Market Roundup
- USD/JPY _0.17%, EUR/USD -0.28%, GBP/USD -0.33%
- DXY +0.18%, DAX -0.25%, Brent -1.5%, Iron -5.2%
- Germany Flash Q1 GDP 0.7% q/q vs 0.3% previous, 0.6% exp
- Germany Flash Q1 GDP 1.3% y/y vs 2.1% previous, 1.5% exp
- Germany Final Apr HICP -0.3% y/y vs -0.3% previous, -0.3% exp
- Germany Final Apr CPI -0.1% y/y vs -0.1% previous, -0.1% exp
- UK Mar Construction Output -4.5% y/y vs -0.4% previous, -2.7% exp
- EZ Flash Q1 GDP 0.5% q/q vs 0.3% previous, 0.6% exp
- EZ Flash Q1 GDP 1.5% y/y vs 1.6% previous, 1.6% exp
- Lagarde-BREXIT to hit UK econ very bad to very very bad
- EU referendum biggest risk to UK economy-IMF
- Riksbank Skingsley-don’t want SEK to appreciate too quickly
- BoJ Gov Kuroda says little new at Jiji News event
- Kuroda-won’t hesitate to ease more if needed
- Kuroda- economic risks tilted towards downside
- Japan E.Min Ishihara – Abenomics hasn’t failed, wages up 3 straight yrs
- Chilly Auckland officially the hottest place for luxury homes - Telegraph
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Census Bureau is likely to report that retail sales rose 0.8 percent in April after declining 0.4 percent in March. Retail sales, excluding automobiles, gasoline, building materials and food services, are expected to rise 0.3 percent after edging up 0.1 percent in March.
- (0830 ET/1230 GMT) The U.S. Labor Department is likely to show that producer price index rose 0.3 percent in April from -0.1 percent in March. In the 12 months through April, the PPI is likely to have gained 0.2 percent after a drop of 0.1 percent in March.
- (1000 ET/1400 GMT) The University of Michigan consumer sentiment survey is expected to show a pickup in the preliminary reading of 90 in May from a final number of 89 in April.
- (1000 ET/1400 GMT) The U.S. Commerce Department is expected to report that business inventories rose 0.2 percent in March, compared with a 0.1 percent drop in February.
- (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count.
Key Events Ahead
- (0830 ET/1230 GMT) Bank of England Monetary Policy Committee member Dr. Martin Weale's Speech.
- (1825 ET/2225 GMT) Federal Reserve Bank of San Francisco President John Williams speaks at the Sacramento Economic Forum in Sacramento.
FX Beat
USD: The dollar index, against a basket of currencies rose 0.1 percent to 94.307, its strongest since April 28.
EUR/USD: The euro trades 0.2 percent lower at 1.1348, having touched a low of 1.1328. The greenback was strengthened by the view that the U.S. Federal Reserve is still on course to raise rates. The short term trend is slightly weak as long as resistance 1.1455 holds. On the higher side any break above 1.1455 will take the pair to next level till $1.1500/1.1530 level. The minor resistance is around 1.1380/1.1420. The minor support is around 1.1350 and break below will target 1.1270/1.1200. Overall bearish invalidation above 1.16200 level.
USD/JPY: The Japanese yen edged up against the dollar, trading 0.1 percent higher at 108.86 yen after touching an early high of 108.51. The minor weakness can be seen only below 108 level. Any break below 108 will drag the pair down till 107.45 (Tenken-Sen)/106.99 (61.8% retracement of 105.54 and 109.36). On the higher side major resistance is around 109.50 and any indicative break above targets 110/110.75.
GBP/USD: Sterling declined towards its lowest in 3-weeks against the dollar after Bank of England Governor Mark Carney warned of a recession if Britain votes on June 23 to exit the European Union. Sterling trades 0.1 percent lower at 1.4421, having touched a low of 1.4378. Against the euro it was flat at 78.705 pence. The short term trend is still bearish as long as resistance 1.4550 holds. The immediate resistance is around 1.4450 and break above targets 1.4500/1.4550 level. Any break below 1.4365 (200 day 4 HMA) will drag the pair down till 1.4296 (55 DMA)/1.4240 level.
USD/CHF: The Swiss franc lost ground against the dollar, trading at 0.9706 after making an early low of 0.9743. The greenback rose after declining in the previous two sessions, pulling away from a low of 0.9663, struck in the previous session. The short term trend is slightly bearish as long as resistance 0.9780 holds. On the higher side any break above 0.9780 will take the pair to next level till 0.9800/0.9850. The short term trend is reversal only above 0.9800. Any violation below 0.96430 will drag it down till 0.9575/0.9530/0.9500.
