Market Roundup
- Ex-BoJ Iwata – BoJ must cut key rate to -1.0% to put away deflation, believes there is a limit to bond buying, more QQE difficult.
- MoF flow data wk-ended Apr 16 – Japanese sell net Y503.4 bln foreign stocks, buy Y844.7 bln bonds, sell Y121.3 bln bills; foreign investors buy net Y538.6 bln Japanese stocks, Y770.9 bln bonds, sell Y285.4 bln bills.
- Japan Inc sees damaged security, less US trade-investment if Trump wins, 39% see operating profits steady this year, 30% slight rise, profits to hold despite recent JPY rise, 78% against more BoJ NIRP – Reuters poll.
- Japan's ruling bloc eyeing summer parliamentary session – Nikkei.
- China SAFE Wang – Cross-border capital flows back to normal, to steady, China will maintain c/a surplus, FX reserves ample, will push forward CNY convertibility, reforms, CNY still withinreasonable range vs basket.
- China commercial banks sell net $36.5 bln FX in March, Feb $33.9 bln, Q1 net sales $124.8 bln – SAFE.
- Moody’s – Rated China property developers credit quality to remain weak.
- Australia NAB quarterly survey – Q1/Q4 ‘15 business confidence +4/+5, conditions +9/+10, next three months +15/+13, next twelve months +26/+24.
- New Zealand April ANZ/RM consumer confidence index 120.0, March 118.0.
- New Zealand March ANZ job adverts +2.9% m/m, +1.7% y/y, 2nd straight month of gains.
- New Zealand March migration gain, short-term visitors up too.
Economic Data Ahead
- (0245 ET/0645 GMT) France Apr business climate index, 101.0 forecast; last 101.0.
- (0430 ET/0830 GMT) Great Britain Mar retail sales, -0.1% m/m, +4.4% y/y forecast; last -0.4%, +3.8%.
- (0430 ET/0830 GMT) Great Britain Mar - ex-fuel, -0.4% m/m, +3.7% y/y forecast; last -0.2%, +4.1%.
- (0430 ET/0830 GMT) Great Britain Mar PSNB/ex-banks, GBP5.5/6.0 bln forecast; last GBP6.49/7.09 bln.
- (0430 ET/0830 GMT) Great Britain Mar PSNCR; last GBP50 mln.
- (0830 ET/1230 GMT) United States Mar Chicago Fed national activity index; last -0.29.
- (0830 ET/1230 GMT) United States Apr Philly Fed business sentiment index, 8.9 forecast; last 12.4.
- (0830 ET/1230 GMT) United States w/e initial jobless claims, 263k forecast; last 253k.
- (0900 ET/1300 GMT) United States Feb FHFA monthly home prices; last +0.5% m/m, +6.0% y/y, index 230.7.
- (1000 ET/1400 GMT) United States Mar leading indicators index, +0.4% m/m forecast; last +0.1%.
- (1000 ET/1400 GMT) Eurozone Apr consumer confidence index – flash, -9.5 forecast; last -9.7.
Key Events Ahead
- N/A ECB/Czech NB conference in Prague, various speakers (till tomorrow).
- N/A Sweden SEK500 mln each 0.125% and 1.0% 2019 and 2025 linker auctions.
- (0330 ET/0730 GMT) Riksbank policy announcement, no change in -0.5% repo rate forecast.
- (0430 ET/0830 GMT) Spain E2-3 bln 5.9/5.75/4.7% 2026/32/41 Bono auctions.
- (0450 ET/0850 GMT) France E5.5-6.5 bln zero and 3.0% 2021 and 2022 OAT auctions.
- (0550 ET/0950 GMT) France E1.0-1.5 bln 0.25% and 0.7% 2024 and 2030 OAT-linker auctions.
- (0745 ET/1145 GMT) ECB policy announcement, no change in zero refi, -0.4% depo rates forecast.
- (0830 ET/1230 GMT) ECB Pres Draghi press conference.
- (1000 ET/1400 GMT) BoE Gov Carney speech at UN.
FX Beat
USD: The greenback hit a 2-week high against the safe-haven yen. Against a basket of currencies, the dollar index rose 0.5 percent overnight and was at 94.563, off a low of 93.926 set earlier in the week as the euro slipped ahead of the European Central Bank meeting.
EUR/USD: The euro stood at 1.1293, well off the overnight peak of 1.1388. The pair declined from a peak of 1.1388, to close down at 1.1290 in the previous session. Investors adjusted their positions ahead of the European Central Bank policy meeting, as markets widely expect the central bank to hold interest rates unchanged at record lows. The weakness in the major also comes in as upbeat U.S. existing home sales data provided relief to the USD bulls. Markets now await the ECB monetary policy decision along with Draghi’s press conference for further cues on the pair. Immediate support is located at 1.1273 (Apr 18 Low), break below will drag the pair to 1.1245 low. On the upside, resistance is seen at 1.1325 (10-DMA).
