Market Roundup
- Philly Fed Harker – Need to continue to get on with rate hikes, strong case to hike, would prefer more than two, dependent on economic conditions, OK to overshoot 2% inflation target, wage pressures to up inflation.
- BoJ Policy Board Funo – Relatively upbeat on growth, inflation in future but BoJ must maintain current easy stance using all three tools at disposal (quantity, quality of asset buys and interest rates), market risk aversion could weigh on sentiment, CAPEX, suggests fiscal stimulus needed.
- Japan March Reuters Tankan manufacturing index +6, non-mfg +24, Feb +7 and +21, +7 and +18 eyed for June, mfg sentiment weighed down by JPY gains, EM slowdown.
- Australian politics complicates calculus on interest rate cut.
- NZ Fonterra – WMP price expected to lift through balance of ’16.
- ADB Pres Nakao – China hard landing unlikely.
- Thomson Reuters/INSEAD Q1 Asian business sentiment index 65, Q4 ’15 58, China demand drop biggest risk, Philippines most optimistic, Indonesia least.
Economic Data Ahead
- (0400 ET/0800 GMT) Sweden March manufacturing confidence index, 114.0 eyed; last 115.7.
- (0400 ET/0800 GMT) Sweden March consumer confidence index, 98.4 eyed; last 98.0.
- (0500 ET/0900 GMT) Italy February wage inflation; last unchanged m/m, +0.7% y/y.
- (0600 ET/1000 GMT) Switzerland March ZEW investor sentiment index; last -5.9.
- (1000 ET/1400 GMT) Belgium March leading indicator, -6.0 eyed; last -6.6.
- (1000 ET/1400 GMT) US February new home sales, 510k units AR, +3.2% m/m eyed; last 490k, -9.2%.
Key Events Ahead
- N/A BoE Financial Policy Committee meeting.
- N/A ESM E1 bln 1.625% 2036 note syndication via CA-CIB, HSBC, Nomura.
- N/A Sweden SEK5 and 10 bln 78 and 176-day treasury bill auctions.
- (0400 ET/0800 GMT) ECB Nouy, Lautenschaeger Frankfurt press conference on SSM annual report.
- (0530 ET/0930 GMT) ECB 910-day LTRO at zero%.
- (0630 ET/1030 GMT) Germany E1 bln 2.5% 2046 Bund auction.
- (0630 ET/1030 GMT) UK DMO GBP350 mln 0.125% 2068 index-linked Gilt auction.
- (0630 ET/1030 GMT) Portugal E0.75-1.0 bln 3.85% and 3.875% 2021 and 2030 OT auctions.
- (0700 ET/1100 GMT) Canada Fin Min Morneau speech at Ottawa breakfast.
- (0840 ET/1240 GMT) ECB/Buba Weidmann speaks at Vaduz, Liechtenstein finance forum.
- (0900 ET/1300 GMT) St Louis Fed Bullard on Bloomberg TV/radio.
- (1215 ET/1615 GMT) BoE DepGov Bailey speaks at London conference.
- (1730 ET/2130 GMT) Philly Fed Harker speaks at Philadelphia event.
FX Recap
USD: The dollar edged down on Wednesday as Asian investors reacted to overnight news of attacks in Brussels, though hawkish comments from another U.S. Federal Reserve official underpinned the U.S. currency. Attacks on Brussels airport and a rush-hour metro train in the Belgian capital, which occurred very late in Tuesday's Asian session, killed dozens and triggered security alerts across Western Europe. The dollar index, which tracks the U.S. currency against six major rivals, edged down slightly to 95.611.
EUR/USD: The euro edged up about 0.1 percent to $1.1218, though it was well above its post-attack low of $1.1188. Pair hovers around $1.1206 marks and intraday bias remains bearish till the time pair holds key resistance level at $1.1284. A daily close above key resistance will drag the parity towards $1.1342/ $1.1376 marks. On the down side, key support level is seen at $1.1175/ $1.1057 marks.
