Market Roundup
- Japan ChiefCabSec Suga - G20 pact does not rule out Japan intervention, will take steps as necessary, recent FX moves one-side, speculative, excessive FX volatility, disorderly markets hurt economy.
- Specs slash US net longs to smallest since late March ’14, net JPY longs highest since early March this year, EUR shorts smallest since late February.
- Japan February core machinery orders -9.2% m/m, -0.7% y/y, -2.7% and -12.4% eyed, weak but not as weak as eyed, prognosis not good for Q1, JPY stronger.
- Beijing risks 'ERM-style' currency crisis as deflation persists in China - Ambrose Evans-Pritchard, Daily Telegraph.
- Bank of Italy conducting inspection of Bank of China offices.
- China March CPI -0.4% m/m, +2.3% y/y, -0.3% and +2.5% eyed, food CPI +7.6% y/y, non-food +1.0%.
- China March PPI +0.5% m/m, -4.3% y/y, -4.6% y/y eyed, pace of decline slower.
- World Bank cuts ’16 developing East Asia-Pacific growth forecast to 6.3%, previously 6.4%, ’17 to 6.2% vs 6.3%, risk to outlook down.
- Australia February owner-occupied housing finance +1.5% m/m, +2% eyed, value of investment housing finance +4.1%.
- NZ March electronic card retail sales +0.1% m/m, +6.2% y/y.
- Germany denies would mull legal action if ECB opts for chopper money.
- ECB/BdF Villeroy – ECB not short on ammunition.
- ECB/BoI Visco – Risks of deflationary spiral in Italy.
- ECB Mersch – Policy must be proportionate and respect rules.
Economic Data Ahead
- (0400 ET/0800 GMT) Italy February industrial output, -0.7% m/m, +1.6% y/y eyed; last +1.9%, +3.9%.
- (0400 ET/0800 GMT) Norway March CPI, +0.4% m/m, +3.2% y/y eyed; last +0.5%, +3.1%.
- (0400 ET/0800 GMT) Norway March – core, +0.3% m/m, +3.3% y/y eyed; last +1.0%, +3.4%.
- (0400 ET/0800 GMT) Norway March PPI; last 14.9% y/y.
Key Events Ahead
- N/A Norway NOK4 bln NST34 11-month Treasury bill auction.
- (0530 ET/0930 GMT) Germany E3 bln 6-month Bubill auction.
- (0855 ET/1255 GMT) France E3.3-3.7/1.2-1.6/1.1-1.5 bln 3/6/12-month BTF auctions.
- (1300 ET/1700 GMT) Dallas Fed Kaplan speaks at Ruston, Texas Fed forum.
FX Recap
USD: The dollar fell as far as 107.63 yen, surpassing last week's trough of 107.67 and extending last week's 3.3 percent drop. It has since drifted back to 107.91, down 0.2 percent on the day.
EUR/USD: The euro stood at $1.1410 against the greenback, not far from a six-month peak of $1.1454. Pair remains well supported above $1.14 marks and trading around $1.1410 mark. Intraday bias remains bullish till the time pair holds key support level at $1.1314. A daily close above key resistance at 1.1402 will drag the parity up towards $1.1469 marks. On the down side, key support level is seen at $1.1159/ $1.1057 marks.
USD/JPY: The Japanese Yen breaks key support at 108.04 and trading around 107.82 marks. A daily close below key support level at 108.04 will drag the parity down towards 107.51 marks. On the top side, key resistance levels are seen at 109.67/112.60/114.87/115.96 levels. Private sector machinery orders excluding ships and utility items fell a seasonally-adjusted 9.2% month-on-month in February, according to data released by Japan's Cabinet Office on Monday, after surging 15% in January. Analysts expected 11.9% decline in machinery orders in February.
GBP/USD: The sterling erases previous gain against US dollar and supported above $1.41 marks. A sustained break below key support $1.4108 level will drag the parity down at $1.4057 marks. A daily close above $1.4357 will take the parity up towards key resistances at $1.4504/$1.4602.
AUD/USD: The Australian dollar rose to $0.7566, having slipped 1.6 percent last week in the second-largest weekly loss this year. It has dropped around two cents since touching a nine-month peak of $0.7723 late March with much of the retreat due to a steep rise in the yen. Pair remains well supported above 0.7498 marks and trading around 0.7561 levels. Intraday bias remains bullish till the time pair holds key support at $0.7510 levels. On the other side, a sustained close above $0.7672 will drag the parity up towards $0.7725 levels. On the downside, a sustained break below $0.7433 support levels will turn bias back to the downside for retesting 0.7365 low. Today Australia released home loans data with negative numbers at 1.5% m/m vs -4.4% previous release.
NZD/USD: The New Zealand dollar rose 0.2 percent to $0.6811, from a low of $0.6773 touched on Friday, benefiting from improving oil prices. It fell 1.6 percent last week. Short term bias remains bullish till the time pair holds key support at $0.6758. Key support was found at $0.6750, with resistance at $0.7002 levels.
Equities Recap
The Nikkei 225 index plummeted 1.01% to 15,661.76 points within the first hour of trade, while the broader Topix index plunged 1.28% to 1,271.16 points.
Chinese markets opened the week on a mixed note, with Hong Kong's Hang Seng index was trading 0.64% higher to 20,504.21 points and the Shanghai Composite rallying 1.41% to 3,027.09 points.
South Korea's Kospi index slipped 0.14% lower to 1,969.73 points on Monday morning.
Australia's main index, the S&P/ASX 200, fell 0.10% to 4,932.70 points on Monday morning in Sydney.
In New Zealand the benchmark S&P/NZX 50 index was trading little down at 6,724.76 points on Monday afternoon.
Commodities Recap
Oil prices rose on Monday, extending a sharp rally seen at the end of last week after a drop in U.S. inventories and drilling, while outages and hopes that exporters could freeze output also supported prices. Oil futures were further underpinned as analysts forecast that global oil demand could accelerate, helping tighten a market that has suffered from oversupply since mid-2014. U.S. crude rose above $40 a barrel in early trading but eased to $39.91 by 0349 GMT, up 19 cents from Friday's close. Brent was up 16 cents at $42.10 a barrel.
Gold jumped to its highest in nearly three weeks on Monday as cautiousness in global equities and the dollar underpinned demand for the metal. Spot gold rose to $1,247.60 an ounce early on Monday, its highest since March 23. It later pared some gains to trade up 0.4 percent to $1,245.30 an ounce by 0036 GMT, following its best weekly gain in five weeks on Friday.
Treasuries Recap
New Zealand government bonds eased, sending yields around 3 basis points higher across the curve.
Australian government bond futures were quiet near one-month highs, with the three-year bond contract steady at 98.210. The 10-year contract dropped half a tick lower at 97.5950, while the 20-year contract eased 1 tick to 97.0100.
U.S. 10-year treasuries yield at 1.717 percent vs U.S. close of 1.722 percent on Friday.
BOJ offers to lend Y 3.2496 trln of JGBs on spot basis through 4/12 as a secondary source of JGBs