USD/JPY: The Japanese yen slightly edged up, trading 0.1 percent higher at 109.64, however, still within the reach of a 2-week low. The recovery comes after the greenback rose to a high of 109.89 from a intra-day low of 109.56 as risk-on sentiment picks up pace amid rallying equities. The major will be driven by oil price action and sentiment on the global equities ahead of U.S. jobless claims and housing price index scheduled later in the day. Immediate support is located at 109.24 (5-DMA), break below could drag the pair to 108.76 (Previous Session Low). While resistance is seen at 110.23 (20-DMA).
GBP/USD: The Sterling trades flat at 1.4329, after declining from a high of 1.4410 in the previous session, however, not far from a 3-week high of 1.4418 hit on Tuesday. It rose to 78.675 pence per euro, its highest since March 30 on Wednesday, after a polls showed support for Britain remaining in the European Union rising before a June referendum. Trader will now focus on UK's retail sales data for further direction on the pair. Immediate resistance is seen at 1.4371 (Apr 1 High), break above could take the pair to 1.4410. On the down side, support is located at 1.4304 (5-DMA).
AUD/USD: The Australian dollar was steady at 0.7805, having advanced to an 11-month peak of 0.7829 in its previous session. The Aussie held near 11-month peaks as surging prices for oil and iron ore strengthened risk appetite. For the week, it has gained more than 2 cents. The pair was also boosted by upbeat local business confidence data. National Bank of Australia showed that Business Confidence for the first quarter was at 4 q/q, unchanged from the previous reading. Immediate resistance is located at 0.7829 (Previous Session High), while on the downside, support is seen at 0.776 (5-DMA), break below, could drag the pair to 0.7766.
NZD/USD: The New Zealand dollar was steady at 0.6979, having shed 1 percent in the previous session. However, the kiwi was still up 0.7 percent for the week and only just off a 10-month peak. It stabilized after a series of strong economic data provided support for the pair. New Zealand’s visitor arrivals hit a record 3.26 million, up 10 percent from March 2015 year-on-year. The resistance is located at 0.7048 (Previous Session High), while on the downside, support is seen at 0.6947 (Apr 19 Low), break below could drag the pair to 0.6919 (10-DMA).
USD/CNY: China's yuan eased after the central bank set the midpoint rate at 6.4803 per dollar prior to market open, 0.35 percent weaker than the previous fix 6.4579. The spot market opened at 6.4782 per dollar and was trading at 6.4768 at midday, easing 0.04 percent from the previous close. While the offshore yuan was trading 0.10 percent softer than the onshore spot at 6.4835 per dollar by midday. The State Administration of Foreign Exchange stated that China would be able to cope with the Fed's rate hike policy normalization, and will push forward with yuan regime reform.
Equities Recap
Asian shares reached a 5-1/2-month high as oil prices rallied over 4 percent overnight facilitated by a smaller than expected increase in U.S. crude inventories and hopes that producers may agree ways to ease a global glut.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.8 percent, its highest since early November. Shanghai rose 0.4 percent, while Hong Kong's Hang Seng added 1.8 percent. Taiwan stocks edged up 0.6 pct at 8,568.65 points.
Australia's S&P/ASX 200 index rose 0.94 pct at 5,265.00 points, while Tokyo's Nikkei gained 2.70 pct at 17,363.62, with Seoul shares up 0.73 pct.
Commodities Recap
Gold rose, while silver steadied below an 11-month top as the dollar firmed against the euro and equities inched higher. Spot gold was at $1,256.90 an ounce by 0626 GMT, after dropping 0.5 percent in the previous session, while U.S. gold futures eased 0.6 percent to $1,246, catching up with moves in the spot market.
Crude prices rose, reversing earlier losses as the International Energy Agency stated that 2016 would see the biggest drop in non-OPEC production in a generation, aiding rebalance a market of oversupply. International Brent crude futures were trading at $46.01 per barrel at 0624 GMT, while U.S. West Texas Intermediate crude futures were at $44.33 a barrel.
Treasuries Recap
The 10-year U.S. treasuries yield stood at 1.8468 down by 0.005.
Australian government bond futures dropped to 1-month lows, with the 3-year bond contract off 6 ticks at 97.990. The 10-year contract shed 7.5 ticks to 97.4050 in a bearish steepening of the curve. The 20-year contract fell 5.5 ticks to 96.8500.
New Zealand government bonds eased, sending yields 2 basis points higher at the long end of the curve.
Canadian government bond prices were lower across the maturity curve, with the benchmark 10-year falling 8 Canadian cents to yield 1.335 percent, while the 2-year price down 2 Canadian cents to yield 0.626 percent. The Canada-U.S. 10-year spread was 5.3 basis points more negative at -51.0 basis points as U.S. Treasuries underperformed.
