Market Roundup
- Japan GPIF Pres Takahashi – Will embrace currency hedging – Nikkei.
- Japan plans to create 1.17 mln jobs by ‘20, to prepare Y500 bln+ extra budget for earthquake recovery, forcast more foreign workers – Nikkei.
- Work resumes at many quake-hit areas in Kyushu, Japan – Nikkei.
- Japan firms delay fiscal ’16 forecasts to factor in quakes – Nikkei.
- Time ticking for choice on Australia central bank chief.
- Reuters poll, news – RBNZ to keep OCR unchanged Thursday, cut by June, interest rate doves may cry as housing heats up.
- LME CEO Jones - Looking to tap Asian demand – Nikkei.
- Dalian iron ore comes off 20-month high as exchange imposes curbs.
Economic Data Ahead
- (0330 ET/0730 GMT) Sweden Mar PPI; last -0.1% m/m, -4.2% y/y.
- (0400 ET/0800 GMT) Italy Mar flash trade balance - non-EU; last E2.62 bln surplus.
- (0430 ET/0830 GMT) Great Britain Mar BBA mortgage approvals, 46.5k forcast; last 45.89k.
- (0730 ET/1130 GMT) United States Mar building permits – revised; prelim 1.09 mln AR, -7.7% m/m.
- (0830 ET/1230 GMT) United States Mar durable goods orders, +1.8% m/m forcast; last -3.0%.
- (0830 ET/1230 GMT) United States Mar - ex-transport/defense, +0.5%, +0.4% m/m forcast; last -1.3%, -2.1%.
- (0830 ET/1230 GMT) United States Mar – non-defense capital goods ex-air, +0.8% n/n forcast; last -2.5%.
- (0900 ET/1300 GMT) United States Feb CaseShiller 20, +0.1% m/m nsa, +0.8% m/m sa forcast; last unch,+0.8%.
- (0900 ET/1300 GMT) United States Feb CaseShiller 20, +5.5% y/y forcast; last +5.7%.
- (0945 ET/1345 GMT) United States Apr Markit PMI services/composite – flash; last both 51.3.
- (1000 ET/1400 GMT) United States Apr consumer confidence index, 96.0 forcast; last 96.2.
- (1000 ET/1400 GMT) United States Apr Rich Fed services/comp/mfg shipments indices; last 9, 22, 27.
- (1030 ET/1430 GMT) United States Apr Dallas Fed services revenues, sector outlook; last 6.4, -3.8.
Key Events Ahead
- N/A ECB conference in Frankfurt, various speakers.
- N/A UK DMO 2.5% 2065 Gilt syndication.
- (0700 ET/1100 GMT) ECB Pres Draghi, France Pres Hollande meeting in Paris.
- (0900 ET/1300 GMT) Italy E500-750 mln 2.35% 2024 index-linked BTP auction.
- (0930 ET/1330 GMT) ECB zero% 7-refi, E55 bln allotment forcast, E54.02 bln maturing.
- N/A FOMC begins two-day policy meeting.
- N/A Primaries in Connecticut, Delaware, Maryland, Pennsylvania, Rhode Island.
- (0840 ET/1240 GMT) BoC Gov Poloz speech in New York/13:50 press conference.
- (1230 ET/1630 GMT) ECB/Buba Weidmann speech in Rome.
- (1730 ET/2130 GMT) United States Tsy Sheets at Washington, DC US Chamber of Commerce China conference.
FX Beat
USD: The dollar index declined 0.1 percent to trade at 94.707, against a basket of major currencies on profit-taking ahead of central bank policy meetings in the United States and Japan scheduled later in the week.
EUR/USD: The euro trades flat at 1.1266, having rebounded from a low of 1.1215, in the previous session. The pair moves between a thin range of 1.1260 -1.1275. Investors are likely to retreat to the sidelines ahead of the Federal Reserve and BOJ policy decisions. The Fed is considered certain to stand pat on interest rates, while BoJ is expected to take further easing steps or expand its asset purchases. Later in the day, markets attention will remain series of U.S. economic data for further cues on the pair. The support is located at 1.1245 (Apr 15-Low), break below could drag the pair to 1.1233. On the upside, resistance is seen at 1.1281 (10-DMA).
