Market Roundup
- US Tsy off’l – To push G20, IMF members on currency, infrastructure issues.
- Japan, US look split over currency policy heading into G20 – Nikkei.
- BoJ Policy Board Harada – Hodge-podge of comments could ease again if risks to outlook materialize, data however may be weaker than actual case, admits consumption-investment-exports sluggish, energy prices won’t fall forever, core CPI to rise, banks need to lend more.
- IMF/ex-MoF Furusawa – Limits to BoJ NIRP policy, JPY rises haven’t deviated sharply from IMF view JPY moves broadly in line with fundamentals, consensus authorities can take action vs disorderly FX moves, BoJ must maintain ultra-loose policy, G20 warning vs competitive devaluation not constraint.
- Deals can help Japan’s banks offset dollar drought.
- OECD’s Gurria urges G7 to coordinate fiscal spending boost.
- Japan March domestic corporate goods prices -0.1% m/m, -3.8% y/y, unchanged, -3.5% eyed.
- Japan March money supply M2 +3.2% y/y, M3 +2.6%, broadest liquidity +3.2%.
- China approves CNY5.5 bln fixed asset investment projects in March.
- China March $29.86 bln trade surplus, $30.85 bln eyed, exports +11.5% y/y, +2.5% eyed, 1st rise since June ’15, imports -7.6%; Q1 exp -9.6%, imp -13.5%.
- China March CNY194.6 bln trade surplus, exports +18.7% y/y, imports -1.7%, still difficulties in trade, exports to stabilize in Q2.
- China Q1 crude oil imports +13.4% y/y, iron ore +6.5%, copper +30.1%, coal -1.2% but March coal +45.4% m/m.
- Richmond Fed Lacker – Faster inflation merits further rate hikes, roughly four hikes maybe needed in ’16.
- SF Fed Williams – 2-3 rates hikes this year reasonable, no market turmoil, doesn’t see hard landing for China.
- Australia April Westpac/MI consumer confidence -4.0% to 95.1, -1.1% y/y.
- NZ March food prices +0.5% m/m, -0.1% y/y.
Economic Data Ahead
- (0500 ET/0900 GMT) Euro Zone February industrial production, -0.7% m/m, +1.2% y/y eyed; last +2.1%, +2.8%.
- (0800 ET/1200 GMT) New Zealand March manufacturing PMI; last 56.0.
- (0830 ET/1230 GMT) US March retail sales/ex-autos, +0.1%/+0.4% m/m eyed; last -0.1%, -0.1%.
- (0830 ET/1230 GMT) US March PPI, +0.2% m/m, +0.3% y/y eyed; last -0.2%, unchanged.
- (0830 ET/1230 GMT) US March – ex-f/e, +0.1% m/m, +1.3% y/y eyed; last unchanged, +1.2%.
- (1000 ET/1400 GMT) US February business inventories, -0.1% m/m eyed; last +0.1%.
Key Events Ahead
- N/A France E6 and 3 bln 20 and 50-year bond syndications, demand high.
- N/A Sweden SEK2 bln each 2.5% and 1.0% 2025 and 2026 govt bond auctions.
- N/A Greece E625 mln 13-week bill auction.
- (0500 ET/0900 GMT) Italy E3-3.5/2.25-75/1.5-2/1 bln 0.1/0.95/3.5/2.7% 2019/23/30/47 BTPs.
- (0530 ET/0930 GMT) UK DMO GBP1.75 bln 3.5% 2045 Gilt auction.
- N/A ECB/Austria CB Nowotny, FinMin Schelling at New York Europe conference.
- N/A IMF/World Bank and related meetings in Washington, DC.
- (0915 ET/1315 GMT) UK parliament hearing on ’16 budget.
- (1000 ET/1400 GMT) BoC policy announcement, MPS, no change in 0.5% overnight rate eyed.
- (1115 ET/1515 GMT) BoC Gov Poloz, DepGov Wilkins press conference on policy.
- (1400 ET/1800 GMT) Fed Beige Book release.
- (1715 ET/2115 GMT) ECB VP Constancio at New York economic conference.
FX Recap
USD: The greenback rose as high as 108.905 yen, having climbed from a near 18-month trough around 107.63 set on Monday. The dollar index climbs back above 94.000, from a near eight-month low of 93.627.
