Market Rounup
- Senior Japan MoF off’l – Recent FX moves one-sided, will take steps if needed, closely watching FX market moves – Reuters.
- Ex-MoF/IMF Shinohara – Intervention unlikely, would be ineffective, unlikely to gain G7 consent, USD/JPY fall in line with fundamentals – Reuters.
- BoJ Gov Kuroda – Will ease more via quantity-quality-rates if necessary, trend for moderate economic recovery but output-exports weak, inflation likely near zero for now but will accelerate towards 2% - Reuters.
- MoF flow data week-ended Apr 2 – Japanese sell net Y50.1 bln foreign stocks, Y1.5551 trln bonds, buy Y65.1 bln bills; foreign investors buy net Y415.2 bln Japanese stocks, Y30.2 bln bonds, sell Y3.7700 trln bills.
- Japan end-March foreign reserves $1.262 trln, +$7.95 bln from end-Feb.
- Dallas Fed Kaplan – Fed should be patient, gradual about rate hikes, election year not factor in rate hike decisions, US to grow 1.9% but to take time to meet inflation target, conditions outside US must be considered – Reuters.
- RBNZ DepGov Bascand – Labor supply factor in keeping policy accommodative, concerned decline in inflation expectations may become embedded – Reuters.
Economic Data Ahead
- (0300 ET/0700 GMT) United Kingdom Mar Halifax house prices, +0.9% m/m forecast; last -1.4%.
- (0300 ET/0700 GMT) Spain Feb industrial output, +3.2% y/y forecast; last +3.5%.
- (0400 ET/0800 GMT) Norway Feb manufacturing output, -0.1% m/m forecast; last -1.0%.
- (0830 ET/1230 GMT) United States w/e initial jobless claims, 270k forecast; last 276k.
- (1500 ET/1900 GMT) United States Feb consumer credit, $14.74 bln forecast; last $10.54 bln.
Key Events Ahead
- N/A ECB Praet, Coeure, Visco speak at Frankfurt conference.
- N/A Sweden SEK500 mln each 1.0/0.125% 2025/32 inflation-linked bond auctions.
- (0300 ET/0700 GMT) ECB VP Constancio presents annual report to European parliament.
- (0430 ET/0830 GMT) Spain E3-4 bln 0.75/1.95/2.9% 2021/26/46 Bono auctions.
- (0430 ET/0830 GMT) Spain E1 bln 1.0% 2030 index-linked Bono auction.
- (0450 ET/0850 GMT) France E7-8 bln 0.5/0.5/1.5% 2025/26/31 OAT auctions.
- (0530 ET/0930 GMT) United Kingdom DMO GBP2.5 bln 1.5% 2026 Gilt auction.
- (0730 ET/1130 GMT) ECB March meeting minutes.
- (0900 ET/1300 GMT) Norges Bank Gov Olsen address in Oslo.
- N/A New York Women in the World Summit.
- (1730 ET/2130 GMT) FOMC Chair Yellen in discussion at New York event.
FX Beat
USD: The dollar slid to a 17-month low against the yen pressured by minutes of the Fed's meeting last month that raised caution about future interest rate hikes. The dollar index stoodat 94.103, its lowest since October last year.
EUR/USD: The euro rose to 1.1450, supparsing a 5-1/2-month high of 1.1438 touched last week. The pair continues to rise, hovering towards sessions high of 1.1454. Markets will continue to remain cautious on Fed monetary policy stance as minutes from the Fed's March 15-16 policy meeting suggested that the central bank appears unlikely to raise interest rates before June due to global economic slowdown. Markets now await ECB meeting minutes and U.S. weekly jobless claims figures ahead of Fed's Yellen speech. Immediate ressitance is located at 1.1454 (Session's High), while support is located at 1.1336 (10-DMA).
USD/JPY: The Japanese yen gained 0.85 percent to 108.85, its strongest against its U.S. counterpart since October 2014. Bank of Japan policymakers are likely to debate the possibility of easing further at their next policy meeting, as recently downbeat economic data has failed to reinforce their expectations that a moderate economic recovery would lift inflation towards their 2 percent target. The major will continue to track the broader market sentiment, while traders will await US jobless claims for fresh cues ahead of Yellen’s speech.
