Market Roundup
- Japan life insurer foreign securities holdings at record highs FY ‘15/16, likely higher still in FY ‘16/17 – Reuters.
- Japan March crude imports +15.9% y/y, LNG +0.1%, thermal coal -3%, coal +10%.
- Japanese oil majors boost gasoline, diesel exports, JX boosts gas exports on strong car sales, low prices – Nikkei, Reuters.
- Australia Q1 CPI -0.2% q/q, +1.3% y/y, trimmed mean +0.2%, +1.7%, weighted median +0.1%, +1.4%, +0.3/+1.8%, +0.5/+2.0% and +0.5%/+1.8% forecast, Q1 core CPI below RBA target for 2nd time in 15-yrs, weak data reviving RBA ease talk.
- NZ March trade surplus NZ$117 mln, imports NZ$4.09 bln, exports NZ$4.2 bln,
- NZ$475.5 mln surplus, NZ$4.3 bln and NZ$4.83 bln forecast, annual deficit
- NZ$3.38 bln, NZ$3.56 bln forecast, widest in 7 years on dairy price collapse.
Economic Data Ahead
- (0330 ET/0730 GMT) Sweden Mar household lending; last +7.5% y/y.
- (0400 ET/0800 GMT) Eurozone Mar money supply M3, +5.0% AR; last +5.0%.
- (0400 ET/0800 GMT) Eurozone Mar loans to non-financials/households; last +0.9%, +1.6%.
- (0400 ET/0800 GMT) Italy Apr consumer confidence index, 115.0 forecast; last 115.0.
- (0400 ET/0800 GMT) Italy Apr business confidence index, 102.6 forecast; last 102.2.
- (0430 ET/0830 GMT) Great Britain Q1 GDP – prelim, +0.4% q/q, +2.0% y/y forecast; last +0.6%, +2.1%.
- (0600 ET/1000 GMT) Spain Feb current account balance; last E660 mln deficit.
- (0830 ET/1230 GMT) United States Mar advance goods trade balance; last $62.86 bln deficit.
- (1000 ET/1400 GMT) United States Mar pending home sales, +0.5% m/m forecast; last +3.5%, index 109.1.
Key Events Ahead
- N/A BoJ Policy Board begins two-day meeting.
- N/A Sweden SEK3.5 bln, 500 mln 1.0%, 3.5% 2026, 2039 bond auctions.
- (0500 ET/0800 GMT) ECB/Estonia CB Hansson presents latest FSR, press conference to follow.
- (0505 ET/0905 GMT) Italy E6 bln 6-month BOT auction.
- (0430 ET/0930 GMT) OECD Gurria speech at LSE, Germany E1 bln 2.5% 2046 Bund auction.
- (0430 ET/0930 GMT) ECB 91-day refi E11 bln allotment forecast, E13.56 bln maturing.
- (0600 ET/1000 GMT) Ireland CB Lane presents annual report, comments to follow.
- N/A FOMC Chair Yellen at Harvard-Radcliffe event, discussion.
- (1400 ET/1800 GMT) FOMC policy statement, no change in 0.375% Fed funds target.
- (1500 ET/1900 GMT) Canada FinMin Morneau speaks in Vancouver.
- (1700 ET/2100 GMT) RBNZ policy statement, no change in 2.25% OCR forecast.
FX Beat
USD: The dollar lost ground against the euro and yen on weaker U.S. economic data. Against a basket of currencies, the dollar index trades flat at 94.457.
EUR/USD: The euro trades flat at 1.1297, having touched a intra-day high of 1.1311. In the previous session, the pair rose to a high of 1.1339, pulling further away from a trough of 1.1216 set earlier in the week. The greenback was weighed down by weaker than expected U.S. durable goods orders data. The major continues to rise as the Fed is considered certain to keep rates steady, hence the focus will remain on the tone of its statement. Markets now await series of economic data from the eurozone, with focus remaining on FOMC policy decision. Immediate resistance is located at 1.1331 (20-DMA), break above could take the pair to 1.1339. On the lower side, support is seen at 1.1272 (5-DMA).
USD/JPY: The Japanese yen rose 0.1 percent to trade at 111.10, however, still within the distance of a 3-week low of 111.88 reached Monday on expectations of further BoJ easing this week. Markets speculate that the central bank will to take further easing measures, including an increase in purchase of stocks and a cut in interest rates. The greenback continues to decline, hovering towards session's low of 111.02. Traders will closely watch the policy decisions of both the central banks for further momentum. Immediate support is located at 110.83 ( Apr 25 Low), break below could drag the pair below 110.00 level. On the higher side, resistance is seen at 111.47 (Previous Session High).
