Market Roundup
- Dutch March Retail Sales +4.0% Y/Y after Revised +2.5% in Feb – CBS
- BOJ Gov Kuroda: don't see any chance now of return to Lehman Bros type shock
- BOJ Gov Kuroda: oil prices showing signs of bottoming out
- Kuroda: expect gradual rise in oil prices to push up consumer prices in future
- BOJ Gov Kuroda: exiting negative rates would involve debate on raising rates, size of BOJ's balance sheet and how to treat JGB’s on balance sheet
- BOJ Gov Kuroda: difficult for Japan to intentionally weaken yen to support exports due to agreements with G7, G20
- Ito: Unthinkable for BOJ to resort to 'helicopter money'
- Ito: Japan unlikely to gain G7 consent for coordinated fiscal action at leaders' summit this month
- BOJ April policy meeting summary of opinions: one member said some time needed for effect of negative rate policy to show on economy, prices
- BOJ meeting summary of opinions: one member said downside risks to economy remain large; BOJ shouldn't hesitate taking additional easing steps if needed
- New Zealand food price inflation Index +0.3% in April on Previous Month
- Fitch Takes Various Actions on Financial Institutions Following Brazilian Sovereign Downgrade
- S. Korea April Import Prices in Won Terms -7.2% Vs Revised -7.6% in March
- S. Korea April Export Prices in Won Terms -5.7% Vs Revised -4.2% in March
Economic Data Ahead
- (0300 ET/0700 GMT) Sweden Industrial Output
- (0400 ET/0800 GMT) Norway C/bank Rate Decision
- (0400 ET/0800 GMT) Norway GDP Growth
- (0500 ET/0900 GMT) Eurozne Industrial Production
- (0700 ET/1100 GMT) Great Britain BOE MPC Vote Hike
- (0700 ET/1100 GMT) Great Britain BOE QE Total GBP
- (0700 ET/1100 GMT) Great Britain BOE MPC Vote Cut
- (0700 ET/1100 GMT) Great Britain BOE MPC Vote Unchanged
- (0700 ET/1100 GMT) Great Britain BOE Bank Rate
Key Events Ahead
- (0800 ET/1200 GMT) UK BoE Monetary Policy Committee Meeting and QIR
FX Beat
USD: The dollar index steadied at 93.924, supported by a recovery in risk appetite in financial markets, after slumping 0.5 percent against a basket of currencies on Wednesday.
EUR/USD: The euro trades flat at 1.1422, after recovering from a low of 1.1358 touched on Tuesday. The major trades between a thin range of 1.1418 -1.1429. It rose to a high of 1.1446, before closing at 1.1425. Markets now await for series of economic data from eurozne economies, ahead of eurozone's March industrial production figures for further cues on the pair. Immediate support is seen at 1.1399 (5-DMA), break below could drag the pair to 1.1366. On the higher side, resistance is seen at 1.1446 (Previous Session High)
USD/JPY: The Japanese yen trades 0.4 percent lower at 108.86, having touched a 2-week low of 109.38 on Wednesday. It made an early high of 108.22, however it failed to extend gains, drifting lower ot its current levels. The yen declined as traders cut their exposure to the currency after a series of warnings from Japanese Finance Minister Taro Aso that the government would intervene to curb any one-sided gains. The pair continues to rise hovering towards sessions high 108.94. Immediate resistance is located at 109.36 (Previous Session High), while on the lower side, support is seen at 108.22 (Session's Low).
GBP/USD: Sterling trades lower at 1.4437, away from a high of 1.4488 struck in the previous session as the referendum on European Union membership entered its final six weeks. The major trades between a thin range of 1.4434 - 1.4452. On Wednesday, finance minister George Osborne stated in the parliament that a vote to leave could prompt a balance of payments crisis and problems for Britain's banking sector. Markets will closely watch Bank of England's interest rate decision for further cues on the pair. Traders expect the central bank to keep the key interest rate unchanged at 0.5 percent. Sterling continues to hover towards sessions low of 1.4434. Immediate support is located at 1.4414 (May 6 Low), break below could drag the pair to 1.4394. On the higher side, resistance is seen at 1.4494 (10-DMA). Against the euro it stood at 79.09.
