Market Roundup
- "A new history starts now" as leaders of two Koreas meet
- BOJ leaves policy as is, as widely eyed, CPI goal time-frame removed
- BOJ sees economic risks skewed to downside, sales tax hike to have effect
- BOJ Tokyo Apr core CPI +0.6% y/y, +0.8% eyed, overall +0.5%, ex-f/e +0.3%
- Mar industrial output +1.2% m/m, +0.5% eyed, Apr +3.1% eyed, May -1.6%
- Mar retail sales -0.7% m/m, +1.0% y/y, +1.7% eyed
- Mar unemployment flat at 2.5%, jobs-applicants ratio 1.59, Feb 1.58
- China's Premier Li says open to trade negotiations with U.S.
- Global investors pile into China stocks ahead of MSCI index entry
- China Mar Industrial Firms profits, +3.1% y/y, last +23.8%
- Mexico says NAFTA deal 'reasonably close' talks 'not easy'
- U.S. equity, bond funds attract over $4 bln on economy, strong Q1 earnings - Lipper
- U.S. muni bond funds post $229.5 mln in inflows - Lipper
- Foreign CB US debt holdings -$25,265 bln to $3.411 tln Apr 25 week
- Treasuries -$24,465 bln to $3.058 tln, agencies -$58 mln to $274.194 bln
Economic Data Ahead
- (0400 ET/0800 GMT) Germany Apr Unemployment Chg SA, f'cast -15k, last -19k
- (0430 ET/0830 GMT) UK Q1 GDP Prelim QQ, f'cast 0.3%, last 0.4%
- (0430 ET/0830 GMT) UK Q1 GDP Prelim YY, f'cast 1.4%, last 1.4%
- (0500 ET/0900 GMT) EZ Apr Business Climate, f'cast 1.27, last 1.34
Key Events Ahead
- (0400 ET/0800 GMT) Speeches by Swiss National Bank Council's Jean Studer and Swiss National Bank's Thomas Jordan, at SNB's General Meeting of Shareholders - Bern
- (1000 ET/1400 GMT) BoE's Mark Carney speaks at the launch of the EconoME programme - London
FX Beat
DXY: The dollar index rallied to multi-month peaks as higher U.S. yields prompted investors unwind their short positions. The greenback against a basket of currencies trades 0.1 percent up at 91.66, having touched a high of 91.67, its highest since Jan. 12. FxWirePro's Hourly Dollar Strength Index stood at 145.82 (Highly Bullish) by 0500 GMT.
EUR/USD: The euro steadied after falling to a 3-1/2 month low in the previous session as European Central Bank President Mario Draghi acknowledged Eurozone's growing momentum but kept rates unchanged. The European currency traded 0.1 percent up at 1.2111, having touched a low of 1.2096 the day before, its lowest since Jan. 12. FxWirePro's Hourly Euro Strength Index stood at -49.00 (Neutral) by 0400 GMT. Investors’ attention will remain on Eurozone economic sentiment indicator, ahead of the U.S. preliminary gross domestic product and personal consumption expenditure prices. Immediate resistance is located at 1.2165, a break above targets 1.2219. On the downside, support is seen at 1.2060, a break below could drag it till 1.2025
USD/JPY: The dollar eased, extending previous session losses against the yen, after Bank of Japan kept monetary policy steady and removed a phrase on the timeframe for achieving its 2 percent inflation target. The central bank maintained a pledge to guide short-term interest rates at -0.1 percent and the 10-year bond yield around zero percent, indicating that it is in no rush to reach its price goal with the economy in upward momentum. The major was trading 0.05 percent down at 109.29, having hit a high of 109.46 the day before, its highest since Feb. 8. FxWirePro's Hourly Yen Strength Index stood at -29.80 (Neutral) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. preliminary gross domestic product and personal consumption expenditure prices. Immediate resistance is located at 109.75 (Feb. 1 High), a break above targets 110.28 (Feb. 2 High). On the downside, support is seen at 108.76 (5-DMA), a break below could take it lower 107.98 (10- DMA).
GBP/USD: Sterling steadied after falling to a 1-1/2month low in the previous session, as investors became more cautious about the outlook for the British economy. Britain's preliminary estimate is expected to show the economy expanded 0.3 percent quarter-on-quarter, compared to 0.4 percent growth registered in the fourth quarter of 2017. The major traded 0.1 percent up at 1.3923, having hit a low of 1.3895 on Thursday, it’s lowest since Mar. 16. FxWirePro's Hourly Sterling Strength Index stood at 127.02 (Highly Bullish) by 0400 GMT. Investors’ focus will remain on the UK preliminary gross domestic product, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.3997 (Apr. 26 High), a break above could take it near 1.4090 (10-DMA). On the downside, support is seen at 1.3874 (Mar. 13 Low), a break below targets 1.3840 (Mar. 12 Low). Against the euro, the pound was trading 0.05 percent up at 86.92 pence, having hit a high of 86.80 pence on Thursday, it’s highest since Apr. 18.
