, the pair had shown a gap-up opening on Monday as Centrist politician Macron qualified for the May 7th French Presidential run – off along with Marine Le Pen.
EUR/USD surged to the highs of 1.0918 yesterday but failed to sustain and close above 1.08735 (Aug 8th high). Market attention now turns towards US tax reform plans announcement due tomorrow. It is currently trading around 1.08750.
The supply zone is at 1.09058 (Mar 27th high) and any violation above will take the pair till 1.09329 (61.8% retracement of 1.1299 and 1.03400)/1.09785 (50% retracement of 1.16163 and 1.03400).On the lower side, major support stands at 1.0840 (200- day MA) and decline below targets 1.07800/1.07500. FxWirePro’s Hourly Euro Strength Index stood firm at 77 (mildly bullish) by 11:50 GMT.
USD/JPY: Same has been the case with USD/JPY for today; the pair extends gains after it displayed a gap up candle yesterday morning after the first round of French election result.
The pair had also shown a mild decline after a gap up yesterday. The pair jumped till 110.518 while articulating and is currently trading around 110.491.
Market awaits tax reform of Donald trump on Wednesday for further direction. It is expected that trump would seek to lower corporate tax to 15%from 35%. JPY trades lower after risk appetite has diminished after the first round of French election.
The pair upside is capped by daily Kijun-Sen (110.51) and any break above will take the USD/JPY till 111.45 (100 –day EMA)/112.The near term support is around 109.59 (38.2% retracement of 108.13 and 110.51) and any break below targets 109.
GBP/USD: Cable trades were quite but forms a temporary top around 1.29035 and is consolidating for the past four trading session. The pair declined till 1.27549 and is currently trading around 1.28177 0.19% higher. On the lower side, the pair downside capped by 7- day MA at 1.2730 and any break below will drag the pair down till 1.2710 (23.6% retracement of 1.29035 and 1.21088)/1.2625 (200 –day MA).
Any break above the high made on Apr 18th, 2017 will take the pair till 1.3000.
USD/CAD: The Canadian dollar fell half a pct to C$1.3570, its lowest since December, against its U.S. counterpart, after U.S. Commerce Secretary Wilbur Ross said his agency will impose new anti-subsidy duties averaging 20 pct on Canadian softwood lumber imports.
Despite gains against most major currencies, the U.S. dollar index -- which is heavily exposed to the euro - slipped 0.1 pct to 98.983. WTI remains below $50/barrel after closing below Monday: another CAD-negative.
USD/CAD hits four months high today after U.S Commerce Secretary news on Canadian softwood lumber imports.
The pair has broken the major resistance of 1.35349 high made on Mar 9th, 2017 and jumped till 1.35732 at the time of writing. It is expected to reach till 1.35985 (Dec 28th high) and any break above confirms that decline from 1.46889 and 1.2460 will come to an end, a jump till 1.370/1.3828 is possible.
On the lower side, major near-term support is around 1.3400 and any break below will drag the pair down till 1.3300 (100- EMA)/1.3220 (Apr 13th, 2017 low).
USD/CHF: USD/CHF has shown a minor jump till 0.99808 after making a low of 0.98963. It is currently trading around 0.99567 0.02% lower.
The minor resistance is around 1.000 and any break above target 1.00240 (55- day EMA). Any break above 1.0024 will take the pair till 1.00413 (61.8% retracement of 1.03435 and 0.98135)/1.0120/1.0170.
Favorable French election outcome suggests SNB steps back. Swiss franc hit along with yen EUR/CHF hits 4-mth high @ 1.0836 early.
AUD/USD: This APAC pair has shown a slight decline after hitting high of 0.75850 yesterday. It is currently trading around 0.75316 0.49% lower. On the lower side, near term support is around 0.7490 and break below targets 0.7450/0.7380 likely.
The pair’s major resistance is around 0.7580 (55- EMA) and breaks above will take the pair till 07650/0.7680/0.7745.
