Market Roundup
- Japan Q1 revised GDP +0.5% q/q, +1.9% AR, as eyed, prelim +0.4%, +1.7%, CAPEX -0.7% q/q, -0.3% eyed, prelim -1.4%, external demand contribution +0.2%, domestic +0.3%, prelim +0.2%, +0.2%, private consumption +0.6%, prelim +0.5%.
- Japan Q1 current account surplus Y1.8785 tln, Y2.3189 tln eyed, March Y2.98 tln surplus, trade surplus, cheap oil, solid overseas investment income, leap year cited.
- MoF May flow data – Japanese buy net Y304.0 bln foreign stocks, Y1.5186 tln bonds, Y245.7 bln bills; foreign investors sell net Y329.3 bln Japanese stocks, Y4.5899 tln bills, buy Y1.0680 tln bonds.
- Japan May outstanding bank loans +2.2% y/y, steady, Y497.217 tln.
- Japan MUFG bank unit to withdraw as JGB primary dealers, SMFG-Mizuho units maybe as well – Nikkei, Reuters, Japan media.
- Japan Kumamoto quakes’ hit to earnings at Y200 bln and climbing – Nikkei.
- Indonesia markets 3/5-year samurais via MUFG/MS, SMBC Nikko – IFR.
- PBOC – Look to maintain ’16 growth at 6.8%, CPI likely +2.4%, exports to slide 1%, fixed asset investment +11%, real estate major uncertainty.
- China May trade surplus $49.98 bln, $58 bln eyed, exp -4.1% y/y, imp -0.4%, -3.6%/-6.0% eyed; surplus in CNY terms 324.77 bln, exp -1.2%, imp +5.1%.
- Australia April owner-occupied housing finance +1.7% m/m, +2.5% eyed, value of investment housing finance -5.0%.
- NZ Q1 mfg sales volumes -1.2% q/q, dairy and meat -7.8%.
- World Bank cuts global growth forecast to 2.4% on weak demand, commodities.
Economic Data Ahead
- (0430 ET/0830 GMT) UK April industrial output, unchanged m/m, -0.4% y/y eyed; last +0.3%, -0.2%.
- (0430 ET/0830 GMT) UK April manufacturing output, unchanged m/m, -1.5% y/y eyed; last +0.1%, -1.9%.
- (1000 ET/1400 GMT) US April JOLTS job openings, 5.67 mln eyed; last 5.76 mln.
Key Events Ahead
- (0400 ET/0800 GMT) ECB/Estonia CB Hansson releases latest macroeconomic forecasts.
- (0500 ET/0900 GMT) Greece E1 and 1.25 bln 13 and 26-week treasury bill auctions.
- (0530 ET/0930 GMT) Germany E5 bln zero% 2018 Schatz auction.
- (0530 ET/0930 GMT) Portugal E750-1.0 bln 3.85% and 2.875% 2021 and 2025 OT auctions.
- (0600 ET/1000 GMT) Sweden SEK2 bln each 3.5% and 2.5% 2022 and 2025 govt bond auctions.
- (0630 ET/1030 GMT) ECB Nouy speaks at Paris Goldman Sachs European financial conference.
- N/A Canada FinMin Morneau keynote address at Toronto The Economist summit.
- (1700 ET/2100 GMT) RBNZ policy announcement, no change in 2.25% OCR eyed.
FX Recap
USD: The dollar was flat at 107.315 yen off the one-month low of 106.35 touched on Monday but still a long way away from the recent peak of 111.455 scaled at the end of May.
EUR/USD: The euro was effectively unchanged at $1.1359, having closed the last two days virtually flat after a 2 percent surge on Friday's disappointing U.S. non-farm report. The euro remains well supported below 1.14 marks against US dollar and trading around $1.1369 marks. The Intraday bias remains bullish till the time pair holds key support at 1.1325 levels. A sustained break above $1.1466 will drag the parity up towards key resistances at $1.1529/$1.1622/$1.1785 and $1.1833 marks. Key supports are seen at $1.1325/$1.1215.
USD/JPY: The Japanese Yen remains well supported below 107.00 marks against US dollar. Intraday bias remains bearish for the moment. A daily close below 106.92 will drag the parity down towards key supports at 106.15, 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. Today Japan released GDP data with positive numbers at 0.5% q/q vs 0.4% q/q previous release. In addition, Japan’s current account showed a surplus of ¥1.63 trillion, lower than the surplus of ¥2.04 trillion seen.
GBP/USD: Sterling was steady at $1.4540 after having gained roughly 0.8 percent overnight as two polls gave a narrow lead to the "Remain" camp. The pound had sunk to a three-week low in trade-weighted terms on Monday after a pair of online surveys gave the "Leave" camp a 4-5 percent leads. A daily close above $1.46 will take the parity up towards key resistances at $1.4769 levels. Alternatively, reversal from key resistance will drag the parity down at $1.4357 marks.
AUD/USD: The Australian dollar was little changed at $0.7454 after surging more than 1 percent overnight to a one-month high of $0.7478 after the Reserve Bank of Australia stood pat on monetary policy and hinted it was not in a hurry to raise rates. Key support levels are seen at 0.7337 and $0.7285 marks. On the top side, key resistance levels are seen at $0.7463 and $0.7602 marks.
NZD/USD: The New Zealand dollar traded at $0.6960, dipping slightly from a one-month peak of $0.6982 touched overnight. The Reserve Bank of New Zealand announces its policy decision early on Thursday with the market expecting the central bank to keep monetary policy unchanged. Key support was found at $0.6808. Resistance was seen at around $0.7054.
Equities Recap
Japan’s Nikkei N225 was trading 0.33% lower at 16,620.53 points in Tokyo.
Shanghai composite index to open down 0.1 pct at 2,932.38 points and China's CSI300 index to open down 0.2 pct at 3,171.81 points.
Hong Kong’s Hang seng index was trading 0.22% lower at 21,281.52 points.
South Korea’s Kospi was trading 0.02% higher at 2,012.97 points.
Australia’s S&P/ASX 200 was trading 0.09% lower at 5,365.80 points.
Commodities Recap
Oil prices rose for a third day to their highest in about eight months on Wednesday, helped by industry data showing a larger-than-expected drawdown in U.S. crude inventories, worries about attacks on Nigeria's oil industry and strong Chinese demand. London Brent crude for August delivery was up 9 cents at $51.53 a barrel by 0451 GMT, after settling up 89 cents on Tuesday. It earlier touched $51.55, the highest since Oct. 12. NYMEX crude for July delivery was up 17 cents at $50.53 a barrel, after touching $50.58 earlier, the strongest since Oct. 9.
Gold touched a fresh two-week high on Wednesday as the possibility of an early U.S. interest rate hike appeared to dim following dovish comments by Federal Reserve chair Janet Yellen earlier this week. Spot gold was up 0.4 percent at $1,248.30 an ounce by 0355 GMT. It hit a high of $1,249.20 earlier in the session, its strongest since May 24. U.S. gold climbed 0.3 percent to $1,251.20.
Treasuries Recap
New Zealand government bonds eased, sending yields around 0.5 bps higher across the curve.
Australian government bond futures held near highs, with the three-year bond contract up 2 ticks at 98.420. The 10-year contract also rose 2 ticks to 97.8300, close to an all-time peak touched on Tuesday, while the 20-year contract gained 3 ticks to 97.2400.
10-year U.S. treasury yield was trading at 1.710 percent vs U.S. close of 1.713 percent on Tuesday.
