Market Roundup
- Dollar mixed early Europe as yields find a footing after U.S Syria strike.
- USD/JPY -0.14%, EUR/USD -0.05%, GBP/USD -0.3%.
- DXY +0.1%, DAX -0.45%, Brent +1.42%, Iron -7.0%.
- EUR/CZK steadies in the 26.600s following Thursday's floor exit.
- UST 10s yields dip below 2.30 but then recovers to 2.33.
- Hamada: Japan should push back on US attack on yen policy.
- Swiss SNB reserves jump CHF 15 bln in March.
- Swiss Mar Jobless Rate un/adj 3.4% vs 3.6% previous.
- Swiss Mar Adjusted Jobless Rate 3.3% vs 3.3% previous.
- Germany Feb Industiral Output 2.2% m/m vs revised 2.2% previous, -0.1% expected.
- Germany Feb Trade Balance E21.0 bln vs revised 18.9 bln previous, 18.4 bln expected.
- UK Mar Halifax Hse Prices 3.8% 3m/y/y vs 5.1% previous, 3.9% expected.
- UK Feb Industrial Output 2.8% y/y vs revised 3.3% previous, 3.7% expected.
- UK Feb Manufacturing Output 3.3% y/y vs revised 2.6% previous, 3.9% expected.
- UK Feb Trade Balance –GBP 12.46 bln vs revised -11.97 bln previous, -10.9 bln expected.
- US launches over 50 Tomahawk missiles against Syria government.
- Currency misalignment gains stature in Trump trade plans.
- Trump dinner with Xi- to develop very good relationship over time.
- German FinMin Schaeuble sees IMF sticking with Greece program.
- US-Japan talks to prevent China acquiring Westinghouse according to US official.
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Labor Department's employment report is likely to show non-farm payrolls increased 180,000 in March, after rising 235,000 in February. The jobless rate is seen held steady at 4.7 percent. Average hourly earnings are expected to have risen 0.2 percent, mirroring February's gain.
- (0830 ET/1230 GMT) A labor market report is expected to show Canada added just 5,000 jobs in March, after a strong February, when the economy added 15,300 jobs. Still, despite the small increase, the unemployment rate is estimated to have risen slightly to 6.7 percent.
- (0900 ET/1300 GMT) Mexico's annual inflation likely rose again in March after rising to a near 7-year high in February. Inflation in the 12 months through March is expected to have risen to 5.32 percent from 4.86 percent in February. Consumer prices likely edged up 0.59 percent in March from 0.58 percent in the prior month.
- (1000 ET/1400 GMT) The U.S. Commerce Department releases revised numbers for wholesale inventories and wholesale sales for February.
- (1000 ET/1400 GMT) The Canada's Ivey Purchasing Managers Index data for March is due for the release.
- (1500 ET/1900 GMT) The U.S. Federal Reserve will report outstanding credit extended to American consumers, which is estimated to have increased to $13.90 billion in February from $8.79 billion in January.
Key Events Ahead
- (1215 ET/1615 GMT) Federal Reserve Bank of New York President William Dudley speaks on "The State of Financial Regulation and the Potential for Reform" before a luncheon organized by the Griswold Center for Economic Policy Studies, Princeton University, in New York.
- (1245 ET/1645 GMT) FedTrade 30-yr Fannie Mae/Freddie Mac secs max $1.275 bln.
- U.S. President Donald Trump will meet his Chinese counterpart, Xi Jinping, concluding the two-day summit with a working lunch.
- Canadian Finance Minister Bill Morneau will give a speech and take part in an armchair discussion as part of an Official Monetary and Financial Institutions Forum City Lecture.
FX Beat
DXY: DXY facing strong resistance at 100.85 high made on Apr 5th 2017 and any break above confirms minor bullishness. It is currently trading around 100.81. On the lower side, the minor support is around 100 and any break below 100 will drag the index down till 99.25/98.85 in the short term. The near term resistance is around 100.85 and any close above will take the index till 100.97/101.40.
EUR/USD: EUR/USD was trading 0.16 percent lower on the day at the time of writing. All safe haven assets have shown huge upside after the attack of U.S on Syria. Market awaits U.S NFP data for further direction. U.S economy is expected to add 174K jobs in March compared to 235k jobs in February. On the lower side, any close below trend line support will drag the pair down till 1.0600/1.05250/1.04950. The near term resistance is around 1.06600 and any break above will take the pair till 1.07020 (21- day EMA)/1.07600.
USD/JPY: USD/JPY was trading largely unchanged on the day at 110.67. The pair has recovered from lows of 110.12. DXY under pressure on renewed risk-off in the markets after the US launched military strike on Syria. Risk assets such as equities, treasury yields, AUD etc. dumped, flight to safe-haven seen. USD/JPY finds major support at 110 levels (major trendline). The risk has shifted quickly to the downside, break below 110level could lead to acceleration lower towards 109.60.