AUD/USD: The Australian dollar nudged up to 0.7627, closer to a recent 9-month peak of 0.7723, after bouncing 0.7 percent up in the previous session. The Assuie was boosted by firmness in crude oil prices and the Fed's last meeting minutes, which showed Fed reluctant to hike further amid global uncertainty. However, it is still down a cent for the week, after the Reserve Bank of Australia stated that a further rise in the currency would not be helpful to the economy. Markets now await U.S. weekly jobless claims for further cues on the pair. The pair faces resistances at 0.7678 (Apr 4 High), while support is located at 0.7580 (20-DMA).
NZD/USD: The New Zealand dollar held its gains after a bounce in oil prices and a cautious U.S. Federal Reserve aided investor sentiment, increasing the demand for risk assets. The kiwi trades around 0.6841 levels, up from 0.6773 the previous day. It rose overnight, halting the previous four session's bearish trend as market's sentiment improved facilitated by upbeat Chinese economic activity yesterday. The economic calender is empty for the kiwi, hence the focus will remain on U.S. unemployment claims figures scheduled later in the day. Immediate resistance is located at 0.6903 (Apr 4 High), while on the downside, support is seen at 0.6777 (20-DMA).
USD/CNY: The yuan firmed against the dollar after the central bank set the midpoint rate at 6.4707 per dollar prior to market open, 0.07 percent firmer than the previous fix of 6.4754. In the spot market, the yuan opened at 6.4727 per dollar and was trading at 6.4714 by midday in range-bound trade, strengthening 0.16 percent from the previous late session close. The
offshore yuan was trading 0.18 percent softer than the onshore spot at 6.4829 per dollar.
Equities Recap
The profit-eroding rise in the yen kept the Asian shares sligthly up despite a big bounce in the energy and healthcare sectors.
Tokyo's Nikkei gained 0.22 pct at 15,749.84. MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.5 percent.
Australia's S&P/ASX200 index nudged up 0.33 pct at 4,962.40 points, while Taiwan stocks edged down 0.3 pct at 8,490.25 points, with Seoul shares 0.09 pct up.
Commodties Recap
Crude futures rose on the back of supportive indicators, although some traders warned that physical supply and demand fundamentals did not warrant a strong price recovery at this stage. International Brent futures advanced above $40 per barrel in early trading and stood at $40.02 at 0703 GMT, up 26 cents from the last close and about 8 percent above lows reached earlier this week. Front month U.S. West Texas Intermediate crude futures were trading at $38.09 per barrel, up 34 cents from their last close and also 8 percent above their April lows.
Gold ticked up after minutes from the Fed's last policy meeting showed caution over U.S. interest rates, but the gains were capped by a rebound in equities. Spot gold had gained 0.5 percent to $1,228.60 an ounce by 0705 GMT, after dipping 0.7 percent in the previous session. Spot gold rose 16 percent in the first quarter of the year on speculation the Fed may delay hiking rates.
Treasuries Recap
The 10-year U.S. treasury yield at 1.756 percent versus previous close of 1.753 percent.
Longer-dated Japanese government bond prices edged up as the market drew comfort from firm investor demand at a liquidity-enhancing debt auction. The benchmark 10-year yield was little changed at minus 0.060 percent, while the 20-year yield dipped half a basis point to 0.360 percent.
Australian government bond futures pulled back from 1-month highs, with the 3-year bond contract off 3 ticks at 98.140. The 10-year contract eased 4 ticks to 97.5300, while the 20-year contract fell 4.5 ticks to 96.9350. New Zealand government bonds gained, sending yields 1 basis points lower at the short end of the curve and 1.5 basis points lower at the long end.
Canadian government bond prices were lower across the maturity curve, with the two-year price falling 5 Canadian cents to yield 0.545 percent and the benchmark 10-year down 40Canadian cents to yield 1.211 percent.
