Market Roundup
- EUR/USD -0.33%, USD/JPY -0.15%, GBP/USD -0.26%, EUR/GBP -0.09%
- DXY 0.31%, DAX -0.45%, FTSE 0.09%, Brent -0.88%, Gold -0.33%
- Trump to reveal Iran deal decision, Tehran defiant as rial falls
- Fed to communicate clearly to avoid market disruptions -Powell
- GB Apr Halifax House Prices MM, -3.1%, -0.2% f'cast, 1.6% prev (r)
- GB Apr Halifax House Price 3M/YY, 2.2%, 3.3% f'cast, 2.7% prev
- DE Mar Industrial Output MM, 1.0%, 0.8% f'cast, -1.7% prev (r)
- DE Mar Exports MM SA, 1.70%, 1.75% f'cast, -3.10% prev (r)
- DE Mar Imports MM SA, -0.9%, 0.9% f'cast, -1.4% prev (r)
- DE Mar Trade Balance, EUR, SA, 22.0 bln, 19.8 bln f'cast, 19.4 bln prev (r)
- BOJ has set its sight on stimulus exit - ex-c.banker Kiuchi
- China April exports bounce back more than expected despite U.S. trade brawl
- White House says China trade talks to resume in Washington next week
- China encourages banks, brokerages to buy more local gov't bonds
- Deepening divisions, Britain's Johnson calls customs plan "crazy"
Economic Data Ahead
- (0855 ET/1255 GMT) U.S. Redbook MM, 0.5% prev
- (0855 ET/1255 GMT) U.S. Redbook YY, 3.5% prev
- (1000 ET/1400 GMT) U.S. Mar JOLTS Job Openings, 6.10 mln f'cast, 6.05 mln prev
- (0815 ET/1215 GMT) CA Apr House Starts, Annualized, 220k f'cast, 225.2k prev
Key Events Ahead
Bank of Finland's Erkki Liikanen and Olli Rehn speak about future of payments – Helsinki
FX Beat
DXY: U.S. dollar was broadly steady after rising above 92.97 on Monday as markets further unwound short bets against the greenback built up in recent months pushing the dollar index up for fourth consecutive week. DXY has breached 1W 55-EMA at 92.93, on track for further upside.
EUR/USD: EUR/USD extends grind below 200-DMA, slumps to fresh 2018 lows near 1.1870. The major is trading 0.40% lower on the day. Bears strongly in control, Technical studies support further weakness in the pair. We see scope for test of major trendline support at 1.1855. Break below will open up downside till 1.1709 (38.2% Fib). On the flipside, 200-DMA is immediate resistance at 1.2017. Retrace and close above could negate bearish bias.
GBP/USD: Sterling on the weak side ahead of the BoE's Thursday rate showing. Cable hovers around 200-DMA at 1.3540, close below will see further downside. Markets expect the Bank of England (BoE) to possibly walk back their long-anticipated May rate hike in the face of recently dovish-turning economic data. Any hawkish surprise will see sharp spikes. Overall picture as depicted by Technical indicators still leans bearish.
USD/CHF: USD/CHF corrects lower from 12-month highs at 1.0056. The major still holds above parity and finds strong support at 5-DMA at 1.00. We foresee some consolidation at highs. Technical studies are still biased higher with no major signs of reversal. 1H 110-EMA at 0.9990 is strong support below 5-DMA and breach at 1H 110-EMA could see minor downside. An overall strong USD demand combined with a dovish SNB to keep the pair supported. 1M 110-EMA at 1.0032 is strong resistance and close above for the month will see further gains.
USD/JPY: USD/JPY slips lower as Greenback fails to hold onto gains. Upside was capped at 5-DMA at 109.40. Price action rages in a narrow range on the day. The pair has formed a 'Bearish Cypher' pattern on daily charts which keeps scope for downside. The major finds strong support at 100-DMA at 108.63, break below will see drag lower. On the flipside 5-DMA is immediate resistance at 109.23. Break above to see next major resistance at 110.18 (200-DMA). Focus remains on speech by the US Fed's Jerome Powell due at 09:00 GMT.