Equities Recap
Eurozone stocks headed towards their rosy day in almost two years on Monday and the euro briefly vaulted to five-month peaks, European shares measured by the STOXX 600 index edged up by 0.2 pct, after rising 2.1 pct on Monday. French shares pulled back 0.1 pct, having risen 4.1 pct on Monday in their biggest daily gain since August 2012.
Euro zone bank shares edged higher after big gains on Monday. The European Central Bank said in a quarterly survey of lenders that while banks would tighten access to credit for companies in the second quarter, lending volumes were still expected to rise.
World stocks hit record highs on Tuesday, with investors' relief at centrist Emmanuel Macron's victory in the first round of the French presidential election supported by speculation about U.S. tax reform.
DAX has spiked about 0.12 pct to flash at 12,469. While FTSE up by 0.17% at 7275.32 and French shares pulled back 0.1 pct, having risen 4.1 pct on Monday in their biggest daily gain since August 2012.
Commodities Recap
US crude oil rose on Tuesday, breaking a six-day streak of price falls, but with doubt swirling over OPEC's ability to force global crude inventories to drop, sentiment has turned more bearish.
Brent crude was up 8 cents at $51.68 a barrel by 0940 GMT, while U.S. crude futures were up 10 cents at $49.33 a barrel.
Brent is down 10 pct since late 2016, despite efforts led by the Organization of the Petroleum Exporting Countries and Russia to cut output by 1.8 million barrels per day (bpd) in the first half of 2017.
Gold prices eased on Tuesday as investor sentiment remained skewed towards riskier assets in the wake of the French election results last weekend, though concerns over Korean peninsula limited the safe havens losses.
Spot gold was down 0.2 pct at $1,272.67 per ounce as of 0700 GMT.
U.S. gold futures slipped 0.3 pct at $1,274.20.
Bullion prices fell about 0.7 pct in the previous session after touching $1,265.90 an ounce, the lowest since April 11, following the first round of France's presidential election that indicated less support for far-right candidate Marine LePen.
Silver dipped 0.2 pct to $17.87 an ounce, after touching a one-month low of $17.65 in the previous session.
Platinum was down 0.1 pct at $957.80 an ounce, after falling over 1 pct in the prior session.
Palladium fell 0.3 pct to $793.05 an ounce.
Treasuries Recap
USTs: The U.S. Treasuries suffered ahead of the 5-year auction and the country’s initial jobless claims, scheduled to be released on April 27. The yield on the benchmark 10-year Treasury jumped 3-1/2 basis points to 2.31 pct, the super-long 30-year bond yields climbed also nearly 3-1/2 basis points to 2.95 pct while the yield on short-term 2-year note traded over 2 basis points higher at 1.25 pct.
UK gilts: The UK gilts slumped on expectations of a rise in the country’s first-quarter gross domestic product (GDP), scheduled to be released on April 28. The yield on the benchmark 10-year gilts, jumped 4 basis points to 1.09 pct, the super-long 30-year bond yields also climbed nearly 4 basis points to 1.71 pct while the yield on the short-term 2-year traded nearly 4 basis points higher at 0.12 pct.
German bunds: The German bunds plunged as investors wait to watch the European Central Bank’s (ECB) monetary policy decision, scheduled to be unveiled on April 27. Also, expectations of a rise in the Eurozone’s consumer price inflation for the month of April, due to be released on April 28 added to the disappointment in safe-haven assets. The yield on the benchmark 10-year bond, jumped 3 basis points to 0.24 pct, the long-term 30-year bond yields surged nearly 4 basis points to 1.11 pct and the yield on the short-term 2-year bond traded 1-1/2 basis points higher at -0.67 pct.
JGBs: The Japanese government bonds lost ground as investors remain keen to watch the Bank of Japan’s (BoJ) monetary policy meeting, scheduled to be held on April 27. Also, markets will be focusing on the country’s March consumer price inflation (CPI), scheduled to be released on April 28 for detailed direction in the debt market. The benchmark 10-year bond yield, rose nearly 1 basis point to 0.02 pct, the long-term 30-year bond yields jumped 2-1/2 basis points to 0.78 pct and the yield on the short-term 2-year note climbed 1 basis point to -0.20 pct.
