Market Roundup
- S.Korea halts border propaganda broadcasts, Trump cautious on N.Korea crisis
- Reuters poll - Most of Japan Inc want PM Abe/LDP to stay in power
- Japan Apr mfg PMI – flash 53.3, Mar 53.1, domestic demand up, export orders down
- Chinese c.bank governor says economy strong, financial leverage under control
- U.S. Treasury chief may visit China as trade tensions simmer
- China opposes all forms of protectionism, commerce minister says
- Australian regulator backs massive increase in fines for corporate wrongdoing
- Few Britons expect Bank of England to raise rates next month – survey
- Bank of Japan's Kuroda says easy policy still needed for some time
Economic Data Ahead
- (0300 ET/0730 GMT) Germany Apr Markit Mfg Flash PMI, f'cast 57.5, last 58.2
- (0300 ET/0730 GMT) Apr Markit Service Flash PMI, f'cast 53.7, last 53.9
- (0300 ET/0730 GMT) Apr Markit Comp Flash PMI, f'cast 54.8, last 55.1
- (0400 ET/0800 GMT) EZ Apr Markit Mfg Flash PMI, f'cast 56.1, last 56.6
- (0400 ET/0800 GMT) EZ Apr Markit Serv Flash PMI, f'cast 54.6, last 54.9
- (0400 ET/0800 GMT) EZ Apr Markit Comp Flash PMI, f'cast 54.9, last 55.2
Key Events Ahead
- (1000 ET/1400 GMT) ECB's Benoit Coeure participates in a conference on 'Resolution in Europe: The Unresolved Questions' organised by Deutsche Bundesbank and the Institute for Law and Finance - Frankfurt
- (1530 ET/1930 GMT) BOC's Stephen S. Poloz, Carolyn A. Wilkins participates in House of Commons Standing Committee on Finance – Ottawa
FX Beat
DXY: The dollar index rose for the fifth consecutive session, as the U.S. 10-year Treasury yield touched a peak of 2.968 percent, the highest since January 2014. The greenback against a basket of currencies trades 0.2 percent up at 90.39, having touched a high of 90.48 on Friday, its highest since Apr. 6. FxWirePro's Hourly Dollar Strength Index stood at 124.80 (Highly Bullish) by 0500 GMT.
EUR/USD: The euro slumped, having hit a 2-week low in the previous session, as investors trimmed long positions in the euro ahead of this week's European Central Bank policy meeting at which policymakers are largely expected to signal no change in policy. The European currency traded 0.1 percent down at 1.2271, having touched a high of 1.2249 on Friday, its highest since Apr. 6. FxWirePro's Hourly Euro Strength Index stood at 11.36 (Neutral) by 0400 GMT. Investors’ attention will remain on series of Markit Manufacturing and Service PMI from Eurozone economies, ahead of the U.S. preliminary Markit manufacturing PMI and existing homes sales. Immediate resistance is located at 1.2421 (Mar. 28 High), a break above targets 1.2476 (Mar. 27 High). On the downside, support is seen at 1.2249 (Apr. 20 Low), a break below could drag it lower 1.2215 (Apr. 6).
USD/JPY: The dollar rallied to a 1-month peak against the Japanese yen, bolstered by rising U.S. bond yields and easing concerns over global political risks. The U.S. 10-year treasury yield extended into Friday’s close, from 2.91 percent to 2.96 percent, slightly above the February 2018 high and the highest since Jan 2014. The major was trading 0.2 percent up at 107.78, having hit a high of 107.88 earlier, its highest since Feb. 21. FxWirePro's Hourly Yen Strength Index stood at 40.92 (Neutral) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. preliminary Markit manufacturing PMI and existing homes sales. Immediate resistance is located at 107.90 (Feb. 21 High), a break above targets 108.50. On the downside, support is seen at 107.35 (5-DMA), a break below could take it lower 106.77 (Apr. 6 Low).
GBP/USD: Sterling steadied after falling to a 2-week low in the prior session on weaker-than-expected inflation and retail sales data. Moreover, dovish comments from Bank of England Governor Mark Carney on Thursday prompted investors to slash expectations the BoE would increase interest rates in May to curb inflation. Sterling traded 0.1 percent up at 1.4015, having hit a low of 1.3992 earlier, it’s lowest since Apr. 6. FxWirePro's Hourly Sterling Strength Index stood at -107.65 (Highly Bearish) by 0400 GMT. Investors’ focus will remain on the U.S. fundamental drivers and Fed official speeches, amid a lack of economic data from the UK docket. Immediate resistance is located at 1.4090 (Previous Session High), a break above could take it near 1.4131 (21-DMA). On the downside, support is seen at 1.3925 (Mar. 14 Low), a break below targets 1.3874 (Mar. 13 Low). Against the euro, the pound was trading 0.1 percent up at 87.53 pence, having hit a low of 87.91 pence the session before, it’s lowest since Mar. 27.
