Market Roundup
- GBP/USD +0.25%, EUR/USD no change, USD/JPY -0.2%
- DXY -0.01%, DAX -1.5%, Brent -2.4%, Iron -3.55%, Gold -0.3%
- 15-week low for EUR/GBP of 0.7649 after UK sales data
- UK Apr R.Sales +4.3% y/y vs +3.0% revised previous, 2.5% exp
- UK Apr R.Sales +1.3% m/m vs -0.5% previous, +0.5% exp
- UK Apr R.Sales ex-fuel +4.2% y/y vs +2.6% revised previous, 1.9% exp
- William Hill 16/5 Brexit, 2/9 Remain: Longest odds since vote date given
- Germany Finmin Schaeuble- will not be another crisis about Greece
- Norgesbank Gov-says NIRP not excluded if econ exposed to major shocks
- Norgesbank Chief-more has to happen in econ for rates to go below zero
- Riksbank Skingsley-CBs may be forced to accept below target infl. for longer
- Fed to markets: June rate increase is on the table – J. Hilsenrath, WSJ
- ChiefCabSec Suga – Ultimately up to PM Abe to decide on sales tax
- Japan’s top non-life insurers seen with record combined profit – Nikkei
- Australia Apr employment +10.8k, jobless 5.7%, participation 64.8%, +12.5k, 5.8% eyed
- New Zealand May ANZ/RM consumer confidence index 116.2, April 120.0, well above 100
Economic Data Preview
- (0830 ET/1230 GMT) New applications for U.S. unemployment benefits are expected to decline 19,000 to a seasonally adjusted 275,000 for the week ending May 14. That would record the 63rd straight week of claims below the 300,000 threshold associated with strong labor market conditions. While continuing claims for the previous week stood at 2.161 M.
- (0830 ET/1230 GMT) Philadelphia Federal Reserve manufacturing survey is likely to report that its business conditions index rose to 3.5 in May from -1.6 in April.
- (0830 ET/1230 GMT) The Statistics Canada is expected to report that wholesale trade slipped 0.5 percent in March after posting a drop of 2.2 percent in the prior month.
- (1000 ET/1400 GMT) The U.S. Conference Board issues April Leading Economic Index. The index probably rose 0.4 percent from 0.2 percent in March.
- (1030 ET/1430 GMT) The Energy Information Administration reports its Natural Gas Storage for the week ending May 13.
Key Events Ahead
- (0915 ET/1315 GMT) Federal Reserve Vice Chair Stanley Fischer speaks on "(Money), Interest and Prices: Patinkin and Woodford" at a conference to honor Michael Woodford's contributions to economics in New York.
- (1030 ET/1430 GMT) Federal Reserve Bank of New York President William Dudley participates in a briefing to discuss monthly report, "U.S. Economy in a Snapshot."
FX Beat
USD: The dollar index, against a basket of currencies trades 0.1 percent higher at 95.315, hovering towards 7-week highs.
EUR/USD: The euro trades 0.1 percent lower at 1.1202, having touched a low of 1.1196, a level last seen since end March. The dollar extended its overnight gains on perceived increase in chances of a rise in U.S. interest rates. The short term trend is slightly bearish as long as resistance 1.1350 (21 day MA) holds. Any break below 1.1200 will drag the pair 1.11500/1.1100/1.1055. On the higher side minor resistance is around 1.1350 (21 day MA) and any break above targets 1.1400/1.1480/1.1530 level. The minor resistance is at 1.1250/1.1320. Overall bearish invalidation is only above 1.16200.
USD/JPY: The Japanese yen gained against the dollar, trading 0.2 percent higher at 109.89. The greenback rose to a high of 110.38, however failed to sustain above the 110.00 mark, declining to a low of 109.78 earlier in the session. The minor weakness can be seen only below 109.50 (4H Kijun-Sen) levels. Any break below 109.50 will drag the pair down till 109/108.80 (21 day MA). On the higher side major resistance is around 110.55 and any indicative break above targets 111.30/112.
GBP/USD: Sterling rose to a 3 1/2 month peak against the euro after data showed retail sales in Britain grew at a much faster-than-expected pace in April. The economy's retail sales rose 1.3 percent in April from a month ago, surpassing forecasts of a 0.5 percent rise. On an annualized, it rose 4.3 percent, against market consensus 2.5 percent and previous 3.0 percent. Sterling trades 0.3 percent higher at 1.4634, having touched a 2-week high of 1.4662. Against the euro, the pound rose 0.3 percent at 76.54 pence, its highest since early February. On the higher side any break above 1.4600 will take the pair till 1.4660/1.4700/1.4769. The minor weakness can be seen only below 1.4550 and break below targets 1.4500/1.4450.
USD/CHF: The Swiss franc continues to slump against the dollar, having touched 1-1/2 month low as the greenback rose on U.S. central bank rate hike prospects. The pair trades 0.1 percent higher at 0.9893, hovering towards a high of 0.9913 hit mid- March. The short term trend is slightly bullish as long as support 0.9800 holds. On the higher side any break above 0.9900 will take the pair to next level till 0.9950/1.000. The short term trend is reversal only below 0.9500. Any violation below 0.9800 will drag the pair down till 0.9760/0.9680/0.9630. The minor support is around 0.9840.
