Market Roundup
- EUR/USD surged by 1.24%, USD/JPY up by 1.13%, GBP/USD unchanged by slightly up a little by 0.14%, AUD/USD went up by 0.42%.
- DXY -0.76%, DAX shot up by +3.04%, FTSE surged 1.81%, Copper +0.59%, Gold dropped by -1.25%.
- Although Euro spiked up to 1.0933 during the earlier Asian session, couldn’t sustain gains to slide lower at current 1.0855 levels as equities breathed a sigh of relief over the outcome of the presidential elections in France, pushing the German benchmark index to an all-time high just below 12,400 points. Sterling falls after weaker than expected retail sales data.
- Centrist candidate Emmanuel Macron won in the first phase of the French presidential election with 23.75% of the vote, advancing to the second and final vote with far-right Marine Le Pen who took 21.53% which will take place on May 7.
- Front portrays Macron as tied to banking lobbies, celebrities.
- Presidency rivals need to more than double their support.
- CH Sight Depos mixed: Domestics banks fall while total depos rise w/e Apr 21.
- ECB/Austria CB Nowotny – ECB to set post-’17 policy in H2’2017.
- Germany IFO business climate rose to 112.90 from previous flashes of 112.40.
Economic Data 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.
- (0830 ET/1230 GMT) Canadian wholesale trade likely dropped 1 pct in February after soaring 3.3 pnt in the previous month, data from Statistics Canada is expected to show.
- 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
(14:45 GMT) Fed’s Trade ops 30-year Fannie Mae/Freddie Mac max $1.450 bln.
(16:30 GMT) FOMC member Minneapolis’s Kashkari speech to show dovish stance on TBTF; Los Angeles, CA.
(19:30 GMT) Fed’s Trade operation 15-yr Fannie Mae/Freddie Mac max $600 mln.
FX Beat
DXY: For today, gap down candle has occurred at 98.79 level but managed to recover the losses upto the current 99.15 levels, the rallies are extended today as well upto 99.33 levels but these upswings are not substantiated by both momentum and trend indicators on this timeframe. Instead, we could see bearish DMA and EMA crossovers on daily and weekly charts.
The dollar seems feeble ahead of the speech by the FOMC member Kashkari. While the FxWirePro currency strength index for the dollar has been feeble as the euro surged on earlier Monday in Asia after an 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 for the day for the previous week after gaining traction found in bullish pattern as stated above but the overall dollar basket is still weaker after today’s gap down, was dropped about 0.83% to 99.15 (while articulating).
EUR/USD: The euro soars in earlier today but tumbled to the current 1.0844 levels, the pair has 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. Euro hits 1.09158 levels highest since Nov 11th, 2016. It is currently trading around 1.08694.
FxWirePro's Hourly Euro Strength Index stood at 47 (Neutral) by 1200 GMT. 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.
USD/JPY: USD/JPY displays a gap up today morning after the first round of French election result. The pair jumped till 110.51 and is currently trading around 110.11 1.07% higher. The market appears to be less risk-off hurt yen as nightmare Le Pen vs Melenchon scenario avoided, widening UST/JGB spreads have also helped push USD/JPY higher. 30/60-day log correlation significant between spreads & USD/JPY across the curve. Decent sized 109.00 strikes set to expire at the NY cut worth 1.6 yards, Japanese exporters took advantage of the spike higher to sell in Asia.
The pair upside is capped by daily Kijun-Sen (110.81) and any break above will take the USD/JPY till 111.48 (100 –day EMA)/112.
Short term bullish invalidation only below 108 and any break below will drag the pair down till 106.35 (61.8% retracement of 98.78 and 118.66)/105.
GBP/USD: Cable forms a temporary top around 1.29035 before sterling gained traction on snapping UK election news and showing a minor dip from the high. The pair declined till 1.27549 and is currently trading around 1.280105 0.03% higher. On the lower side, the pair downside capped by 5- day MA at 1.2750 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/CHF: USD/CHF opened lower at 0.98963 after French election and shown minor recovery above 200- day MA (0.9945) and is trading around 0.99520 0.05% 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 rose towards mooted offers at 0.76 during early Asia and the European sessions when AUD boosted by risk appetite rise on Macron victory, subsequent retreat to 0.7539 Asia low influenced by temporary iron ore losses. Dalian iron ore closed up 0.3% Monday having been down 3% at one stage.
