Market Roundup
- EUR/USD +0.05%, EUR/JPY +0.1%, GBP/USD flat, AUD/USD -0.2%
- DAX -0.5%, FTSE -0.5%, Brent +0.1%, Gold -0.1%, Copper +0.1%
- Czech central bank says ends crown exchange cap, ready to intervene if necessary
- EUR/USD hits 3-wk low at 1.0629 after Draghi, recovers to 1.0670
- ECB's Draghi sees no need to deviate from stated policy path
- Germany Feb Industrial Orders 3.4% m/m vs previous -6.8% revised 4.0% forecast
- Switzerland Mar CPI 0.2% m/m, 0.6% y/y vs previous 0.5%/0.6%. 0.5% y/y forecast
- UK PM May says government will act where consumer markets not working
- ECB keeps emergency funding cap for Greek banks unchanged at 46.6 bln euros
- ECB's top economist upholds policy plan against rate speculation
- EU's Dombrovskis says banks' loan problems not sign of new crisis
- Bundesbank: Legitimate to discuss route to end of ECB stimulus
Economic Data Ahead
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have decreased by 8,000 to a seasonally adjusted 250,000 for the week ended Mar. 31 while continuing claims for the week ended Mar. 24 is expected to decline to 2.040 m from 2.052 m.
- (0830 ET/1230 GMT) The Statistics Canada reports it building permits for the month of February. The indicator rose 5.4 percent in the previous month.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending Mar. 31.
- (1930 ET/ 2330 GMT) The Australian Industry Group (AiG) releases its Performance of Construction Index for the month of March. The index stood at 83.1 in the month of March.
- (1950 ET/2350 GMT) Japan releases Foreign Exchange Reserves report for the month of March.
Key Events Ahead
- (0930 ET/1330 GMT) Federal Reserve Bank of San Francisco President John Williams participates in a moderated debate titled, "Do monetary policy frameworks need to be adjusted in a world of (potentially) low natural real interest rates? If so, how?" hosted by the Watchers Conference at Goethe University in Frankfurt.
- (1245 ET/1645 GMT) FedTrade 30-yr Ginnie Mae securities (max $850 mn)
- N/A U.S. President Donald Trump and Chinese President Xi Jinping meeting in Florida.
- (1600 ET/2000 GMT) European Central Bank (ECB) President Mario Draghi's Speech.
FX Beat
DXY: The dollar rebounded versus the yen as investors remained cautious ahead of talks between U.S. president Donald Trump and his Chinese counterpart Xi Jinping. The greenback against a basket of currencies traded down at 100.49, having hit a high of 100.73 on Tuesday, its highest since Mar. 16. FxWirePro's Hourly Dollar Strength Index stood at 10.27 (Neutral) by 0400 GMT.
EUR/USD: The euro edged up after declining to a fresh 3-week low earlier in the session on the back of dovish comments from European Central Bank President Mario Draghi. The policymaker’s remarks suggest the ECB won't change its policy message this month despite mounting calls from Germany for it to wind down its stimulus. The European currency traded 0.1 percent up at 1.0668, rebounding from an early low of 1.0629, its lowest since Mar. 15. FxWirePro's Hourly Euro Strength Index stood at 79.06 (Slightly Bullish) by 0900 GMT. On the lower side, any close below trend line support at 1.06300 will drag the pair till 1.0600/1.05250 (Mar 9 low)/1.04940 (Mar 2 low). The near term resistance is around 1.0702 (21- day EMA) and any break above will take it to next level till 1.07450/1.07800. The short term bearish invalidation is only above 1.09058.
USD/JPY: The dollar rose, halting its four-day losing streak as investors digested the FOMC March meeting minutes and shifted their focus towards the much-awaited Presidents Donald Trump and Xi Jinping meeting scheduled later today. The major traded 0.1 percent up at 110.75, having touched a low of 110.26 on Tuesday, its lowest since Mar. 28. FxWirePro's Hourly Yen Strength Index stood at 35.60 (Neutral) by 0900 GMT. On the higher side, any break above 112.20 (100- day EMA) will take the pair till 112.90 (55- day EMA)/113.44. The near term support is around 110 and any break below will drag ittill 108.65.
GBP/USD: Sterling eased versus the dollar as increasing uncertainty surrounding Britain's departure from the European Union offset some signs of economic resilience. Moreover, dovish BoE policymaker Vlieghe’s remarks and a mild recovery in the greenback added to the renewed weakness seen around the major. Sterling trades lower at 1.2478, having hit a low of 1.2419 on Tuesday, its lowest since Mar. 30. FxWirePro's Hourly Sterling Strength Index stood at -46.22 (Neutral) by 0900 GMT. 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 it till 1.2525/1.2580. It should break above 1.2700 for further bullishness. Against the euro, the pound traded down at 85.46 pence, having hit a low of 85.89 the day before, its lowest since Mar 31.
