Market Roundup
- BoJ Gov Kuroda (in Diet) – Closely watching market moves, effect on prices and economy, NIRP positive effects to spread steadily, moderate recovery to continue, inflation trend improving, target to be met H1 FY ’17, assuming crude oil prices rising, options still to ease, can expand QQE, G20 understands Japan’s position.
- Japan March trade surplus Y755 bln, exports -6.8% y/y, imports -14.9%, Y834.6 bln, -6.9% and -16.2% eyed, exports to US -5.1%, China -7.1%, Asia -9.7%.
- Japan March crude oil import volume +15.9% y/y, LNG +0.1%, thermal coal -3%.
- Japan April Reuters Tankan manufacturing index +10, non-manufacturing +23, March +6 and +24, +6 and +15 eyed for July, JPY rise weighing on outlook.
- Japan PM Abe unlikely to call snap election due to quakes – Sankei.
- Japanese govt could consider raising sales tax 1% at a time – Nikkei.
- Japan Asahi reaches mega-E2.6 bln deal in Europe, pulls US bid – Nikkei.
Economic Data Ahead
- (0200 ET/0600 GMT) Germany March producer prices, +0.2% m/m, -2.9% y/y eyed; last -0.5%, -3.0%.
- (0430 ET/0830 GMT) UK March claimant count, -11.3k eyed; last -18.0k.
- (0430 ET/0830 GMT) UK February ILO unemployment, 5.1% eyed; last 5.1%.
- (0430 ET/0830 GMT) UK February average weekly earnings – 3-mo average, +2.3% y/y eyed; last +2.1%.
- (0430 ET/0830 GMT) UK February - ex-bonus, +2.2% y/y eyed; last +2.2%.
- (0500 ET/0900 GMT) Switzerland April ZEW investor sentiment index; last 2.5.
- (0900 ET/1300 GMT) Belgium April consumer confidence index; last -7.0.
- (1000 ET/1400 GMT) US Mar exist home sales, 5.3 mln AR, +3.5% eyed; last 5.08 mln, -7.1%.
Key Events Ahead
- N/A ECB Pres Draghi speech in Frankfurt.
- N/A OECD global symposium in Amsterdam, various speakers.
- N/A Riksbank begins two-day policy meeting.
- N/A Sweden SEK5/10bln 89/152 bill, Norway NOK3bln 4.5% NST473 bond auctions.
- (0130 ET/0530 GMT) Norges bank Gov Olsen speech in Oslo.
- (0530 ET/0930 GMT) Germany E4 bln 0.5% 2026 Bund auction.
- (0530 ET/0930 GMT) UK DMO GBP1.4 bln 0.125% 2026 index-linked Gilt auction.
- (0900 ET/1300 GMT) BoE MPC McCafferty speaks in London.
- (1615 ET/2015 GMT) BoC Gov Poloz, DepGov Wilkins parliamentary testimony.
FX Recap
USD: The dollar climbed back above 109.00 yen, pulling away from Monday's trough of 107.75. The euro briefly popped above 124.00 yen for the first time in over a week.
EUR/USD: The euro was at $1.1365, continuing to recover from a low of $1.1234 set last week. Traders said much now depends on the outcome of the European Central Bank policy meeting on Thursday. In March, ECB chief Mario Draghi unleashed a bold easing package but the euro rallied after he suggested there would be no further cuts. Intraday bias remains slightly bearish till the time pair holds key resistance at $1.1384. A sustained break above it will drag the parity up towards $1.1402/$1.1469 marks. On the down side, key support level is seen at $1.1159/ $1.1057 marks.
USD/JPY: The Japanese Yen gains after trade balance data as well as BOJ governor Kuroda’s speech. Pair falls below 109.00 marks, trading around 108.92 levels. A sustain close above 109.48 tests other resistances at 112.60/114.87/115.96 levels. A daily close below key support level at 108.04 will drag the parity down towards 107.51 marks. Japan's trade surplus expanded from ¥242.8 billion in February to ¥775.0 billion last month, the highest since February 2011 but lower than the market forecast of a ¥834.6 billion surplus. In addition BOJ Kuroda said that, “He will scrutinise risks to economy, prices and won't hesitate taking more easing steps if needed to hit price target.”
GBP/USD: The Sterling erases previous gain against the dollar on Wednesday and trading around $1.4360 marks. A daily close above $1.4357 will take the parity up towards key resistances at $1.4504/$1.4602. Alternatively, a sustained break below key support will drag the parity down at $1.4115/$1.4057 marks.
AUD/USD: The Aussie was down 0.3 percent at $0.7791. It had climbed on Tuesday to $0.7827, a high not seen since June, as global risk appetite had improved thanks to an earlier sharp bounce in crude oil and equities, with U.S. stocks coming within reach of a record high. Intraday bias remains bearish till the time pair holds key resistance at $0.7814 levels. On the downside, a sustained break below $0.7741 support levels will turn bias back to the downside for retesting 0.7592/0.7496 low. Initial resistance is seen at $0.7802 levels.
NZD/USD: The New Zealand dollar paused at $0.7015, having touched a 10-month peak of $0.7055 on Tuesday. Helping the kiwi, up two cents since Monday, was a rise in global dairy prices. The fortnightly global dairy sale showed prices rose for the second consecutive auction as volumes dropped. The New Zealand dollar pushed above 70 U.S. cents for the first time in 10 months. Support was found at $0.6773. Resistance was seen at around $0.7016.
Equities Recap
Japan's Nikkei 225 index was trading 0.61% higher at 16977.30 points in Tokyo on Wednesday morning, following a rally of over 3% on Tuesday, while the broader Topix gauge sprung up 1.02% to 1,376.88 points.
Chinese markets opened on a mixed note on Wednesday, the Shanghai Composite rising 0.42% to 3,055.36 points, and Hong Kong's Hang Seng slipping 1.03% to 21,215.55 points.
Korea's Kospi index gained 0.01% to trade at 2,011.45 points.
Australia's main equity index, the S&P/ASX 200, rallied 0.29% to 5,209.90 points on Wednesday morning in Sydney.
New Zealand's S&P/NZX 50 index was trading little higher at 6,874.16 points on Wednesday afternoon in Wellington.
Commodities Recap
Crude futures fell on Wednesday after Kuwaiti oil workers ended a three-day strike that had cut production from the Middle Eastern country, and data showed U.S. stockpiles rose last week. Brent crude futures were down 68 cents at $43.35 a barrel at 0302 GMT. On Tuesday, they settled up $1.12, or 2.6 percent, at $44.03 a barrel. U.S. crude was down 85 cents at $40.23. The contract rose $1.30, or 3.3 percent, to $41.08 in the previous session.
Gold retained sharp overnight gains on Wednesday as disappointing U.S. housing data dented the dollar and supported the Federal Reserve's cautious stance on interest rates. Spot gold was little changed at $1,250.80 an ounce by 0039 GMT, following a 1.5 percent gain on Tuesday.
Treasuries Recap
New Zealand government bonds eased, sending yields 3 basis points higher at the long end of the curve.
Australian government bond futures were quiet, with the three-year bond contract steady at 98.030. The 10-year contract rose 2 ticks to 97.4600, while the 20-year contract was flat at 96.8850.
10-year U.S. treasury yield held at 1.764 percent vs U.S. close of 1.783 percent on Tuesday.
