Market Roundup
- EUR/USD 0.36%, USD/JPY -0.32%, GBP/USD 0.17%, EUR/GBP 0.24%
- DXY -0.12%, DAX -0.31%, FTSE -0.05%, Brent 0.29%, Gold 0.58%
- Trump praises China's Xi as U.S. team arrives for trade talks
- Euro zone economy to slow next year, downside risks increase - Commission
- EZ Apr HICP Flash YY, 1.2%, 1.3% forecast, 1.3% previous
- EZ Apr HICP ex F&E Flash YY, 1.1%, 1.2% forecast, 1.3% previous
- EZ Apr HICP ex F,E,A&T Flash YY, 0.7%, 0.9% forecast, 1.0% previous
- EZ Mar Producer Prices MM, 0.1%, 0.1% forecast, 0.1% previous, 0.0% revised
- EZ Mar Producer Prices YY, 2.1%, 2.1% forecast, 1.6% previous
- Great Britain Apr Markit/CIPS Service PMI, 52.8, 53.5 forecast, 51.7 previous
Economic Data Ahead
- (0830 ET/1230 GMT) The United States releases trade balance figures for the month of March. The economy's trade deficit is expected to have narrowed to $50.0 billion from 57.6 billion in February.
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 16,000 to a seasonally adjusted 225,000 for the week ended Apr. 27, while continuing claims for the week ended Apr. 20 is expected to rise to 1.838 million from a previous reading of 1.837 million.
- (0830 ET/1230 GMT) The U.S. Labor Department will release preliminary labor costs report for the first quarter. The indicator is expected to nudge up 2.9 percent after posting a gain of 2.5 percent in the previous quarter.
- (0830 ET/1230 GMT) The U.S. Labor Department is likely to report that preliminary non-farm productivity declined 1.5 percent in the first quarter, after staying flat in the previous quarter.
- (0830 ET/1230 GMT) The Statistics Canada is likely to report that international trade deficit narrowed to C$2.24 billion in March from C$2.69 billion in February.
- (0945 ET/1345 GMT) Financial firm Markit releases final U.S. composite PMI for the month of April. The index posted a final reading of 54.8 in the previous month.
- (0945 ET/1345 GMT) Markit Economics reports final U.S. services PMI for the month of April. The index posted a final reading of 54.4 in March.
- (1000 ET/1400 GMT) The Institute for Supply Management (ISM) is expected to report that U.S. non-manufacturing Purchasing Managers' index eased to a final reading of 58.1 in April from 58.8 in March.
- (1000 ET/1400 GMT) The United States is likely to report that factory orders increased 1.4 percent in March from 1.2 percent in February.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending April 27.
Key Events Ahead
- (0830 ET/1230 GMT) The European Central Bank Executive Board member Benoît Cœuré speaks at Joint ECB/EC conference in Frankfurt
- (1200 ET/1600 GMT) The Swiss National Bank Chairman of the Governing Board Thomas J. Jordan's speech.
FX Beat
DXY: The dollar index eased from recent highs as the Federal Reserve policy meeting gave no surprises with rates left unchanged. The greenback against a basket of currencies trades 0.2 percent down at 92.55, having touched a high of 92.83 on Wednesday, its highest since Dec. 28. FxWirePro's Hourly Dollar Strength Index stood at -20.39 (Neutral) by 1000 GMT.
EUR/USD: The euro rebounded from a 4-month low as the greenback retreated from recent peaks after the Federal Reserve did little to alter market expectations for further interest rate rises this year. The European currency traded 0.3 percent up at 1.1988, having touched a low of 1.1937 the day before, its lowest since Jan. 11. FxWirePro's Hourly Euro Strength Index stood at -93.43 (Slightly Bearish) by 1000 GMT. Immediate resistance is located at 1.2010, a break above targets 1.2050 (5-DMA). On the downside, support is seen at 1.1915 (Jan. 9 Low), a break below could drag it till 1.1880.
USD/JPY: The dollar slumped as a breakthrough deal to fundamentally change China's economic policies is viewed as highly unlikely during the two-day US.-China talks. The major was trading 0.3 percent down at 109.46, having hit a high of 110.03 the day before, its highest since Feb. 5. FxWirePro's Hourly Yen Strength Index stood at 17.37 (Neutral) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. unemployment benefit claims, factory orders and service PMI's from both Markit and ISM. Immediate resistance is located at 110.48 (Feb. 2 High), a break above targets 111.17 (Jan. 23 High). On the downside, support is seen at 109.23 (May 1 Low), a break below could take it lower 108.92 (10- DMA).