AUD/USD: The Australian dollar slumped; hitting a 2-1/2 month low after mixed jobs data triggered speculative selling. The Aussie trades 0.3 percent lower at 0.7201, having declined to a low of 0.7190, a level not seen since early March. The short term trend is slightly bearish as long as resistance 0.7260 (200 day MA) holds. On the higher side major resistance is around 0.7260 and break above targets 0.7300/0.7336. The major support is around 0.7180 and break below will drag the pair till 0.710/0.7000.
NZD/USD: The New Zealand dollar rose after skidding 1 percent overnight on rising expectations of U.S. central bank rate hike as soon as next month. The kiwi gained 0.1 percent to trade at 0.6747, having touched an early high of 0.6764 and pulling away from a low of 0.6722 hit earlier in the session. The recovery comes after a survey showed that local job ads added 4.6 percent from a year ago, hinting strength in the labor market. Immediate resistance is located at 0.6764 (Session High), break above could take the pair to 0.6783 (10-DMA). On the down side, support is located at 0.6716 (May-10 Low).
Equities Recap
European shares nursed losses, as the dollar rose to a near 2-month high on revived prospects of an early Federal Reserve interest rate hike, possibly as soon as June.
Europe's FTSEurofirst 300 index lost 0.4 pct, Germany's DAX slumped 0.9 pct, Britain's FTSE 100 skidded 0.8 pct and France's CAC 40 dropped 0.5 pct.
Tokyo's Nikkei was flat at 16,646.66, Australia's S&P/ASX 200 index ended down 0.60 pct at 5,324.00 points and MSCI's broadest index of Asia-Pacific shares outside Japan declined 1 percent.
Shanghai composite index closed flat at 2,806.91 points, while CSI300 index edged down 0.2 pct at 3,062.50 points. HK’s Hang Seng index declined 0.7 pct at 19,694.33 points.
Commodities Recap
Oil slipped below $48 a barrel, as an unexpected increase in U.S. crude inventories added to the global oil supply glut. Brent crude was down at $47.82 by 1035 GMT. It reached a 2016 high of $49.85 on Wednesday, only to close lower. U.S. crude was down $1.06 at $47.13.
Gold declined to a 3-week low, extending overnight losses after the Federal Reserve policy meeting minutes suggested that the U.S. central bank could raise rates as soon as next month. Spot gold had dropped 0.3 percent to $1,253.79 per ounce by 1038 GMT, having dropped to its lowest since April 28 at $1,252.19 earlier in the session. U.S. gold futures dipped 1.5 percent to $1,255.40.
Treasuries Recap
The U.S. Treasuries recovered their early losses Thursday as crude oil prices fell more than 2 pct intra-day. Rising crude stockpiles, strong dollar and surging output from Iran to Europe and Asia also supported bond prices. The yield on the benchmark 10-year Treasury note which moves inversely to its price fell 1bp to 1.781 pct by 1120 GMT. Markets now look forward to jobless claims, Philadelphia Fed manufacturing and Conference Board leading economic indicators to be released later today
The European bonds slumped as investors cooled on safe-haven assets after FOMC April meeting minutes from the U.S. Federal Reserve’s strengthened bets of an interest rate hike in June. On the contrary, future course in bond prices are likely to be ruled by the movements in the crude oil market. The benchmark German 10-year bonds yield rose 3bps 0.194 pct, French 10-year bunds yield jumped 2bps to 0.536 pct, Irish equivalents inched higher 2bps to 0.874 pct, Italian equivalents climbed 3bps to 1.511 pct, Netherlands 10-year bonds yield rose 3bp at 0.415 pct, Portuguese 10-year bonds yield ticked up 2bps to 3.112 pct, Spanish 10-year bonds yield increased 3bp to 1.620 pct and British 10-year bonds yield mounted 4bps to 1.477 pct by 0855 GMT.
The Japanese government bonds slumped on Thursday, tracking weak trend in U.S. Treasuries prices overnight after the minutes of the April FOMC revealed hawkish remarks by many policymakers. Also, higher than expected first quarter GDP figure drove-out investors from safe-haven buying. Moreover, future course in bond prices are likely to be ruled by the movements in the crude oil market. The yield on the benchmark 10-year bonds, which moves inversely to its price rose 2bps to -0.076 pct and the yield on short-term 2-year bonds climbed 1bp to -0.224 pct by 0620 GMT.
The U.K Gilts plunged after data showed stronger than expected April retail sales data. Also, investors drove-out from safe-haven buying after FOMC April meeting minutes from the U.S. Federal Reserve’s strengthened bets of an interest rate hike in June. The yield on the benchmark 10-year bonds rose 4bps to 1.475 pct and the yield on short-term 2-year bonds jumped 2bps to 0.455 pct by 0915 GMT.
The Australian government bonds recovered their early losses Thursday as investors poured into safe-haven assets amid losses in riskier assets including crude oil and stocks. The yield on the benchmark 10-year Treasury note which moves inversely to its price fell 1bp to 2.352 pct and the yield on the short-term 2-year Treasury bond dipped 1bp to 1.661 pct by 1030 GMT.