USD/CHF: The Swiss franc rose, rebounding from a 3-week low touched in the previous session as renewed risk-aversion wave that gripped Europe boosted safe-haven assets. The major traded 0.1 percent down at 1.0042, having hit a high of 1.0076 in the previous session, its strongest since Mar. 15. FxWirePro's Hourly Swiss Franc Strength Index stood at 27.02 (Neutral) by 1000 GMT. The near term resistance is at 1.00783 (61.8% retracement of 1.03435 and 0.98136)/1.00950 (trend line joining 1.033 and 1.01700). On the lower side, near term support is around 1.000 (21- day EMA) and any violation below will take the pair till 0.9960/0.9929 (200- day MA) /0.98600/0.98100.
AUD/USD: The Australian dollar trimmed losses after falling to an early 4-week low following the release of worse than expected Chinese Caixin Services PMI data. The Aussie trades 0.1 percent down at 0.7560, having hit a low of 0.7532 earlier in the day, it’s lowest since Mar. 10. FxWirePro's Hourly Aussie Strength Index stood at -59.33 (Bearish) by 1000 GMT. On the lower side, the next immediate support stands at 0.74910 (Mar 9 low) and any break below will drag the pair down till 0.7450. The major resistance is around 0.7620 (21- day EMA) and a break above will take it till 07680/0.7745. The minor resistance is around 0.7580.
Equities Recap
European shares declined in early deals after latest FOMC meeting minutes raised worries over high stock market valuations, while investors awaited meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping.
The pan-European STOXX 600 index tumbled 0.43 percent to 378.75 points, while the FTSEurofirst 300 index dropped 0.43 percent to 1,491.21 points.
Britain's FTSE 100 trades 0.57 percent down at 7,290.02 points, while mid-cap FTSE 250 lost 0.24 percent to 19,024.38 points.
Germany's DAX slumped 0.43 percent at 12,164.40 points; France's CAC 40 trades 0.20 percent lower at 5,081.84 points.
Tokyo's Nikkei eased 1.40 percent to 18,597.06 points, Australia's S&P/ASX 200 index fell 0.49 percent to 5,847.50 points. South Korea's KOSPI declined 0.37 percent to 2,152.75 points.
Shanghai composite index rallied 0.3 percent to 3,281.00 points, while CSI300 index climbed 0.3 percent to 3,514.05 points. Hong Kong’s Hang Seng shed 0.5 percent to 24,273.72 points.
Commodities Recap
Crude oil prices rose, hovering towards a 1-month high despite rising U.S. crude production bolstered inventories to record levels. International benchmark Brent crude was trading 0.8 percent up at $54.44 per barrel by 0900 GMT, having hit a high of $55.06 on Wednesday, its strongest since Mar. 8. U.S. West Texas Intermediate crude rose 0.8 percent to $51.21 a barrel, after rising as high as $51.86 the day before, its highest since Mar. 8.
Gold prices declined, extending previous session losses, while investors appetite for risky assets faded ahead of a potentially tense meeting between U.S. President Donald Trump and his Chinese counterpart. Spot gold edged down 0.1 percent to $1,253.81 per ounce by 0908 GMT, having hit a high of $1,261.07 on Tuesday, its highest since March 27. U.S. gold futures were up 0.6 percent at $1,255.60, after rising as much as 1 percent to $1,260.80 earlier in the day.
Treasuries Recap
The U.S. Treasuries traded flat despite expectations of a modest fall in the country’s initial jobless claims, scheduled to be released later in the day. The yield on the benchmark 10-year Treasury hovered around 2.35 percent, the super-long 30-year bond yields remained flat at 3.00 percent while the yield on short-term 2-year note fell nearly 1 basis point to 1.24 percent.
The UK gilts plunge on expectations that the country’s manufacturing production will witness a rebound during the month of February. The yield on the benchmark 10-year gilts, climbed 1 basis point to 1.09 percent, the super-long 30-year bond yields jumped 2 basis points to 1.71 percent while the yield on the short-term 3-year traded 1/2 basis point higher at 0.23 percent.
The German bunds trade narrowly mixed after European Central Bank (ECB) President Mario Draghi commented that he does not see any reason to bring about any change in the zone’s current monetary policy stance. The yield on the benchmark 10-year bond, fell 1/2 basis point to 0.25 percent, the long-term 30-year bond yields hovered around 1.03 percent and the yield on a short-term 3-year bond traded 1/2 basis point higher at -0.72 percent.
The New Zealand bonds traded modestly lower as investors cashed in profits toward the end of the trading week. The yield on the benchmark 10-year bond, rose 1/2 basis point to 3.12 percent, the yield on 7-year note remained nearly flat at 2.75 percent and the yield on short-term 2-year note also traded 1/2 basis point higher at 2.12 percent.
The Australian bonds jumped as investors covered previous short positions amid modestly lower equities that further lent support to the bond market. The yield on the benchmark 10-year Treasury note, slumped 4-1/2 basis points to 2.58 percent, the yield on 15-year note plunged 4 basis points to 2.96 percent and the yield on short-term 2-year traded 3-1/2 basis points lower at 1.67 percent.
