Market Briefs
- USD/JPY +0.3%, EUR/USD -0.5%, GBP/USD -0.3%, AUD/USD +0.1%.
- DXY +0.5%, Brent +2.00%, Gold +0.05%, Iron -5.3%, Copper -1.5%.
- UK Apr Service PMI 52.3 vs 53.7 previous, 53.5 expected- Low since Feb 2013.
- Fitch in Asia: Japan's NIRP struggling to find traction.
- ECB-Economic recovery to proceed but risks remain tilted downside.
- Australian Treasurer says Lowe to replace retiring RBA Governor Stevens.
- Turkey may have to consider whether TRY is overvalued- Presidential adviser.
- China Caixin April Services PMI Falls to 51.8 (March 52.2).
- Australia March Retail Sales 0.4% M/M S/Adj (Reuters Poll +0.3%).
- Moody's: Budget Constraints Leave Australian Public Finances Vulnerable
Economic Data Preview
- (0830 ET/1230 GMT) The number of Americans filing for jobless benefits probably rose 3,000 to a seasonally adjusted 260,000 for the week ended April 30. While the continuing claims for the week ended April 22 are likely to have risen to 2.133 mln from 2.130 mln previous week.
- (0830 ET/1230 GMT) The value of Canadian building permits is expected to have fallen by 5 percent in March, offsetting some of the large gain of 15.5 percent that was seen in February. Investors will be watching to see if the activity in the province continues.
- (1030 ET/1430 GMT) EIA reports Natural Gas Storage Change for the week ended April 29.
- (1400 ET/1800 GMT) Mexico's central bank is expected to hold its key lending rate steady. Economists expect the benchmark interest rate to remain at 3.75 percent.
- (0930 ET/1330 GMT) Brazil's automakers' association releases automobile production for April.
- (1730 ET/2130 GMT) The IMACEC economic activity index of Chile is expected to have increased 0.2 percent in March from the same month a year earlier. The economic activity rose 2.8 percent in February from the same month a year earlier.
Key Events
- (1145 ET/1545 GMT) FedTrade Operation 30-year Fannie Mae / Freddie Mac (max $2.4 bn).
- (1150 ET/1550 GMT) Bullard speaks on the U.S. economy and monetary policy, and participates in a panel before the 35th University of California at Santa Barbara Economic Forecast Project Santa Barbara County Summit.
- (1915 ET/2315 GMT) Four top Federal Reserve policymakers - Robert Kaplan, the dovish chief of the Dallas Fed; James Bullard, the hawkish head of the St. Louis Fed; and Dennis Lockhart and John Williams, the centrist presidents of the Atlanta Fed and the San Francisco Fed, respectively - will present their views on monetary policy and the outlook for the economy at the Hoover Institution's third annual central banking conference at Stanford University.
Equities Recap
European shares and oil prices rebounded on Thursday and a rally in bond markets cooled as investors are ready to position for U.S. payrolls data.
The pan-European FTSEurofirst 300 index rose 0.3 percent as firmer oil prices helped lift the region's big producers, it fell 1.2 percent to its lowest level in nearly a month in the previous session. U.K.s FTSE100 rose 0.38 pct, Germany's DAX climbed 0.78 pct and France's CAC 40 gained 0.45 pct by 0921 GMT.
In Asia, Japan markets were closed on account of national publich holiday, MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.3 percent, and shed 5 percent in just two weeks. China's CSI300 Index closed up 0.1 pct at 3,213.92 points, Shanghai Composite Index ended up 0.2 pct at 2,997.84 points. Australia's S&P/ASX 200 Index gained marginally 0.03 pct at 5,272.60 points, while HK’s Hang Seng Index edged down 0.4 pct at 20,449.82 points.
Commodities Recap
The escalating tensions in Libya and a wildfire near Canada's oil sands region fueled concerns among investors over a near-term supply shortage, driving crude prices up for the first time in a week on Thursday. Brent crude futures climbed $1.19 on the day to $45.81 a barrel by 0845 GMT, while U.S. West Texas Intermediate (WTI) futures rose $1.45 to $45.23.
Gold dropped for a fourth consecutive session on Thursday, moving further away from a 15-month peak as the weak dollar recovered on optimism the U.S. economy could bounce back after nearly stalling in the first quarter. Spot gold fell 0.2 percent at $1,276.40 an ounce by 0941 GMT, extending a 1.1 percent fall over the past three sessions. U.S. gold futures climbed 0.3 percent to $1,281.10.
Treasuries Recap
The U.S. Treasuries slumped as oil prices snapped a 4-day losing streak on Thursday after a huge wildfire in Canada disrupted its oil sands production, while escalating fighting in Libya threatened the North African nation's output. Also, modest improvement in yesterdays April estimate of national non-manufacturing conditions drove out traders from safe assets. The yield on the benchmark 10-year bonds, which moves inversely to its price rose 2bps to 1.803 pct.
