Market Roundup
- USD/JPY -0.6%, GBP/USD -0.27%, EUR/USD +0.14%, AUD/USD -0.23%
- DXY -0.11%, DAX -0.8%, Brent -0.4%, Gold +0.5%
- UK Mar Ind. Output -0.2% y/y vs +0.1% revised previous, -0.4% exp
- UK Mar Mfg Output -1.9% y/y vs -1.6% revised previous, -1.9% exp
- Norway 2016 budget revision expansionary: Could impact NB policy
- BoE will need to raise rates to 3.5% by end-2017 on BREXIT-Telegraph
- G7 devising action plan to crack down on tax avoidance – Nikkei
- Eiji Maeda appointed BoJ director of int’l affairs
- RBNZ – Risks to financial stability up but system resilient
- Australia May Westpac/MI consumer conf. idx +8.5% m/m to 103.2
Economic Data Ahead
- (1000 ET/1400 GMT) United Kingdoms' National Institute of Economic and Social Research will release its GDP estimate over the last 3 months.
- (1030 ET/1430 GMT) The Energy Information Administration reports its Crude Oil Stocks for the week ending May 6.
- (1400 ET/1800 GMT) The U.S. government is likely to have posted a $112 billion budget surplus in April, in contrast to a $108 billion deficit in March.
- (1901 ET/2301 GMT) United Kingdoms' Royal Institution of Chartered Surveyors is likely to report that housing price balance declined to 37 percent in April from 42 percent in March.
Key Events Ahead
- N/A Bank of Canada Senior Deputy Governor Carolyn Wilkins will participate on a panel called "Paradigm Shift: The Changing Global Bond Market and Implications for Investors" at the CFA Institute in Montreal.
- (0945 ET/1345 GMT) FedTrade Operation 30-year Fannie Mae/Freddie Mac max $2.4 bln.
- (1900 ET/2300 GMT) Reserve Bank of Australia Assistant Governor Dr Malcolm Edey's Speech.
- (1900 ET/2300 GMT) FRB NY releases tentative MBS ops schedule for period from May 12.
FX Beat
USD: The dollar index, against a basket of currencies was 0.2 percent down at 94.010, easing back from 2-week high of 94.350 struck in the previous session.
EUR/USD: The euro trades 0.2 percent higher at 1.1398, ending a 6-day losing streak against a broadly stronger U.S. dollar. 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 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 gained following a series of warning by Japan to intervene on its currency. The yen trades 0.5 percent higher at 108.75, having touched a high of 108.51 and away from a early low of 109.36. The short term trend is slightly bullish as long as support 108 (55 day 4H EMA) holds. On the lower side any break below 108 will drag the pair down till 106/105.20.The minor support is around 108.80, while major resistance is around 109.50 (61.8% retracement of 111.93 and 105.54) and break above targets 110.56/110.95.
GBP/USD: Sterling declined against the euro and dollar as investors remain wary on the latest polls that show Britons who want to leave the European Union at a referendum in June in line with those who want to stay. Sterling trades flat at 1.4434, having touched session's low of 1.4394. Against the euro, it was at 79.00 pence. Markets now await for Bank of England interest rate decision scheduled on Thursday. The short term trend is still bearish as long as resistance 1.4550 holds. Any break below 1.4370 will drag the pair down till 1.4320/1.4280/1.4240 level. On the higher side minor resistance is around 1.4480 and break above targets 1.4550/1.4600.
USD/CHF: The Swiss franc rose against the dollar, trading 0.1 percent higher at 0.9742. It touched a high of 0.9726, pulling away from a low of 0.9762 struck in the previous session. The short term trend is slightly bullish as long as support 0.9680 holds. On the higher side any break above 0.9760 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 0.9680 will drag it down till 0.9630/0.9575.
