Europe Roundup: Sterling bounces on "In" camp poll, oil prices and European shares rise as workers strike in Kuwait fades Doha meeting effect - Tuesday, April 19th, 2016

Market Roundup

• GBP/JPY early Europe 155.62 dip then rally to 157.33 and bid holding
   
• EUR/USD +0.16%, USD/JPY +0.50%, GBP/USD +0.4%, AUD/USD +0.4%
   
• DXY -0.2%, Brent +1.85%, Gold +1.0%, DAX +2.25%, Nikkei closed up 3.68%
   
• Germany Apr ZEW Economic Sentiment 11.2 vs 4.3 previous, 8.0 exp
   
• Germany Apr ZEW Current  Conditions 47.7 vs 50.7 previous, 51.0 exp
   
• EZ Feb C/A SA E19.0bln vs rvsed 27.5bln previous
   
• EZ Feb C/A  NSA E11.1bln vs rvsed 8.3bln previous
   
• Magnitude 5.5 quake hits southern Japan
   
• Japan FinMin – Threat to act on FX if JPY moves rapid – whether up/down
   
• Kuroda sees yen rise threatening infl. goal readiness to act if need be- WSJ
   
• 41 Chinese firms delayed or cancelled bond issuance last week – Caixin
   
• RBA Apr 5 minutes – AUD one reason to keep policy very loose
   
• Low  inf. still provides scope for more ease if needed, eyes moderate growth
   
• Australia PM Turnbull – General election likely July 2

Economic Data Ahead

• (0830 ET/1230 GMT) The U.S. Commerce Department is likely to report that housing starts declined to a seasonally adjusted annual pace of 1.17 million units in March from 1.18 million units in February. Building permits are expected to rise to 1.20 million-unit pace from 1.18 million in February.
   
• (1630 ET/2030 GMT) API reports its weekly crude oil stock.
   
• (1950 ET/2350 GMT) Japan's Ministry of Finance is expected to report that merchandise trade balance increased to Y 834.6 billion in the month of March from Y 242.8 billion in February.

Key Events Ahead

• (0930 ET/1330 GMT) The Reserve Bank of Australia Governor Glenn Stevens' Speech.
   
• (0945 ET/1345 GMT) FedTrade Ops 30-yr Ginnie Mae max $1.125 bln
   
• (1035 ET/1435 GMT) The Bank of England Governor Mark Carney's Speech.
   
• (1100 ET/1500 GMT) The Bank of Canada Governor Stephen Poloz and Senior Deputy Governor Carolyn Wilkins will speak before the House of Commons Standing Committee on Finance.
   
• (1145 ET/1545 GMT) FedTrade Ops 15-yr F.Mae/Fr.Mac max $650 mln
   
• N/A Canadian Infrastructure Minister Amarjeet Sohi will speak about the role public-private partnerships will play in the government's C$120 billion 10-year infrastructure plan.

FX Beat

USD: The U.S. dollar lost ground against the commodity currencies as they drew support from oil prices which stabilized after a steep decline. Against a basket of currencies, the dollar index edged 0.1 percent lower to 94.210.

EUR/USD: The euro was up 0.1 percent to 1.1333, drifting towards sessions high of 1.3446.  The pair has broken major resistance 1.1320. On the lower side minor intraday support is around 1.1270 and any violation below that level will drag the pair to next level 1.1230/1.1180 level. Further weakness can be seen below 1.1150. Break below 1.1150 will take the pair till 1.1050 level. Resistance around 1.1350 level and any violation above this level will reach till 1.13766/1.1400/1.1460level.

USD/JPY: The Japanese yen slipped 0.4 percent to 109.33 yen against its U.S. counterpart as risk appetite recovered. The greenback rose a high of 109.45, pulling away from a 1-week low of 107.75 hit in the previous session. The short term trend is slightly bullish as long as support 108.75 holds. On the lower side any break below 108.75 will drag the pair down till 108/107.60. The major resistance is around 110 and break above targets 111.25/112, while the minor resistance is around 109.25

GBP/USD: Sterling bounced above 1.4300 for the first time in a week, facilitated by two polls showing the "In" camp well ahead in the run in to June's referendum on European Union membership. ICM and ORB surveys gave the campaign to remain in the bloc 8 and 11 point leads respectively. Sterling gained around 0.5 percent to 1.4356, while against the euro it was 0.3 percent higher at 78.90 pence per euro. The short term trend is slightly bearish as long as resistance 1.4460 holds. Any upside violation above 1.4360 will take the pair till 1.4400/1.4430/1.4460 level. On the lower side major support is around 1.4280 and break below targets 1.4240/1.4170/1.4100 level. The pair should close above 1.4500 for further upside.

