Market Roundup
- BOJ Keeps Monetary Policy Steady
- Additional Easing in 3 Dimensions-Quantity, Quality and Int rate, if needed
- Nikkei -3.61%, USD/JPY -2.9%, EUR/JPY -2.7%, AUD/JPY -2.4%
- DAX -1.2%, DXY -0.6%, Brent +0.04%, Gold +0.76%, EUR/USD +0.3%
- ECB’s Nowotny-can’t say exactly when policy will have an effect on inflation
- Riksbank’s Jansson-Stronger the ccy the nearer we are to doing something
- Kuroda inflation to hit 2.0% during fiscal year 2017
- Kuorda-hard to see NIRP impact due to uncertainty over overseas economies
- BOJ: Japan Real GDP Expected +1.2% in Fy2016/17 Vs +1.5% Projected in Jan
- Ishihara: Government Will Support what BOJ is Say & Do Regarding 2% Inflation Target
- New Zealand's Reserve Bank OCR unchanged at 2.25%
Economic Data Ahead
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is expected to have risen to 260,000 for the week ending April 22 from 247,000 the week before.
- (0830 ET/1230 GMT) The U.S. Commerce Department is likely to report that gross domestic product growth slowed to a 0.7 percent annualized rate in the first quarter from a 1.4 percent pace in the fourth quarter.
- (1030 ET/1430 GMT) The Energy Information Administration reports its Natural Gas Storage for the week ending April 22.
- (1845 ET/2245 GMT) The Statistics New Zealand will release Building Permits s.a. figures for the month of March. The indicator posted a gain of 10.8 percent in the prior month.
- (1905 ET/2305 GMT) The GfK Group will release UK's consumer confidence index for the month of April.
Key Events Ahead
No Major Events Scheduled
FX Beat
USD: The dollar was lower across the board after the FOMC was in no hurry to tighten monetary policy amid an apparent slowdown in the U.S. economy. The dollar index trades 0.5 percent lower at 93.847, having touched a 2-week low of 93.685 earlier in the session.
EUR/USD: The euro trades 0.2 percent higher at 1.1347, having touched sessions high of 1.1367. The major was boosted after eurozones economic sentiment indicator for the month of April edged up 103.9 surpassing market expectations 103.5 and previous 103.0. Euro zones service sentiments index for April also rose to 11.5, against market consensus of 10.0 and previous 9.6. However, consumer confidence was unchanged at -9.3 in April. The short term trend is slightly bearish as long as resistance 1.1400 holds. On the higher side major resistance is around 1.1400 and break above targets 1.14600/1.1500. The major support is around 1.1270 and any violation below targets 1.12150 (Apr 24th low) /1.1150/1.1050. The short term reversal only above 1.1460 level.
USD/JPY: The Japanese yen gained more than 3 percent against the dollar after the BoJ held off from expanding monetary stimulus. The yen rose to a high of 107.91, recording its biggest daily gain in almost a year. The Japanese currency trades at 108.05, hovering towards a high of 107.91. The short term trend is slightly bearish as long as resistance 110 holds. On the lower side any break below 107.60 will drag the pair down till 106.80/106. The minor resistance is around 108.50 and break above targets 108.85/109.50.
GBP/USD: Sterling gained against a the dollar, advancing towards 12-week highs as markets do not expect the Federal Reserve to raise interest rates any time soon. However, gains are likely to be capped after a fresh YouGov poll for the Times showed that support for the "Out" campaign increased for Britain to exit the European Union in June referendum. Sterling trades at 1.4547, after touching a session high of 1.4617. Against the euro, it was slightly lower at 77.975 pence. Cable took support near 7 day EMA and started to jump from that level.The short term trend is bullish as long as support 1.4450 holds. On the higher side major resistance is around 1.46680 and break above targets 1.47000/1.4755/1.4800 levels.On the lower side major support is around 1.4450 and break below targets 1.4400/1.4345 level.
