Market Roundup
- BoJ Gov Kuroda says little new at Jiji News event, won’t hesitate to ease more if needed, economic risks tilted towards downside – Reuters.
- Japan EconMin Ishihara – Abenomics hasn’t failed, wages up 3 straight years.
- Japan April money supply M2 +3.3% y/y, M3 +2.7%, broadest liquidity +2.7%.
- FOMC Chair Yellen – Won’t completely rule out negative rates – Reuters.
- US monetary authorities did not intervene in FX in Q1 – MNI.
- Foreign CB US debt holdings -$8.771 bln to $3.219 trln week to May 11, Tsy holdings -$8.571 bln to $2.905 trln, agencies -$164 mln to $264.728 bln.
- New Zealand Q1 retail sales +0.8% q/q, +4.8% y/y, +1.0% and +3.9% forecast.
- Chilly Auckland is officially the hottest place for luxury homes - Telegraph.
Economic Data Ahead
- (0300 ET/0700 GMT) Spain Apr CPI, +0.6% m/m, -1.1% y/y forecast; flash -0.8% y/y.
- (0300 ET/0700 GMT) Spain Apr HICP, +0.4% m/m, -1.2% y/y forecast; last +2.0% m/m, flash -1.2% y/y.
- (0330 ET/0730 GMT) Sweden Q1 capacity utilization; last -0.4% q/q.
- (0400 ET/0800 GMT) Italy Q1 GDP - flash, +0.3% q/q, +0.9% y/y forecast; last +0.1%, +1.0%.
- (0430 ET/0830 GMT) Great Britain Mar construction output, -2.5% m/m, -2.7% y/y forecast; last -0.3%, +0.3%.
- (0500 ET/0900 GMT) Eurozone Q1 GDP - flash, +0.6% q/q, +1.6% y/y forecast; last +0.3%, +1.6%.
- (0500 ET/0900 GMT) Italy Apr CPI - final, unch m/m, -0.4% y/y forecast; flash unch, -0.4%.
- (0500 ET/0900 GMT) Italy Apr HICP – final, +0.3% m/m, -0.3% y/y forecast; flash +0.3%, -0.3%.
- (0830 ET/1230 GMT) US Apr PPI final demand, +0.3% m/m, +0.2% y/y forecast; last -0.1%, -0.1%.
- (0830 ET/1230 GMT) US Apr – ex-food/energy, +0.1% m/m, +1.0% y/y forecast; last -0.1%, +1.0%.
- (0830 ET/1230 GMT) US Apr retail sales/ex-autos, +0.8/+0.5% m/m forecast; last -0.4/+0.1%.
- (1000 ET/1400 GMT) US Mar business inventories, +0.2% m/m forecast; last -0.1%.
- (1000 ET/1400 GMT) US May U.Mich sentiment – prelim, 90.0 forecast; last 89.0.
Key Events Ahead
- (0500 ET/0900 GMT) IMF assessment of UK economy, press conference.
- (0500 ET/0900 GMT) BoE ChiefEcon Haldane May 12 Edinburgh speech text.
- (0600 ET/1000 GMT) UK DMO GBP0.5/1.0/2.5 bln 1/3/6-month treasury bill auctions.
- (0700 ET/1100 GMT) BoS ECB VP Constancio speaks at Madrid event, BoS Gov Linde to attend.
- (0830 ET/1230 GMT) BoE MPC Weale speaks at University of Liverpool.
- (1825 ET/2225 GMT) SF Fed Williams speaks at Sacramento Economic Forum.
FX Beat
USD: The dollar index against a basket of currencies trades 0.1 percent higher at 94.276, having recovered 2.46 percent from May lows, reversing an almost 8-percent fall earlier in the year.
EUR/USD: The euro trade flat at 1.1375, after declining from a high of 1.1429 in the previous session. The greenback was buoyed overnight after Boston Federal Reserve President Eric Rosengren stated that the Fed should raise interest rates if data confirms a stronger jobs market and inflation outlook in the second quarter. The pair moves within a thin range of 1.1366 - 1.1379. Immediate support is located at 1.1358 (May 10-Low), while resistance is seen at 1.1385 (5-DMA).
