Market Roundup
• RBA holds OCR at 2%, continued low inflation provide scope for easier policy, accommodative policy appropriate, AUD up recently, reflects commodity rises, could complicate economic adjustment, inflation likely to remain low.
• BoJ Gov Kuroda – QQE exerting intended effects, still half-way to inflation target, technically possible to deepen negative rates, monetary policy alone can’t sold problems, won’t hesitate to ease again if needed, Japan not headed towards slump, EM slowdown at fault, JPY rise having negative effect.
• BoJ Sakurai – Warns against frequent policy changes, small steps won’t do, bold action way to go, many policy options important, NIRP not wrong.
• Japan FinMin Aso – To frontload FY ’16 budget spending for public works to spur growth.
• Chief Cab Sec Suga – Not right time to discuss extra FY ’16 budget.
• Econ Min Ishihara – Japan not in deflation but hasn’t escaped deflation risk.
• Japan February real wages +0.4% y/y, first rise in four months, total cash earnings +0.9%, overtime +0.4%, special payments +25.7%.
• Japan March PMI services index 50.0, no growth-no contraction, Feb 51.2.
• Impact of China on advanced economies set to grow.
• Minny Fed Kashkari – Eyes moderate growth, current policy about right.
• Australia February trade deficit A$3.41 bln, A$2.6 bln eyed, exp -1%, imp unchanged.
• Australia March PSI -2.3 points to 49.5, sales off, sector in contraction.
• Australia March VFACTS new vehicle sales +8.4% m/m but -0.5% y/y.
• NZ QSBO Q1 business confidence +2.0%, capacity utilization 93.2%, Q4 ’15 +15% and 93.2%, NZIER sees rate cut by mid-year.
• NZ March ANZ commodity price index -1.3% m/m, -22.4% y/y, Feb +0.5%, -17.8%.
Economic Data Ahead
• (0330 ET/0730 GMT) Sweden February industrial production; last +0.6% m/m, +4.6% y/y.
• (0330 ET/0730 GMT) Sweden February new manufacturing orders; last +3.8% y/y.
• (0345 ET/0745 GMT) Italy March PMI – services, 54.0 eyed; last 53.8.
• (0350 ET/0750 GMT) France March PMI – services, 51.2 eyed; flash 51.2.
• (0350 ET/0750 GMT) France March PMI – composite; flash 51.1.
• (0355 ET/0755 GMT) Germany March PMI – services, 55.5 eyed; flash 55.5.
• (0355 ET/0755 GMT) Germany March composite; flash 54.1
• (0400 ET/0800 GMT) EZ March PMI – services, 54.0 eyed; flash 54.0.
• (0400 ET/0800 GMT) EZ March PMI – composite, 53.7 eyed; flash 53.7.
• (0430 ET/0830 GMT) UK March PMI – services, 53.7 eyed; last 52.7.
• (0500 ET/0900 GMT) EZ February retail sales, unchanged m/m, +1.9% y/y eyed; last +0.4%, +2.0%.
• (0500 ET/0900 GMT) Norway March housing prices; last +4.4% y/y.
• (0830 ET/1230 GMT) US February int’l trade balance, $46.2 bln deficit eyed; last $45.7 bln deficit.
• (0945 ET/1345 GMT) US March Markit PMI – composite and services final; flash 51.1, 51.0.
• (1000 ET/1400 GMT) US March ISM PMI - non-mfg, 54.0 eyed; last 53.4.
• (1000 ET/1400 GMT) US February JOLTS job openings, 5.5 mln eyed; last 5.54 mln.
Key Events Ahead
• Taiwan market closed for Ching Ming.
• N/A OECD Economic Survey of Germany.
• (0330 ET/0730 GMT) IMF Lagarde, ECB/Buba Weidmann speak at Frankfurt SAFE event.
• (0440 ET/0840 GMT) Spain E4-5 bln 6 and 12-month treasury bill auction.
• (0500 ET/0900 GMT) Austria E1.1 bln 0.75% and 1.5% 2026 and 2047 RAGB auctions.
• (0530 ET/0930 GMT) UK DMO GBP2.75 bln 1.5% 2021 Gilt auction.
• (0530 ET/0930 GMT) ECB zero% 7-day refi, E60 bln allotment eyed, E62.3 bln maturing.
• (0540 ET/0940 GMT) Belgium E2.1-2.5 bln 3 and 6-month treasury certificate auctions.
• (0630 ET/1030 GMT) ESM E1.5 bln 3-month bill auction.
• (1445 ET/1845 GMT) BoC DepGov Wilkins speech in Vancouver.
