Market Roundup
- Reports BoJ widening scope of negative rate applications.
- Japan eyes double-barreled stimulus to ease yen strains .
- Japan EconMin Ishihara – Will determine if Kyushu quakes qualify as major natural disaster (trigger for government action) .
- Japan April flash mfg PMI 48.0, biggest decline in three years, March final 49.1, output sub-index 47.9, most contraction since April ’14, March 49.8.
- Japan govt seeks higher pay for caregivers, to cost @Y120 bln - Nikkei.
- Japan Post Nagato – No plans to splurge on Japan stocks.
- Foreign CB US debt holdings -$1.445 bln to $3.241 trln April 20 week, Treasuries -$227 mln to $2.928 trln, agencies -$1.165 bln to $265.498 bln.
- NY Fed – Swaps with foreign CBs total $33 mln April 20 week, all with ECB.
- Lipper – Investors pull $4.5 bln from US-based stock funds in latest week.
- New Zealand FinMin English douses reports on RBNZ inflation targe3t concerns .
Economic Data Ahead
- (0300 ET/0700 GMT) France Apr PMI mfg – flash, 49.8 forcast; last 49.6.
- (0300 ET/0700 GMT) France Apr PMI services – flash, 50.2 forcast; last 49.9.
- (0300 ET/0700 GMT) France Apr PMI composite – flash; last 50.0.
- (0330 ET/0730 GMT) Germany Apr PMI mfg – flash, 51.0 forcast; last 50.7.
- (0330 ET/0730 GMT) Germany Apr PMI services – flash, 55.2 forcast; last 55.1.
- (0330 ET/0730 GMT) Germany Apr PMI composite – flash; last 54.0.
- (0400 ET/0800 GMT) Eurozone Apr PMI mfg – flash, 51.8 forcast; last 51.6.
- (0400 ET/0800 GMT) Eurozone Apr PMI services – flash, 53.3 forcast; last 53.1.
- (0400 ET/0800 GMT) Eurozone Apr PMI composite – flash, 53.2 forcast; last 53.1.
- (0400 ET/0800 GMT) Italy Feb ind orders/sales; last +0.7% m/m, +0.1% y/y and +1.0%, -0.3%.
- (0500 ET/0900 GMT) Italy Feb retail sales; last unch m/m, -0.8% y/y.
- (0945 ET/1345 GMT) United States Apr Markit PMI mfg – flash, 52.0 forcast; last 51.5.
Key Events Ahead
- N/A Informal EcoFin meeting in Amsterdam (till Saturday).
- N/A ECB/Czech CB conference in Prague, various speakers (final day).
- (0600 ET/1000 GMT) UK DMO GBP0.5/1.0/2.0 bln 1/3/6-month treasury bill auctions.
- (0745 ET/1145 GMT) Riksbank DepGov Skingsley speech in Stockholm.
FX Beat
USD: The dollar index, which tracks the greenback against a basket of six major currencies, was flat at 94.664, however, was poised for a modest weekly loss.
EUR/USD: The euro steadied around 1.1300 after dropping as low as 1.1269 overnight from a more than 1-week peak of 1.1398. It declined in a volatile overnight session following the ECB policy meeting as the central bank kept the interest rate unchanged, however, markets now expect further stimulus in near term. The currency initially rallied as trades anticipated that the central bank would not take additional stimulus measures anytime soon, but it skidded following the ECB President Mario Draghi presser. Market's focus will now shift on series on economic data from the eurozone economies. Immediate resistance is located at 1.1315 (10-DMA), while support is seen at 1.1269 (Previous Session Low).
USD/JPY: The Japanese yen edged down against the dollar at 110.07, and was on track for a weekly loss of 0.6 percent and well off this week's high of 107.75 yen hit on Monday. The yen will continue to remain under pressure ahead of BoJ policy meeting next week, as market speculate that the central bank could take further easing steps or expand its asset purchases. The weakness in the yen also comes in as Japan's preliminary manufacturing PMI in April was revised down to 48.0 against market expectations of 49.6 and previous 49.1. Looking ahead, in absence of significant economic data releases today, the major will be driven by broader market sentiment. Immediate resistance is located at 110.64 (Apr 6 High), break above could take the pair above 111.00 level. On the downside, support is seen at 109.12 (10-DMA).