AUD/USD: The Australian dollar was trading flat at 0.7365, within the range of a 2-month trough of 0.7299 touched on Tuesday. The Aussie rose to a high of 0.7390, before reversing gains to trade at its current levels. The short term trend is slightly bearish as long as resistance 0.7410 (4 H Kijun-Sen) holds. On the higher side major resistance is around 0.7410 and break above targets 0.7480/0.7520.The minor resistance is around 0.7350/0.7380, while major support is around 0.7300 and break below will drag the pair till 0.7256/0.7200.
NZD/USD: The New Zealand dollar advanced after the Reserve Bank of New Zealand refrains from curbing housing market. The kiwi rose to a high of 0.6825, having gained a full cent from a 6-week low touched on Tuesday. It trades at 0.6802, hovering towards sessions high. Immediate resistance is located at 0.6847 (May 9 High), while on the lower side, support is seen at 0.6761 (Previous Session Low).
Equities Recap
European shares were weighed down by weak corporate earnings after rising initially in the week.
Europe's FTSEuroFirst 300 index of leading shares erased much of Tuesday's rise, France's CAC dropped 0.4 pct, UK's FTSE nudged down 0.1 pct, Germany's DAX ended a 4-day winning streak and was 0.3 pct down.
Tokyo's Nikkei ended flat at 16,579.01, Australia's S&P/ASX 200 index gained 0.64 pct at 5,376.80 points, MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.2 percent, resuming the recent downtrend.
Shanghai Composite index edged up 0.2 pct at 2,837.04 points, while CSI300 index gained 0.4 pct at 3,082.81 points. HK’s Hang Seng index slumped 0.9 pct at 20,055.29 points.
Commodities Recap
Crude prices rose despite oil sands production in Canada restarted after forced closures due to wildfires, and record-high inventories especially in the United States grew. International Brent crude oil futures were down 28 cents at $45.97 per barrel at 1056 GMT. U.S. West Texas Intermediate futures were down 44 cents at $44.22 a barrel.
Gold rebounded from 2-week lows as the dollar's rally halted and European shares declined. Spot gold was up 0.7 percent at $1,274.65 an ounce by 1058 GMT, while U.S. gold for June delivery gained 0.7 percent to $1,274.70 an ounce.
Treasuries Recap
U.S. Treasuries were left relatively unchanged during a quiet session that saw few economic releases of note. The yield on the benchmark 10-year bonds held unchanged on the session, staying just above 1.75 pct mark. Ahead of the flurry of data coming at the end of the week, markets now await for 10-Year Note and 30-Year Bond auctions on Wednesday and Thursday, respectively. Markets will also look ahead to a lighter flow of data this week, highlighted by retail sales, producer prices, business inventories and University of Michigan consumer sentiment releases on Friday.
The European bonds were trading marginally higher as investors pour into safe-haven assets amid losses in riskier assets including stocks and oil. Also, a favour rising for Britain to leave the European Union on 23rd June has shifted investors towards safe-haven assets. Meanwhile, the benchmark German 10-year bonds yield fell 1bp to 0.113 pct, French 10-year bunds yield dipped 1bp to 0.474 pct, Italian equivalents tumbled 1bp to 1.486 pct, Spanish 10-year bonds yield inched lower 1bp to 1.608 pct, Portuguese 10-year bonds yield fell 3bps to 3.316 pct, Netherlands 10-year bonds yield dipped 1bp to 0.335 pct and British 10-year bonds yield tumbled 3bps to 1.382 pct by 0910 GMT.
The U.K gilts gained as investors shifted to safe assets amid deepening economic growth fears after reading weaker-than-expected industrial and manufacturing production figures. Also, investors await Bank of England’s monetary policy meeting on Thursday. The yield on the benchmark 10-year bonds fell 3bps to 1.390 pct by 0910 GMT.
The Japanese government bonds were trading nearly flat as investors await upcoming 30-year debt auction due on Thursday. Moreover, bond prices are likely to be ruled by the movements in the crude oil market. The yield on the benchmark 10-year bonds fell 1bps to -0.091 pct by 0555 GMT.
The Australian bond has brushed aside strong consumer confidence data and is treading water on a quiet day of trade. The yield on the benchmark 10-year Treasury note stood flat at 2.31 pct by 1110 GMT.