GBP/USD: Cable reverses gains, extends sell off till 1.24115 after jumping till 1.25056. It is currently trading around 1.24205. We see a potential reversal zone at 1.2616. The near term support is around 1.2375 and any break below 1.2375 will drag the pair down till 1.2320/1.2260. On the higher side, any break above 1.2500 will take the pair till 1.2525/1.2580. It should break above 1.2700 for further bullishness.
AUD/USD: Risk and high yielding assets dumped after risk-off driven by US launched military strike on Syria. AUD/USD has closed below 200-DMA on Thursday's trade, bias remains lower. Increased cautiousness in the wake of the Trump-Xi Summit to keep pressure on the Aussie. Technical studies on daily charts are bearish, RSI and Stochs biased lower. Weekly charts also support downside. The pair is currently holding 100-DMA support at 0.7515, break below will see further downside.
EUR/JPY: Demand for safe haven Japanese Yen strengthened, weighing on EUR/JPY. The pair hit lows of 117.31 before paring some losses to currently trade at 117.68. The single currency remains weak, after Draghi squashed rate rise hopes on Thursday. The pair is struggling at major trendline support at 117.50. Technical studies are bearish, pair could accelerate slide on a sustained break through 117.50 support (major trendline).
Equities Recap
The European stocks fell 0.2 percent dragged down by weakness in mining stocks as investors locked in some profits following the sector's stellar run this year.
Britain's FTSE 100 was down 0.2 pct and mid cap index hit fresh record high, up 0.3 pct.
The Tokyo's Nikkei Index closed up 0.36 pct at 18,664.63. China's CSI300 Index closed up 0.1 pct at 3,517.46 points, Shanghai Composite Index ended up 0.2 pct at 3,286.62 points. HK’s Hang Seng Index finished the day flat at 24,267.30 points, up 0.6 pct for the week.
Commodities Recap
Oil prices hit a 1-month high after the United States' on Syrian government airbase, escalating tensions with Russia and Iran. Brent crude futures were up 38 cents at $55.27 a barrel at 1129 GMT after reaching an intraday peak of $56.08, the highest since March 7, shortly after the missile strike was announced. U.S. West Texas Intermediate (WTI) crude futures rose 47 cents at $52.17 a barrel, having reached an intraday high of $52.94.
Gold hit a 5-month high as investors looking for safety after the United States' attack on Syrian airbase. Spot gold rose 1.07 percent at $1,264.70 per ounce by 1012 GMT, after earlier climbing to its highest since Nov. 10 at $1,269.28 and on track for a fourth straight week of gains. U.S. gold futures climbed 1 percent to $1,267 an ounce.
Treasuries Recap
U.S.: The U.S. Treasuries traded higher ahead of the country’s March employment report, scheduled to be released later in the day. The yield on the benchmark 10-year Treasury slumped nearly 2 basis points to 2.32 percent, the super-long 30-year bond yields fell 1 basis point to 2.97 percent while the yield on short-term 2-year note traded 1/2 basis point lower at 1.24 percent.
UK: The UK gilts rebounded after reading worse-than-expected manufacturing production for the month of February. The yield on the benchmark 10-year gilts, slumped 2 basis points to 1.08 percent, the super-long 30-year bond yields also plunged 2 basis points to 1.68 percent while the yield on the short-term 2-year traded 1-1/2 basis points lower at 0.12 percent.
German: The German bunds gained despite higher-than-expected industrial production during the month of February. The yield on the benchmark 10-year bond, slumped 1-1/2 basis points to 0.25 percent, the long-term 30-year bond yields fell nearly 1 basis point to 1.02 percent and the yield on short-term 2-year bond also traded nearly 1 basis point lower at -0.78 percent.
NZ: The New Zealand bonds sharply rebounded at the time of closing, tracking firmness in the U.S. Treasuries, after investors moved away from riskier assets, following the missile launch by the latter on the Syrian airbase. The yield on the benchmark 10-year bond, slumped 4 basis points to 3.08 percent, the yield on 7-year note remained also plunged 3-1/2 basis points to 2.72 percent and the yield on short-term 2-year note also traded 4-1/2 basis points lower at 2.08 percent.
AUS: The Australian 10-year bond yields plunged to near 5-month low as investors poured interest in safe-haven assets, after the United States fired a fleet of missiles against the Syrian airbase earlier today, which further shored up bond demand. The yield on the benchmark 10-year Treasury note, slumped nearly 3 basis points to 2.55 percent, the yield on 15-year note slipped 1 basis point to 2.95 percent and the yield on short-term 2-year traded 2-1/2 basis points lower at 1.65 percent.
