Market Roundup
- Seeking to avert higher tariffs, China dispatches top negotiator to U.S.
- NZ c. bank cuts rates to record lows, signals another next year
- China Apr Trade Balance USD 13.84 bln, 35.00 bln f'cast, 32.65 bln prev, 32.67 bln rvsd
- China Apr Exports YY, -2.7%, 2.3% f'cast, 14.2% prev
- China Apr Imports YY, 4.0%, -3.6% f'cast, -7.6% prev
- BOJ board debated pros, cons of more easing at March meeting -minutes
- White House defies Congress on McGahn subpoena as Trump battles Democrats
- Trump tax returns from 1985 to 1994 show $1 bln in losses -NY Times
- South Africa's ANC seeks to reverse sliding support in tough election
Economic Data Ahead
- (0200 ET/0600 GMT) Germany Mar Industrial Output MM, -0.5% f'cast, 0.7% prev
- (0330 ET/0730 GMT) Great Breat Apr Halifax House Prices MM, 0.1% f'cast, -1.6% prev
Key Events Ahead
- (0415 ET/0815 GMT) Bank of England Deputy Governor Ramsden speaks in London
- (0730 ET/1130 GMT) ECB's Draghi speaks in Frankfurt, Germany
- (0800 ET/1200 GMT) Irish Central Bank Deputy Governor Ed Sibley speaks in Dublin
- (0830 ET/1230 GMT) Fed's Brainard speaks in Virginia, USA
FX Beat
DXY: The dollar index eased after Fed Vice Chair Richard Clarida said that the U.S. Federal Reserve does not see a good case for raising or lowering interest rates and its current policy stance could help inflation move toward the central bank's 2 percent target. The greenback against a basket of currencies traded 0.1 percent down at 97.45, having touched a low of 97.38 on Tuesday, its lowest since May 1. FxWirePro's Hourly Dollar Strength Index stood at 8.31 (Neutral) by 0400 GMT.
EUR/USD: The euro rose, reversing most of its previous session losses after the European Commission stated that the eurozone will rebound next year from a slow-down in 2019 and unemployment will fall further, but inflation is likely to remain at this year's levels and below the ECB's target. The European currency traded 0.1 percent up at 1.1204, having touched a low of 1.1135 on Friday, its lowest since Apr. 26. FxWirePro's Hourly Euro Strength Index stood at 60.90 (Bullish) by 0400 GMT. Investors’ attention will remain on German industrial production and ECB President Draghi's speech, ahead of Fed Brainard's speech. Immediate resistance is located at 1.1229 (April 30 high), a break above targets 1.1262 (April 22 High). On the downside, support is seen at 1.1140 (April 24 Low) a break below could drag it till 1.1096 (May. 2017 Low).
USD/JPY: The dollar plunged to their lowest in more than 6-week on growing fears about the impact of a worsening U.S.-China trade conflict on global growth. The U.S. officials have accused China of reneging in the past week on substantial commitments made during months of negotiations aimed at ending their trade dispute. The major was trading 0.3 percent down at 109.93, having hit a low of 109.90 earlier, its lowest since Mar. 25. FxWirePro's Hourly Yen Strength Index stood at 140.67 (Highly Bullish) by 0400 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of Fed Brainard's speech. Immediate resistance is located at 110.58 (38.2% retracement of 111.68 and 109.90), a break above targets 111.07 (Feb. 27 High). On the downside, support is seen at 109.70 (Mar. 25 Low), a break below could take it lower at 109.13 (Jan. 29 Low).
