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Europe Roundup: Gold hits over 2-week low, European indices slip on Trump's latest tariff threat, Focus on U.S. payrolls data - Friday, April 6th, 2018

Market Roundup

  • EUR/USD 0.06%, USD/JPY -0.01%, GBP/USD 0.13%, EUR/GBP -0.08%
     
  • DXY -0.06%, DAX -0.52%, FTSE -0.19%, Brent -0.31%, Gold -0.11%
     
  • China says will fight back "at any cost" against U.S. trade tariffs
     
  • Trade war fears already hurting the economy, ECB's Coeure says
     
  • Germany Feb Industrial Output MM, -1.6%, +0.3% forecast, -0.1% previous
     
  • Spain Feb Industrial Output Cal Adj YY, +3.1%, +1.2% previous
     
  • France Feb Current Accounts EUR, -2.0 bln, -1.6 bln previous
     
  • France Feb Trade Balance SA EUR, -5.20 bln, 5.15 bln forecast, -5.56 bln previous
     
  • France Feb Imports EUR, 44.860 bln, 45.820 bln previous
     
  • France Feb Exports EUR, 39.680 bln, 40.260 bln previous
     
  • Japan's long growth run faces turning point as wages, spending fall
     
  • China hopes N.Korea leader's summits with Trump, Moon will defuse tension
     
  • As Australia regulators target broker fees, banks' mortgage business face risk
     
  • Gold steadies near $1,325/oz before U.S. payrolls data
     
  • Oil moves lower on Trump's latest China trade threats

Economic Data Ahead

  • (0830 ET/1230 GMT) US Mar Nonfarm Payrolls, +190k forecast, +313k previous 
     
  • (0830 ET/1230 GMT) US Mar Private Nonfarm Payrolls, +190k forecast, +287k previous 
     
  • (0830 ET/1230 GMT) US Mar Factory Payrolls, +23k forecast, +31k previous 
     
  • (0830 ET/1230 GMT) US Mar Unemployment Rate, 4.0% forecast, 4.1% previous 
     
  • (0830 ET/1230 GMT) US Mar Average Hourly Earnings, +0.2% m/m, +2.7% y/y forecast; +0.1% m/m, +2.6% y/y previous 
     
  • (0830 ET/1230 GMT) US Mar Workweek Hours, 34.5 forecast, 34.5 previous 
     
  • (0830 ET/1230 GMT) Canada Mar Employment Change, 20.00k forecast, 15.40k previous
     
  • (0830 ET/1230 GMT) Canada Mar Full time employment change, -39.30k previous 
     
  • (0830 ET/1230 GMT) Canada Mar Participation Rate, 65.50% previous 
     
  • (0830 ET/1230 GMT) Canada Mar Part time employment change, 54.70k previous 
     
  • (0830 ET/1230 GMT) Canada Mar Unemployment Rate, 5.80% forecast, 5.80% previous
     
  • (1000 ET/1400 GMT) Canada Mar Ivey PMI, 58.40 previous 
     
  • (1000 ET/1400 GMT) Canada Mar Ivey PMI SA, 59.60 previous 
     
  • (1115 ET/1515 GMT) US Q1 New York Fed Staff Nowcast for Real GDP growth q/q AR, +2.71% previous
     
  • (1115 ET/1515 GMT) US Q2 New York Fed Staff Nowcast for Real GDP growth q/q AR, +2.87% previous
     
  • (1500 ET/1900 GMT) US Mar Consumer, +$15.00 bln forecast, +$13.91 bln previous

Key Events Ahead

  • (0800 ET/1200 GMT) China commerce ministry to hold media briefing on Sino-U.S. trade relations
     
  • (1145 ET/1545 GMT) US FedTrade 30-year Ginnie Mae (max $620 mn) 
     
  • (1330 ET/1730 GMT) US Fed's Jerome Powell delivers speech on the economic outlook - Chicago, IL 
     
  • (1600 ET/2000 GMT) US Fed's John Williams discusses the outlook for the national economy - Santa Rosa, CA

FX Beat

DXY: DXY holds onto gains ahead of NFP data. The index was trading at 90.45 at around 1115 GMT. The index managed to break consolidation phase and is now flirting with fresh 5-week highs. Bias remains higher. 

EUR/USD: EUR/USD was trading in a narrow range as we head into the crucial US Non-Farm-Payrolls data. Price was largely unchanged as markets remain wary of placing any major bets. Technical studies on daily charts are biased lower. 100-DMA at 1.2150 is next major support on the downside. 5-DMA at 1.2266 is immediate resistance. Break above 5-DMA could test 20-DMA at 1.2318. We need a decisive break above 20-DMA for further upside. On the downside, violation at 100-DMA raises scope for test of 200-DMA at 1.1945.

