Market Roundup
- USD/JPY hits 109.26 highs from 108.27 low-Rhetoric cited
- USD/JPY +0.75%, EUR/USD +0.03%, GBP/USD +0.3%, AUD/USD +0.55%
- DXY +0.04%, DAX +1.10%, Brent +1.42%, Iron -4.46%
- Switzerland Apr Jobless 3.5% vs 3.6% previous, 3.5% exp
- Germany Mar Ind. Output -1.3% m/m vs -0.5% previous, -0.2% exp
- Germany Mar Trade Bal. E23.6bln vs 20.0bln revised previous, 20.5 bln exp
- UK Mar Trade Bal. –GBP11.2 bln vs -11.42 bln revised previous, -11.3 bln exp
- Japan would intervene if Yen firms to 90-95 vs Dollar-PM advisor Hamada
- Japan FinMin Aso – Reiterates ready to intervene in FX is moves one-sided
- Japan has not and has no plans to manipulate FX over long-run
- BoJ watchers see July Upper House race entering into policy calculation –NEN
- UK April BRC like-for-like retail sales -0.9% y/y, weakest since Aug ’15
- ECB/BdF Villeroy – Helicopter money not on table, not needed - SDZ
Economic Data Ahead
- (1000 ET/1400 GMT) The U.S. Labor Department is likely to report that job openings have decreased 14,000 to 5.431 million in March from 5.445 million in February.
- (1000 ET/1400 GMT) The U.S. Census Bureau is expected to report that wholesale inventories rebounded by 0.1 percent in March, after declining at their fastest pace in nearly three years in February.
- (1600 ET/2000 GMT) The Reserve Bank of New Zealand will release its Financial Stability Report.
- (1630 ET/2030 GMT) API reports its weekly crude oil stock.
Key Events Ahead
- (1145 ET/1545 GMT) FedTrade Ops 30yr Ginnie Mae max $1.35 bln
- (1700 ET/2100 ET) The Reserve Bank of New Zealand Governor Graeme Wheeler's Speech.
FX Beat
USD: The dollar index was at 94.30, having hit its highest in nearly 2-weeks, extending its rise from a 15-month trough struck on May 3.
EUR/USD: The euro trades flat at 1.1373, having touched sessions high of 1.14010. The currency continues to trade lower, hovering towards session’s low of 1.1358 and, pulling further away from a peak of 1.1616 struck last week. The short term trend is slightly weak as long as resistance 1.1455 holds. On the higher side any break above 1.1455 will take the pair to next level till $1.1500/1.1530 level. The minor support is around 1.1370 and break below will target 1.1340/1.1270/1.1200. Overall bearish invalidation above 1.16200 level.
USD/JPY: The Japanese yen declined to its lowest in almost 2-weeks against the dollar following warnings by Japan that it was prepared to step in to weaken the currency. The yen dropped 0.9 percent to a 12-day low of 109.26 yen, after losing more than 1 percent on Monday. The short term trend is slightly bullish as long as support 108 holds. On the lower side any break below 108 will drag the pair down till 106/105.20.The minor support is around 108.80, while the major resistance is around 109.70 and break above targets 110.56/110.95.
GBP/USD: Sterling steadied after hitting a 2-week low against the dollar on opinion polls showing the outcome of June's referendum on European Union membership. The pair was strengthened by upbeat Trade balance data. United Kingdom's revised trade balance (non EU) for the month of March stood at -3.110 billion pounds, better than market expectations of -3.500 billion pounds and previous -3.350 billion pounds. Revised total trade balance for March came in at -3.83 billion pounds versus -4.30 billion pounds. Sterling trades 0.1 percent higher at 1.4436 having fallen as low as 1.4374 on Monday, against the euro it was flat at 78.93 pence. The short term trend is still bearish as long as resistance 1.4550 holds. Any break below 1.4370 will drag the pair down till 1.4320/1.4280/1.4240 level. On the higher side minor resistance is around 1.4480 and break above targets 1.4550/1.4600.
USD/CHF: The Swiss franc lost ground against the dollar, trading 0.2 percent lower at 0.9737. It touched a high of 0.9698, before falling down to its current levels. The short term trend is slightly bullish as long as support 0.9630 holds. On the higher side any break above 0.9750 will take the pair to next level till 0.9800/0.9850. The short term trend is reversal only above 0.9800. Any violation below 0.9630 will drag it down till 0.9575/0.9530/0.9500.
AUD/USD: The Australian dollar trades at 0.7335, recovering from a low of 0.7300 hit earlier in the session. The Aussie rose to a high of 0.7373, before giving up some ground to trade at its current levels. The short term trend is slightly bearish as long as resistance 0.7410 (4 H Kijun-Sen) holds. On the higher side major resistance is around 0.7410 and break above targets 0.7480/0.7520.The minor resistance is around 0.7350/0.7380, while the major support is around 0.7300 and break below will drag the pair till 0.7256/0.7200.
