Market Roundup
- U.S. expects talks with China as trade fight escalates
- China envoy says prefers to resolve trade dispute by negotiation
- China, holding Treasuries, keeps 'nuclear option' in U.S. trade war
- Mexico Senate rebukes Trump over border deployment plans
- U.S. plans to sanction Russian oligarchs this week -sources
- Canada reports progress on NAFTA, says 'we're not there yet'
- Australia service sector sees strong growth in March-surveys
- Australia Feb Trade balance G&S (A$), 825 mln, 700 mln eyed, 1,055 mln last, 952 mln r’vsd
- Australia begins privacy investigation into Facebook
- Brazil's top court rules that ex-president Lula can be jailed
Economic Data Ahead
- (0345 ET/0745 GMT) Italy Mar Markit/ADACI Svcs PMI, 53.8 eyed, 55.0 last
- (0350 ET/0750 GMT) France Mar Markit Serv PMI, 56.8 eyed, 56.8 last
- (0355 ET/0755 GMT) Germany Mar Markit Services PMI, 54.2 eyed, 54.2 last
- (0400 ET/0800 GMT) EZ Mar Markit Serv Final PMI, 55.0 eyed, 55.0 last
- (0400 ET/0800 GMT) Great Britain Mar Markit/CIPS Serv PMI, 54.0 eyed, 54.5 last
- (0500 ET/0900 GMT) EZ Feb Producer Prices MM, 0.1% eyed, 0.4% last
- (0500 ET/0900 GMT) EZ Feb Producer Prices YY, 1.5% eyed, 1.5% last
- (0500 ET/0900 GMT) EZ Feb Retail Sales MM, 0.5% eyed, -0.1% last
- (0500 ET/0900 GMT) EZ Feb Retail Sales YY, 2.1% eyed, 2.3% last
Key Events Ahead
- (1200 ET/1600 GMT) Speech by Member of the Governing Board of the Swiss National Bank Andrea Maechler at Money Market Event - Zurich, Switzerland
- (1200 ET/1600 GMT) Alternate member of the Governing Board of the Swiss National Bank Dewet Moser gives speech at Money Market Event – Zurich, Switzerland
- (1300 ET/1700 GMT) Fed'S Raphael Bostic speaks on "Financial Literacy" before a Financial Literacy Day event hosted by the University of South Florida Sarasota-Manatee - Sarasota, Florida
FX Beat
DXY: The dollar index rebounded as the United States expressed willingness to negotiate a resolution to the trade fight after the proposed U.S. tariffs on $50 billion in Chinese goods. The greenback against a basket of currencies trades 0.1 percent down at 90.20, having touched a high of 90.28 on Tuesday, its highest since Mar. 21. FxWirePro's Hourly Dollar Strength Index stood at 47.64 (Neutral) by 0500 GMT.
EUR/USD: The euro consolidated ahead of German Markit Services and Composite PMI, which are expected to hold steady at the previous figure of 54.2 and 55.4 respectively. While the Eurozone Service PMI is expected at 55 and the Composite PMI is forecast 55.3, both likely to stay firm at the previous period's reading. The European currency traded flat at 1.2275, having touched a low of 1.2253 on Tuesday, its lowest since Mar. 21. FxWirePro's Hourly Euro Strength Index stood at -46.25 (Neutral) by 0500 GMT. Investors’ attention will remain on German, Eurozone and Spain PMI's, alongside Switzerland CPI, ahead of the U.S. trade balance, unemployment and FOMC member Bostic's speech. Immediate resistance is located at 1.2300, 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 rose to a 1-week peak against the Japanese yen after the United States expressed willingness to negotiate a resolution to the trade fight. President Donald Trump's economic adviser Larry Kudlow stated that the administration was in negotiation with China, and not engaged in a trade war. The major was trading 0.2 percent up at 106.92, having hit a high of 107.02 earlier, its highest since Mar. 28. FxWirePro's Hourly Yen Strength Index stood at -57.03 (Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. trade balance, unemployment, and FOMC member Bostic's speech. Immediate resistance is located at 107.29 (Mar. 13 High), a break above targets 107.52 (Feb. 28 High). On the downside, support is seen at 106.38 (5-DMA), a break below could take it lower 105.99 (Apr. 4 Low).