FX Recap
USD: The dollar nursed losses against the yen and euro on Tuesday, but was firmer versus the Canadian and New Zealand currencies, which succumbed to weakness in commodity prices. The greenback has been on the defensive as views that the U.S. central bank is in no hurry to tighten monetary policy have held sway ever since Federal Reserve Chair Janet Yellen last week expressed caution towards hiking interest rates. The dollar index was last at 94.545, back near a 5-1/2 month trough of 94.319 set on Thursday
EUR/USD: The euro was up 0.1 percent at $1.1399, hovering within distance of a 5-1/2-month peak of $1.1438 scaled last week. Pair remains well supported above key resistance at $1.1342 marks and trading around $1.1382 mark. Intraday bias remains bullish till the time pair holds key support level at $1.1334. A daily close above key resistance at 1.1342 will drag the parity up towards $1.1469 marks. On the down side, key support level is seen at $1.1159/ $1.1057 marks. Later today, Euro zone will release PMI services PMI final, retail sales and German factory orders.
USD/JPY: The Japanese Yen edged up and remains supported below 111.00. Pair is currently trading around 110.78 levels. A daily close below key support level at 111.02 will drag the parity down towards at 110.66/ 108.75/107.51 marks thereafter. On the top side, key resistance levels are seen at 114.87/115.96 levels. Today Japan released Labour cash earnings data with positive numbers at 0.9% m/m vs 0.0% previous release.
GBP/USD: The Sterling bounced almost half a percent against the euro and dollar on Monday, with the conviction of some investors that June's Brexit referendum is reasonably priced in helping cool concerns over a record current account gap. Pair breaks key support at $1.4357 marks and trading around $1.4253 levels. A sustained break below key support $1.4225 level will drag the parity down at $1.4057 marks. A daily close above $1.4357 will take the parity up towards key resistances at $1.4504/$1.4602.
AUD/USD: The Australian dollar nudged up 0.3 percent to $0.7623 from an intraday low of $0.7568 after the Reserve Bank of Australia left its cash rate unchanged at a record low 2 percent as widely expected but highlighted that the economic outlook had been weakened by the Australian dollar's recent rise. Intraday bias remains bullish till the time pair holds key support at $0.7471 levels. On the other side, a sustained close above $0.7672 will drag the parity up towards $0.7725 levels. On the downside, a sustained break below $0.7433 support levels will turn bias back to the downside for retesting 0.7365 low.
NZD/USD: The Kiwi slid 0.7 percent to $0.6790. Pair supported below $0.68 marks and Short term bias remains bearish till the time pair holds key resistance at $0.6965. Key support was found at $0.6750, with resistance at $0.7002 levels. Today NZIER disclosed that a net 2% of businesses were optimistic about the outlook for the economy last quarter, down from a net 15% in the previous quarter. Lower business confidence data increases the risk of a follow-up interest rate cut from the RBNZ in April.
Equities Recap
Japan’s Nikkei 225 index was trading 2.19% lower to 15,769.04 points in early trade on Tuesday, and Tokyo's broader Topix index fall 1.96% to 1,277.14 points.
Hong Kong's Hang Seng index opened the week 1.68% lower at 20,154.27 points, while mainland China's Shanghai Composite rose 0.16% to 3,014.44 points.
South Korea’s Kospi was trading 0.84% lower at 1961 points.
Australia's S&P/ASX 200 index was trading 1.64% lower to 4,912.40 points on Tuesday morning in Sydney.
New Zealand’s benchmark S&P/NZX 50 index was trading 0.15% lower at 6,733.32 points.
Commodities Recap
Oil prices on Tuesday extended losses from the previous two sessions on weakening demand for gasoline and on concerns the global crude glut could persist for some time. Front month U.S. West Texas Intermediate (WTI) crude futures were trading at $35.54 per barrel at 0454 GMT, down 16 cents from their last settlement. International Brent futures were down 11 cents at $37.58 a barrel. Both WTI and Brent extended their declines for a third session as investors doubted that producers will be able to rein in global overproduction that has seen crude prices tumble by as much as 70 percent since mid-2014.
Gold jumped 1 percent on Tuesday following a two-day decline, as Asian stocks slid on weak oil prices and mixed views on the outlook for Federal Reserve monetary policy. Spot gold rose to a session-high of $1,227 an ounce before paring some gains to trade up 0.8 percent at $1,223.95 by 0239 GMT. It had dropped 1.4 percent in the past two sessions.
Treasuries Recap
BOJ offers to lend Y 5.7381 trln of JGBs on spot basis through 4/6 as a secondary source of JGBs. Japan 10-year JGB auction bid-to-cover ratio 3.89.
New Zealand government bond prices were touch firmer, pushing yields 2 basis points lower.
Australian government bond futures were little changed with the three-year bond contract flat at 98.150. The 10-year contract was edged up 1 tick to 97.5450.