AUD/USD: The Australian dollar declined to an 11-week trough after another slide in commodities hurt investors risk sentiment. The Aussie trades 0.5 percent lower at 0.7286, having dropped as low as 0.7276, its weakest reading since early March. The short term trend is slightly bearish as long as resistance 0.7340 (4 H Kijun-Sen) holds. On the higher side major resistance is around 0.7340 and break above targets 0.7380/0.7410.The minor resistance is around 0.7300, while the major support is around 0.7259 and break below will drag the pair till 0.7200/0.710.
NZD/USD: The New Zealand dollar slipped to 0.6784, from an early high of 0.6830, however remained well supported as the market continues to pare expectations of a June rate cut. The kiwi trades 0.2 percent lower at 0.6799, on course for weekly losses. Immediate support is located at 0.6784 (Session Low), while on the higher side, resistance is seen at 0.6847 (10-DMA).
Equities Recap
European shares declined as the dollar was set for a second week of gains, with investors cautious ahead of U.S. and Chinese data releases.
Europe's FTSEurofirst 300 was down 0.27 pct to 1,304.36 points, Britain's FTSE 100 lost 0.5 pct, France's CAC declined 0.78 pct and Germany's DAX dropped 0.73 pct.
Tokyo's Nikkei average slumped 1.41 pct at 16,412.21, Australia's S&P/ASX 200 index ended down 0.73 pct at 5,320.10 points, MSCI's broadest index of Asia-Pacific shares outside Japan was down 1.1 percent, and on track for its third straight weekly decline.
Shanghai composite index ended down 3 pct for the week, while CSI300 index closed down 0.5 pct at 3,074.94 points. HK’s Hang Seng index edged down 1.0 pct at 19,719.29 points
Commodities Recap
Oil prices declined, ending a 3-day bull run as a strong dollar made it more expensive to hold oil positions; however losses were limited by Nigerian outages that have slashed output to the lowest in 22 years. Global benchmark Brent crude futures were down at $47.68 a barrel at 1118 GMT. U.S. West Texas Intermediate crude futures traded at $46.20 a barrel, down 50 cents day on day.
Gold edged higher after losing more than 1 percent the previous session, however was on course for its biggest weekly decline since March. Spot gold was up 0.8 percent at $1,273.79 an ounce by 1120 GMT, after dropping 1.1 percent on Thursday. It has lost 1.2 percent so far for the week. U.S. gold for June delivery rose 0.3 percent to $1,274.50 an ounce.
Treasuries Recap
U.S. Treasuries strengthened after Fed Chair Janet Yellen said that she would not completely rule out the use of negative interest rates in some future very adverse scenario, which reduces the possibilities for a hike June. Also, tumbling crude oil prices and weak equities markets drove investors towards safe assets. The yield on the benchmark 10-year bonds fell 3bps to 1.728 pct by 1130 GMT. Markets now await for lighter flow of data, highlighted by retail sales, producer prices, business inventories and University of Michigan consumer sentiment releases on Friday.
The European bonds gained as investors pour into safe-haven assets amid deepening economic growth fears after reading weaker than expected Q1 Gross Domestic Product (GDP) figure. Also, losses in riskier assets including stocks and oil supported the cause. The benchmark German 10-year bonds yield fell 2bps to 0.134 pct, French 10-year bunds yield dipped 2bps to 0.487 pct, Italian equivalents tumbled 2bps to 1.481 pct, Spanish 10-year bonds yield inched lower 1bps to 1.619 pct and Portuguese 10-year bonds yield fell 3bps to 3.211 pct, Netherlands 10-year bonds yield moved down 2bps to 0.354 pct, British 10-year bonds yield fell 2bps to 1.263 pct by 0910 GMT.
The Irish bonds strengthened as investors were cautious ahead of Moody’s ratings review that may end with an upgrade for Europe's fastest growing economy. The yield on the benchmark 10-year bonds fell 3bps to 0.836 pct by 1055 GMT.
The U.K Gilts were trading higher as weak risk sentiments among investors drove them towards safe-haven assets. Also, rising worries about the up-coming June referendum supported the cause. The yield on the benchmark 10-year bonds fell 2bps to 1.380 pct by 0945 GMT.
The German bunds rallied as investors pour into safe-haven assets after consumer inflation continue to decline in April amid losses in riskier assets including stocks and oil. The yield on the benchmark 10-year bonds fell 2bps to 0.138 pct by 0700 GMT.
The Indian government bonds traded lower after data showed higher than expected April retail inflation figure, which raised concerns that the Reserve Bank of India (RBI) may not be able to slash rates at the up-coming policy meeting. The yield on the benchmark 10-year bonds, which moves inversely to its price rose 3bps to 7.450 pct by 0825 GMT.
The Japanese government bonds traded marginally firmer on following weak equities and volatile crude oil prices. The yield on the benchmark 10-year bonds fell 1bp to -0.111 pct by 1140 GMT.
The Australian government bonds were trading marginally firmer as investors pour into safe-haven assets amid losses in riskier assets including stocks and oil. The yield on the benchmark 10-year Treasury note which moves inversely to its price fell 1bps to 2.282 pct by 0510 GMT.