GBP/USD: Sterling steadied, halting a 2-day losing streak after Britain's Conservative government held constructive and detailed talks with the opposition Labour Party on Tuesday as the two sides struggle to break a parliamentary deadlock over the country's exit from the EU. However, the upside lacks momentum amid rising concerns about the progress of Brexit negotiations and worries over Prime Minister Theresa May's leadership. The major traded at 0.1 percent up 1.3074, having hit a high of 1.3176 on Friday; it’s highest since Apr. 4. FxWirePro's Hourly Sterling Strength Index stood at -103.68 (Highly Bullish) 0400 GMT. Investors’ attention will remain on the UK Halifax house prices and BoE Ramsden's speech, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3132 (Apr. 12 High), a break above could take it near 1.3191 (Apr. 4 High). On the downside, support is seen at 1.3022 (Apr. 8 Low), a break below targets 1.2976 (Mar. 29 Low). Against the euro, the pound was trading 0.2 percent down at 85.70 pence, having hit a high of 84.88 on Monday, it’s highest since Mar. 27
AUD/USD: The Australian dollar rallied, extending gains for the third straight session, after the Reserve Bank of Australia kept its policy interest rate unchanged at 1.5 percent on Tuesday, defying expectations for a cut. However, the upside appears limited as trade figures out of China showed exports declined unexpectedly but imports surprised on the high side. The Aussie trades 0.2 percent up at 0.7022, having hit a low of 0.6962 on Monday, it’s lowest since Jan. 3. FxWirePro's Hourly Aussie Strength Index stood at 38.27 (Neutral) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6950, a break below targets 0.6921. On the upside, resistance is located at 0.7069 (Apr. 30 High), a break above could take it near 0.7110 (Mar. 19 High).
NZD/USD: The New Zealand dollar slumped to a 6-month low after the Reserve Bank of New Zealand cut its benchmark interest rate by 25 basis point to 1.5 percent for the first time in two-and-a-half years, stating more stimulus was required to support employment and inflation. The Kiwi trades 0.2 percent down at 0.6589, having touched a low of 0.6525 earlier, its lowest level Nov. 1. FxWirePro's Hourly Kiwi Strength Index was at -90.23 (Slightly Bearish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6653 (May 3 High), a break above could take it near 0.6694 (Apr. 19 High). On the downside, support is seen at 0.6514 (Nov. 1 Low), a break below could drag it below 0.6474 (Oct. 4 Low).
Equities Recap
Asian shares plunged amid renewed worries over U.S.-China trade dispute and its potential impact on global growth.
MSCI's broadest index of Asia-Pacific shares outside Japan slumped 0.5 percent.
Tokyo's Nikkei fell 1.8 percent to 21,528.86 points, Australia's S&P/ASX 200 index eased 0.5 percent to 6,267.20 points and South Korea's KOSPI tumbled 0.2 percent to 2,171.79 points.
Shanghai composite index declined 0.3 percent to 2,916.52 points, while CSI 300 index traded 0.5 percent down at 3,702.08 points.
Hong Kong’s Hang Seng traded 0.7 percent lower at 29,144.05 points. Taiwan shares shed 0.4 percent to 10,944.19 points
Commodities Recap
Crude oil prices steadied as markets remained relatively tight amid U.S. sanctions on crude exporters Iran and Venezuela. International benchmark Brent crude was trading 0.6 percent higher at $70.16 per barrel by 0410 GMT, having hit a low of $68.82 on Monday, its lowest since Apr, 3. U.S. West Texas Intermediate was trading 0.6 percent up at $61.80 a barrel, after falling as low as $60.02 on Monday, its lowest since the Mar, 29.
Gold prices rose to a 1-week peak as renewed worries over U.S.-China trade dispute and its potential impact on global growth dented risk sentiment. Spot gold was 0.2 percent up at $1,286.24 per ounce by 0412 GMT, having touched a high of $1,287.14 earlier, its highest since May 1. U.S. gold futures edged 0.1 percent higher to $1,287 an ounce.
Treasuries Recap
The long-dated Japanese government bond prices edged, with the 20-year JGB yield and the 30-year yield dipping half a basis point each, to 0.355 percent and 0.535 percent, respectively. The 40-year yield lost one basis point to 0.570 percent. Ten-year JGB futures ticked up 0.05 points to 152.81.
The Australian government bond futures were firmer, with the three-year bond contract adding 3.5 ticks to 98.730, while the 10-year contract rose 4.5 ticks to 98.2500.
The yields on New Zealand's two-year paper dropped 8 basis points to an historic low of 1.34 percent.
The Canadian government bond prices were higher across a flatter yield curve. The two-year rose 8 Canadian cents to yield 1.580 percent and the 10-year was up 49 Canadian cents to yield 1.684 percent.
The gap between Canada's 2- and 10-year yields narrowed by 1.1 basis points to a spread of 10.4 basis points, its narrowest since April 1.
