Market Roundup
- Japan FinMin Aso – Reiterates Japan ready to intervene in FX is moves one- sided, G7/20 agree excessive FX volatility undesirable, Japan has not and has no plans to manipulate FX
- over long-run, 2-yen spikes undesirable - Reuters.
- BoJ watchers see July Upper House race entering into policy calculation –NEN.
- BoJ starts off-loading legacy of bygone stock-buying program – Nikkei.
- Japanese govt calls for additional 7 mln Takata-related recalls – Nikkei.
- China April CPI -0.2% m/m, +2.3% y/y, -0.2%, +2.4% forecast, food CPI +7.4% y/y.
- China April PPI +0.7% m/m, -3.4% y/y, -3.8% y/y forecast.
- SF Fed – Medicare payment cuts continue to restrain inflation.
- UK April BRC like-for-like retail sales -0.9% y/y, weakest since Aug ’15, cold weather dampens mood, March -0.7%, total sales unch y/y, March unch.
- ECB/BdF Villeroy – Helicopter money not on table, not needed - SDZ.
- New Zealand FinMin English - RBNZ takes fin’l stability seriously, will use lending control tools if needed, watch for more direction tomorrow – interest.co.nz
- New Zealand April electronic card retail sales +0.9% m/m, +7.8% y/y.
Economic Data Ahead
- (0245 ET/0645 GMT) France Mar industrial output, +0.5% m/m forecast; last -1.0%.
- (0245 ET/0645 GMT) France Q2 industrial investment; last +7.0% AR.
- (0245 ET/0645 GMT) France Mar budget balance; last E25.58 bln deficit.
- (0400 ET/0800 GMT) Italy Mar industrial output, +0.2% m/m forecast; last -0.6% m/m, +1.2% y/y.
- (0400 ET/0800 GMT) Norway Mar manufacturing output, -0.3% m/m forecast; last +0.7%.
- (0400 ET/0800 GMT) Norway Apr CPI, +0.3% m/m, +3.3% y/y forecast; last +0.5%, +3.3%.
- (0400 ET/0800 GMT) Norway Apr – core, +0.3% m/m, +3.3% y/y forecast; last +0.3%, +3.3%.
- (0400 ET/0800 GMT) Norway Apr PPI; last -14.9% y/y.
- (0430 ET/0830 GMT) Great Britain Mar trade bal, GBP11.3 bln deficit forecast; last GBP11.96 bln deficit.
- (0430 ET/0830 GMT) Great Britain Mar - non-EU, GBP 3.5 bln deficit forecast; last GBP 3.36 bln deficit.
- (0600 ET/1000 GMT) United States Apr NFIB business optimism index; last 92.6.
- (1000 ET/1400 GMT) United States Mar wholesale inventories/sales, +0.1/+0.3% forecast; last -0.5/-0.2%.
- (1000 ET/1400 GMT) United States Mar JOLTS job openings, 5.43 mln forecast; last 5.45 mln.
Key Events Ahead
- (0440 ET/0840 GMT) Spain E3.5-4.5 bln 6 and 12-month treasury bill auctions.
- (0500 ET/0900 GMT) Netherlands E2-3 bln 0.5% 2026 DSL auction.
- (0500 ET/0900 GMT) Austria E1.1 bln 0.75% and 2.4% 2026 and 2034 RAGB auctions.
- (0530 ET/0930 GMT) UK DMO GBP700 mln 0.125% 2058 index-linked Gilt auction.
- (0530 ET/0930 GMT) ECB 7-day zero% refi, E53 bln allotment forecast, E53.55 bln maturing.
- (0540 ET/0940 GMT) Belgium E1.7-2.1 bln 3 and 12-month treasury certificate auctions.
- (1000 ET/1400 GMT) BoE DepGov Bailey in London EBRD conference panel discussion.
- (1700 ET/2100 GMT) RBNZ Financial Stability Report.
FX Beat
USD: The dollar index stood at 94.18, pulling closer to its highest in nearly 2-weeks, extending its rise from a 15-month trough set on May 3.
EUR/USD: The euro trades flat at 1.1386, having touched a early low of 1.1369. It made an intra-day high of 1.1392, before declining to its current levels. The major continues to trade lower, pulling away from a peak of 1.1616 touched last week. Markets will closely watch series of data from eurozone economies, for further cues on the pair. Immediate support is located at 1.1351 (20-DMA), break below could drag the pair to 1.1353 (Apr 12 Low). On the higher side, resistance is seen at 1.1409 (5-DMA).