EUR/JPY: EUR/JPY extends bearish momentum, targets 38.2% Fib at 128.85. Break below daily cloud has opened room for further downside. Technical indicators on weekly charts are bearish. Violation at 38.2% Fib could see further weakness. Price has broken below 1W 55-EMA at 130.10, and upside remains capped below 1W 20-SMA. We see major resistance at 20W SMA at 132.56, bearish invalidation only on break above.
Equities Recap
European shares are seen steady to slightly firm on Tuesday. The pan-European STOXX 600 index was down 0.19 percent at 388.76 points, while the FTSEurofirst 300 index slipped 0.41 percent to 1,591.20 points.
Britain's FTSE 100 trades 0.13 percent up at 7,577.09 points, while mid-cap FTSE 250 gained 0.68 percent to 20,559.96 points.
Germany's DAX fell 0.43 percent at 12,892.11 points; France's CAC 40 trades 0.42 percent lower at 5,508.10 points.
Commodities Recap
Oil prices retreated from 3-1/2 year highs at 70.80 and are trading in a narrow range on the day as markets await Trump decision on Iran. U.S. West Texas Intermediate (WTI) crude futures had dropped 78 cents, or 1.1 percent, to $69.95 a barrel by 0550 GMT. Brent crude futures were down 67 cents, or 0.9 percent, at $75.50.
Spot gold was down about 0.1 percent at $1,313.20 per ounce at 0635 GMT as commodities remain pressured by strong USD. U.S. gold futures for June delivery were unchanged at $1,314.10 per ounce.
Silver gained 0.2 percent to $16.48 an ounce, while platinum rose 0.2 percent to $909.65 an ounce. Palladium was down 0.3 percent to $969 an ounce.
Treasuries Recap
U.S.: The U.S Treasuries traded flat Tuesday ahead of the Federal Reserve Chair Jerome Powell’s speech, scheduled to be delivered today by 12:45GMT. Also, later in the day, the JOLTs job openings data and President Donald Trump’s speech can be witnessed, respectively at 19:30GMT and 23:30GMT, for further direction in the debt market. The yield on the benchmark 10-year Treasuries remained flat at 2.95 percent, the super-long 30-year bond yields hovered around 3.12 percent and the yield on the short-term 2-year traded tad higher at 2.50 percent.
EUR: The German bunds fell during European session Tuesday as investors moved away from safe-haven assets, after witnessing a higher-than-expected trade balance for the month of March. The German 10-year bond yields, which move inversely to its price, rose nearly 1-1/2 basis points to 0.54 percent, the yield on 30-year note jumped close to 2 basis points to 1.22 percent and the yield on short-term 2-year traded flat at -0.56 percent.
NZD: New Zealand bonds ended on a higher note Tuesday as investors wait to watch the Reserve Bank of New Zealand’s (RBNZ) monetary policy decision, scheduled to be unveiled on May 9, followed by a press conference later in the day. Also, the focus remains on the central bank Governor Adrian Orr’s first policy decision speech, due on May 10 for added insights into the debt market. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, slumped 1-1/2 basis points to 2.77 percent, the yield on the long-term 20-year note also plunged 1-1/2 basis points to 3.32 percent and the yield on short-term 2-year closed flat at 1.89 percent.
JGBs: The Japanese government bonds faltered during Asian session Tuesday as investors’ risk sentiments improved, although the steady demand from the latest 10year auction held early today, helped to cushion further losses. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose nearly 1 basis point to 0.04 percent, the yield on the long-term 30-year note climbed nearly 1-1/2 basis points to 0.74 percent and the yield on short-term 2-year traded tad higher at -0.12 percent.
AUD: Australian government bonds gained on Tuesday following weaker-than-expected March retail sales data, hinting that weaker consumer spending could drag overall economic activity. That dragged the benchmark 10-year Note yield to over 3-week low of 2.740. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, fell over 2 basis points to 2.740 percent, the yield on the long-term 30-year Note dipped 3 basis points to 3.251 percent and the yield on short-term 2-year slumped nearly 1/2 basis point to 2.023 percent.
