Market Roundup
- EUR/USD -0.01%, USD/JPY -0.27%, GBP/USD -0.12%, EUR/GBP 0.13%
- DXY -0.05%, DAX -0.86%, FTSE -0.43%, Brent -0.01%, Gold 0.32%
- China says fully ready to defend interests in trade war
- More China policy easing seen as lending slows, trade risks rise
- Yen hits three-month high as U.S.-China talks go to the wire
- BOJ chief rejects idea of Japan as 'Modern Monetary Theory' model
- BoE's Saunders does not expect UK rates to rise "far or fast"
- Labour's Corbyn says: "No big offer" yet from PM May on Brexit
- Great Britain Apr RICS Housing Survey, -23, -22 f'cast, -24 prev, -23 rvsd
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. producer price index is likely to have increased 0.2 percent in April, while in the 12 months through the same period, it is expected to have advanced 2.3 percent. PPI excluding food and energy probably edged up 0.2 percent after having risen 0.3 percent in March
- (0830 ET/1230 GMT) The United States releases trade balance figures for the month of March. The economy's trade deficit is expected to have widened to $50.2 billion from 49.4 billion in February.
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have decreased by 10,000 to a seasonally adjusted 220,000 for the week ended May 3, while continuing claims for the week ended April 26 is expected to decline to 1.670 million from a previous reading of 1.671 million.
- (0830 ET/1230 GMT) Statistics Canada is likely to report that international trade deficit narrowed to C$2.45 billion in March from C$2.9 billion in February.
- (0830 ET/1230 GMT) Statistics Canada releases its New Housing Price Index (NHPI) for the month of March. The index remained flat in February.
- (1000 ET/1400 GMT) The U.S. Census Bureau is likely to report that wholesale inventories remained unchanged in March after coming in flat in the prior month.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending May 3.
Key Events Ahead
- (0830 ET/1230 GMT) Federal Reserve Chairman Jerome Powell gives opening remarks before Federal Reserve System Community Development Research Conference in Washington, D.C.
- (1045 ET/1445 GMT) Federal Reserve Bank of Atlanta President Raphael Bostic speaks on the economic outlook and monetary policy before the Louisiana Bankers Association Convention and Exposition in New Orleans
- (1415 ET/1815 GMT) Federal Reserve Bank of Chicago President Charles Evans speaks at luncheon before the Federal Reserve System Community Development Research Conference in Washington, D.C.
FX Beat
DXY: The dollar index steadied as U.S. and China resume two-day trade talks in Washington later in the day, while investors wait to see if a last-minute truce could avoid a sharp increase of tariffs on $200 billion worth of Chinese goods on Friday. The greenback against a basket of currencies traded flat at 97.63, having touched a low of 97.38 on Tuesday, its lowest since May 1. FxWirePro's Hourly Dollar Strength Index stood at 116.66 (Highly Bullish) by 1100 GMT.
EUR/USD: The euro consolidated below the 1.1200 handle as markets remain focused on the U.S.-China trade dispute amidst the recent deterioration in talks. The European currency traded flat at 1.1188, having touched a low of 1.1135 on Friday, its lowest since Apr. 26. FxWirePro's Hourly Euro Strength Index stood at 24.93 (Neutral) by 1100 GMT. Immediate resistance is located at 1.1229 (April 30 high), a break above targets 1.1262 (April 22 High). On the downside, support is seen at 1.1140 (April 24 Low) a break below could drag it till 1.1096 (May. 2017 Low).
USD/JPY: The Japanese yen rallied to a 3-month peak as investors sought safety in safe-haven assets, fearing the U.S.-China trade dispute will escalate. Investors now await two days of trade talk that begins in Washington later in the day to see whether Chinese and U.S. negotiators can strike a deal to prevent more U.S. tariff increases. The major was trading 0.2 percent down at 109.88, having hit a low of 109.59 earlier, its lowest since Feb. 6. FxWirePro's Hourly Yen Strength Index stood at 65.58 (Bullish) by 1100 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. producer price index, unemployment benefit claims, trade balance, wholesale inventories and speeches by Fed's Powell, Bostic and Evan. Immediate resistance is located at 110.54 (38.2% retracement of 111.68 and 109.83), a break above targets 111.07 (Feb. 27 High). On the downside, support is seen at 109.13 (Jan. 29 Low), a break below could take it lower at 108.80 (Jan. 30 Low).
