Market Roundup
- NZ Fonterra revises supply forecast down sharply.
- BoJ Gov Kuroda - QQE having intended effects, to hit CPI target at H1 FY'16, time frame for hitting target helping to change mindset, up expectations, no need for further ease now but won't hesitate to adjust policy if needed, too early to debate exit strategy.
- Japan April domestic corp goods prices +0.1% m/m, -2.1% y/y, as eyed.
- Rabobank launches Y116.5 bln 2-tranche samurai via BAML/Mizuho/Nomura/Nikko.
- Fed staff says Q1 slowdown was real, not a statistical fluke.
- Foreign CB US debt holdings +$5.793 bln to $3.321 trln May 13 week, Treasury holdings +$448 mln to $2.986 trln, agencies +$4.799 bln to $289.485 bln.
- Lipper - US-based stock funds attract $3.7 bln in week-ended May 13.
- BoC Dep Gov Patterson - Bar high for changing inflation target, proposed changes to fine-tuning operations shouldn't impact monetary policy.
Economic Data Ahead
- (0100 ET/0500 GMT) Japan April consumer confidence index; last 41.7.
- (0315 ET/0715 GMT) Switzerland PPI and import prices, -0.1% m/m consensus; last +0.2%.
- (0400 ET/0800 GMT) Norway trade balance; last NOK20.7 bln surplus.
- (0430 ET/0830 GMT) UK March construction output, +2.5% m/m, +1.0% y/y consensus; last -0.9%, -1.3%.
- (0830 ET/1230 GMT) US May NY Fed Empire State mfg index, 5.0 consensus; last -1.19.
- (0915 ET/1315 GMT) US April industrial/mfg output, +0.1%, +0.2% m/m consensus; last -0.6%, +0.1%.
- (0915 ET/1315 GMT) US April capacity utilization, 78.4% consensus; last 78.4%.
- (1000 ET/1400 GMT) US May UOM sentiment index, prelim, 96.0 consensus; last 95.9.
Key Events Ahead
- N/A BoE DepGov Bailey lecture at Cambridge University.
- N/A Economist Athens roundtable, various speakers (final day).
- N/A EBRD annual meeting/business forum in Tbilisi (final day).
- N/A UK DMO 1/3/6-month treasury bill auctions.
- (0830 ET/1230 GMT) Canada March int'l securities transactions data.
- (1600 ET/2000 GMT) US Treasury March int'l capital flows data, February net $4.1 bln inflow.
FX Recap
EUR/USD is supported above 1.1400 levels after making 1.1444 high yesterday. It is currently trading at 1.1411 levels. Today is data free session for Euro zone so focus will be on USD UOM consumer sentiment data due later in a day. 1.1450 is an immediate resistance and if that holds we may see a short dip. Initial support is seen around 1.1341 levels.
USD/JPY pair trades higher at 119.37, consolidating below 119.50 levels. Pair keeps gains as the pair remains unresponsive to BOJ Kuroda's same old reiteration at his speech. Kuroda notes, "BOJ won't hesitate to adjust monetary policy if price trend changes, warrants action to hit 2% inflation." "Japan's price trend is improving steadily. Prices have to move in line with BOJ's commitment to achieve price target at earliest date possible with time frame of around 2 years. There is no doubt that inflation expectations have raised due to QQE." On the top side, the next resistance is located at 120.30 (May 1 High) levels and above which it could extend gains 120.54 (May 5 High) levels. Immediate support might be located at 118.85 levels.
GBP/USD made a new high at 1.5814 levels yesterday and currently trading flat at 1.5770 levels, largely on the back of negative USD PPI data and positive weekly jobless claims. Today UK will release construction output data. The pair has an immediate resistance at 1.5845 above which gains could be extended to 1.5900 levels. On the other side, support is seen at 1.5726.
USD/CHF is trading around 0.9126 levels and made low at 0.9077 levels. Today Switzerland will release producer import price data which will give further direction to the parity. Near term support is seen at 0.9070 levels and resistance is seen at 0.9227 levels.
AUD/USD is supported below 0.8100 levels and trading around 0.8058 levels. Also significance noting that in the last 24hours, iron ore has been under pressure, which might have weighed on the Aussie. Today is no major data schedule for Australia. Markets now eagerly await US UOM consumer sentiment data due later in a day. Initial support is seen at 0.8033 and resistance at 0.8239 levels.