NZD/USD: The New Zealand dollar declined to a 6-week low of 0.6730, having shed nearly 0.5 percent in today’s session and 1 percent on Monday. The Kiwi was weighed down by oil and metal prices combined with worries about economic strength in China. Investors now await for the Reserve Bank of New Zealand's Financial Stability Report for further cues on the pair. Immediate support is located at 0.6730 (Session Low), while resistance is seen at 0.6818 (5-DMA).
Equities Recap
European shares rose, facilitated by some solid corporate earnings in Europe and Japan's move to intervene on yen's weakness.
The pan-European FTSEurofirst 300 index advanced 1.2 percent, Germany's DAX gained 0.8 pct, Britain's FTSE 100 rose 0.6 pct, France's CAC 40 edged up 0.4 pct
The MSCI All-Country World index gained 0.4 percent while the MSCI Emerging Market index also edged higher.
Tokyo's Nikkei gained 2.15 pct at 16,565.19, Australia's S&P/ASX 200 index rose 0.35 pct at 5,339.20 points, Shanghai Composite index ended flat at 2,832.59 points, CSI300 index edged up 0.1 pct at 3,069.11 points and HK’s Hang Seng index gained 0.4 pct at 20,242.68 points.
Commodities Recap
Oil rose after slumping more than 3 percent in the previous session. The recovery was driven by supply disruptions in Canada and elsewhere that have knocked out 2.5 million barrels of daily production. Brent crude futures were up at $44.22 per barrel by 1050 GMT, while U.S. crude futures were up 45 cents at $43.89 per barrel.
Gold was firm near a 1-1/2-week low after suffering its steepest loss since March in the prior session as the dollar remained strong. Spot gold was up 0.1 percent at $1,265.58 an ounce by 1054 GMT, after hitting an early low of $1,259.25, its weakest since April 28. Bullion fell 1.9 percent on Monday, recording its sharpest single-day drop since March 23.
Treasuries Recap
The U.S. Treasuries were trading modestly firmer amid subdued trade with investors seeking riskier assets. The yield on the benchmark 10-year bonds rose 1bps to 1.770 pct by 1015 GMT. Markets now look ahead to a lighter flow of data this week, highlighted by retail sales, producer prices, business inventories and University of Michigan consumer sentiment releases on Friday. Additionally, markets receive 3-Year Note, 10-Year Note and 30-Year Bond auctions on Tuesday, Wednesday and Thursday, respectively.
The European bonds were trading mixed as investors shifted to safe-haven assets amid gains in riskier assets including stocks and oil. Also, bond prices were supported by the recent polls which showed the outcome of the U.K referendum is too close to call, raising the possibility that Britain might leave the EU after 43 years of membership in the bloc. The benchmark German 10-year bonds yield stood flat at 0.130 pct, French 10-year bunds yield dipped 1bps to 0.488 pct, Italian equivalents tumbled 5bps to 1.426 pct, Spanish 10-year bonds yield inched lower 4bps to 1.558 pct, Portuguese 10-year bonds yield fell 4bps to 3.282 pct, Netherlands 10-year bonds yield dipped 1bps to 0.356 pct and British 10-year bonds yield rose 2bps to 1.434 pct by 0945 GMT.
The Greek government bonds rallied after Euro zone finance ministers offered debt relief to the cash-strapped country from 2018. The yield on the benchmark 10-year bonds fell 51bps to 7.829 pct 0840 GMT.
The Japanese government bonds were trading mixed as markets receive no more important data this week. Moreover, bond prices are likely to be ruled by the movements in the crude oil market and the results of today's monthly 10-year JGB auction were largely in line with market expectations. The yield on the benchmark 10-year bonds rose 2bps to -0.089 pct and the yield on the 2-year bonds stood unchanged at -0.243 pct by 0650 GMT.
The Chinese bonds strengthened after data showed that China’s April consumer-inflation rate held steady for 3rd straight month, giving the People's Bank of China (PBOC) more breathing space to ease monetary policy as the world's 2nd biggest economy fights weak demand. The yield on the benchmark 10-year bonds moved lower 2bps to 2.909 pct by 0545 GMT.
The Australian government bonds were trading modestly firmer as investors were cautious with global markets uncertainty and weak inflation outlook. Also, bonds are higher with global markets uncertain about the US economic outlook. The yield on the benchmark 10-year Treasury note which moves inversely to its price fell 4 bps to 2.290 pct by 0500 GMT.
