Market Roundup
- BoJ Gov Kuroda – Not thinking now of changes to policy mix, YCC main focus.
- Too early to talk on specific exit strategies, monitoring FX impact on economy.
- BoJ Apr 26-27 Policy Board meeting minutes – Overseas risks warrant even keel.
- Positive economic signs but risks still balanced to downside.
- BoJ will have to reduce JGB purchases but will maintain current stance for now.
- Japan end-Apr foreign reserves $1.2423 trln, end-Mar $1.2303 trln.
- Trump fires FBI Director Comey, setting off U.S. political storm
- China's factory prices slow further as manufacturing, commodities cool
- China Apr PPI y/y, +6.4% v/s forecast +6.9%
- China Apr PPI m/m, -0.4% from previous +0.3%
- China Apr CPI, +1.2% y/y, +0.1% m/m vs forecast +1.1%, 0.0%
- China sets yuan midpoint at 6.9066/dollar, weakest level in seven weeks
- S. Korea's Moon takes presidency of divided country amid N. Korea tensions
Economic Data Ahead
- (0245 ET/0645 GMT) France Mar Trade Balance EUR, SA, -6.00 bln forecast; last -6.57 bln
- (0245 ET/0645 GMT) France Mar Industrial Output m/m, +1.0% forecast; last -1.6%
- (0400 ET/0800 GMT) Italy Mar Industrial Output y/y WDA, +2.4% forecast; last +1.9%
- (0400 ET/0800 GMT) Italy Mar Industrial Output m/m SA, +0.3% forecast; last +1.0%
Key Events Ahead
- N/A Riksbank April 26 policy meeting minutes.
- N/A Norges Bank DepGovs Nicolaisen, Matsen speeches in Bryne, Norway
- (0330 ET/0730 GMT) Riksbank DepGov Kerstin speech in Stocky
- (0430 ET/0830 GMT) Portugal 5Y E0.600 bln auction
- (0430 ET/0830 GMT) Portugal 10Y E0.600 bln auction
- (0530 ET/0930 GMT) Germany 5Y 3.000 bln auction
- (0630 ET/1030 GMT) ECB President Mario Draghi speaks in the Dutch Parliament
FX Beat
DXY: The dollar eased across the board after U.S. President Donald Trump abruptly fired FBI Director James Comey. The greenback against a basket of currencies traded 0.1 percent down at 99.43, having hit a high of 99.69 on Tuesday, it’s highest since Apr. 11. FxWirePro's Hourly Dollar Strength Index stood at 29.49 (Neutral) by 0500 GMT.
EUR/USD: The euro edged up, reversing some of its previous session losses, as investors’ remained anxious ahead of the European Central Bank President Draghi’s speech at the Dutch House of Representatives later in the day. Markets will wait to check if the central bank alters its dovish tone in light of recent strength in the euro zone economy. The European currency traded 0.2 percent up at 1.0895, having touched a high of 1.1021 on Monday, its highest since Nov. 09. FxWirePro's Hourly Euro Strength Index stood at -8.63 (Neutral) by 0400 GMT. Investors’ attention will remain on ECB President Draghi's speech, ahead of U.S. import/export price index, monthly budget statement and Fed officials' speech. Immediate resistance is located at 1.0916 (10-DMA), a break above targets 1.0950. On the downside, support is seen at 1.0850, a break below could drag it near 1.0820/1.0800.
USD/JPY: The dollar eased from a near 2-month high after U.S. President Donald Trump abruptly fired FBI Director James Comey triggering a fresh bout of risk aversion across the global markets. The major also came under renewed selling pressure as the BOJ ‘Summary of Opinions’ of the April monetary policy meeting release boosted the Japanese yen's demand. The major traded 0.2 percent down at 113.74, pulling away from a peak of 114.32 hit in the previous session, its highest since Mar. 17. FxWirePro's Hourly Yen Strength Index stood at -74.97 (Slightly Bearish) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of U.S. import/export price index, monthly budget statement and Fed Rosengren’s speech. Immediate resistance is located at 114.32 (Previous Session High), a break above targets 114.88. On the downside, support is seen at 113.50, a break below could take it near 113.01 (5 DMA).
GBP/USD: Sterling steadied above the 1.2900 handle as traders cautiously awaited the Bank of England inflation report and policy meeting this week for fresh drivers. Moreover, broad based U.S. dollar correction amid a retreat in the US yields underpinned the British currency. Sterling trades 0.1 percent up at 1.2948, having hit a high of 1.2987 on Monday, its highest since Sept. 30. FxWirePro's Hourly Sterling Strength Index stood at 86.43 (Slightly Bullish) by 0400 GMT. Investors’ attention will remain on the U.S. import/export price index and UK Housing Price Balance report for further momentum on the pair. Immediate resistance is located at 1.3000, a break above could take it near 1.3120 (Sept. 22 High). On the downside, support is seen at 1.2900 (Apr 5 Low), a break below targets 1.2830. Against the euro, the pound traded flat at 84.10 pence, having hit an over 2-week high of 84.00 the day before.