USD/JPY: The safe-haven yen was trading around 112.26 against US dollar. But it remained above Tuesday's low of 111.38 yen as well as a 17-month low of 110.67 touched last Thursday after Fed Chair Janet Yellen took a cautious tone on the timing of interest rate hikes this year. Japanese Yen erases previous gain against US dollar and supported above 112.00 marks. A daily close below key support level at 111.31 will drag the parity down towards at 110.66/ 108.75/107.51 marks thereafter. On the top side, key resistance levels are seen at 114.87/115.96 levels.
GBP/USD: Sterling edged up 0.1 percent to $1.4224 after falling more than 1 percent to one-week lows against the dollar following news of the attacks, on fears that more voters would favour Britain leaving the European Union in a June referendum. Sterling fell to a six-day low of $1.4191. It also weakened by around 1 percent against the euro, to 79.05 pence. Sterling extended earlier losses after downbeat CPI data from UK. The inflation reading came in slightly worse than expected, posting 0.3% growth in February, the same pace as in January and slightly lower than the initial forecast of 0.4% growth. Pair breaks key support at $1.4364, turns the bias slightly bearish and dragged the parity down below $1.4200 marks. On the other side, a daily close above $1.4504 will take the parity up towards key resistance at $1.4602.
AUD/USD: The Aussie usually sold off in times of heightened risk aversion was a touch higher at $0.7628. It held their ground on Wednesday with markets in an uncertain mood following attacks in Brussels. Intraday bias remains bearish till the time pair holds key resistance at $0.7648 levels. A sustained close above it will drag the parity towards 0.7725 levels. On the downside, a break below $0.7533 support levels will turn bias back to the downside for retesting 0.7365 low.
NZD/USD: The New Zealand dollar shuffled in a narrow range of $0.6738-$0.6769, near where it closed in New York. The kiwi shed 0.3 percent on the yen to 75.63. Pair breaks key support level at $0.6750 marks and trading around $0.6730 levels. Short term bias remains bearish for the moment. Key support was found at $0.6585, with resistance at $0.6885 levels.
Equities Recap
The Japan’s Nikkei 225 index slipped 0.04% to 17,041.91 points within the first hour of trade in Tokyo, while the broader Topix index fell 0.27% to 1,366.28 points.
Chinese markets opened on a soft note, with Hong Kong's Hang Seng index sliding 0.22% to 20,621.59 points and the Shanghai Composite easing 0.12% to 2,995.67 points.
South Korea's Kospi index was trading 0.10% lower at 1,994.75 points in early trade.
Australian benchmark S&P/ASX 200 index 0.45% lower to 5,143.30 points in Sydney.
New Zealand’s benchmark S&P/NZX 50 index traded 0.14% higher at 6,673.27 points on Wednesday afternoon in Wellington.
Commodities Recap
Oil prices fell in early Asian trading on Wednesday after figures from an industry group showed U.S. crude stockpiles rose last week more than expected, reinforcing concerns that supply continues to exceed demand. The front-month contract in U.S. crude futures was down 40 cents at $41.05 a barrel by 0328 GMT. It struck a 2016 high of $41.90 in the previous session before closing at $41.45. The contract has rebounded 58 percent since hitting its lowest level since 2003 in February. Brent crude was 39 cents lower at $41.40, reversing gains in the previous session when it finished at $41.79.
Spot gold edged lower on Wednesday, with the impact of a stronger dollar outweighing a slight swell in the metal's safe-haven appeal after attacks on an airport and a rush-hour metro train in Brussels. Spot gold had slipped 0.4 percent to $1,243.60 an ounce by 0208 GMT, with trade expected to wind down ahead of the Easter holidays which start on Friday. Prices have been trading in a narrowing band of $1,240-$1,270 for the past week. U.S. gold also slipped 0.4 percent to $1244.20.
Treasuries Recap
New Zealand government bonds eased, sending yields up to 6.5 basis points higher.
Australian government bond futures also slipped, with both the three-year and 10-year bond contracts down 6 ticks at 97.970 and 97.3400 respectively.
