Market Roundup
- Japan ground zero for NIRP's global distortions
- Ex-MoF/IMF Shinohara: Intervention unlikely, would be ineffective
- Shinohara: Intervention unlikely to gain G7 consent, USD/JPY fall in line with fundamentals
- BOJ's Nagoya head: No damage to auto exports from strong yen
- Senior Japan MoF official: Recent FX moves one-sided, will take steps if needed
- Senior Japan MoF official: Closely watching FX market moves
- BoJ Gov Kuroda: Will ease more via quantity-quality-rates if necessary
- Kuroda: Trend for moderate economic recovery but output-exports weak
- Kuroda: Inflation likely near zero for now but will accelerate towards 2%
- MoF flow data w/e Apr 2 – Japan sell net Y50.1bn foreign stocks, Y1.5551tn bonds, buy Y65.1bn bills
- MoF flow- Foreigners buy net Y415.2bn Japanese stocks, Y30.2bn bonds, sell Y3.7700tn bills
- Japan end-March foreign reserves $1.262tn, +$7.95bn from end-Feb
- China end-March FX reserves $3.21tn vs $3.20tn from end-Feb
- Australian iron ore & steel group Arrium enters administration
- ECB Constancio: Helicopter money not on the table
- ECB Praet: Helicopter money “not on the table”
- Dutch voters reject EU-Ukraine treaty, 32% turnout
- UK Mar Halifax house prices +2.6%m/m vs -1.4% previous, 0.7% exp
- UK Mar Halifax house prices +10.1%y/y vs 9.7% previous, 9.5% exp
- UK PM Cameron urges young Britons to vote against Brexit
- UK Govt to send anti-Brexit leaflet to every UK household
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Labor Department is likely to report that new applications for state unemployment benefits have declined to 270,000 last week from 276,000 the prior week, as the labor market continues to gain momentum. While continuing claims for the week ending Mar 25 likely increased to 2.189 M from 2.173 M.
- (1500 ET/1900 GMT) The Federal Reserve is expected to report that consumer credit increased to $14.00 billion in the month of February from $10.54 billion in January.
- (0830 ET/1230 GMT) The Statistics Canada is likely to show that building permits rebounded by 4.8 percent in February, partially reversing the steep decline seen in the previous month.
- (0900 ET/1300 GMT) Mexico’s statistics institute releases inflation data for the month of March.
- (1950 ET/ 2350) Japan's Customs Office will release Trade Balance figures for the month of February. The economy posted a trade deficit of Y411 billion in the prior month.
- (1950 ET/ 2350) Japan's Ministry of Finance reports its Current Account (N.S.A) data for the month of February.
Key Events Ahead
- (1145 ET/1545 GMT) NY Fed purchases up to $1.10 bn 30-year Ginnie Mae securities
- (1730 ET/2130 GMT) Fed's Janet Yellen and her three predecessors - Ben Bernanke, Alan Greenspan, and Paul Volcker - will discuss in the Paul A. Volcker Distinguished Speaker Program in New York.
- (2015 ET/0015 GMT) The Federal Reserve Bank of Kansas City President Esther George could give clues on divisions over rate path before an economic forum hosted by the Federal Reserve Bank of Kansas City's Omaha Branch.
FX Beat
USD: The dollar was broadly under pressure after minutes of the Fed's last policy meeting highlighted its caution about future interest rate hikes. Against a basket of currencies, the dollar index declined to 94.389, its lowest since October last year.
EUR/USD: The euro trades down at 1.1388, after going as high as 1.1453 earlier in the session. The pair has recovered from the low of 1.1326 after dovish FOMC minutes confirms that Fed funds rate will be steady in the near term with further tightening likely to be delayed until 2016 end. The major resistance is around 1.14380 and nay break above confirms minor trend reversal, a jump till 1.1500/1.1545 is possible. On the lower side minor support is around 1.1380 and break below targets 1.1320/1.1280/1.1250. Minor trend is reversal only below 1.1320.
USD/JPY: The Japanese yen gained to a 17-month high against the dollar and surged up 9.6 percent so far this year. The pair broken major support 110 and declined till 108.01 in the session, before edging up to 108.44. The short term trend is slightly bearish as long as resistance 110 holds. On the lower side any break below 108 will drag the pair down till 106.5/105.
