Market Roundup
- CFTC IMM CTA data - Specs have net USD shorts for first time since May, JPY net longs 71,870 contracts - up, EUR net shorts 46,917 - off.
- Japan’s life insurers stung by negative rates, look abroad for assets - NEN.
- Japan PM Abe – To submit extra budget for earthquake reconstruction in current Diet session.
- Japan March corp service price index +0.6% m/m, +0.2% y/y, rise still slow.
- Japan Mazda profits to shrink double digits FY ‘16/17, cites JPY.
- China debt load reaches record high as risk to economy mounts, US-style credit crunch/Japan-style grinding malaise increasingly likely – Fin’l Times.
- PBOC ViceGov Chen – Financial institutions face increasing credit risks - Shanghai Securities News.
- Obama boosts UK’s remain camp and infuriates the Brexiteers, sheer gusto of EU referendum intervention delights In campaign – Financial Times.
- Citigroup’s commodity trading gross profit rises 50% - Financial Times.
- ECB/Austria CB Nowotny – Negative rates necessary to avoid deflation.
- Germans flock to property as interest rates fall and rents rise.
Economic Data Ahead
- (0330 ET/0730 GMT) Sweden Mar unemployment, 7.5% nsa forecast; last 7.6% nsa, 7.1% sa.
- (0400 ET/0800 GMT) Germany Apr Ifo business climate index, 107.0 forecast; last 106.7.
- (0400 ET/0800 GMT) Germany Apr Ifo current conditions index, 113.8 forecast; last 113.8.
- (0400 ET/0800 GMT) Germany Apr Ifo expectations index, 100.8 forecast; last 100.0.
- (0900 ET/1300 GMT) Belgium Apr leading indicator index, -4.0 forecast; last -4.2.
- (1000 ET/1400 GMT) United States Mar new home sales, 520k AR, +1.0% m/m forecast; last 510k, +2.0%.
- (1030 ET/1430 GMT) United States Apr Dallas Fed mfg business index; last -13.6.
Key Events Ahead
- ANZAC Day – Australia and New Zealand markets closed.
- (0440 ET/0840 GMT) Japan CEFP meeting, PM Abe to speak.
- N/A EC/ECB conference in Frankfurt, Norway t-bill auction.
- (0530 ET/0930 GMT) Germany E1.5 bln 12-month Bubill auction.
- (0855 ET/1255 GMT) France E3.2-3.6/1.2-1.6/0.9 bln 3/6/12-month BTF note auctions.
FX Beat
USD: The dollar declined on profit taking against the yen after rising above 111.00 level on Friday. The dollar index, which tracks the greenback against a basket of currencies, dropped 0.2 percent to 94.930.
EUR/USD: The euro trades 0.2 percent higher at 1.1241, rebounding from a low of 1.1216, struck on Friday. Investors are likely to remain cautious ahead of the FOMC meeting, as the policymakers seen mixed over the rate hike prospects. The Fed is expected to stand pat and deliver a rate hike in June, followed by another before the end of this year, according to Reuter’s survey. Markets attention will turn towards German Ifo surveys and U.S. new homes sales data, for further momentum on the pair. The major continues to rise, hovering towards session’s high of 1.1247. Markets focus will now turn towards the BoJ and FOMC meeting for further cues. Immediate resistance is located at 1.1280 (5-DMA), break above could take it to 1.1308 (Previous Session High). While on the downside, support is located at 1.1188 (Mar 22 Low).
USD/JPY: The Japanese yen edged 0.6 percent higher to 111.10, after hitting a 3-week low as markets expect the Bank of Japan could start lending to banks at negative rates. The yen declined as low as 111.88 in early trade, however, it pushed back from the low. On Friday, the greenback rose to close at 111.78, as investors wary that BoJ is considering applying negative rates to its lending programme for financial institutions. The pair faces resistance at 111.88 (Session High), while support is located at 110.26 (5-DMA), break below could drag the pair to 110.04 (20-DMA).
GBP/USD: Sterling scaled a 5-week high of 1.4468 in early trade after U.S. President Barack Obama supported the "in" camp, raising hopes that public opinion may roll in favor of staying in the European Union. The pound hit a 6-week high against the euro of 77.52 pence per euro. Sterling slightly edged down from the high, trading around 1.4426, however still 0.2 percent up from last week. Immediate resistance is located at 1.4468 (Session High), while support is seen at 1.4374 (5-DMA), break below could drag the pair to 1.4313 (Previous Session Low).
AUD/USD: The Australian dollar edged up to 0.7709, recovering from a low of 0.7691 hit earlier in the session. The Aussie trades between a thin range of 0.7691-0.7712 as traders are away on the Anzac Day public holiday. Traders will keenly await for the FOMC decision due on Wednesday, followed by RBNZ and BOJ policy meetings scheduled on Thursday. As the Australian markets remain closed in observance of national holiday, markets attention will remain on U.S. new home sales data for further cues. The pair continues to rise, hovering towards session's high of 0.7712. Immediate resistance is located at 0.7751 (5-DMA), while support is seen at 0.7680 (Apr 15 Low).
NZD/USD: The New Zealand dollar rose after following a 3-day continuous decline. The kiwi is trading around 0.6856, having touched session high of 0.6866. It made a low of 0.6836, before climbing up to its current levels. The pair trades between a thin range of 0.6836-0.6866 as markets remain closed in observance of Anzac Day public holiday. Traders will remain cautious ahead of the RBNZ and FOMC meeting due later in the week. The kiwi faces resistance at 0.6881 (20-DMA), break above could take the pair to 0.6918. Immediate support is seen at 0.6834 (Previous session Low).
USD/CNY: The yuan eased against the dollar after the central bank set the midpoint rate at 6.5120 per dollar, 0.34 percent weaker than the previous fix 6.4898, as the dollar gained from last week's low. The spot market opened at 6.5051 per dollar and was trading at 6.5063 at midday, easing 0.07 percent from the previous close. The offshore yuan was trading 0.11 percent softer than the onshore spot at 6.5137 per dollar,
Equities Recap
Asian shares declined as investors took profits from the dollar's recent gains ahead of FOMC and BoJ meetings this week.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.4 percent, taking its cue from a mixed day on Wall Street on Friday.
Shanghai Composite Index was down 1.2 percent, while the CSI300 index declined 0.9 percent.
Markets in Australia were closed for the Anzac Day public holiday.
Tokyo's Nikkei closed down 0.76 pct at 17,439.30, while Seoul shares lost 0.15 pct, with Taiwan stocks edged up 0.3 pct at 8,560.28 points.
Commodities Recap
Oil prices declined over 1 percent as traders took profits after 3-weeks of gains and as a rally in the dollar late last week was priced into fuel markets. Front-month Brent crude was trading at $44.55 per barrel at 0332 GMT, while U.S. West Texas Intermediate futures were down 62 cents, or 1.4 percent, to trade at $43.11 a barrel.
Gold edged up as the dollar reversed some of its recent gains, with investors cautious ahead of the Federal Reserve policy meeting later this week restraining its advance. Spot gold rose 0.1 percent to $1,233.39 an ounce by 0325 GMT, after declining 1 percent on Friday as the dollar rallied.
Treasuries Recap
The 10-year U.S. treasuries yield stood at 1.879 percent versus previous of 1.888 percent.
Japanese government bond prices declined; in anticipation the Bank of Japan may not enhance bond buying if it should further ease monetary policy at its policy-setting meeting later in the week. The benchmark 10-year yield was up 4.5 basis points at minus 0.080 percent, reaching an 11-day peak. The 30-year yield climbed 5 basis points to 0.385 percent.