GBP/USD: Sterling slightly edged down to 1.4569, having touched a 12-week high of 1.4638 against the dollar in the previous session. It rose on expectations that Britain will vote to remain in the European Union, however, a vote for a Brexit in June would leave Britain exposed to a further slide in the sterling. Against the euro it trades at 77.55 pence, having reached a high of 77.35 pence in the previous session. Immediate support is located at 1.4470 (5-DMA), while on the upside, resistance is seen at 1.4638 (Previous Session High).
AUD/USD: The Australian dollar tumbled after unexpected inflation figures signaled markets to price in a higher chance of an interest rate cut. The Aussie declined more than 1 percent to 0.7610 after data showed Australia's headline consumer prices index surprisingly declined 0.2 percent in the first quarter, against median forecast of a 0.3 percent rise. The currency had risen almost 15 percent earlier this month on the back of rising commodity prices, however, growing expectations of a rate cut could halt the rally. Immediate support is located at 0.7608, break below could drag the pair below 0.7600 level. On the upside, resistance is seen at 0.7765.
NZD/USD: The New Zealand dollar declined 0.3 percent to 0.6867 after the economy posted a wider-than-expected annual trade deficit of NZ$3.838 billion. The kiwi continues to fall, hovering towards sessions low of 0.6859. The next focus is on central bank policy decisions, beginning with the Federal Reserve and followed by the Reserve Bank of New Zealand. Analysts expect the RBNZ to hold rates at 2.25 percent on Thursday, however, markets speculate an easing as a 50-50 chance. Immediate support is seen at 0.6859 (Session, low), break below could drag the pair to 0.6851. On the higher side, resistance is located at 0.6909 (10-DMA).
USD/CNY: The yuan trades flat against the dollar as corporate dollar demand offsetted a slightly stronger PBoC midpoint. The central bank set the midpoint rate at 6.4837 per dollar, 0.07 percent firmer than the previous fix 6.4882. Spot yuan opened at 6.4928 per dollar and was trading at 6.4896 at midday, steady from the previous close. The offshore yuan was trading 0.20 percent weaker than the onshore spot at 6.5027 per dollar by midday,
Equities Recap
Asian shares were subdued, as investors remained cautious ahead of U.S. and Japanese central bank policy decisions.
MSCI's broadest index of Asia-Pacific shares outside Japan was little changed. Taiwan stocks declined 0.2 pct at 8,563.05 points
South Korea's Kospi slipped 0.2 percent while Shanghai edged up 0.4 percent.
Australia's S&P/ASX 200 index closed down 0.76 pct at 5,181.10 points, while Tokyo's Nikkei lost 0.36 pct at 17,290.49.
Commodities Recap
Crude oil futures edged down, however, near 2016 highs on the back of strong investor sentiment and a weak dollar. International Brent crude futures were trading at $46.26 per barrel at 0630 GMT, while U.S. West Texas Intermediate crude was also up 52 cents, or 1.2 percent, at $44.56 a barrel.
Gold ticked higher for a third straight session on a softer dollar and weak U.S. economic data, but the metal traded in a tight range as investors waited for the Federal Reserve's policy decision later in the session. Spot gold had risen 0.1 percent to $1,245 an ounce by 0631 GMT, following a 0.4-percent gain in the previous session.
Treasuries Recap
The 10-year U.S. treasuries yield stood at 1.9129 down by 0.018 bps.
Australian government bond futures rallied, with the 3-year bond contract up 10 ticks at 98.060. The 10-year contract added 3.5 ticks to 97.3900 in a bullish steepening of the curve. The 20-year contract eased 1.5 ticks to 96.7650. The spread between 10- and 3-year cash bonds increased to 67 basis points, the widest since mid-February.
New Zealand government bonds were mixed across the curve with yields slightly lower at the short end and slightly higher at the long end.
Canadian government bond prices were mixed across the maturity curve, with the benchmark 10-year falling 6 Canadian cents to yield 1.552 percent, while the 2-year price up 0.5 Canadian cent to yield 0.697 percent. The 10-year yield touched its highest since Dec. 7 at 1.577 percent.
