Market Roundup
- EUR/USD 0.07%, USD/JPY -0.44%, GBP/USD -0.18%, EUR/GBP 0.26%
- DXY -0.08%, DAX -1.57%, FTSE -0.73%, Brent -1.73%, Gold 0.76%
- China retaliates for US tariffs, slaps duties on soybeans, planes
- China's March data set to show gradual cooling in economy as trade war risks grow
- EZ Mar HICP Flash y/y, 1.4%, 1.4% forecast, 1.1% previous
- EZ Mar HICP ex F&E Flash y/y, 1.3%, 1.3% forecast, 1.2% previous
- EZ Feb Unemployment rate, 8.5%, 8.5% forecast, 8.6% previous
- Easter price push keeps ECB on track for ending stimulus
- Great Britain Mar IHS Markit/CIPS Construction PMI, 47.0, forecast, 50.8, 51.4 previous
- Japan sees output exceed capacity the most in decade, BOJ slows bond buying
- Italy revises up 2017 deficit, debt due to bank bailouts
- Italy Feb jobless rate 10.9%, 11.0% forecast, 11.1% previous
- Gold gains as dollar dips, U.S.-China trade tensions escalate
- Oil tumbles after China slaps tariffs on U.S. goods
Economic Data Ahead
- (0815 ET/1215 GMT) Payrolls processor ADP releases U.S. employment report for the month of March. The report is expected to show that 205,000 jobs were added as compared with 235,000 jobs in the previous month.
- (0945 ET/1345 GMT) Financial firm Markit releases final U.S. composite PMI for the month of March. The index printed a final reading of 54.3 in the previous month.
- (0945 ET/1345 GMT) Markit Economics reports final U.S. services PMI for the month of March. The index posted a final reading of 54.1 in February.
- (1000 ET/1400 GMT) The Institute for Supply Management (ISM) is expected to report that U.S. non-manufacturing Purchasing Managers' index slipped to a reading of 59.0 in March from 59.5 in February.
- (1000 ET/1400 GMT) The United States is likely to report that factory orders increased 1.7 percent in February after posting a fall of 1.4 percent in the prior month.
- (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending March 30.
Key Events Ahead
- (0945 ET1345 GMT) FedTrade 15-year Fannie Mae/Freddie Mac (max $345 mn)
- (0945 ET/1345 GMT) Federal Reserve Bank of St. Louis President James Bullard makes a presentation at the Arkansas Bankers Association & Arkansas State Bank Department's Day with the Commissioner, in Little Rock, Arkansas.
- (1100 ET/1500 GMT) Federal Reserve Bank of Cleveland President Loretta Mester speaks on "Diversity in Economics" before the Central State University Leaders, Executives, Entrepreneurs, and Directors (LEED) Program, in Wilberforce, Ohio.
FX Beat
DXY: The dollar index declined as persistent worries over global trade tensions dented the global economy and U.S. growth. The greenback against a basket of currencies trades 0.1 percent down at 90.11, having touched a high of 90.28 on Tuesday, its highest since Mar. 21. FxWirePro's Hourly Dollar Strength Index stood at 40.46 (Neutral) by 1000 GMT.
EUR/USD: The euro gained after falling to a near 2-week low in the previous session, after data showed Eurozone's inflation increased in March on the back of expensive food and services, providing modest support to European Central Bank policymakers to wind down its stimulus. The economy's preliminary inflation came in at 1.4 percent year-on-year in March, up from 1.1 percent in February and in line with market expectations. The European currency traded 0.1 percent up at 1.2281, having touched a low of 1.2253 the day before, its lowest since Mar. 21. FxWirePro's Hourly Euro Strength Index stood at -105.59 (Highly Bearish) by 1000 GMT. Immediate resistance is located at 1.2334 (21-DMA), a break above targets 1.2373 (Mar. 23 High). On the downside, support is seen at 1.2253 (Apr. 3 Low), a break below could drag it lower 1.2239 (Mar. 20 Low).
USD/JPY: The dollar slumped after rising to a 6-day high earlier in the day as China imposed additional tariffs against U.S. products, increasing concerns of an escalating trade war between both the countries. Moreover, an unexpected decline in Chinese Caixin Services PMI and instability in global financial markets continued to underpin the Japanese Yen's safe-haven appeal. The major was trading 0.5 percent down at 106.08, having hit a high of 106.68 earlier, its highest since Mar. 29. FxWirePro's Hourly Yen Strength Index stood at 118.45 (Highly Bullish) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. ADP employment change, Markit Services PMI, FOMC members Bullard and Mester's speech. Immediate resistance is located at 106.93 (Mar. 29 High), a break above targets 107.29 (Mar. 13 High). On the downside, support is seen at 105.87 (10-DMA), a break below could take it lower 105.45 (Mar. 7 Low).
GBP/USD: Sterling eased after rising to a 1-week peak earlier in the day, following data that showed Britain's construction industry slowed due to heavy snow last month, indicating the biggest drop in activity since 2016's Brexit vote. The economy's Markit/CIPS Construction Purchasing Managers' Index slumped to 47.0 from 51.4 in February. The major traded 0.1 percent down at 1.4037, having hit a high of 1.4096 earlier, it’s highest since Mar. 29. FxWirePro's Hourly Sterling Strength Index stood at -29.96 (Neutral) by 1000 GMT. Immediate resistance is located at 1.4171 (Mar. 23 High), a break above could take it near 1.4200 (Mar. 28 High). On the downside, support is seen at 1.4012 (Mar 30 Low), a break below targets 1.3982 (Mar. 20 Low). Against the euro, the pound was trading 0.3 percent down at 87.48 pence, having hit a high of 87.13 pence the day before, it’s highest since Mar 22.