The major resistance is around 110 and break above targets 111.25/112.
GBP/USD: Sterling declined to its weakest level in almost 2-1/2 years against a basket of currencies, with demand hampered by persistent Brexit concerns. Sterling fell 0.4 percent to 1.4073, while against the euro it dropped as much as half a percent to a 22-month trough of 81.17 pence. The cable has recovered till 1.4072 after making a low of 1.4048. Any break below 1.4000 confirms short term trend reversal, a decline till 1.3900/1.3835. On the higher side any break above 1.4180 will take the g the pair further up till 1.4250/1.4320. The minor resistance is around 1.4100/1.4170.
USD/CHF: The Swiss franc lost ground against its U.S. counterpart, trading 0.18 percent lower at 0.9573, after making a high of 0.9521. Intraday bullishness can be seen only above 0.9580 level. Any indicative break above 0.9580 will take the pair till 0.9630/0.9680. On the lower side break below 0.9530 will drag it down till 0.9480/0.9420/0.9390. Overall bearish invalidation can happen only above 0.9800.
AUD/USD: The Australian dollar trades 0.96 percent lower at 0.7525, making fresh session lows. The Aussie touched a high of 0.7636 earlier in the session, before falling down to its current levels. The short term trend is slightly weak as long as resistance 0.7650 holds. On the higher side major resistance is around 0.7650 and break above targets 0.7680/0.7725. The minor resistance is around 0.7570, while minor support is around 0.7500 and break below will drag the pair till 0.7470/0.7435.
NZD/USD: The New Zealand dollar trades lower at 0.6790 after touching sessions high of 0.6862. The kiwi continues to hover towards sessions low of 0.6785, reversing its previous session gains. Immediate support is located at 0.6774 (20-DMA), while resistance is seen at 0.6862 (Session's High).
Equities Recap
European shares inched higher after minutes of the Fed's last policy meeting offered little optimism over the state of global growth and the prospect of interest rate hike in June.
Europe's FTSEurofirst 300 was 0.02 pct up at 1,298.54 points, Britain's FTSE 100 advanced 0.37 pct, France's CAC gained 0.11 pct; Germany's DAX climbed 0.22 pct.
Tokyo's Nikkei gained 0.22 pct at 15,749.84. The MSCI's broadest index of Asia-Pacific shares outside Japan was in positive territory, rising 0.5 percent for the day.
Shanghai composite index was 1.4 pct down at 3,008.42 points, while CSI300 index lost 1.5 pct at 3,209.29 points. HK’s Hang Seng index edged up 0.3 pct at 20,266.05 points.
Commodities Recap
Oil steadied at around $40 per barrel as a surprise fall in U.S. inventories the previous day was offset by an increase in exports from Iraq, underlining global oversupply. Brent futures were at $39.97 at 1121 GMT, down 15 cents from the last close. U.S. crude futures were at $37.59 per barrel, down 16 cents from their last close.
Gold rose more than one percent as the dollar remained under pressure hitting 17-month low versus the Japanese yen. Spot gold touched a 1-week high of $1,239.30 an ounce and were up 1.2 percent at $1,237.62 by 1123 GMT.
Treasuries Recap
The 10-year U.S. treasury yield at 1.756 percent versus previous close of 1.753 percent.
German 10-year bond yields fell 1 basis point to 0.11 percent, reversing most of the rise seen on Wednesday after a sharp surge in the oil price, which bolstered inflation expectations.
Longer-dated Japanese government bond prices edged up as the market drew comfort from firm investor demand at a liquidity-enhancing debt auction. The benchmark 10-year yield was little changed at minus 0.060 percent. The 20-year yield dipped half a basis point to 0.360 percent.
Gilts opened a mere 2 ticks lower than the close of 121.54 and are holding in a narrow range. June Gilts trades between a 9 tick range.
Australian government bond futures pulled back from one-month highs, with the 3-year bond contract off 3 ticks at 98.140. The 10-year contract eased 4 ticks to 97.5300, while the 20-year contract fell 4.5 ticks to 96.9350. New Zealand government bonds gained, sending yields 1 basis points lower at the short end of the curve and 1.5 basis points lower at the long end.
