Market Roundup
- Japan FinMin – Reiterates threat to act on FX if JPY moves rapid – whether up or down, stability desired.
- BoJ Gov Kuroda sees yen rise threatening inflation goal, stresses concerns on prices, readiness to act if need be - WSJ.
- Japan govt formally nominates Shinsei’s Masai to BoJ Policy Board.
- It's all suddenly going wrong in China's $3 trillion bond market – Bloomberg.
- 41 Chinese firms delayed or cancelled bond issuance last week – Caixin.
- China Comm Min – Outlook for ’16 trade gloomy, complicated, domestic export- led companies losing export edge.
- Boston Fed Rosengren – Eyes more rate hikes than predicted by pessimistic investors, downplays weak GDP view, shouldn’t pause.
- RBA April 5 meeting minutes – AUD one reason to keep policy very loose, low inflation still provides scope for more ease if needed, eyes moderate growth.
- Australia PM Turnbull – General election likely July 2.
Economic Data Ahead
- (0400 ET/0800 GMT) EZ February current account bal; last E6.3 bln nsa, E25.4 bln sa surpluses.
- (0400 ET/0800 GMT) EZ February net investment flow; last E45.6 bln inflow.
- (0500 ET/0900 GMT) Germany April ZEW economic sentiment index, 8.0 eyed; last 4.3.
- (0500 ET/0900 GMT) Germany April ZEW current conditions index, 51.0 eyed; last 50.7.
- (0830 ET/1230 GMT) US March housing starts, 1.17 mln AR eyed; last 1.18 mln, +5.2% m/m.
- (0830 ET/1230 GMT) US March building permits, 1.20 mln AR eyed; last 1.18 mln, -2.2% m/m.
Key Events Ahead
- N/A UK ChancExch Osborne, BoE Gov Carney parliamentary testimony.
- N/A Italy ’36 benchmark syndication, BarCap, Citi, CA, SocGen et al leads.
- (0500 ET/0900 GMT) Spain EconMin de Guindos parliamentary testimony.
- (0530 ET/0930 GMT) ECB zero% 7-day refi, E55 bln allotment eyed, E55.71 bln maturing.
- (0630 ET/1030 GMT) ESM E1.5 bln 6-month bill auction.
- (0740 ET/1140 GMT) BoS Gov Linde Madrid conference speech.
- (0930 ET/1330 GMT) RBA Gov Stevens speech at New York conference.
- (1100 ET/1500 GMT) BoC Gov Poloz, DepGov Wilkins parliamentary testimony.
FX Recap
USD: The dollar gained 0.2 percent to 109.08 yen, having bounced back from a one-week low of 107.75 hit on Monday.
EUR/USD: The euro held steady at $1.1320, having pulled up from a two-week low of $1.1234 set last week. Intraday bias remains bullish till the time pair holds key support at 1.1237. A sustained break above it will drag the parity up towards $1.1402/$1.1469 marks. On the down side, key support level is seen at $1.1159/ $1.1057 marks.
USD/JPY: The yen edged lower after oil prices appeared to stabilise from a sharp slide, underpinning risk sentiment. Pair hovers around 109.00 marks, pulling well away from 107.83 marks set yesterday. A sustain close above 109.48 tests other resistances at 112.60/114.87/115.96 levels. A daily close below key support level at 108.04 will drag the parity down towards 107.51 marks.
GBP/USD: The Sterling staged a recovery on Tuesday as world stock markets rose and on increased demand for higher-yielding currencies, including the pound, although uncertainty over the prospect of Britain exiting the European Union checked gains. Sterling continues to gain against the dollar on Tuesday and trading around $1.4319 marks. A daily close above $1.4357 will take the parity up towards key resistances at $1.4504/$1.4602. Alternatively, a sustained break below key support $1.4115 level will drag the parity down at $1.4057 marks.
AUD/USD: The Australian dollar hit a 10-month high and rose on the back of the RBA minutes which despite talking down the Aussie highlighted the strength of the economy and in turn reduced the chances of a rate cut anytime soon. The Australian dollar touched a high of $0.7784 at one point, its best level since last June. It last stood at $0.7773, up 0.3 percent from late U.S. levels on Monday. Intraday bias remains bullish till the time pair holds key support at $0.7645 levels. On the downside, a sustained break below $0.7433 support levels will turn bias back to the downside for retesting 0.7365 low. Initial resistance is seen at $0.7802 levels.
NZD/USD: The kiwi rose as much as to $0.7005 early on Tuesday, its strongest level since mid June 2015. It managed to keep its gains later on, trading around the $0.70 mark. Support was found at $0.6773. Resistance was seen at around $0.7016.
Equities Recap
Japan's Nikkei 225 index spiked 3.26% higher to 16,806.34 points shortly after the open in Tokyo, while the broader Topix index started the day 2.99% higher at 1,359.76 points.
In Korea markets also began on a higher note, with the Kospi index climbing 0.47% to 2,010.80 points.
Hong Kong's Hang Seng index rose 0.60% to 21,286.47 on Tuesday, while the Shanghai Composite gained 0.58% to trade at 3,051.19 points.
Australia's S&P/ASX 200 stock index rallied 0.97% to 5,186.60 points early on in Sydney, the highest level since January.
New Zealand's S&P/NZX 50 equity index was trading 0.07% higher at 6,855.76 points after midday in Wellington.
Commodities Recap
Crude futures slipped on Tuesday on a persistent global glut and the failure of a producer meeting at the weekend to rein in the ballooning oversupply, although a sharp drop in output in Kuwait due to an oil worker strike underpinned prices briefly. Brent crude was at $42.78 a barrel at 0317 GMT, 13 cents below their previous close. U.S. West Texas Intermediate (WTI) futures were down 5 cents at $39.73 a barrel.
Gold eased on Tuesday as safe-haven bids retreated after oil prices steadied and equities edged higher, while uncertainty over U.S. monetary policy also weighed. Spot gold had fallen 0.3 percent to $1,228.02 an ounce by 0045 GMT, after dropping 0.2 percent overnight.
Treasuries Recap
New Zealand government bonds eased, sending yields 3.5 basis points higher at the short end and 2 basis points higher at the long end.
Australian government bond futures dipped, with the three-year bond contract off 6 ticks at 98.030. The 10-year contract fell 7.5 ticks to 7.4350, while the 20-year contract shed 6 ticks to 96.8800.
BOJ offers to lend Y2 trln of JGBs on spot basis through 4/20 as a secondary source of JGBs.