Aussie has shown a huge recovery after declining till 0.75394 at the time of writing. It is currently trading around 0.7578 0.47% higher. 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, after the market's favored candidate won the first round of the French election, reducing the risk of another Brexit-like shock.
The victory for pro-EU centrist Emmanuel Macron, who is now expected to beat right-wing rival Marine Le Pen in a deciding vote next month (Full Story), fuels the benchmark blue-chip STOXX 50 index bulls run by 3.7 pct, Germany’s DAX30 traded up 4.80 pct, while CAC40 over 4.3 pct and bank stocks shot up by more than 6 pct.
There was also an unwinding of safe-haven trades. Shorter-term German bonds saw their biggest sell-off since the end of 2015 as investors piled back into French as well as Italian, Spanish, Portuguese and Greek debt .
Le Pen wants to print money to finance expanded welfare payments and tax cuts, ditch the euro currency and possibly pull out of the EU, all of which raise huge uncertainties
."Good that @EmmanuelMacron succeeded with his policy for a strong EU and social market economy," German Chancellor Angela Merkel's spokesman tweeted, wishing him all the best for the next two weeks."
Futures markets pointed to a 1 pct rise for Wall Street which is in now in the grip of earnings season.
Commodities Recap
Gold dropped more than 1 pct today, marking its biggest tumble in more than a month, after the market's favored candidate won the first round of the French election, easing worries over a political shock in the second round.
Spot gold was down 1 pct at $1,271 an ounce by 1008 GMT, having touched its lowest in nearly two weeks at $1,265.81. U.S. gold futures were down 1.3 pct at $1,272.40.
While Spot silver was down 0.6 pct at $17.78 an ounce after touching a one-month low of $17.65.
Platinum fell 0.4 pct to $966.50, and palladium was up 1.1 pct at $800.50.
Oil prices recouped just a little of last week's hefty losses, still weighed by signs U.S. production and inventory growth were offsetting OPEC's attempts to reduce the global crude glut.
Brent futures were up 16 cents at $52.12 a barrel, while U.S. crude futures added 17 cents to $49.79.
Treasuries Recap
The U.S. Treasuries suffered ahead of the Federal Open Market Committee (FOMC) member Neel Kashkari’s speech, scheduled to be held later in the day. The yield on the benchmark 10-year Treasury jumped nearly 7 basis points to 2.30 pct, the super-long 30-year bond yields climbed nearly 6 basis points to 2.95 pct while the yield on short-term 2-year note traded over 6-1/2 basis points higher at 1.25 pct.
The UK gilts sunk on expectations of a rise in the country’s Q1 gross domestic product (GDP), scheduled to be released on April 28. The yield on the benchmark 10-year gilts, jumped 7-1/2 basis points to 1.11 pct, the super-long 30-year bond yields climbed 6-1/2 basis points to 1.72 pct while the yield on the short-term 2-year traded nearly 4 basis points higher at 0.13 pct.
The German 10-year bund yields jumped to nearly 1-month high, following a plunge in demand for safe-haven assets post the results of the 1st round of French elections and ahead of the European Central Bank’s interest rate decision, due to be held on April 27. The yield on the benchmark 10-year bond, surged 10 basis points to 0.35 pct, the long-term 30-year bond yields also jumped 10 basis points to 1.06 pct and the yield on the short-term 2-year bond traded 7-1/2 basis points higher at -0.69 pct.
The Japanese government bonds (JGBs) slid as investors remain keen to watch the Bank of Japan’s (BoJ) monetary policy meeting, scheduled to be held on April 27. Also, the market 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 basis points to 0.77 pct and the yield on the short-term 2-year note climbed 1 basis point to -0.20 pct
The New Zealand treasuries witnessed losses, tracking weakness in U.S. Treasuries amid a drop in demand for safe-haven assets post the first round of French elections held over the weekend. At the time of closing, the yield on the benchmark 10-year bond, jumped 5 basis points to 3.04 pct, the yield on 7-year note surged nearly 4-1/2 basis points to 2.74 pct and the yield on short-term 2-year note traded 1-1/2 basis points higher.
The Australian government bonds slumped on rising risk appetite of global investors post the first round of French elections concluded early today. Also, investors unwound hedges, following a keenly-watched French election in which centrist Emmanuel Macron swayed to victory in the first round. The yield on the benchmark 10-year Treasury note, jumped 7 basis points to 2.61 pct, the yield on the 15-year note climbed 6-1/2 basis points to 3.01 pct and the yield on short-term 2-year traded 3 basis points higher at 1.69 pct.