USD/JPY: USD/JPY holds above 107 handle ahead of US Non-Farm Payrolls data. The risk-off together with the ongoing slide in UST yields offset a strong follow-through US Dollar buying interest. The pair is struggling to extend gains. Cloud offers stiff resistance at 107.50. Downside remains supported at 50-DMA at 107.03. Technical indicators are biased higher. Bullish divergence keeps scope for further upside. Break into daily cloud will see test of 38.2% Fib at 108.49.

EUR/JPY: EUR/JPY on track to extend gains for a 2nd straight week. The pair is trading in a rising channel pattern and has bounced off channel base support at 129.25 levels. Price has broken above 50W SMA at 130.54. Upside now finds stiff resistance at 200-DMA at 132.08. Break above 200-DMA could see further upside. On the downside we see major weakness only on breach below channel base.

USD/CHF: USD/CHF pivotal around 200-DMA at 0.9655. Break out at 200-DMA could propel the pair higher. We then see scope for test of 61.8% Fibo at 0.9713 ahead of 0.9770 (major trendline). Technical indicators support further gains in the pair. We see weakness on break below 20-DMA at 0.9526. All eyes of US NPF data for further impetus.

GBP/USD: Cable extremely range bound as markets await US NFP data. Price action remains capped below 5 and 20 DMAs. Technical indicators on daily charts are biased lower. Scope for test of 100-DMA at 1.3758. On the upside, decisive break above 20-DMA invalidates bearish bias. Data from CME Group for GBP futures markets showed investors trimmed their open interest positions by around 3K contracts on Thursday from Wednesday’s final 174,157 contracts. 

Equities Recap 

European shares trade weaker on the day on latest Trump's threat to impose further tariffs on China. The pan-European STOXX 600 fell 0.5 percent by 07.58 GMT, erasing part of Thursday's 2.4 percent gain. 

Britain's FTSE 100 trades 0.17 percent lower at 7,187.58 points, while mid-cap FTSE 250 also slipped 0.17 percent to 19,542.00 points. 

Germany's DAX fell 0.47 percent to 12,247.50 points; France's CAC 40 trades 0.43 percent lower at 5,253.96 points.

Spain's IBEX 35 was down 0.42 percent at 9,699.70 points, while Italy's FTSE MIB index was down 0.16 percent at 22,931.84 points.

Commodities Recap

Gold prices hit over two-week lows on Friday, ahead of the U.S. payrolls data. Spot gold hit $1,321.16, its lowest since March 21, before paring some losses to trade at $1,324.01 per ounce, as of 0800 GMT. The U.S. gold futures slipped 0.1 percent to $1,327.70 an ounce.

Spot silver dropped 0.2 percent to $16.31 an ounce. Platinum slipped 0.6 percent to $904.50 an ounce and was on track for a second straight week of losses. Palladium fell 0.4 percent to $901.50 an ounce. 

Oil prices edged lower on Friday, but lower inventories seem to keep downside limited. Brent crude for June delivery was down 36 cents, or 0.53 percent, at $67.97 per barrel at 0807 GMT. U.S. West Texas Intermediate crude for May delivery was down 35 cents, or 0.55 percent, at 63.19 a barrel.

Treasuries Recap

U.S.: The U.S. Treasuries remained tad lower Friday ahead of the country’s non-farm payrolls and the unemployment rate for the month of March, scheduled to be released today by 12:30GMT. Also, Fed Chair Jerome Powell’s speech, due later today will add further direction to the debt market. The yield on the benchmark 10-year Treasuries slid 1/2 basis point to 2.82 percent, the super-long 30-year bond yields remained tad lower at 3.07 percent and the yield on the short-term 2-year traded flat at 2.30 percent.

EUR: The German bunds plunged Friday after the country’s industrial production for the month of February disappointed market expectations, coming in lower than the previous reading in January. The German 10-year bond yields, which move inversely to its price, slid 1-1/2 basis points to 0.51 percent, the yield on 30-year note plunged 2 basis points to 1.17 percent and the yield on short-term 2-year traded nearly 1-1/2 basis points lower at -0.57 percent.

JGBs: The Japanese government bonds suffered Thursday even as investors expect to see a fall in the country’s household spending for the month of February, scheduled to be released today by 23:30GMT. It is seen to come in at 0.3 percent y/y, from 2.0 percent y/y in January and at -0.36 percent y/y, from prior 2.7 percent y/y. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, hovered around 0.04 percent, the yield on the long-term 30-year note jumped 1 basis point to 0.74 percent and the yield on short-term 2-year held steady at -0.13 percent.

AUD: Australian government bonds gained on the last trading day of the week Friday amid rising fears of a trade war between world’s biggest economies after U.S. President Donald Trump threatens further $100 billion in tariffs against China. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, fell 1/2 basis point to 2.667 percent, the yield on the long-term 30-year note dipped 1/2 basis point to 3.276 percent and the yield on short-term 2-year also fell 1 basis point to 2.048 percent.


 

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