Market Roundup
- EUR/USD -0.2%, USD/JPY +0.2%, GBP/USD -0.25%, EUR/CHF -0.35%
- DXY +0.1%, DAX -0.2%, FTSE -0.3%, Brent +0.7%, Copper -2.25%
- Eurozone Q1 GDP flash prelim 0.5% q/q, 1.7% y/y vs previous 0.4%/1.7%. 0.5%/1.7% forecast
- Eurozone March Producer prices -0.3% m/m, 3.9% y/y vs previous 0.0%/4.5%. -0.1%/4.1%
- UK April Construction PMI 53.1 va previous 52.2. 52.0 forecast. 4-month high
- German April seasonally adjusted Jobless total -15,000 to 2.543mln. Jobless change forecast -12,000
- German April seasonally adjusted Jobless rate steady at 5.8%
- UK will not pay 100 bln euro EU exit bill, says Brexit minister - Rtrs
- UK wants generous deal for EU residents post-Brexit - David Davis - Rtrs
- Britain must agree way of calculating exit dues - EU's Barnier - Rtrs
- Le Pen says euro a deadweight, capital controls an option if she wins power - Rtrs
- Centrist Macron seen beating Le Pen in run-off vote with 60% of votes - Opinionway poll - Rtrs
- Turkey's Erdogan says will "certainly" bring down interest rates, lower inflation - Rtrs
Economic Data Ahead
- (0800 ET/1200 GMT) MBA Weekly Mortgage Application Indices
- (0915 ET/1315 GMT) ADP National Employment Report (Apr) mkt +175k, prev +263k
- (1045 ET/1445 GMT) Markit Services PMI (final Apr) flash 52.5
- (1100 ET/1500 GMT) ISM Nonmanufacturing PMI (Apr) mkt 55.8, prev 55.2
- (1130 ET/1530 GMT) EIA Weekly Petroleum Status Report
Key Events Ahead
- (1000 ET/1400 GMT) FOMC resumes 2-day policy meeting
- (1500 ET/1900 GMT) FOMC policy statement
FX Beat
DXY:
The dollar index, which tracks the greenback against a basket of trade-weighted peers, rose on expectations that the U.S. Federal Reserve may raise rates in June. The DXY was up 0.1 percent at 99.058.
Strong support around 98.70 and any break below confirms further weakness, a decline till 98 is possible. On the higher side, near term resistance is around 99.15 (200- day MA) and any close above will take the index till 99.36 (daily Tenken-Sen)/100.03 (Apr 21st high)/100.33 (55- EMA). Minor trend reversal only above 100.05.
EURUSD:
EUR/USD is in consolidation phase between 1.08610 and 1.09500 for the past five trading days. Euro is trading on the higher side for the entire Apr series and any break above 1.09780 confirms further bullishness. It is currently trading around 1.09100.
On the lower side, minor weakness can be seen only below 1.08500 bottom formed after French election will drag the pair down till 1.08200/1.07850 (61.8% retracement of 1.06822 and 1.09508)/1.0745 (21 EMA).
The near term major resistance 1.09780 (50% retracement of 1.16163 and 1.03400) and any violation above will take the pair till 1.1000/1.1045.The minor resistance is around 1.09329 (61.8% retracement of 1.1299 and 1.03400).
GBP/USD:
Markets largely ignored a solid UK construction PMI report, GBP/USD staged a solid comeback and tested 1.2940 levels post-European open, before dropping back to 1.29 handle. The pound met fresh supply on the EU-Brexit directives delivered by the EU’s Chief Brexit Negotiator Barnier, citing that Brexit will have legal and human consequences.
The pair is facing major resistance around 1.29652 high made on Apr 28th 2017 and any violation above will take the pair till 1.3000. Bullish continuation can be seen only above 1.3000 level. On the lower side, near term support is around 1.28500 and any break the support will drag the pair till 1.27549 (Apr 21st low).
USD/JPY:
Broad-based US dollar strength supports USD/JPY higher. The pair has broken 50-DMA at 111.67, bias remains higher. Stiff resistance seen at 112.31 (Ichi cloud base), break above will see further upside. Momentum studies are bullish, RSI is strong at 62 levels and biased higher.
Weakness with chance of bearish reversal only below 50-DMA at 111.67. FOMC meeting and ADP employment report in focus for further impetus. On the higher side, any close above 112.20 will take the pair till 113/113.80.
USD/CHF:
USD/CHF has once again broken 200-day MA and declined till 0.98908. It is currently trading around 0.9906 0.02% lower.
The near term resistance is around 1.000 and any break above target 1.0024. Any break above 1.0024 will take the pair till 1.00413 (61.8% retracement of 1.03435 and 0.98135), 1.0120 and then 1.0170. On the lower side , support stands at 0.9860 and any decline below that will drag the pair till 0.9800.