GBP/USD: Sterling plunged to a 9-day low amid doubts that Brexit negotiations between the ruling Conservative and opposition Labour parties would progress. The major traded at 0.1 percent down 1.2990, having hit a low of 1.2974; it’s lowest since Apr. 30. FxWirePro's Hourly Sterling Strength Index stood at -150.88 (Highly Bearish) 1100 GMT. Immediate resistance is located at 1.3071 (5-DMA), a break above could take it near 1.3132 (Apr. 12 High). On the downside, support is seen at 1.2960 (Mar. 11 Low), a break below targets 1.2923 (Apr. 30 Low). Against the euro, the pound was trading 0.1 percent down at 86.14 pence, having hit a low of 86.23 on Wednesday, it’s lowest since Apr. 30
USD/CHF: The Swiss franc gained, halting a 3-day losing streak, as increased tensions ahead of U.S.-China trade negotiations stoked fresh concerns about the outlook for the global economy. The major trades 0.1 percent down at 1.0190, having touched a high of 1.0226 on Tuesday; it’s highest since Apr. 26. FxWirePro's Hourly Swiss Franc Strength Index stood at -19.75 (Neutral) by 1100 GMT. On the higher side, near-term resistance is around 1.0248 (Jan. 11 2017 High) and any break above will take the pair to next level till 1.0280 (Dec. 29, 2016, High). The near-term support is around 1.0130 (April 19 Low), and any close below that level will drag it till 1.0100.
Equities Recap
European shares declined, weighed down by losses in banking stocks, while investors cautiously wait to see whether the United States and China can avoid a resumption of their trade war.
The pan-European STOXX 600 index slumped 0.8 percent at 379.12 points, while the FTSEurofirst 300 index plunged 0.8 percent to 1,490.59 points.
Britain's FTSE 100 trades 0.3 percent down at 7,252.57 points, while mid-cap FTSE 250 fell 0.8 to 19,373.94 points.
Germany's DAX fell 0.8 percent at 12,083.08 points; France's CAC 40 trades 1.2 percent lower at 5,352.57 points.
Commodities Recap
Crude oil prices rose following an upward pressure from a surprise decline in U.S. inventories of crude, however, an escalating trade battle between the United States and China limited upside. International benchmark Brent crude was trading 0.4 percent higher at $70.47 per barrel by 1051 GMT, having hit a low of $68.82 on Monday, its lowest since Apr, 3. U.S. West Texas Intermediate was trading 0.2 percent up at $62.10 a barrel, after falling as low as $60.02 on Monday, its lowest since the Mar, 29.
Gold prices gained as renewed trade tensions between the United States and China stoked fears of a global economic slowdown, sending investors to seek lower-risk assets. Spot gold edged up 0.2 percent to $1,283.02 per ounce by 1053 GMT, having touched a high of $1,291.36 on Wednesday, its highest since Apr. 15. U.S. gold futures were also 0.3 percent higher, at $1,285.20 an ounce.
Treasuries Recap
The U.S. Treasury yields plunged during te afternoon session, ahead of Federal Reserve Chair Jerome Powell’s speech, scheduled to be held today at 12:30GMT, besides, the country’s weekly initial jobless claims, also due today at the same time. The yield on the benchmark 10-year Treasury yield plunged nearly 3-1/2 basis points to 2.451 percent, the super-long 30-year bond yields slumped nearly 2-1/2 basis points to 2.868 percent and the yield on the short-term 2-year too traded nearly 2-1/2 basis points down at 2.272 percent.
The German bunds traded slightly lower during European trading session ahead of the country’s trade balance for the month of March, scheduled to be released on May 10 by 06:00GMT. The German 10-year bond yields, which move inversely to its price, slipped 1 basis point to -0.011 percent, the yield on 30-year note also slipped 1 basis point to 0.593 percent and the yield on short-term 2-year traded tad lower at -0.621 percent.
The Australian government bond yields plunged during Asian trading session amid tensions gruelling over trade tariffs between the United States and China. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, suffered 2 basis points to 1.724 percent, the yield on the long-term 30-year bond also fell 2 basis points to 2.343 percent and the yield on short-term 2-year traded nearly 1-1/2 basis points lower at 1.299 percent.
