Market Roundup
- EUR/USD +0.05%, USD/JPY -0.1%, GBP/USD -0.15%, EUR/GBP +0.2%
- DXY -0.1%, DAX flat, Silver +1.4%, Copper +1.8%, Brent +1.6%
- Sterling dips after UK output data disappoints, trade gap widens
- UK Mar Construction output -0.7% m/m, +2.4% y/y vs previous -1.3%/+0.9% revised 0.3%/2.8% forecast
- UK Mar Manufacturing output -0.6% m/m, +2.3% y/y vs previous -0.3%/+3.7% revised 0%/+3.0% forecast
- UK Mar Industrial output -0.5% m/m, +1.4% y/y vs previous -0.8%/+2.5% revised -0.3%/+2.1% forecast
- UK Mar Global good trade balance -13.441bln vs previous -11.448 revised -11.8bln forecast
- Germany Apr Wholesale price index 0.3% m/m, 4.7% y/y vs previous 0.0%/4.7%
- Switzerland Apr CPI 0.2% m/m, 0.4% y/y vs previous 0.2%/0.6%. 0.2%/0.5% forecast
- EU raises euro zone growth forecasts, sees unemployment to drop
- French exports to rebound in 2017 - central bank head
- Kiwi slides as RBNZ retains inflation outlook, neutral rate bias
- SNB Jordan: Negative interest rates/interventions central to SNB since CHF still sig overvalued
- Jordan: Monetary policy needs to remain expansive because inflation is still very low
- Norway's finance minister says crown weakness boosts competitiveness
- Swedish crown hits one-week high vs. euro after inflation beats forecasts
- MoF April flow data – Japanese big net sellers of foreign bonds, Y4.2559 trillion
- MoF April flow data – Foreigners good buyers of Japan stocks, JGBs, bills
- Japan Mar c/a surplus Y2.9077 trillion, Y2.6432 eyed, Feb surplus Y2.8136 trillion
- Japan April bank loans continue to show steady rise, +3.0% y/y, March +3.0%
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. producer price index is likely to have increased 0.2 percent in April after a 0.1 percent drop in the prior month, while PPI excluding food and energy probably edged up 0.2 percent after staying unchanged in March.
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 7,000 to a seasonally adjusted 245,000 for the week ended May. 5 while continuing claims for the week ended Apr. 21 stood at 1.964 m.
- (0830 ET/1230 GMT) The Statistics Canada releases its New Housing Price Index (NHPI) for the month of March. The index is expected to rise 0.2 percent after a 0.4 percent increase in February.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending May 5.
- (1030 ET/1430 GMT) The Bank of Canada will release its financial system review.
- (1830 ET/2230 GMT) New Zealand will release its Business PMI index for the month of May. The index stood at 57.8 in the previous month.
Key Events Ahead
- N/A G7 Finance Ministers and Central Bank Governors will start their three-day summit in Bari, Italy.
- N/A The Federal Reserve Board of Governors will start a two-day conference on "Developments in Empirical Monetary Economics" in Washington.
- (0900 ET/1300 GMT) Federal Reserve Bank of Chicago President Charles Evans speech.
FX Beat
DXY: The dollar fell from an 8-week high versus the Japanese yen as increasing geopolitical tensions triggered a fresh bout of risk aversion. The greenback against a basket of currencies traded 0.05 percent down at 99.58, having hit a high of 99.72 on Wednesday, it’s highest since Apr. 21. FxWirePro's Hourly Dollar Strength Index stood at 80.48 (Slightly Bullish) by 1000 GMT.
EUR/USD: The euro edged up after declining for three consecutive sessions following the release of mixed Eurozone growth and inflation forecasts, published by the European Commission. Moreover, the major slightly benefited from the cross-driven strength, as the EUR/GBP cross gained following the releases of downbeat UK economic data. The European currency traded 0.1 percent up at 1.0873, having touched a low of 1.0853 the day before, its lowest since Apr. 27. FxWirePro's Hourly Euro Strength Index stood at -77.18 (Slightly Bearish) by 1000 GMT. The pair minor upside is capped by 10- SMA and any break above 1.09120 will take the pair to next level till 1.09500/1.1000. On the lower side, major support stands at 1.08500-1.08370 (200 day MA) and any break below confirm major weakness, a decline till 1.05694 likely.
USD/JPY: The dollar declined from an 8-week high hit earlier in the session as concerns over the US President Donald Trump's abrupt firing of FBI Director James Comey continued to weigh on market sentiment. However, growing prospects of an eventual Fed rate hike action limited the downside in the major. The pair traded 0.1 percent down at 114.12, having touched an early peak of 114.36, its highest since Mar. 15. FxWirePro's Hourly Yen Strength Index stood at -38.21 (Neutral) by 1000 GMT. The pair is facing support at 112.70 (daily Tenken-Sen) and any break below 112.70 will drag it down till 111.65 (100- EMA)/110.50 (61.8% retracement of 108.13 and 114.36). On the higher side, any break above 114.35 will take it to next level till 115.50 likely.
GBP/USD: Sterling eased after data released showed UK industrial output data was sharply weaker than expected, while the trade deficit widened sharply. The economy's industrial output fell by 0.5 percent in March, while manufacturing production declined 0.6 percent in the same period. Britain's trade gap also widened by more than expected, indicating that the impact of last year's Brexit vote has begun to weigh on the economy. Sterling trades 0.1 percent down at 1.2923, having hit a high of 1.2987 on Wednesday, its highest since Sept. 30. FxWirePro's Hourly Sterling Strength Index stood at 46.73 (Neutral) by 1000 GMT. On the higher side, major resistance is around 1.3000 and any break above will take the pair till 1.3050/1.3088 in the short term. The near term support is around 1.2830 (May 4 low) and any break below will drag the pair down till 1.2780 (23.6% retracement of 1.2108 and 1.29875). Against the euro, the pound traded 0.1 percent down at 84.10 pence, having hit a 3-week high of 83.82 the day before.
