Market Roundup
- Rebounding USD crucial for central banks.
- Japan CabSec Suga - Excessive FX volatility undesirable but current pace of JPY decline hasn't reached that level, eyeing FX closely.
- BoJ April 30 Policy Board minutes - Soggy economy emphasized, consumption lacking momentum but resilient, April output maybe flat on inventory adjusts, above potential growth later in year but below again post-next sales tax hike, CPI may not reach target during forecast period, risks skewed to downside.
- BoJ DepGov Iwata - Risks to growth, price target achievement somewhat delayed, no end to QQE till target achieved, more upbeat on economy than minutes.
- Japan Inc lower expectations after bumper run.
- FOMC Chair Yellen to skip Jackson Hole this year.
- Ex-Fed Bernanke - No extreme moves in US assets, US rate hike good, to signal economy strong enough, China soft-landing, Japan must use "arrows" correctly.
- IMF - China currency is no longer undervalued.
- RBA DepGov Lowe - Global asset managers might face tighter rules, steps to cool property investment loans positive, modest effect, would welcome more AUD weakness when Fed eventually ups rates.
- Australia Q1 construction work done -2.4% q/q, -1.5% eyed.
Economic Data Ahead
- (0200 ET/0600 GMT) Switzerland April UBS consumption indicator; last 1.35.
- (0200 ET/0600 GMT) Germany Jun GfK consumer sentiment index, 10.0 eyed; last 10.1.
- (0245 ET/0645 GMT) France May consumer confidence index, 95.0 eyed; last 94.0.
- (0300 ET/0700 GMT) Sweden May consumer confidence index, 98.5 eyed; last 97.1.
- (0300 ET/0700 GMT) Sweden May manufacturing confidence index; last 93.7.
- (0330 ET/0730 GMT) Sweden April trade balance; last SEK4.2 bln surplus.
- (0900 ET/1300 GMT) BE May leading indicator index, -6.0 eyed; last -6.2.
- (1030 ST/1430 GMT) US May Dallas Fed Texas service sector outlook, revenues; last 14.6, -1.
Key Events Ahead
- N/A Dresden G7 FinMins, central bankers meeting (to May 29).
- N/A Balkan area central bank meeting in Belgrade (to May 28).
- N/A Ital 6-month BOT, Sweden t-bill, Norway NOK3 bln 3.75% 2021 bond auctions.
- (0530 ET/0930 GMT) Germany E2 bln 2.5% 2046 Bund, UK 0.125% 2058 index-linked Gilt auctions.
- (0530 ET/0930 GMT) Portugal -1 bln 3.85% 2021 bond auction.
- (0530 ET/0930 GMT) ECB 91-day refi tender, E48.5 bln allotment eyed, last E54.0 bln.
- (0545 ET/0945 GMT) US TsySec Lew to participate in LSE panel discussion.
- (0700 ET/1100 GMT) Slovakia central bank press conference on financial stability.
- (1000 ET/1400 GMT) BoC monetary policy announcement.
FX Recap
EUR/USD is supported below 1.0900 levels and currently trading at 1.0880 levels. It has made intraday high at 1.0880 and low at 1.0863 levels. Today Germany GKF consumer sentiment data and German bond auction will be main focus for the day. Initial support is seen at 1.0859 and resistance is seen around 1.1041 levels.
USD/JPY broke the 123.00 levels and posted a daily high at 123.30 levels and low at 122.91 levels. Pair is currently trading at 123.13 levels. The Bank of Japan Minutes from April 30 has been released, with the statement highlighting that QQE will continue until 2% inflation is stable. Members agreed that private consumption is likely to remain resilient due to improving incomes and Japan can exceed its potential growth rate from 2015 through financial year 2016. Near term resistance is seen at 123.67 levels and support is seen at 121.35 levels.
GBP/USD is trading around at $1.5389. It made an intraday high at 1.5398 and low at 1.5376 levels. The pair took a breather in its downslide and is seen struggling around 1.54. Today is data free session for UK. Initial support is seen at 1.5324 and resistance is seen around 1.5471 levels.
USD/CHF is supported above 0.9500 levels and trading around 0.9513 levels and made intraday low at 0.9511 and high at 0.9537 levels. Today Switzerland will release UBS consumer confident data. Near term support is seen at 0.9285 levels and resistance is seen at 0.9571 levels.
AUD/USD is supported below 0.7800 levels and trading at 0.7748 levels. It has made intraday high at 0.7752 levels and low at 0.7724 levels. Markets also shrugged off weak Aus construction activity which fell for the sixth-consecutive period last quarter in Australia. Meanwhile, markets now shift their attention towards key Australian private capex numbers to be published tomorrow in absence of any macro data from US due today. Initial support is seen at 0.7700 and resistance at 0.7845 levels.
