Market Roundup
- Australia Q1 CPI -0.2% q/q, +1.3% y/y,+0.3/+1.8%,eyed,
- Australia Q1 core CPI below RBA target 2nd time in 15-yrs
- AFR’s Mitchell-RBA has perfect excuse to cut pre-election
- AUD/USD -1.8% Iron -5.45%, Copper -0.6%, AUD/CAD -1.89%
- EUR/USD +0.07%, USD/JPY +0.07%, GBP/USD +0.12%
- DXY -0.1%, DAX +0.21%, Brent +2.47%, Gold +0.25%
- Germany May GfK Consumer confidence 9.7 vs 9.4 previous, 9.4 exp
- Germany Mar Imp prices -5.9% y/y vs -5.7% previous, -6.3% exp
- EZ Mar M3 5.0% yy vs 4.9% revised previous, 5.0% exp
- UK Apr CBI Distr Trades -13 vs +7 previous, +12 exp
- UK Prelim Q1 GDP +0.4% q/q vs 0.6% previous, 0.4% exp
- UK Prelim Q1 GDP +2.1% y/y vs 2.1% previous, 2.0% exp
- Switzerland Mar UBS Consumption indicator 1.51 vs downward revised 1.45
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Bureau of Economic releases its trade balance data for the month of March. The economy posted a trade deficit of $63.0 billion in February.
- (1000 ET/1400 GMT) The National Association of Realtors is likely to report that U.S. contracts to purchase previously owned homes gained 0.5 percent in March after it rose 3.5 percent in February.
- (1030 ET/1430 GMT) The Energy Information Administration reports its Crude Oil Stocks for the week ending April 22.
- (1400 ET/1800 GMT) The U.S. Federal Reserve concludes its two-day policy meeting and issues a statement on interest rates.
- (1430 ET/1830 GMT) The FOMC releases its statement regarding monetary policy.
- (1700 ET/2100 GMT) The Reserve Bank of New Zealand will announce its Interest Rate Decision and publishes its Monetary Policy Statement (MPS).
- (1930 ET/2330 GMT) Japan's Statistics Bureau is expected to report that unemployment rate remained unchanged at 3.3% for the month of March.
- (1950 ET/2350 GMT) Japan's Ministry of Economy, Trade and Industry will release preliminary industrial production figures for the month of March. The indicator is expected to rise 2.9 percent after posting a decline of 5.2 percent in the prior month.
- N/A Brazil's central bank will announce its benchmark interest rate and the central bank is widely expected to keep the interest rates on hold.
Key Events Ahead
- N/A Canadian Finance Minister Bill Morneau speaks to the Greater Vancouver Board of Trade.
- N/A Bank of Japan holds a two-day monetary policy meeting.
FX Beat
USD: The dollar index trades flat at 94.485, against a basket of major currencies as traders expect the Fed keep rates steady, while focus will remain on its statement for further clues as to when interest rates could be hiked again.
EUR/USD: The euro trades flat at 1.1302, after touching a high of 1.1333, earlier in the session. Market awaits Fed monetary policy meeting to be held today for further momentum. The short term trend is slightly bearish as long as resistance 1.14000 holds. On the higher side major intraday resistance is around 1.13500 and break above targets 1.1380/1.1400. The pair should close above 1.1400 for further bullishness. The support is at 1.1270 and any violation below that level targets 1.1200/1.11500/1.10500 level.
USD/JPY: The Japanese yen trades at 111.31 yen against the dollar, retreating after making a high of 111.02. Markets continue to remain cautious ahead of the Bank of Japan policy decision on Thursday as traders expect the central bank to ease further. The short term trend is slightly bullish as long as support 110 holds. On the lower side any break below 110 will drag the pair down till 109.50/109. The major resistance is around 112.35 (55 day EMA) and break above targets 113/114.50.
GBP/USD: Sterling recovered from a low against the dollar and reversed losses against the euro, after data showed the British economy grew in line with market consensus in the first quarter. Gross domestic product (GDP) grew by 0.4 percent in the first quarter, in line with consensus, however, slower than the 0.6 percent in the previous quarter. On a annualized basis the economy grew by 2.1 percent. Sterling rose to $1.45621 after the data release, from a low of $1.4545 struck just beforehand. The euro slipped to 77.38 pence, compared with 77.77 before the data was released. The short term trend is bullish as long as support 1.4500 holds. On the higher side major resistance is around 1.46680 and break above targets 1.4700/1.4750 levels. On the lower side major support is around 1.4500 and break below targets 1.4450/1.4400 level.