AUD/USD: The Australian dollar slipped to 0.7335, from an early high of 0.7379, pulling closer to a 2-month trough of 73 cents touched on Tuesday. The Aussie has tumbled around 5 U.S. cents in 3- weeks, largely after the Reserve Bank of Australia cut rates for the first time in a year and on expectations of more easing. In absence of major economic data from Australia, markets will closely watch U.S. trade and unemployment data for further cues on the pair. The pair continues to hover towards session's low of 0.7330. Immediate support is seen at 0.7307 (May 9 Low), while resistance is located at 0.7401 (Previous Session High).
NZD/USD: The New Zealand dollar held gains at 0.6828, having bounced off from a low of 0.6716 touched on Tuesday. The Kiwi was boosted after the central bank did not announce any specific measures to curb the housing market, potentially putting a lid on any further interest rate cuts. The pair continues to trade higher, pulling closer to a high of 0.6845 touched on Wednesday. Immediate resistance is located at 0.6845 (Previous Session High), while support is seen at 0.6798 (5-DMA).
USD/CNY: The yuan weakened slightly as the dollar appeared to stabilize after declining overnight. The People's Bank of China set its official midpoint guidance rate at 6.4959 per dollar prior to market open, a sharp 0.38 percent firmer than the previous fix of 6.5209. The spot yuan opened at 6.4989 per dollar and was trading at 6.5033, 0.17 percent weaker than the previous close. The offshore yuan was trading 0.45 percent weaker than the onshore spot at 6.5324 per dollar, reflecting less confidence in the yuan's value among foreign investors.
Equities Recap
Asian shares declined following a drop in the Wall Street stocks as the dollar took a breather from this week's rebound.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.3 percent, moving back toward a 2-month low touched on Tuesday.
Shanghai Composite index dropped 1.73% to 2,787.98 points, Hong Kong's Hang Seng index was trading 0.52% lower at 19,952.53 points and Taiwan stocks lost 0.3 pct at 8,108.05 points.
Australia's S&P/ASX 200 index ended down 0.40 pct at 5,350.90 points, Tokyo's Nikkei gained 0.41 pct at 16,646.34 and Seoul shares edged down 0.11 pct.
Commodities Recap
Oil prices extended gains despite gradual return of Canadian oil sands production. International Brent crude futures were trading at $47.78 per barrel at 0637 GMT, while U.S. West Texas Intermediate crude futures were down 38 cents or 0.8 percent at $45.85.
Gold declined from the near $1,280 an ounce mark after rising the most since late April. Spot gold was at $1,271.31 an ounce by 0638 GMT, after climbing off 2-week lows overnight, while U.S. gold for June delivery rose 0.3 percent to $1,279.20 an ounce.
Treasuries Recap
The 10-year U.S. treasuries yield stood at 1.7344 percent up by 0.005 bps.
Japanese government bond prices slipped, with yields on longer-dated maturities rising after a 30-year auction drew only lukewarm demand from investors. The benchmark 10-year yield rose half a basis point to minus 0.100 percent, and the 30-year yield was up 2 basis points at 0.325 percent, pulling away from a record low of 0.265 percent touched last month.
Australian government bond futures had a firm tone, with the 3-year bond contract up 2 ticks at 98.450. The 10-year contract edged up 1 tick to 97.7150, while the 20-year contract gained 2.5 ticks to 97.0950.
New Zealand government bonds gained, sending yields 3.5 basis points lower at the short end and 5 basis points lower at the long end.
Canadian government bond prices were mixed across the maturity curve, with the benchmark 10-year up 18 Canadian cents to yield 1.297 percent, while the 2-year price off 1.5 Canadian cents to yield 0.537 percent.
