Market Briefs
- USD/JPY +0.2%, GBP/USD -0.36%, EUR/USD -0.12%.
- DXY +0.32%, DAX -0.8%, Brent -0.2%, Gold -0.7%.
- Germany Final Apr Service PMI 54.5 vs 54.6 previous, 54.6 expected.
- EZ Final Apr Service PMI 53.1 vs 53.2 previous, 53.2 expected.
- EZ Mar Retail Sales -0.5% m/m vs +0.3% revised previous, -0.1% expected.
- EZ Mar Retail Sales +2.1% y/y vs 2.7% revised previous, 2.5% expected.
- UK Apr Construction PMI 52.0 vs 54.2 previous, 54.0 expected.
- UK Shop Prices -1.7% y/y in April vs -1.7% in March – BRC.
- New Zealand Commodity Price Index -0.8% in April - ANZ Bank.
Economic Data Preview
- (0815 ET/1215 GMT) The ADP national employment report is likely to show private employers in U.S. added 196,000 jobs in April, after hiring 200,000 workers in March.
- (0830 ET/1230 GMT) The U.S. Labor Department is expected to report that nonfarm productivity contracted at a 1.4 percent annualized rate in the first quarter, after declining 2.2 percent in the fourth quarter. Unit labor costs probably stayed flat at 3.3 pct in the first quarter.
- (0830 ET/1230 GMT) The Commerce Department is expected to report that U.S. trade deficit narrowed to $41.5 billion in March from $47.1 billion in February.
- (0830 ET/1230 GMT) Canada's trade deficit is likely to have narrowed slightly to C$1.4 billion in March from a deficit of C$ 1.91 billion. Investors want to know if the recent growth in exports will continue, which is key to the central bank's outlook for the economy.
- (0945 ET/1345 GMT) The financial firm Markit releases its services PMI for April which is expected to stay unchanged at 52.1.
- (1000 ET/1400 GMT) New orders for manufactured goods are expected to have risen 0.6 percent in March, after having declined 1.7 percent in February.
- (1000 ET/1400 GMT) The Institute for Supply Management's non-manufacturing index is expected to have slightly risen to 54.7 in April from 54.5.
. - (1030 ET/1430 GMT) EIA reports Crude Oil Stocks for the week ending April 29.
Key Events
- (1145 ET/1545 GMT) FedTrade Ops 30-yr Ginnie Mae max $1.35 bln.
- (1430 ET/1830 GMT) FedTrade Ops 15-yr F.Mae/Fr.Mac max $600 mln.
- (1830 ET/2230 GMT) Federal Reserve Bank of Minneapolis President Neel Kashkari hosts a Town Hall meeting in Rochester, Minnesota, that may touch on monetary policy and the outlook for the economy as well as his message on corralling big banks.
Equities Recap
Global stocks slid for the second consecutive day on Wednesday and metals prices dropped as worries about a renewed and prolonged global growth downturn persist due to a set of lacklustre manufacturing data across the world.
European shares started with a weaker note, with the pan-European FTSEurofirst 300 index, trading aroun d just off 3-week lows hit on Tuesday when it fell almost 2 percent. The blue-chip FTSE 100 index dropped for a third straight session and was down 0.6 percent at 6,150.72 points by 0837 GMT after falling to 6,150.37, the lowest level since early April. France's CAC was down 0.1 pct and Germany's DAX was flat in early deals.
MSCI's index of world stocks was down a quarter of a percent to 2-1/2 week lows after falling 1 percent on Tuesday for its biggest one-day fall in a month.
Emerging equities extended losses, falling almost 1 percent.
Australia's S&P/ASX 200 index closed down 1.46 pct at 5,275.70 points, Japan markets were closed on account of national public holiday. China's CSI300 index ended down 0.1 pct at 3,209.46 points, Shanghai Composite Index closed flat at 2,991.27 points and HK’s Hang Seng index lost 0.7 pct at 20,525.83 points.
Commodities Recap
Oil prices steadied just below $45 a barrel weighed by expectations U.S. crude inventories will rise further from a record high, although reduced production in Canada's oil sands region lent support. Brent crude was unchanged at $44.97 at 1008 GMT, while U.S. crude was down 11 cents at $43.54.
Gold dropped further from 15-month high on Wednesday as the weak dollar recovered from its lowest in over a year, with some investors booking profits after the yellow metal failed to trade above $1,300 an ounce. Spot gold was down 0.4 percent at $1,280.46 an ounce at 0935 GMT, while U.S. gold futures for June delivery were down $9.10 an ounce at $1,282.70.