EUR/USD: The common currency eased 0.2 percent to $1.1369 after turning around from a six-month peak of $1.1465. That helped the dollar index climb back above 94.000, from a near eight-month low of 93.627. The euro rose to 123.85 yen, putting further distance from a three-year low of 122.085 set last month. Pair falls below $1.14 marks and trading around $1.1355 mark. Intraday bias remains bearish till the time pair holds key resistance at 1.1402. A sustained break above it will drag the parity up towards $1.1469 marks. On the down side, key support level is seen at $1.1159/ $1.1057 marks.
USD/JPY: The safe-haven Japanese yen slid from recent peaks against the greenback on Wednesday as solid gains in oil prices helped underpin risk appetite. The Japanese Yen breaks key resistance at 108.04 and trading around 108.92 marks. On the top side, key resistance levels are seen at 109.67/112.60/114.87/115.96 levels. A daily close below key support level at 108.04 will drag the parity down towards 107.51 marks. Japan’s M2 money stock remained unchanged unexpectedly last month, official data showed on Tuesday. In addition, Japan’s Corporate Goods Price Index fell to a seasonally adjusted annual rate of -3.8%, from -3.4% in the preceding month.
GBP/USD: The sterling climbed to a high of $1.4347 but fails to break key resistance at $1.4357 and was last at $1.4245. A sustained break below key support $1.4228 level will drag the parity down at $1.4057 marks. A daily close above $1.4357 will take the parity up towards key resistances at $1.4504/$1.4602.
AUD/USD: The Aussie extended gains as upbeat China trade data favoured risk appetite. Chinese exports in March rose a much stronger-than-expected 11.5 percent, the first increase since June and largest gain since February 2015. Intraday bias remains bearish till the time pair holds key resistance at $0.7716 levels. On the downside, a sustained break below $0.7433 support levels will turn bias back to the downside for retesting 0.7365 low. Moreover, The Westpac-Melbourne Institute Consumer Sentiment index fell 4.0% to 95.1 in April from 99.1 last month.
NZD/USD: The New Zealand dollar rose to $0.6945, from $0.6852 the previous day. Resistance was seen at around $0.6970. Short term bias remains bearish for the moment. Key support was found at $0.6750. Today New Zealand released FPI data with positive numbers at 0.5% m/m vs -0.6% m/m previous release.
Equities Recap
The Nikkei 225 index rallied 2.64% to 16,349.19 points on Wednesday, while Tokyo's broader Topix index surged 1.70% to 1,321.44 points.
Chinese equity markets also enjoyed an upbeat start on Wednesday, with Hong Kong's Hang Seng index rallying 2.38% to 20,991.29 points and the Shanghai Composite charging 1.44% higher to 3,066.97 points.
Australia's benchmark S&P/ASX 200 index was trading 1.40% higher at 5,045.90 points on Wednesday morning in Sydney.
New Zealand's S&P/NZX 50 index traded 0.63% higher at 6,769.69 points on Wednesday afternoon in Wellington.
Commodities Recap
Oil futures fell in Asian trade on Wednesday as profit-taking and concern over a larger-than-expected build in U.S. crude stocks outweighed a report that Russia and Saudi Arabia had reached consensus on an oil output cap. Brent crude had dropped 30 cents to $44.39 a barrel as of 0454 GMT, after hitting a four-month high in the previous session, when it settled up $1.86, or 4.3 percent. U.S. crude dropped 40 cents to $41.77 a barrel after settling up $1.81, or 4.48 percent, the day before.
Gold eased below a three-week high on Wednesday as the dollar regained some ground from the yen and equities climbed higher, but the metal remained a favourite amid uncertainties in the global economy and timing of a U.S. rate hike. Spot gold eased 0.1 percent to $1,254.10 an ounce by 0041 GMT, following a 0.2 percent drop overnight.
Treasuries Recap
New Zealand government bonds eased, sending yields 5 basis points higher.
Australian government bond futures fell, with the three-year bond contract off 4 ticks at 98.120. The 10-year contract dropped 6 ticks to 97.4800, while the 20-year contract shed 4.5 ticks to 96.9000.