AUD/USD:
AUD/USD plummets to weekly lows. Aussie dumped and was the worst performer amid AUD/NZD driven weakness and falling copper prices. AUD/USD has shown a decline after a jump near 200-day MA at 0.7550. It is currently trading around 0.7470 0.84% lower on the day.
On the lower side, near term support is around 0.7450 and break below targets 0.7380 (61.8% retracement of 0.71599 and 0.7749)/ 0.7330 (161.8% retracement of 0.74910 and 0.77493) likely. The pair’s near term resistance is around 0.7555 (200- day MA) and any break above targets 0.7610 (Apr 17th 2017 high)/0.7650.
Equities Recap
European markets in the red in early trade as markets pondered the chances of another rise in U.S. interest rates next month ahead of the Federal Reserve's May statement.
European indices retreated from 20-month highs on Wednesday. Around 1045 GMT, the Euro STOXX 50 index of leading European shares was down 0.02 percent at 3,577.50 points. France's CAC 40 and Germany's DAX were down 0.24 and 0.13 percent respectively.
The resource-heavy FTSE 100 dipped 0.28 percent to trade at 7,228.50 points, while Italy's FTSE MIB was down 0.22 percent at 20,688.50 points.
In Asia, the MSCI global share index was marginally lower on the day. China's CSI300 index closed down 0.4 pct at 3,413.13 points, while Shanghai composite index closed down 0.3 pct at 3,135.35 points.
Commodities Recap
Oil prices supported by higher-than-expected fall in U.S. crude stocks which revived bullish sentiment about easing oversupply.
Benchmark Brent crude edged higher from Tuesday's lows. On Wednesday, Benchmark Brent crude was up 37 cents at $50.83 a barrel at 0815 GMT. U.S. West Texas Intermediate (WTI) crude traded at $47.96 a barrel, up 30 cents following a 2.4 percent slide on Tuesday on concerns about falling OPEC compliance with its production-curbing deal.
Gold prices hovered near 3-week lows as the dollar firmed on expectations of rate hike from the U.S. Federal Reserve in June. Spot gold was down 0.2 percent at $1,253.86 per ounce at around 1000 GMT. U.S. gold futures fell 0.1 percent to $1,255.40 an ounce.
Silver was largely unchanged at $16.80 per ounce, after touching a fresh three-month low of $16.71. Platinum hit a four-month low of $911, before paring some losses to trade 0.2 percent down at $920.90. Palladium rose 0.9 percent to $807.35 per ounce.
Treasuries Recap
US: The U.S. Treasuries traded flat ahead of the Federal Reserve’s interest rate decision, due to be unveiled later in the day. The yield on the benchmark 10-year Treasury remained flat at 2.29 percent, the super-long 30-year bond yields hovered around 2.97 percent while the yield on short-term 2-year note traded 1 basis point higher at 1.27 percent.
UK: The UK gilts traded tad lower after reading the higher-than-expected construction PMI for the month of April, released today. The yield on the benchmark 10-year gilts, rose 1/2 basis point to 1.09 percent, the super-long 30-year bond yields traded flat at 1.72 percent and the yield on the short-term 2-year traded nearly 1 basis point higher at 0.08 percent.
German: The German bunds traded flat after witnessing a deeper fall in the country’s unemployment change for the month of April, offset by a fall in Eurozone’s producer prices. The yield on the benchmark 10-year bond, hovered around 0.32 percent, the long-term 30-year bond yields rose nearly 1 basis point to 1.11 percent and the yield on the short-term 2-year bond traded flat at -0.72 percent.
NZD: The New Zealand bonds gained at the time of closing as investors largely shrugged off the upbeat reading of the GlobalDairyTrade price auction, held later yesterday. Also, the country’s fall in Q1 unemployment rate failed to distract investors away from safe-haven assets. At the time of closing, the yield on the benchmark 10-year bond, slumped 1 basis point to 2.99 percent, the yield on 7-year note also slipped 1 basis point to 2.66 percent while the yield on the short-term 2-year note too traded 1 basis point lower at 2.06 percent.
AUS: The Australian government bonds rebounded as investors await the Reserve Bank of Australia (RBA) Governor Philip Lowe’s speech, scheduled to be held on May 4, besides the country’s trade balance data for the month of March, due on the same day. The yield on the benchmark 10-year Treasury note, slumped 1-1/2 basis points to 2.60 percent, the yield on 15-year note also rose a little over 1 basis point to 3.02 percent and the yield on short-term 2-year traded 1-1/2 basis points lower at 1.68 percent.