Treasuries Recap
The U.S. Treasuries were trading mixed on Wednesday as investors await wave of economic data on Wednesday. The yield on the benchmark 10-year bonds fell 0.11 pct to 1.798 pct and the yields on 2-year bonds rose 1.57 pct to 0.770 pct.
The European bonds slumped as investors booked profit after snapping 2-day rally driven by weak crude oil and global growth concern. The benchmark German 10-year bonds yield, which is inversely proportional to bond price rose 4.06 pct to 0.205 pct. French 10-year yield climbed 2.35 pct to 0.571 pct, Italian equivalents jumped 2.08 pct to 1.501 pct, while Spanish 10-year bonds yield inched higher 1.84 pct to 1.604 pct.
The U.K government bonds strengthened after the data showed weaker-than-expected construction PMI amid rising worries among investors about the up-coming June referendum. Also, tumbling crude oil prices drove investors towards safe-haven assets. The yield on the benchmark 10-year bonds fell 0.72 pct to 1.520 pct.
The Australian bonds rallied for two 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. Also, tumbling crude oil prices drove investors towards safe-haven assets. The yield on the benchmark 10-year Treasury note dropped 1.54 pct to 2.426 pct. While the New Zealand bonds closed modestly firmer after data showed that unemployment rate increased more-than-expected in the first quarter of 2016. The yield on the benchmark 10-year bonds fell 0.53 pct to 2.805 pct.
FX Beat
USD: The dollar rose 0.32 percent against a basket of currencies to 93.240, recovering from 15-month lows hit on Tuesday. It gained a quarter percent to 106.86 yen, off earlier highs, by 0839 GMT. The greenback was flat at $1.1497 per euro, up from Tuesday's low of $1.1616.
EUR/USD: The Euro has dropped 0.18 pct after making a high of 1.16161 yesterday, it was trading around 1.14760 at the time of writing. The short term trend is slightly bearish as long as resistance 1.16200 holds. On the higher side minor resistance is around 1.1550 and any indicative break above 1.155 will take the pair to next level till 1.1600/1.16200. The short term support is around 1.1450 and break below targets 1.1370/1.13300/1.12700.
USD/JPY: The Japanese yen slipped off 18-month highs against the dollar of 105.55 as markets looked to sentiment surveys in Europe and a series of U.S. jobs data due by the end of the week for fresh direction. It has slightly recovered till 107.36 and was trading around 106.72. The short term trend is slightly bearish as long as resistance 107.60 (3 W EMA) holds. On the lower side any break below 105.20 (200 W MA) will drag the pair down till 104.85/103. The minor support is around 106.50/105.80/105.20 and the minor resistance is around 107.60 and break above targets 108.50/109.35.
GBP/USD: The Sterling fell again on Wednesday, after its biggest one-day fall against the dollar for six weeks in the previous session after a survey showed the campaign for Britain to leave the European Union neck-and-neck with the campaign to stay in. It edged down 0.2 percent to $1.4500, almost three U.S. cents away from the 4-month high of $1.4770 it had hit on Tuesday. Against the euro, it was steady at 79.12 pence. The short term trend is weak as long as resistance 1.4600 holds. On the higher side major resistance is around 1.4600 and break above targets 1.4670/1.4755 levels. On the lower side major support is around 1.4450 and break below targets 1.4400/1.4380 level.
USD/CHF: The Swiss Franc has rallied 0.22 pct on Wednesday till 0.9575 at the time of writing. The short term trend is slightly bullish as long as support 0.9500 holds. Any violation above 0.9580 will take the pair to next level till 0.9630/0.9680. On the lower side any break below 0.9500 will drag it down till 0.9440/0.9400.
AUD/USD: The Australian dollar hit a 7-week low on Wednesday after the RBA's first rate cut in a year and sliding commodity prices further trimmed long positions in the currency. It stood at $0.7489, having sunk as deep as $0.7467, its lowest since mid-March and down two cents in 24 hours. The
Key support was found at $0.7455, the 38.2 percent retracement of the January-April rise and a break would target $0.7335. The short term trend is slightly bearish as long as resistance 0.7550 holds. On the higher side major resistance is around 0.7550 and break above targets 0.7600/0.7630
The pair’s major support is around 0.7450 and break below will drag it till 0.7435/0.7380. Against its New Zealand peer the Aussie managed to bounce 1.5-cent to NZ$1.0873, from a trough of NZ$1.0746.
NZD/USD: The New Zealand dollar skidded on broad U.S. dollar strength and falling dairy prices. It was trading at $0.6925, up from Wednesday's opening price of $0.6915, but far from Tuesday's high of $0.7054.