USD/JPY: The Japanese yen extended losses, declining from recent peaks following warnings by Japan that it was prepared to step in and weaken the currency. The greenback rose 0.4 percent to a 12-day high of 108.85 yen, after surging more than 1 percent on Monday. Finance Minister Taro Aso reiterated on Tuesday that Tokyo is ready to intervene to weaken the currency if moves are volatile enough to hurt the country's trade and economy. In absence of significant economic releases, the broader market sentiment is likely to drive the pair moves. The currency trades at 108.83, hovering towards session's high. Immediate resistance is located at 109.09 (Apr 8 High), while on the lower side, support is seen at 107.86 (Apr 28 Low).
GBP/USD: Sterling continues to trade lower, hovering towards to a 2-week low struck on Monday, as investors remain cautious on opinion polls showing the outcome between those wanting to stay in the European Union and those wanting to leave. Sterling trades at 1.4400, well below a 4-month high of 1.4770 last Tuesday. Against the euro, it was trading at 78.99. Immediate support is located at 1.4374 (Previous Day High), while on the higher side, resistance is seen at 1.4441 (5-DMA).
AUD/USD: The Australian dollar stood at 0.7327, after hitting a low of 0.7300 earlier in the day, a level not seen since early March. The Aussie tumbled 5 cents in three weeks, largely after the Reserve Bank of Australia cut rates last week for the first time in a year. A 5-day decline in prices of iron ore, Australia's top export earner also weighed down the pair. Markets now await the Fed official Bullard’s speech and the U.S. JOLTS jobs opening data for further momentum. Immediate resistance is seen at 0.7383 (5-DMA), while on the downside, support is located at 0.7300 (Session Low).
NZD/USD: The New Zealand dollar trades 0.3 percent lower at 0.6742 after declining oil and metal prices combined with worries about economic strength in China sapped appetite for the commodity-linked currencies. The kiwi slipped to a 6-week trough of 0.6733, having shed nearly 1 percent on Monday. Reserve Bank of New Zealand's Financial Stability Report and RBNZ Governor Wheeler speech will be closely watched for further cues on the pair. Immediate support is located at 0.6733 (Session Low), while resistance is seen at 0.6821 (5-DMA).
Equities Recap
Asian shares declined to 2-month lows as weak oil prices weighed on investor sentiment.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.2 percent, its lowest since Mar. 11. Hong Kong and Chinese stocks led regional markets lower. Taiwan stocks closed up 0.3 pct at 8,156.29 points.
Australia's S&P/ASX 200 index nudged up 0.35 pct at 5,339.20 points, Tokyo's Nikkei gained 2.15 pct at 16,565.19, Seoul shares rose 0.65 pct.
Commodities Recap
Oil prices steadied after tumbling more than 3 percent in the previous session as inventories and refined products glut offset supply disruptions in Canada and elsewhere that have taken more than 2 million barrels a day of production out of the market. International Brent crude futures were trading at $43.84 per barrel at 0636 GMT, while U.S. crude futures were trading at $43.34 per barrel, down 10 cents.
Gold recovered ground near a 1-1/2-week low after witnessing its steepest loss since March in the prior session as the dollar remained robust, reducing appetite for the precious metal. Spot gold was nearly flat at $1,266.00 an ounce by 0636 GMT, after hitting an early low of $1,259.25, its weakest since April 28, while U.S. gold for June delivery was little changed at$1,265.90 an ounce.
Treasuries Recap
The 10-year U.S. treasury yield stood at 1.764 percent versus previous close of 1.760 percent.
Australian government bond futures extended gains, with the 3-year bond contract steady at 98.450, having advanced a fresh record of 98.490. The 10-year contract rose 3 ticks to 97.7150, while the 20-year contract was unchanged at 97.0900.
New Zealand government bonds rose, sending yields around 3 basis points lower across the curve. The 10-year cash bond declined to a record low of 2.6 percent.
Canadian government bond prices rose across the maturity curve, with the benchmark 10-year rising 34 Canadian cents to yield 1.318 percent and the 2-year price up 6.5 Canadian cents to yield 0.528 percent.