AUD/USD: The Australian dollar steadied after falling to a 4-month low in the previous session. However, the upside in the major was limited as the weaker-than-expected Chinese PPI number weakened investor sentiment. The Aussie trades 0.2 percent higher at 0.7362, having hit a low of 0.7328 on Tuesday, it’s weakest since Jan. 1. FxWirePro's Hourly Aussie Strength Index stood at -21.99 (Neutral) by 0500 GMT. Investors will continue to digest downbeat Chinese data, ahead of the U.S economic releases and Fed speech. Immediate support is seen at 0.7300, a break below targets 0.7266 (Dec 16 Low). On the upside, resistance is located at 0.7376 (78.6 retracements of 0.7556 and 0.7328), a break above could take it near 0.7414 (61.8% retrace).
NZD/USD: The New Zealand dollar rose, attempting to regain the 0.6900 handle following upbeat China’s CPI data and persistent broad based US dollar weakness. Investors now await the Reserve Bank of New Zealand's policy decision due tomorrow, with economists expecting no change to the official cash rate. The Kiwi trades 0.2 percent up at 0.6907, having touched a low of 0.6839 last week, its weakest since Jun. 03. FxWirePro's Hourly Kiwi Strength Index was at 99.16 (Slightly Bullish) by 0500 GMT. Investors’ will continue to track overall market sentiment, ahead of the U.S. economic data and RBNZ policy decision. Immediate resistance is located at 0.6940 (May 2 High), a break above could take it near 0.6983 (May 3 High). On the downside, support is seen at 0.6880 (Previous Session Low), a break below could drag it near 0.6860.
Equities Recap
Asian shares rallied for a third straight day as investors attention shifted on strong corporate earnings, while the greenback eased after a rise in political tensions.
MSCI's broadest index of Asia-Pacific shares outside Japan rose to its highest level in more than three years.
Tokyo's Nikkei gained 0.2 percent to 19,894.14 points, Australia's S&P/ASX 200 index rose 0.5 percent to 5,871.60 points and South Korea's KOSPI fell 0.63 percent at 2,278.36 points.
Shanghai composite index edged up 0.1 percent to 3,082.93 points, while CSI300 index was trading 0.3 percent higher at 3,363.81 points.
Hong Kong’s Hang Seng was trading 1.1 percent higher at 25,159.10 points. Taiwan shares shed 0.5 percent to 9,963.98 points.
Commodities Recap
Crude oil prices steadied after Reuters reported Saudi Arabia would cut supplies to Asian customers by about 7 million barrels in June, as part of OPEC's agreement to reduce production. International benchmark Brent crude was trading flat at $48.95 per barrel by 0403 GMT, having hit a low of $46.63 last week, its weakest since Nov. 29. U.S. West Texas Intermediate was little unchanged at $46.14 a barrel, after declining as low as $43.73 on Friday, its lowest since Nov. 15.
Gold prices edged up after declining to an eight-week low in the previous session, as the dollar dipped after U.S. President Donald Trump abruptly dismissed FBI Director James Comey. Spot gold was up 0.2 percent at $1,223.00 per ounce at 0406 GMT, having hit a low of $1,214.13 the day before, its lowest since Mar 15. U.S. gold futures climbed 0.5 percent to $1,222.50 an ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.388 percent lower by 0.018 bps, while 5-year yield was 0.02 bps down at 1.914 percent.
The Australian government bonds sharp rebounded tracking U.S. Treasuries. The yield on the benchmark 10-year Treasury note fell 1 basis point to 2.68 percent, the yield on 15-year note slumped 1-1/2 basis points to 3.08 percent and the yield on short-term 2-year also traded nearly 1-1/2 basis points lower at 1.71 percent.
The New Zealand bonds ended Wednesday’s session on a higher note as investors wait to watch the Reserve Bank of New Zealand’s (RBNZ) monetary policy decision, scheduled to be unveiled on May 11. At the time of closing, the yield on the benchmark 10-year bond fell 1 basis point to 3.09 percent, the yield on 7-year note also slipped 1 basis point to 2.78 percent and the yield on the short-term 2-year note too 1 basis point lower at 2.11 percent.
The Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries. The two-year fell 2.5 Canadian cents to yield 0.722 percent and the 10-year declined 29 Canadian cents to yield 1.621 percent.