AUD/USD: The Australian dollar snapped a two-day losing streak as investors anxiously awaited domestic consumer price data due Tuesday with March quarter core inflation seen at 1.8 percent. On Friday, the major slumped to a near 2-week low on dovish Reserve Bank of Australia as well as softer-than-expected employment figures. The Aussie trades 0.1 percent up at 0.7673, having hit a low of 0.7655; it’s lowest since Apr. 9. FxWirePro's Hourly Aussie Strength Index stood at -77.95 (Slightly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7643 (Mar. 29 Low), a break below targets 0.7600. On the upside, resistance is located at 0.7713 (21-DMA), a break above could take it near 0.7744 (10-DMA).
NZD/USD: The New Zealand dollar extended losses for the fifth straight session on expectations that the Reserve Bank of New Zealand would stand pat after leaving rates at all-time lows since late 2016. The Kiwi trades 0.05 percent down at 0.7206, having touched a low of 0.7198 earlier, its lowest level since Apr. 3. FxWirePro's Hourly Kiwi Strength Index was at -55.31 (Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7247, a break above could take it near 0.7300 (5-DMA). On the downside, support is seen at 0.7188 (Mar 29 Low), a break below could drag it below 0.7153 (Mar. 21 Low).
Equities Recap
Asian shares declined, as investors braced for a series of earnings results from the world's largest corporations, while the greenback held gains near a 2-week peak amid rising U.S. Treasury yields.
MSCI's broadest index of Asia-Pacific shares outside Japan slumped 0.4 percent.
Tokyo's Nikkei declined 0.3 percent to 22,088.04 points, Australia's S&P/ASX 200 index fell 0.3 percent to 5,886.80 points and South Korea's KOSPI tumbled 0.2 percent to 2,471.98 points.
Shanghai composite index fell 0.6 percent to 3,053.01 points, while CSI300 index was trading 0.3 percent down at 3,748.47 points.
Hong Kong’s Hang Seng was trading 0.5 percent lower at 30,275.91 points. Taiwan shares shed 0.8 percent to 10,697.13 points.
Commodities Recap
Crude oil prices steadied as a rising U.S. rig count pointed to further increases in American output. International benchmark Brent crude was trading 0.6 percent up at $74.10 per barrel by 0444 GMT, having hit a high of $74.71 on Thursday, its highest since Nov. 2014. U.S. West Texas Intermediate was trading 0.3 percent up at $68.36 a barrel, after rising as high as $69.53 on Thursday, its highest since Nov. 2014.
Gold prices declined to their lowest level in nearly two weeks as rising U.S. Treasury yields supported the dollar. Spot gold was down 0.2 percent at $1,333.79 per ounce at 0447 GMT, having hit a low of $1,331.57 an ounce earlier, its lowest since Apr. 10. U.S. gold futures fell 0.2 percent to $1,335.50 per ounce.
Treasuries Recap
The Japanese government bonds edged slightly on the downside, tracking similar movement in the U.S. 10-year benchmark counterpart, which hit its highest in over 4 years, following disappointment in the Asian stocks as investors awaited the earnings result from the world's largest corporations. The yield on the benchmark 10-year JGBs, which moves inversely to its price, remained tad higher at 0.06 percent, the yield on the long-term 30-year note rose 1 basis point to 0.74 percent and the yield on short-term 2-year too traded nearly 1 basis point higher at -0.12 percent.
The Australian bonds slumped across the board on the first day of the trading week following weakness in the U.S. Treasuries, where the latter’s 10-year yields rose to highest since January 2014. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, rose 4-1/2 basis points to 2.867 percent, the yield on the long-term 30-year Note jumped 3-1/2 basis points to 3.429 percent and the yield on short-term 2-year also surged 2 basis points to 2.147 percent.
The New Zealand 10-year government bond yields close Tuesday’s session at near 6-week high, after the United States’ benchmark counterpart, was seen approaching 3 percent, with yields up since January 2014 as Asian stocks struggled to overcome the market dip ahead of an array of earnings from the world’s largest corporations. The yield on New Zealand’s benchmark 10-year Treasury note, which moves inversely to its price, jumped 5 basis points to 2.93 percent, the yield on the long-term 20-year note surged 4 basis points to 3.51 percent and the yield on short-term 2-year closed 1/2 basis point higher at 1.97 percent.