USD/JPY: The Japanese yen edged 0.1 percent up to 111.05, pulling away from multi-week low against the dollar as investors adjusted positions ahead of the Bank of Japan policy review. The yen slumped late last week following speculation of further easing, however, it recovered some ground in the previous session as markets doubt that the BoJ will actually deliver fresh stimulus at its upcoming policy meeting. The greenback continues to drift lower, hovering towards session's low of 110.85. Immediate support is located at 110.64 (5-DMA), break below could drag the pair to 109.96. On the upside, resistance is seen at 111.29 (Session’s High).
GBP/USD: Sterling trades 0.1 percent higher at 1.4493, hovering towards a 10-week high against the dollar, struck on Monday as bets on Brexit eased after U.S. President Barack Obama backed Britain staying in the European Union. Sterling jumped almost 1 percent on Monday to as high as 1.4519, its strongest since Feb. 15. The pound hit a 6-week high of 77.49 pence per euro, while on a trade-weighted index, it gained half a percent to hit a 5-week high. Immediate resistance is located at 1.4508 (Session's High), break above could take the pair to1.4519 (Previous Session High). On the downside, support is located at 1.4404 (5-DMA).
AUD/USD: The Australian dollar edged down to 0.7707 and off an 10-month peak of 0.7836 touched last week, as investors remain cautious ahead of central bank’s policy decisions later in the week. The pair is weighed down by subdued commodity prices; however, it has rallied 0.7 percent so far this month and was up 4 cents for the year. Markets will now focus on U.S. durable goods release and also Australian CPI report for further cues, ahead of central banks meeting. Immediate support is located at 0.7693 (Apr 22 Low), break below could drag the pair to 0.7680. While the resistance is seen at 0.7728 (10-DMA).
NZD/USD: The New Zealand dollar rose 0.3 percent to 0.6879, drifting away from a low of 0.6836, hit in the previous session. The kiwi touched a high of 0.6887, however is still way off a 10-month high of 0.7040. Markets now await U.S. durable goods data and New Zealand Trade figures ahead of the Fed and the RBNZ policy decision for further momentum on the pair. Immediate resistance is located at 0.6893 (5-DMA), break above will take the pair above 0.6900 level. On the downside, support is seen at 0.6836 (Previous Session Low).
USD/CNY: The yuan trades almost unchanged against the dollar despite the central bank setting a firmer midpoint rate at 6.4882 per dollar prior to market open, 0.37 percent firmer than the previous fix of 6.5120. The spot market opened at 6.4890 per dollar and was trading at 6.4936 at midday, while the offshore yuan was trading 0.15 percent softer than the onshore spot at 6.5032 per dollar.
Equities Recap
Asian stocks retreated as investors are cautious about buying riskier assets ahead of the United States and Japan's central bank policy meetings in this week.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.3 percent. Taiwan stocks nudge up 0.3 pct at 8,581.57 points.
Hong Kong's Hang Seng index tumbled 0.5 percent; however, Chinese shares were flat, with the CSI 300 little changed and the Shanghai Composite edged down 0.1 percent.
Australia's S&P/ASX 200 index ended down 0.30 pct at 5,220.40 points, while Tokyo's Nikkei slumped 0.49 pct at 17,353.28, with Seoul shares up 0.24 pct.
Commodities Recap
Crude oil futures declined as analysts warned that fundamentals remain weak as a producer race for customers heats up in the Middle East. Front-month Brent crude futures were trading at $44.53 per barrel at 0618 GMT, down around 0.6 percent, from their last settlement. U.S. crude futures were at $43.10.
Gold prices eased as investors adjusted positions ahead of Bank of Japan and U.S. Federal Reserve policy meetings this week. Spot gold had edged down 0.1 percent to $1,236.26 an ounce by 0620 GMT, after gaining 0.5 percent in the previous session.
Treasuries Recap
The 10-year U.S. treasuries stood at 1.897 percent versus previous close of 1.902 percent.
Australian government bond futures fell to 1-month lows, with the 3-year bond contract off 2 ticks at 97.940. The 10-year contract also lost 2 ticks to 97.3350, while the 20-year contract was steady at 96.7650.
New Zealand government bonds were largely flat at the short end while yields were a tad higher at the long end. The spread between Australian and New Zealand 2-year bonds dropped to 8 basis points, the thinnest in three years.
Canadian government bond prices were lower across the maturity curve, with the benchmark 10-year falling 27 Canadian cents to yield 1.545 percent, while the 2-year price down 3.5 Canadian cents to yield 0.696 percent. The 10-year yield touched its highest since Dec. 7 at 1.564 percent, while its gap to the U.S. 10-year yield reached its smallest since Jan. 26 last year at -37 basis points.