AUD/USD: The Australian dollar slumped to a fresh 4-1/2 month low despite data showing the inflation as measured by the PPI rose 0.5 percent quarter-on-quarter, surpassing the estimate of 0.4 percent, but slightly down from the previous quarter's print of 0.6 percent. Meanwhile, the annualized figure held steady at 1.7 percent, beating the estimated drop to 1.2 percent. The Aussie trades 0.1 percent up at 0.7546, having hit a low of 0.7538; it’s lowest since Dec. 12. FxWirePro's Hourly Aussie Strength Index stood at -94.50 (Slightly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7519 (Dec. 12 Low), a break below targets 0.7501 (Dec 8 Low). On the upside, resistance is located at 0.7599 (5-DMA), a break above could take it near 0.7625.
NZD/USD: The New Zealand dollar declined to a 4-month trough as domestic trade balance figures missed expectations, with the March trade balance printing an expected -$86 million decline m/m, as compared to the $270 million surplus that was expected. The Kiwi trades 0.2 percent down at 0.7049, having touched a low of 0.7048 earlier, its lowest level since Dec. 27. FxWirePro's Hourly Kiwi Strength Index was at -109.64 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7121 (5-DMA), a break above could take it near 0.7157. On the downside, support is seen at 0.7030, a break below could drag it below 0.7000.
Equities Recap
Asian shares rallied as a rebound in technology stocks supported U.S. equities, while the greenback held near a 3-1/2-month high against a basket of currencies as the U.S. Treasury yields eased back below the 3.00 percent.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.8 percent.
Tokyo's Nikkei rose 0.7 percent to 22,467.87 points, Australia's S&P/ASX 200 index surged 0.7 percent to 5,953.60 points and South Korea's KOSPI gained 0.8 percent to 2,495.35 points.
Shanghai composite index rose 0.1 percent to 3,079.33 points, while CSI300 index was trading 0.05 percent down at 3,754.83 points.
Hong Kong’s Hang Seng was trading 0.7 percent lower at 30,208.87 points. Taiwan shares added 0.6 percent to 10,553.43 points.
Commodities Recap
Crude oil prices declined, reversing some of its previous session gains amid concerns that Iran may face renewed sanctions. International benchmark Brent crude was trading 0.4 percent down at $74.47 per barrel by 0423 GMT, having hit a high of $75.44 on Tuesday, its highest since Nov. 2014. U.S. West Texas Intermediate was trading 0.3 percent down at $67.94 a barrel, after rising as high as $69.53 last week, its highest since Nov. 2014.
Gold prices consolidated near 5-week lows and were set for a weekly decline of more than 1 percent on the back of a stronger dollar, higher U.S. Treasury yields and easing geopolitical concerns. Spot gold was steady at $1,317.36 an ounce at 0428 GMT, having hit a low of $1,315.18 an ounce on Thursday, its lowest since March 21. U.S. gold futures were unchanged at $1,318 an ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.973 percent lower by 0.016 bps, while 5-year yield was 0.01 bps down at 2.807 percent.
The Japanese government bonds climbed during late Asian session after the Bank of Japan (BoJ) dropped the expected time-frame for reaching the 2 percent inflation target in its quarterly outlook report released early today. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slipped nearly 1 basis point to 0.05 percent, the yield on the long-term 30-year note fell nearly 1-1/2 basis points to 0.74 percent and the yield on short-term 2-year traded tad lower at -0.13 percent.
The Australian government bonds gained as a fresh wave of buying pressured the U.S. 10-year Treasury note rate to under 3 percent mark. Markets will now eye the Reserve Bank of Australia (RBA) monetary policy decision of next week, where it is widely expected do nothing. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, fell 4-1/2 basis points to 2.836 percent, the yield on the long-term 30-year Note also dipped 5 basis points to 3.390 percent and the yield on short-term 2-year down 2 basis points to 2.107 percent.
The New Zealand government bonds ended the last trading day of the week on a higher note, following influx of risk averse sentiments after the country’s trade balance data for the month of March disappointed market sentiments, in addition to strength in the United States counterpart. The yield on New Zealand’s benchmark 10-year Treasury note, which moves inversely to its price, slumped 5 basis points to 2.90 percent, the yield on the long-term 20-year note also plunged 5 basis points to 3.47 percent and the yield on short-term 2-year closed 2-1/2 basis points lower at 1.92 percent.
The Canadian government bond prices were higher across the yield curve in sympathy with U.S. Treasuries. The two-year rose 3.8 Canadian cents to yield 1.912 percent and the 10-year climbed 30.3 Canadian cents to yield 2.353 percent. Still, the 10-year yield touched its highest intraday level since Feb. 15 at 2.379 percent.