GBP/USD: Sterling trimmed gains after a survey showed Britain's services sector struggled to rebound in April from a sharp slowdown in March, further reducing expectations of an interest rate hike next week. The economy’s services purchasing managers' index rose to 52.8 in April from March's 20-month low of 51.7, below a forecast of 53.5 rise. The major traded 0.2 percent up at 1.3594, having hit a low of 1.3555 the day before, it’s lowest since Jan. 12. FxWirePro's Hourly Sterling Strength Index stood at -102.55 (Highly Bearish) by 1000 GMT. On the downside, support is seen at 1.3534 (Jan. 12 High), a break below targets 1.3458. Against the euro, the pound was trading 0.2 percent down at 88.16 pence, having hit a low of 88.31 pence earlier, it’s lowest since Mar. 16.
USD/CHF: The Swiss franc edged up after falling to a near 6-month low in the prior session on strong U.S. economic outlook and rising Treasury yields. The major trades 0.1 percent down at 0.9977, having touched a high of 0.9999 the day before, it’s highest since Nov. 9. FxWirePro's Hourly Swiss Franc Strength Index stood at -72.35 (Slightly Bearish) by 1000 GMT. On the higher side, near-term resistance is around 1.0017 (Nov. 9 High) and any break above will take the pair to next level till 1.0033 (Nov. 2 Low). The near-term support is around 0.9936 (5-DMA) and any close below that level will drag it till 0.9849 (10-DMA).
Equities Recap
European shares declined, weighed down by series of disappointing earning updates, while the greenback consolidated near a 4-month peak against a basket of currencies after the Federal Reserve reaffirmed the outlook for more rate hikes.
The pan-European STOXX 600 index declined 0.3 percent at 386.39 points, while the FTSEurofirst 300 index plunged 0.3 percent to 1,515.69 points.
Britain's FTSE 100 trades 0.05 percent down at 7,539.90 points, while mid-cap FTSE 250 eased 0.3 percent to 20,453.37 points.
Germany's DAX fell 0.3 percent at 12,764.65 points; France's CAC 40 trades 0.2 percent lower at 5,517.21 points.
Commodities Recap
Crude oil prices rose on potential new U.S. sanctions against Iran, however, increasing U.S. crude inventories and record weekly U.S. production undermined efforts by OPEC to cut supplies. International benchmark Brent crude was trading 0.7 percent up at $73.55 per barrel by 0951 GMT, having hit a high of $75.58 on Monday, its highest since Nov. 2014. U.S. West Texas Intermediate was trading 0.7 percent up at $68.15 a barrel, after rising as high as $69.53 in mid-April, its highest since Nov. 2014.
Gold prices gained for a second straight session after the U.S. Federal Reserve held interest rates steady as expected at the end of a two-day policy meeting. Spot gold rose 0.5 percent to $1,311.68 per ounce at 0953 GMT, having eased to $1,301.70 on Tuesday, their lowest level since Dec 29. U.S. gold futures for June delivery rose 0.2 percent to $1,307.60 per ounce.
Treasuries Recap
The U.S. Treasuries gained, taking cues from the Federal Reserve’s overnight decision, where the Fed Funds rate remained unchanged, with expectations of a slightly higher inflationary pressure. In addition, they dropped the statement indicating that they are "monitoring inflation developments closely", hinting to an easing of concerns about inflation being too low and perhaps also suggesting that they do not expect inflation to accelerate significantly. The yield on the benchmark 10-year Treasuries slipped 1 basis point to 2.95 percent, the super-long 30-year bond yields also fell 1 basis point to 3.12 percent and the yield on the short-term 2-year traded 1-1/2 basis points lower at 2.48 percent.
The German bunds climbed after the Eurozone’s consumer price inflation index for the month of April disappointed market participants, missing consensus estimates as well as the prior reading. The German 10-year bond yields, which move inversely to its price, slumped nearly 2 basis points to 0.56 percent, the yield on 30-year note remained tad lower at 1.24 percent and the yield on short-term 2-year traded nearly steady at -0.56 percent.
The New Zealand bonds jumped at the time of closing, tracking similar movement in the U.S. Treasuries in the overnight session after the Federal Reserve remained on hold at its monetary policy meeting concluded yesterday, as was widely anticipated but the underlying statement did point towards higher inflationary pressures ahead. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, fell 1-1/2 basis points to 2.83 percent, the yield on the long-term 20-year note also slumped 1-1/2 basis points to 3.38 percent and the yield on short-term 2-year closed 1 basis point lower at 1.91 percent.
The Australian government bonds traded nearly flat as investors stayed sidelined amid a lack of any major news. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, trades flat at 2.805 percent, the yield on the long-term 30-year Note dipped nearly 1/2 basis point to 3.227 percent and the yield on short-term 2-year remained steady at 2.069 percent.