USD/CHF: The Swiss franc trades flat at 0.9638 against the U.S. dollar. It made a high of 0.9617 earlier in the session, before falling down to its current levels. The short term trend is slightly bearish as long as resistance 0.9700 holds. On the lower side break below 0.9630 will drag the pair down till .9575/0.9525. The resistance is at 0.9700 and break above will take it to next level at 0.9750/0.9800. Overall bearish invalidation can happen only above 0.9800.

AUD/USD: The Australian dollar trades around 0.7790, after rising to a high of 0.7802, its strongest level since June at 0.7803. The Aussie was supported by stabilized oil prices and underpinned broad risk sentiment. The short term trend is slightly bullish as long as support 0.7720 holds. On the higher side major resistance is around 0.7800 and break above targets 0.7850/0.7900. The major support is around 0.7720 and break below will drag the pair till 0.7680/0.7630, while the minor support is at 0.7750.

NZD/USD: The New Zealand dollar scaled 10-month peak after a sudden reversal higher in oil prices strengthened risk appetite. The kiwi trades 1.2 percent higher at 0.7028, hovering towards 0.7036 session's high. Immediate resistance is located at 0.7036 (Session High), while on the downside, support is seen at 0.6930 (5-DMA). 
 

Equities Recap

European shares hit 3-month highs following gains on Asian bourses after a workers' strike in Kuwait rose oil prices, strengthening investors' appetite to take on risk.

The pan-European FTSEurofirst 300 share index rose 1.3 percent, Britain's FTSE 100 and Germany's DAX both added 0.5 percent and France's CAC 40 nudged up 0.3 pct.

Tokyo's Nikkei advanced 3.68 pct at 16,874.44. MSCI's broadest index of Asia-Pacific shares outside Japan was up 1 percent, after touching its highest intraday levels since November.

Shanghai Composite index and CSI300 index both edged up 0.3 pct at 3,042.82 points and 3,238.30 points, respectively. HK’s Hang Seng index gained 1.3 pct at 21,436.21 points

Commodities Recap 

Oil prices rose as oil workers strike in Kuwait overshadowed bearish sentiment following failure of Doha meeting to agree to freeze output levels. Brent crude futures, the global benchmark, traded at $43.72 a barrel at 1010 GMT, more than 40 cents above previous close. U.S. crude futures were up 33 cents at $40.11 a barrel.

Silver advanced 3 percent to its highest in more than 10 months, strengthening gold to a session high of $1,246.16 an ounce, up more than 1 percent, after it dipped 0.3 percent earlier in the day in choppy trading.

Treasuries Recap

The 10-year U.S. treasuries yield stood at 1.7904 up by 0.019 bps.

Low-rated euro zone bond yields rose as investors made room in their portfolios for an unexpected Italian bond sale. Italian, Spanish and Portuguese 10-year yields all rose around 4 basis points to 1.40 percent, 1.54 percent and 3.04 percent, respectively. The gap or spread to the bloc's benchmark widened, with German equivalents flat at 0.16 percent

Japanese government bond prices held firm after an auction of 5-year JGBs attracted solid demand, amid expectations that the BoJ could ease its policy further later this month. The 30-year JGB yield fell to a record low of 0.325 percent, falling 4.0 basis points from Monday while the 20-year yield fell 2.5 basis points to 0.265 percent, also record low. The 5-year JGB yield dipped 1.0 basis point to minus 0.240 percent.

Gilts opened flat to the settlement of 120.70 but have since moved lower in line with the general risk on tone noted from core fixed income markets.

Australian government bond futures dipped, with the 3-year bond contract off 6 ticks at 98.030. The 10-year contract fell 7.5 ticks to 7.4350, while the 20-year contract shed 6 ticks to 96.8800. The spread between 2-year U.S. Treasury bond yields and those of its Australian counterpart narrowed to 127 basis points. It widened to 130 basis points late last week, a level not seen since July.

New Zealand government bonds eased, sending yields 3.5 basis points higher at the short end and 2 basis points higher at the long end.