USD/CHF: The Swiss franc edged up after falling to a 1-month low earlier in the session as a fresh bout of risk aversion dampened market sentiment. The major traded 0.1 percent down at 1.0078, having touched an early high of 1.0095, its strongest since Apr. 10. FxWirePro's Hourly Swiss Franc Strength Index stood at -40.43 (Neutral) by 1000 GMT. The pair is facing strong resistance at 1.0107 the high made on Apr 10 and any break above will take the pair to next level till 1.01700. On the lower side, major support is around 1.0034 (23.6% retracement of 0.9855 and 1.00953) and any break below will drag it till 1.000/0.9950.
AUD/USD: The Australian dollar rose, extending previous session gains, as it benefitted from a modest recovery in commodity prices, especially copper and crude oil. The Aussie trades 0.1 percent higher at 0.7373, rebounding from a low of 0.7328 hit on Tuesday, it’s weakest since Jan. 1. FxWirePro's Hourly Aussie Strength Index stood at 3.11 (Neutral) by 1000 GMT. On the lower side, near term support is around 0.7300 and any close below will drag the pair till 0.7200/0.71599. The near term resistance is around 0.7440 (support turned into resistance) and any break above targets 0.7517 (21- EMA)/0.7552 (200 day MA).
Equities Recap
European shares tumble, despite a rise in Italian banking stocks, while the greenback eased from a 2-1/2 week high as geopolitical tensions spurred risk-off market sentiment.
The pan-European STOXX 600 index declined 0.15 percent to 395.87 points, while the FTSEurofirst 300 index declined 0.1 percent to 1,555.41 points.
Britain's FTSE 100 trades 0.1 percent down at 7,377.74 points, while mid-cap FTSE 250 fell 0.3 percent to 19,813.57 points.
Germany's DAX added 0.5 percent at 12,763.19 points; France's CAC 40 trades 0.1 percent higher at 5,405.08 points.
Tokyo's Nikkei gained 0.31 percent to 19,961.55 points, Australia's S&P/ASX 200 index eased 0.02 percent to 5,874.20 points. South Korea's KOSPI jumped 1.16 percent to 2,296.37 points.
Shanghai composite index rose 0.3 percent to 3,061.50 points, while CSI300 index climbed 0.6 percent to 3,356.65 points. Hong Kong’s Hang Seng added 0.4 percent to 25,025.55 points.
Commodities Recap
Crude oil prices rallied to 1-week highs after a fall in U.S. inventories and a bigger-than-expected cut in Saudi supplies to Asia strengthened market sentiment. International benchmark Brent crude was trading 1.4 percent up at $50.96 per barrel by 0951 GMT, having hit an early high of $50.98, its strongest since May 3. U.S. West Texas Intermediate gained 1.5 percent at $48.05 a barrel, after rising as high as $48.09 earlier, its highest since May. 3.
Gold edged up, retreating from an eight-week low hit earlier this week as the U.S. dollar weakened, however, the prospect of a U.S. rate increase in June capped the upside. Spot gold was up 0.2 percent at $1,221.60 per ounce by 0954 GMT, having hit a low of $1,214.13 on Tuesday, its lowest since Mar 15. U.S. gold futures also gained 0.2 percent to $1,221.10 an ounce.
Treasuries Recap
The U.S. Treasuries gained ahead of the country’s 30-year note auction, scheduled to be held later in the day. The yield on the benchmark 10-year Treasury fell 1 basis point to 2.40 percent, the super-long 30-year bond yields also slipped nearly 1 basis point to 3.03 percent while the yield on short-term 2-year note traded flat at 1.35 percent.
The UK gilts slipped after the Bank of England (BoE) maintained its benchmark Bank Rate at 0.25 percent, hinting that it may need to raise interest rates before late 2019 as markets had been expecting, after witnessing a rise in the country’s rate of inflation and a steady economic over the next few years. The yield on the benchmark 10-year gilts, rose 1/2 basis point to 1.17 percent, the super-long 30-year bond yields climbed nearly 1 basis point to 1.80 percent while the yield on the short-term 2-year traded flat at 0.13 percent.
The 10-year German bund yields jumped to near 2-month high, following expectations of a rise in the first quarter gross domestic product (GDP), scheduled to be released on May 12. The yield on the benchmark 10-year bond, jumped 4 basis points to 0.45 percent, the long-term 30-year bond yields climbed 3 basis points to 1.24 percent and the yield on the short-term 2-year bond traded 1-1/2 basis points higher at -0.64 percent.
The New Zealand bonds ended the session on a higher note after reading the Reserve Bank of New Zealand’s (RBNZ) neutral monetary policy stance, wherein the central bank maintained its official cash rate (OCR) at a record-low of 1.75 percent. At the time of closing, the yield on the benchmark 10-year bond, fell 1 basis point to 3.04 percent, the yield on 7-year note also slipped 1 basis point to 2.71 percent and the yield on the short-term 2-year note too traded 1 basis point lower at 2.03 percent.
The Australian government bonds rallied as investors covered previous short positions before the end of the trading week and also tracking U.S. Treasuries. The yield on the benchmark 10-year Treasury note, fell nearly 1 basis point to 2.66 percent, the yield on 15-year note slipped 1/2 basis point to 3.07 percent and the yield on short-term 2-year also traded 1-1/2 basis points lower at 1.69 percent.
