Market Roundup
- Australia April retail sales unchanged m/m, +0.4% eyed, March rev +0.2% (+0.3%).
- Australia April trade deficit A$3.888 bln, widest on record, A$2.25 bln eyed, exports -6% m/m, at A$25.659 bln, imports +4% at A$25.547 bln.
- BoJ Gov Kuroda - Unconventional policies meant to influence long-term interest rates, asset prices, inflation expectations, recoveries globally modest relative to past recoveries despite central bank policies, concerned with spill-overs of diverging Fed-ECB-BoJ policies, effect on FX.
- BOJ Kuroda - Positive attitude and conviction, new solutions key to monetary policy, cites Peter Pan story.
- MoF flow data week-ended May 30 - Japanese buy net Y168.7 bln foreign stocks, sell Y348.4 bln bonds, buy Y77.1 bln bills; foreign investors buy net Y574.2 bln Japanese stocks, sell Y6.2 bln bonds, buy trln bills.
- PBOC Sheng - China may free up bank deposit rates soon.
- NZ Q1 residential bldg work +2.6% q/q, NZ$1.4 bln, best pace in yr, +9.7% y/y.
- Brazil CB Copom ups benchmark Selic rate 50 bps to 13.75%, signals more hikes.
Economic Data Ahead
- (0130 ET/0530 GMT) France Q1 ILO unemployment; last 10.4%.
- (0730 ET/ 1130 GMT) US May Challenger layoffs; last 61.58k.
- (0830 ET/1230 GMT) US w/e initial jobless claims, 279k eyed; last 282k.
- (0830 ET/1230 GMT) US Q1 productivity revised, -2.9% eyed; prelim -1.9%.
- (0830 ET/1230 GMT) US Q1 unit labor costs revised, +5.9% eyed; prelim +5.0%.
Key Events Ahead
- N/A World Economic Forum on Africa in Cape Town (till June 5).
- N/A Helsinki ECB/Finland CB conference, various attendees (till June 5).
- N/A Germany E2-2.5 bln 30-year linker syndication via Commerz, CA, GS et al.
- (0400 ET/0800 GMT) EU Juncker speaks in Brussels.
- (0550 ET/0950 GMT) France E8-9 bln 1.75/0.5/2.5% 2023/25/30 OAT auctions.
- (0630 ET/1030 GMT) UK DMO GBP750 mln 4.5% 2055 Gilt auction.
- (0630 ET/1030 GMT) UK ChancExch Osborne in Queen's Speech debate in London.
- (0700 ET/1100 GMT) BoE MPC policy announcement, unchanged 0.5% repo rate, QE eyed.
- (0700 ET/1100 GMT) Buba Dombret at Singapore event.
- N/A IMF MD Lagarde press conference on US economy in Washington, DC.
- (1200 ET/1600 GMT) Fed Gov Tarullo in IIF North America Summit panel discussion in New York.
FX Recap
EUR/USD is supported just above 1.1250 levels and currently trading at 1.1267 levels. It has made intraday high at 1.1273 and low at 1.1252 levels. The pair fluctuated wildly on Wednesday. Despite brief fall to 1.1079 during ECB news conference, the pair rallied broadly as German Bund yields soared after ECB President Mario Draghi said the bank would look through bond market volatility. The release of weaker-than-expected US ISM non-manufacturing PMI further lifted the single currency to 1. France bond auction, unemployment rate and Euro zone retail PMI will be main focus. Initial support is seen at 1.1210 and resistance is seen around 1.1325 levels.
USD/JPY is supported above 124.00 levels and posted a high of 124.56 levels. It has made intraday low at 124.20 and currently trading at 124.45 levels pair extends it upward trajectory as the USD bulls continue to cheer the upbeat ADP jobs and trade data from the US released yesterday which added to the recent increased bets of Fed rate hike as early as Sept this year, completely ignoring dismal US ISM non-manufacturing PMI report. Meanwhile, in absence of significant macro data from Japan this session, markets now turn their attention towards a set of US data releases due later in the day for further momentum. Near term resistance is seen at 124.68 levels and support is seen at 123.51 levels.
GBP/USD is supported above $1.5300. It made an intraday high at 1.5339 and low at 1.5314 levels. Pair is currently trading at 1.5324 levels. A data-dry European session, with the Bank of England's monetary policy meeting the only highlight in today's EUR calendar. BOE policymakers will most likely leave the monetary policy unchanged today at its rate decision, as inflation remains significantly weak and is expected to remain close to zero before rising again toward the end of this year. Initial support is seen at 1.5250 and resistance is seen around 1.5378 levels.
USD/CHF is supported above 0.9300 levels and trading at 0.9341 levels and made intraday low at 0.9335 and high at 0.9351 levels. Yesterday pair reached to 0.9422 levels at the time of ECB meets and US ADP job data but the upside movement was temporary only. Today is data free session for Switzerland. Near term support is seen at 0.9285 levels and resistance is seen at 0.9430 levels.
AUD/USD is supported below 0.7800 levels and trading at 0.7726 levels. It has made intraday high at 0.7786 levels and low at 0.7707 levels. Poor retail sales and trade balance numbers on the Australia data space today signalled further need for policy loosening which dragged the Australian dollar lower across the board. The gap in trade broadened to a record $3.89 billion in April from a revised $1.23 billion in March, expanding more than the $2.1 billion deficit forecast. While retail sales showed no change in April after rising a revised 0.2% in March, falling far short of the forecast of 0.4% growth. Initial support is seen at 0.7689 and resistance at 0.7877 levels.