USD/JPY: The Japanese yen slightly edged up after the greenback steadied to gain about 0.6 percent overnight. The yen rally has been halted following verbal warnings by Japanese authorities over the past week to intervene on its currency. Markets now await Fed speakers and key U.S. data, including retail sales for further cues on the major. The pair trades at 0.6 percent lower at 108.80, having touched fresh session lows of 108.70. Immediate support is located at 108.22 (Previous Session Low), break below could drag the pair to further losses. On the higher side, resistance is seen at 109.13 (Sessions High).
GBP/USD: Sterling edged down after hitting a 6-day high of 1.4529 against the dollar on Thursday after Bank of England policymakers voted to keep interest rates unchanged. June 23 referendum weighs on the sterling, as the BoE warned about the economic risks of a Brexit, stating that the currency could weaken further and unemployment would probably rise. Sterling trades lower at 1.4441, having touched early low of 1.4423. Immediate support is located at 1.4406 (Previous session Low), break below could drag the pair to 1.4394. On the higher side, resistance is seen at 1.4479 (10-DMA). Against the euro, the pound weakened to 78.75 pence.
AUD/USD: The Australian dollar declined to an 11-week trough following another slide in commodities, which hampered risk sentiment. The Aussie declined as low as 0.7286, its weakest reading since early March, breaking the 73 cents mark. It has dropped more than 5 cents since its April 21 high and on track for a fourth consecutive week of losses. The pair trades at 0.7291, hovering towards sessions low. Immediate support is located at 0.7281 (Mar 3 Low), break below could drag the pair to further losses. On the upside, resistance is seen at 0.7332 (5-DMA).
NZD/USD: The New Zealand dollar also came under pressure, trading lower at 0.6802, after declining to an early low of 0.6793. The kiwi is on for weekly losses, however, it remained well supported as the market continues to pare expectations of a June rate cut after the central bank's financial stability report this week. With the New Zealand economic calendar absolute data empty, attention now shifts towards U.S. macro data, including the retail sales and PPI, for fresh momentum on the major. The pair made a high of 0.6830 before falling down to its current levels. Immediate support is located at 0.6791(Apr 11 Low), while on the higher side, resistance is seen at 0.6830 (Session High).
Equities Recap
Asian shares declined followed by a volatile performance on Wall Street, while the yen hovered near 2-week lows as traders speculated the Bank of Japan will add to its massive stimulus before too long.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.1 percent, and was on track for a weekly drop of 1.2 percent, its third straight week of declines.
Shanghai Composite and CSI 300 both lost 0.3 percent and are on track to end the week lower. Hong Kong shares dropped 1.2 percent and were set for a 2.2 percent decline for the week. Taiwan stocks closed down 0.7 pct at 8,053.69 points
Australia's S&P/ASX 200 index ended down 0.73 pct at 5,320.10 points, while Tokyo's Nikkei slumped 1.41 pct at 16,412.21, with Seoul shares edged down 0.51 pct.
Commodities Recap
Oil prices were weighed down by a stronger dollar and following warning from Russia that a global crude supply overhang could last into next year. International Brent crude futures were trading at $47.63 per barrel at 0651 GMT, while U.S. West Texas Intermediate crude futures were down 41 cents at $46.29 a barrel.
Gold edged higher after declining more than 1 percent in the prior session, however was on course for its biggest weekly fall since March. Spot gold was up 0.5 percent at $1,275.31 an ounce by 0650 GMT, after dropping 1.1 percent on Thursday. It has lost 1.8 percent so far for the week, the most since the week ended March 25. U.S. gold for June delivery slipped 0.3 percent to $1,267.40 an ounce.
Treasuries Recap
The 10-year U.S. treasury yield stood at 1.737 percent versus previous close of 1.758 percent.
Australian government bond futures were quiet, with the 3-year bond contract steady at 98.450. The 10-year contract added 2 ticks to 97.7250, while the 20-year contract edged 2 ticks lower to 97.0600.
New Zealand government bonds eased, sending yields 6 basis points higher at the short end and five at the long end.
Canadian government bond prices were lower across the maturity curve, the benchmark 10-year declined 14 Canadian cents to yield 1.319 percent, while the 2-year price fell 5 Canadian cents to yield 0.566 percent and