USD/CHF: The Swiss franc extended gains, rising in its third successive session against the U.S. dollar. It trades at 0.9728, having touched a high of 0.9712, earlier in the session. The short term trend is slightly bearish as long as resistance 0.9800 holds. Any violation above 0.9800 will take the pair to next level till 0.9850/0.9900. The short term trend reversal is only below 0.9500 level. On the lower side break below 0.97000 will drag the pair to next level till 0.9650/0.9630/0.9575.
AUD/USD: The Australian dollar slumped to a low of 0.7603, from a high of 0.7765, after downbeat inflation figures prompted markets to price in a greater chance of an interest rate cut. The Aussie declined by nearly 1.9 percent to trade at 0.7596, hitting a 9-day low of 0.7603 and on track for its biggest 1-day fall in three months. The short term trend is slightly bearish as long as resistance 0.7760 holds. On the higher side major resistance is around 0.7760 and break above targets 0.7835/0.7850. The minor resistance is around 0.7650/0.7680. The major support is around 0.7600 and break below will drag the pair till 0.7575/0.7520/0.7485.
NZD/USD: The New Zealand declined by 0.7 percent to trade at 0.6843, reversing previous session gains. The weakness in the kiwi came as domestic data showed a wider-than-expected trade deficit. The currency continues to skid, hovering towards session’s low of 0.6839. Immediate support is located at 0.6834 (Apr 22 Low), break below could drag the pair to 0.6823. On the upside, resistance is seen at 0.6910 (Previous Session High).
Equities Recap
European shares declined on the back of worse-than expected technology stocks results.
The pan-European FTSEurofirst 300 index fell 0.3 percent in early trade, UK's FTSE edged down 0.1 pct, Germany's DAX gained 0.3 pct and France's CAC rose 0.2 pct.
Shanghai Composite index and CSI300 index both slumped 0.4 pct at 2,953.67 points and 3,165.92 points, respectively. HK’s Hang Seng index nudged down 0.2 pct at 21,361.60 points.
Tokyo's Nikkei closes down 0.36 pct at 17,290.49, while MSCI's broadest index of Asia-Pacific shares outside Japan retreated 0.7 percent.
Commodities Recap
Oil rose to its highest level this year, facilitated by a weak dollar and evidence of declining U.S. supply, putting the price on track for its strongest monthly performance since last April. Brent crude futures were up $1.03 at $46.73 a barrel by 1104 GMT, having risen nearly 20 percent in April, their largest 1-month gain in a year. The international benchmark earlier hit a 2016 high of $47.02. U.S. West Texas Intermediate crude futures rose 86 cents to $44.90 a barrel.
Gold edged up for a third straight session, strengthened by a softer dollar and weak U.S. economic data. Spot gold had risen 0.2 percent to $1,245.97 an ounce by 1106GMT, following a 0.4-percent gain in the previous session.
Treasuries Recap
The 10-year U.S. Treasuries yield stood at 1.9076 percent down by 0.023 bps.
Euro zone bond yields were steady with caution prevailing before the Fed's rate decision. Germany's 10-year Bund yield hovered near Tuesday's five-week high at 0.30 percent. Spain's benchmark 10-year bond yield rose 1.1 basis point to 1.65 percent, underperforming Portuguese counterparts which fell 3 bps. French 10-year bunds yield dipped 0.25 pct to 0.636 pct,
Japanese government bond prices slipped, taking cues from falls in U.S. bonds as market players adjusted their positions ahead of crucial central bank policy meetings in the United States and Japan. The 10-year JGB yield rose 4.0 basis points to minus 0.065 percent, its highest level in nearly three weeks.
Gilts opened 12 ticks higher than the settlement of 119.06 as external core markets remained supported by dealer caution ahead of Central Bank meetings.
Australian government bond futures rallied, with the 3-year bond contract up 10 ticks at 98.060. The 10-year contract added 3.5 ticks to 97.3900 in a bullish steepening of the curve. The 20-year contract eased 1.5 ticks to 96.7650. The spread between 10- and 3-year cash bonds increased to 67 basis points, the widest since mid-February. New Zealand government bonds were mixed across the curve with yields slightly lower at the short end and slightly higher at the long end.