The European bonds slumped as investors cooled on safe-haven assets amid gains in riskier assets including stocks and oil. The benchmark German 10-year bonds yield rose 1bps to 0.215 pct, French 10-year yield climbed 2bps to 0.585 pct, Italian equivalents jumped 3bps to 1.514 pct, Spanish 10-year bonds yield inched higher 3bps to 1.617 pct and Portuguese 10-year bonds yield rose 7bps to 3.216 pct. While British 10-year Gilts yield rose 1bp to 1.535 pct by 0900 GMT.
The Australian government bonds continued to rise for three consecutive days as investors pour into safe-haven assets after Reserve Bank of Australia lowered its interest rate by 25 bps to historic low of 1.75 pct on Tuesday. Also, tumbling crude oil prices drove investors towards safe-haven assets. The yield on the benchmark 10-year Treasury note fell 5 bps to 2.384 pct. The New Zealand bonds traded nearly flat as markets receive no more important data this week. The yield on the benchmark 10-year bonds stood unchanged at 2.740 pct.
FX Beat
USD: The dollar was holding at 107.33 yen in European trading, above the recent 18-month trough of 105.55 but a long way from last week's peak of 111.88. Against a basket of currencies it was up 0.37 percent at 93.524.
EUR/USD: The euro was trading at $1.1454, having been as high as $1.1614 this week from a low of $1.1213 in April. The intraday bias remains neutral for consolidation below $1.1615 temporary top. The near term outlook stays bullish as long as 1.1217 support holds. Today the key event risk with a USD bid is natually Friday's payrolls. The weakening techs were also undermining recent EUR/USD longs, the rise from 1.0517 might still extend to 1.1713 resistance. The strong resistance from 38.2% retracement of 1.3993 to 1.0461 at 1.1810 to limit upside and bring larger down trend resumption eventually. On the downside, a break of 1.1217 support will indicate the near term reversal.
USD/JPY: The Japanese yen weakened for a third consecutive day on Thursday but was still close to a recent 18-month peak, with investors unconvinced by a signal from Japan's prime minister that it could step in to weaken the currency. It was trading at 107.23 and the intraday bias remains neutral as consolidation from 105.54 temporary low continues. Solid supply persists at 107.45, which was Wed's high, if spot breaks 107.45, this will put pressure on the upside. 107.98 is an important Fibo which should limit further gains. The outlook will stay bearish as long as 111.85 resistance holds. EUR/JPY was trading in a range of 122.69-123.10. Large 2.1B NY cut option expiry likely to attract in early NY.
GBP/USD: The Sterling dropped for a third consecutive day on Thursday after the data showed Britain's services sector grew at its lowest rate in more than three years in April, raising concerns that the economy is stumbling in the run-up to a vote on whether Britain should quit the European Union.
It fell to a day's low of $1.4467 after the survey was released, well below a 4-month high of $1.4770 struck on Tuesday. It was 0.4 percent higher against the euro at 78.90 pence per euro. The intraday bias remains neutral for consolidation below 1.4769 temporary top. The near term outlook will stay bullish as long as 1.4472 support holds. Above 1.4769 will extend recent rise to 161.8% projection of 1.3835 to 1.4514 from 1.4004 at 1.5103 next. However, break of 1.4472 will open up the case of near term reversal and target 61.8% retracement at 1.4296.
USD/CHF: The Swiss Franc was trading down 0.65 pct at 0.9634, The intraday bias remains neutral for consolidation above 0.9443. Further fall is still in favor with 0.9796 resistance intact. Break of 61.8% projection of 1.0091 to 0.9498 from 0.9796 at 0.9430 will target 100% projection at 0.9203. However, the break of 0.9796 resistance will confirm near term trend reversal and turn outlook bullish. The franc hits its 8-week low of 1.1019 francs per euro. The EUR/CHF was again banging into the daily cloud top at 1.1005, 11-day assault seen on the cloud top, despite the cloud the cross looks supported. SNB presence on dips added weight to the eventual bull break call.
AUD/USD: The Australian dollar rose half a percent to $0.7499, helped by upbeat Australian data, including a stronger-than-expected rise in retail sales in March. It was away from a 7-week trough of $0.7447 touched on Wednesday, the resistance was found near $0.7515 with support at $0.7455. The slide from 0.7514 influenced by lower iron ore and copper prices. After “Bearish Engulfing” pattern is formed at 0.7484 it seems like intermediate uptrend is over. The pair has broken minor support at 0.7479 levels and evidenced price dips. Current prices have slid below both 7 & 21DMAs, while, 7DMA crosses below 21DM that signals selling pressures. It is currently testing major support at 0.7445 (38.2% fibos), if it holds decisively on a closing basis then bounce upto 0.7555 is possible. On the contrary, the break below these levels could evidence bearish targets at 0.7414.
NZD/USD: The New Zealand dollar rose to $0.6893 from a low of $0.6861 touched on Wednesday. It has shed 1.1 percent so far this week in the wake of the RBA's easing and sliding global prices for dairy products. Analysts expect the currency to trade between $0.6860 and $0.6960.
