Market Roundup
- Australia central bank cuts rates 25bps to 1.75%.
- RBA Says Rising AUD Could Complicate Economic Adjustment.
- China April Caixin manufacturing PMI Falls to 49.4, 14th Month of Contraction (Vs Poll 49.9, March 49.7).
- China April Caixin PMI Shows Job Losses, Weak Exports Persist.
- Australia March Building Approvals +3.7% M/M, S/Adj (Reuters Poll -3.0%).
- Australia March Private Sector House Approvals +2.6% M/M, S/Adj.
- PBOC Sets Yuan Mid-Point at 6.4565 / Dlr Vs Last Close 6.4791.
- South Korea Says April Consumer Price Index +1.0% Vs Yr Earlier (Poll +1.0%).
- South Korea Says April Consumer Price Index +0.1% Vs March (Reuters Poll +0.1%).
- South Korea Says April Core CPI +1.8% Vs Yr Earlier.
- Fed's Williams says Biggest Systemic Risk Today is Big Declines in Broad Classes of Assets as Rates Rise.
- Williams - The New 'Normal' Level of U.S. Interest Rates May be as low as 3%.
- Fed's Williams says it Makes Sense for U.S To Move Rates back to normal over Next Couple Years.
- Williams - The Fact That Fed is able to Raise Interest Rates is a Positive for the Global Economy.
- Fed's Williams - U.S. has done Amazing Work on Making Banks More Resilient.
- Fed's Williams - Right now Systemic Risk is not the Biggest Problem; People are still in Risk-Off Mode.
Economic Data Ahead
- (0430 ET/0830 GMT) UK Markit/CIPS manufacturing PMI, previous 51.0, consensus 51.3.
- (0500 ET/0900 GMT) EZ Producer Prices, previous -0.7%, consensus 0.1%.
Key Events Ahead
- No key events scheduled for the day.
FX Recap
USD: The U.S dollar slipped to as low as 105.76 yen, its lowest level since October 2014. The greenback last traded at 105.97 yen, down 0.4 percent on the day.
EUR/USD: The euro continues to add strength against the US dollar and trading around $1.1532 levels. Intraday bias remains bullish till the time pair holds immediate support at $1.1448. A sustained break below it will drag the parity down towards $1.1314/$1.1215 marks. On the top side, key resistances are seen at $1.1622/$1.1785 and $1.1833 marks.
USD/JPY: The Japanese Yen gains and fell below 106.00 marks for the first time in about 18 months on Tuesday, as the yen surged against the Australian dollar after Australia's central bank cut interest rates to a record low of 1.75 percent. Intraday bias remains bearish till the time pair holds immediate resistance at 106.81 levels. A daily close below 106.15 will drag the parity down towards key supports at 105.71, 105.45 and 104.55 levels respectively. Alternatively, reversal from key support will take the parity higher towards key resistances at 107.87, 109.49, 111.23, 112.60 and 113.42 levels respectively. Japanese banks will be closed in observance of Constitution Day.
GBP/USD: Sterling reached its strongest against the dollar since the start of January, tracking gains for the euro against the greenback after solid numbers on manufacturing from Germany. It has recovered in the past two weeks as bookmakers' odds shifted away from predicting a Brexit vote in June's referendum on European Union membership. It reached a five-month high of $1.4695, its highest since January 5, as U.S. markets opened on Monday after a morning session thinned out by the absence of London traders due to a holiday. The Sterling strengthens against the US dollar on Tuesday and supported above $1.4650 marks. A daily close above $1.47 will take the parity up towards key resistances at $1.4739 levels. Alternatively, reversal from key resistance will drag the parity down at $1.4473 marks.
AUD/USD: The Australian dollar dropped more than 1 percent on Tuesday after the Reserve Bank of Australia (RBA) cut rates to a record low of 1.75 percent. The Aussie fell to $0.7589 from around $0.7700 before the RBA. In addition today Australia released building approval data with positive numbers at 3.7% m/m vs 2.9% previous release.
NZD/USD: The New Zealand dollar traded around $0.6990 but fails to break key resistance at $0.7054 marks. Support was found at $0.6773. Resistance was seen at around $0.7054.
Equities Recap
Shanghai composite index to open up 0.1 pct at 2,940.39 points and China's CSI300 index to open up 0.1 pct at 3,159.82 points.
Taiwan stocks open down 0.2 pct at 8,362.35 points.
Hong Kong’s hang seng was trading 1.25% lower at 20,804 points while South Korea’s Kospi was trading 0.44% higher at 1,986 points.
Australia’s S&P/ASX 200 was trading 0.67% higher at 5,278 points.
Commodities Recap
Oil prices rose on Tuesday as the dollar slipped to an 18-month low against the yen, potentially spurring fuel demand, but gains were restricted by rising Middle East output that renewed concerns of a global supply overhang. The international Brent crude benchmark was trading at $46.04 per barrel at 0210 GMT, up 21 cents from its last close. U.S. West Texas Intermediate (WTI) crude futures were 20 cents up at $44.98 a barrel.
Gold rose on Tuesday, in another attempt to cross the key $1,300-an-ounce level, as the U.S. dollar extended losses and as assets of the top bullion fund rose to their highest in over two years. The metal rose to $1,303.60 an ounce on Monday; it’s strongest since January 2015, but ended the day lower on profit-taking. Spot gold had climbed 0.2 percent to $1,293.31 an ounce by 0315 GMT, after earlier hitting a session-high of $1,296.81.
Treasuries Recap
Portugal's 10-year bond yield hits one-month low at 2.92 pct, down 6 basis points on day.
Malaysia sells 2.5 bln ringgit Islamic govt bonds.
South Korea sells 30-year treasury bonds at average yield of 1.935 pct.