USD/CHF: The Swiss franc plunged to a 2-1/2 month low despite investors turning cautious after the Trump administration increased the stakes in its showdown with China, announcing 25 percent tariffs on some 1,300 industrial technology, transport, and medical products. The major trades flat at 0.9588, having touched a high of 0.9599 earlier, it’s highest since Jan. 23. FxWirePro's Hourly Swiss Franc Strength Index stood at -88.23 (Slightly Bearish) by 1000 GMT. On the higher side, near-term resistance is around 0.9600 and any break above will take the pair to next level till 0.9640 (Jan 22 High). The near-term support is around 0.9518 (10-DMA) and any close below that level will drag it till 0.9501 (21-DMA).
Equities Recap
European shares slumped, while the greenback against a basket of currencies eased after China imposed additional tariffs against U.S. products, increasing concerns of an escalating trade war between both the countries.
The pan-European STOXX 600 index dropped 0.8 percent to 366.17 points, while the FTSEurofirst 300 index slumped 0.9 percent to 1,433.20 points.
Britain's FTSE 100 trades 0.4 percent down at 6,999.53 points, while mid-cap FTSE 250 fell 0.6 percent to 19,284.89 points.
Germany's DAX declined 1.3 percent at 11,843.24 points; France's CAC 40 trades 0.6 percent lower at 5,119.16 points.
Commodities Recap
Crude oil prices declined to 2-week lows on the likelihood of a build-up in U.S. crude inventories, however, Russian government comments on prospects for stepping up cooperation with OPEC to coordinate output cuts limited the downside. International benchmark Brent crude was trading 1.8 percent down at $66.89 per barrel by 0950 GMT, having hit a low of $66.68 earlier, its lowest since Mar. 20. U.S. West Texas Intermediate was trading 1.9 percent down at $62.36 a barrel, after falling as low as $62.19, its weakest since Mar. 20.
Gold prices gained as investors refrained from risk assets after the United States imposed tariffs on $50 billion worth imports from China, raising the stakes in a growing trade showdown with Beijing. Spot gold rose 0.8 percent to $1,343.18 per ounce as of 0952 GMT, after touching a low of $1,321.12 on Friday, its lowest since Mar. 21. U.S. gold futures were up 0.1 percent at $1,338.40 an ounce.
Treasuries Recap
The U.S. Treasuries jumped on rise in safe-haven demand after the US administration unveiled yesterday a detailed list of some 1,300 Chinese imports worth USD50 billion that could be subject to a 25 percent tax, in retaliation for China’s intellectual property practices. The yield on the benchmark 10-year Treasuries slumped 3 basis points to 2.75 percent, the super-long 30-year bond yields plunged 2 basis points to 2.99 percent and the yield on the short-term 2-year traded 2-1/2 basis points lower at 2.25 percent.
The UK gilts rose during European session after the country’s construction PMI for the month of March missed market expectations, thus attracting investors into safe-haven instruments. The yield on the benchmark 10-year gilts, fell 1 basis point to 1.34 percent, the super-long 30-year bond yields remained tad lower at 1.73 percent and the yield on the short-term 2-year traded 1 basis point lower at 0.82 percent.
The German bunds climbed after eurozone’s consumer price inflation (CPI), for the month of March met market expectations, albeit rising in comparison to the previous reading in February. Also, the bloc’s jobless rate for the similar period fell, adding value to debt prices. The German 10-year bond yields, which move inversely to its price, slid 1 basis point to 0.49 percent, the yield on 30-year note also fell 1 basis point to 1.14 percent and the yield on short-term 2-year too traded 1 basis point lower at -0.58 percent
The New Zealand government bonds slumped at the time of closing after investors have largely shrugged-off the decline in dairy prices at the latest GlobalDairyTrade (GDT) price auction held overnight. The yield on New Zealand’s benchmark 10-year Treasury note, which moves inversely to its price, jumped 5 basis points to 2.79 percent, the yield on the long-term 20-year note surged 3-1/2 basis points to 3.37 percent and the yield on short-term 2-year too closed 3-1/2 basis points higher at 1.93 percent.
The Japanese government bonds traded narrowly mixed as investors remained sidelined in a muted session that witnessed data of little economic significance. Further, the 20-year JGB yield hit a 16-month low, amid solid demand received at an auction held yesterday. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, hovered around 0.02 percent, the yield on the long-term 30-year note fell 1 basis point to 0.71 percent and the yield on short-term 2-year traded tad higher at -0.13 percent.
The Australian government bonds slumped following higher-than-expected February retail sales data, pushing the interest rate sensitive 2-year Note yield to its highest since January 31. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 2-1/2 basis point to 2.632 percent, the yield on the long-term 30-year note climbed 3-1/2 basis points to 3.221 percent and the yield on short-term 2-year also jumped 3-1/2 basis points to 2.077 percent.