USD/CHF: The Swiss franc rose against the dollar, trading around 0.9667, after going as high as 0.7657 earlier in the session. It continues to rise, pulling away from a low of 0.9796 struck last week. The short term trend is slightly bearish as long as resistance 0.9760 holds. Any violation above 0.9760 will take the pair to next level till 0.9800/0.9850. On the lower side any break below 0.9680 will drag it down till 0.9630/0.9575. The short term trend is reversal only below 0.9500 level.
AUD/USD: The Australian dollar was steady at 0.7640, having slumped 2 percent in the previous session, marking its biggest 1-day decline in eight months. The Aussie made a intra-day high of 0.7657, before edging down to its current levels. The short term trend is slightly bearish as long as resistance 0.7760 holds. On the higher side major resistance is around 0.7760 and break above targets 0.7835/0.7850. The minor resistance is around 0.7650/0.7680. The major support is around 0.7500 and break below will drag the pair till 0.7485/0.7435. The minor support is around 0.7540.
NZD/USD: The New Zealand dollar gained after the Reserve Bank of New Zealand kept the key interest rate on hold at 2.25 percent. The kiwi rose to a high of 0.6989, to trade at 0.6952, pulling away from a low of 0.6806 hit in the previous session. It was also drifting closer to a 10-month peak of 0.7055 touched last week. Immediate resistance is located at 0.6989 (Session's High), break above could take the pair to 0.7048 (Apr 20 High). On the lower side, support is seen at 0.6806 (Previous Session Low).
Equities Recap
European shares slumped as the yen surged almost 3 percent against both the dollar and the euro following the BoJ policy decision.
The pan-European FTSEurofirst 300 declined 0.6 percent, Germany's DAX and Britain's FTSE both lost 0.7 pct and France's CAC skidded 0.92 pct.
Tokyo's Nikkei slumped 3.61 pct at 16,666.05, while MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.7 percent.
Shanghai composite index ended down 0.3 pct at 2,945.59 points, while CSI300 index closed down 0.2 pct at 3,160.58 points. HK’s Hang Seng index edged up 0.1 pct at 21,388.03 points.
Commodities Recap
Oil futures steadied after hitting a 2016 high of 47.45 as traders locked in profits; however, traders were cautious amid supply disruptions. Brent crude futures were trading at $47.19 per barrel at 1020 GMT, off from an earlier high of $47.47. U.S. West Texas Intermediate futures were down 2 cents at $45.31 a barrel.
Gold rose to its highest in a week as the Bank of Japan held policy steady, strengthening the yen versus the dollar. Spot gold was up 0.8 percent at $1,256.32 an ounce at 1021 GMT, off an earlier 1-week high of $1,258.91, while U.S. gold futures for June delivery were up $8.90 an ounce at $1,259.53.
Treasuries Recap
The 10-year U.S. treasury yield stood at 1.83 versus previous close of 1.86 percent.
German bond yields declined after the Bank of Japan surprised markets by leaving policy unchanged. German 10-year bond yields shed 5 basis points to 0.23 percent. French 10-year bunds yield dipped 9.25 pct to 0.580 pct, Spanish 10-year bonds yield inched down 0.74 pct to 1.610 pct and Portuguese 10-year bonds yield fell 1.89 pct to 3.119 pct.
Japanese government bonds gained, with the superlong zone rallying after the Bank of Japan opted to hold policy steady instead of easing further as some had expected. The benchmark 10-year yield shed 1.5 basis points to minus 0.085 percent, while the 10-year JGB futures contract ended up 0.08 point at 151.49. The 20-year yield skidded 4.5 basis points to 0.290 percent, while the 30-year yield fell 4 basis points to 0.335 percent. But the 5-year yield added 1 basis point to minus 0.240 percent.
Gilts opened 60 ticks higher than the settlement of 119.39, as the FOMC delivered a statement that was less hawkish than had been expected.
Australian government bond futures strengthened on inflation figures, with the 3-year contract up 7 ticks at 98.140. The 10-year contract climbed 8.5 ticks to 97.4750 in a bullish flattening of the curve. The 20-year contract also rose 8.5 ticks to 96.9000. New Zealand government bonds followed a rally in U.S. Treasuries after the Fed sounded in no rush to hike after its policy meeting. Yields were 5.5 basis points lower at the long end.