GBP/USD: Sterling steadied after rising to a 1-week high earlier in the day, as concerns about Brexit abated after Britain signed a transition agreement last month for exiting the European Union. Investors remain skeptical about the odds of the Bank of England raising interest rates next month and possibly again before the end of the year as it unwinds a massive stimulus programme. The major traded 0.05 percent up at 1.4080, having hit a high of 1.4097 earlier, it’s highest since Mar. 29. FxWirePro's Hourly Sterling Strength Index stood at 31.95 (Neutral) by 0500 GMT. Investors’ focus will remain on UK Service PMI, ahead of the U.S. fundamental drivers. 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 0.05 percent up at 87.30 pence, having hit a high of 87.13 pence on Tuesday, it’s highest since Mar 22.
AUD/USD: The Australian dollar slumped after rising to a 1-week peak earlier in the day on the back of data that showed Australia recorded trade balance of 825 million surplus in February, beating the 700 million forecast. Additionally, the major was also boosted by another survey showing the economy's Performance of Services Index climbed 2.9 points to 56.9 in March, recording the 13th month of expansion and the fastest pace since late 2016. The Aussie trades 0.4 percent down at 0.7687, having hit a high of 0.7726 earlier; it’s highest since Mar. 27. FxWirePro's Hourly Aussie Strength Index stood at -15.95 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7643 (Mar. 29 Low), a break below targets 0.7600. On the upside, resistance is located at 0.7743 (Mar. 23 high), a break above could take it near 0.7783 (Mar. 22 High).
NZD/USD: The New Zealand dollar declined after rallying to a 2-week peak amid ongoing geopolitical turmoil. Earlier in the day, the major advanced above the 0.7300 handle after prices for New Zealand's main commodities rose 1.2 percent in March led by gains in dairy, while on an annual basis the index was 5.8 percent higher, compared with a 5 percent jump the month before. The Kiwi trades 0.3 percent down at 0.7285, having touched a high of 0.7322, its highest level since Mar. 15. FxWirePro's Hourly Kiwi Strength Index was at -10.97 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7334 (Mar. 15 High), a break above could take it near 0.7365 (Feb. 22 High). On the downside, support is seen at 0.7258 (Mar. 27 Low), a break below could drag it below 0.7231 (Feb 27 Low).
Equities Recap
Asian shares rebounded from 2-month lows, while the greenback steadied as the U.S. expressed willingness to negotiate a resolution to the trade war.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.5 percent.
Tokyo's Nikkei surged 1.6 percent to 21,663.78 points, Australia's S&P/ASX 200 index gained 0.5 percent to 5,791.30 points and South Korea's KOSPI rallied 1.2 percent to 2,437.28 points.
Markets in mainland China, Hong Kong, and Taiwan remained closed for the Tomb Sweeping Day holiday.
Commodities Recap
Crude oil prices rose, extending gains for the third straight session, supported by the U.S. government data showing an unexpected drawdown in crude stockpiles. International benchmark Brent crude was trading 0.1 percent up at $68.29 per barrel by 0435 GMT, having hit a low of $66.86 on Wednesday, its lowest since Mar. 20. U.S. West Texas Intermediate was trading 0.1 percent up at $63.60 a barrel, after falling as low as $62.09 on Monday, its weakest since Mar. 19.
Gold prices fell to a 3-day low, retreating from 1-week highs touched in the session before, as risk appetite recovered after the United States expressed willingness to resolve an escalating trade fight with China. Spot gold was down 0.3 percent at $1,328.39 per ounce by 0439 GMT, after touching a high of $1,348.11 on Wednesday, its highest its Mar. 27. U.S. gold futures fell 0.6 percent to $1,332.60 an ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.811 percent higher by 0.022 bps, while 5-year yield was 0.018 bps up at 2.626 percent.
The Japanese government bonds suffered Thursday even as investors expect to see a fall in the country’s household spending for the month of February, scheduled to be released today by 23:30GMT. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1/2 basis point to 0.03 percent, the yield on the long-term 30-year note jumped 1-1/2 basis points to 0.72 percent and the yield on short-term 2-year hovered around -0.13 percent.
The Australian 10-year bond yield hit over 1-week high following higher-than-expected February trade balance data. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 3 basis points to 2.6656 percent, the yield on the long-term 30-year note climbed 4 basis points to 3.265 percent and the yield on short-term 2-year also fell nearly 2 basis points to 2.057 percent.
The Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries. The two-year fell 3 Canadian cents to yield 1.815 percent and the 10-year declined 22 Canadian cents to yield 2.177 percent.