GBP/USD: Sterling steadies around 1.4352, after dropping from a high of 1.4440, struck in the previous session. It gained more than half a percent higher following euro's surge against the dollar during the first minutes of ECB chief Mario Draghi's news conference. However, it failed to sustain its gains, ending the session flat at 1.4297. Immediate resistance is seen at 1.4371 (Apr 1 High), break above could take the pair to 1.4404. While support is seen at 1.4273 (10-DMA).
AUD/USD: The Australian dollar edged up to 0.7754, from 0.7735 early. The Aussie is up nearly one cent this week, and 6.5 percent for the year. It was strengthened as iron ore hit 10-month highs, Australia's single biggest export earner. Markets focus will now remain on U.S. Markit manufacturing PMI scheduled later in the day. Immediate resistance is located at 0.7826, while support is seen at 0.7718 (10-DMA).
NZD/USD: The New Zealand dollar trades 0.2 percent higher at 0.6924, trying to recover from a low of 0.6899 after declining in its previous two sessions from a peak of 0.7048. The kiwi was on track for a 0.2 percent gain on the week. Markets will continue to track oil and stock market sentiments, ahead of RBNZ's interest rate decision, scheduled next week. Immediate resistance is seen at 0.6959 (5-DMA), while support is located at 0.6878 (20-DMA).
USD/CNY: The yuan edges down, with dollar demand from industrial firms marginally exceeding supply. The central bank set the midpoint rate at 6.4898 per dollar prior to market open, 0.15 percent weaker than the previous fix of 6.4803. Spot yuan opened at 6.4806 per dollar and was trading at 6.4823 at midday, while the offshore yuan was trading 0.08 weaker than the onshore spot at 6.4887 per dollar.
Equities Recap
Asian shares declined from a 5 1/2-month high as disappointing earnings from U.S. blue chip companies halted the rally.
MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.6 percent, after it hit its highest level since early November.
Australia's S&P/ASX 200 index edged down 0.69 pct at 5,236.30 points, while Tokyo's Nikkei gained 1.20 pct at 17,572.49, while Seoul shares lost 0.38 pct.
The Shanghai Composite index pared earlier losses, but on track for a loss of 4.4 percent for the week. Hong Kong's Hang Seng index dropped 0.7 percent, narrowing gains for the week to 0.7 percent. Taiwan stocks ended down 0.4 pct at 8,535.75 points
Commodities Recap
Oil prices rose, setting crude futures on track for their biggest weekly gains this year, as sentiment has become more upbeat despite ongoing oversupply. International benchmark Brent crude futures were trading at $45.11 per barrel at 0626 GMT, while U.S. West Texas Intermediate crude was up 52 cents at $43.70 a barrel.
Gold dropped from a 5 week high, however on track for weekly gains supported by a rally in commodities. Spot gold eased to $1,246.90 an ounce by 0625 GMT. Gold hit a 5-week high of $1,270.10 on Thursday, but pared some gains after the dollar regained ground versus the euro.
Treasuries Recap
The 10-year U.S. treasuries yield stood at 1.8504 down by 0.02.
Australian government bond futures eased, with the 3-year bond contract off 2 ticks at 97.980. The 10-year contract also shed 2 ticks to 97.3900, while the 20-year contract was unchanged at 96.8300.
New Zealand government bonds eased, sending yields 2 basis points higher across the curve.
Canadian government bond prices were lower across the maturity curve, with the new benchmark 10-year falling 26 Canadian cents to yield 1.458 percent, while the 2-year price down 1.5 Canadian cents to yield 0.635 percent. The Canada-U.S. 10-year spread was 1.4 basis points less negative at -40.7 basis points, its narrowest gap since Jan. 29 last year.
