Market Roundup
- EUR/USD 1.1367 to 1.1410, USD/JPY 112.06-112.58
- Nikkei off 3.5%, SSEC +0.17%, DAX currently off 1.6%
- Germany Mar Mfg PMI 50.7 vs 50.4 previous, 50.4 exp
- EZ Mar Mfg PMI 51.6 vs 51.4 previous, 51.4 exp
- Switzerland Feb R.Sales -0.2% vs -0.1%-Mfg PMI 53.2 vs 51.6 previous, 51.0 exp
- UK Mar Mfg PMI 51.0 vs 50.8 previous, 51.2 exp
- UK N/Wide Mat Hse Prices +5.7% y/y vs 4.8% previous, 5.2% exp
- UK TNS Brexit poll-35% out, 35% in and 30% undecided
- Saudi will freeze output but only if Iran joins plan
- China March Official Mfg PMI at 50.2 (Reuters Poll 49.3) Vs 49.0 in Feb
- China March Official Services PMI Rises to 53.8 Vs February 52.7
- BoJ’s Sakurai-may need to develop additional tools for monetary easing
- Japan Final March Mfg PMI Falls to 49.1 (Vs Flash 49.1, Feb Final 50.1)
- Japan March Mfg PMI Survey Shows Biggest Contraction in Activity since Feb ‘13
- BOJ Tankan: March Big Manufacturers Index Hits Lowest Level since June 2013
- Tankan: March Big Non-Mfgs Index Worsens For First Time in 6 Quarters
- BOJ Official: EM Slowdown Likely Behind Worsening of Big Mfgs' Sentiment
- Australian Performance Mfg Index 58.1 in March Vs 53.5 in Feb, Highest since 2004
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Labour Department is likely to report that unemployment rate have stayed unchanged at an 8-year low of 4.9 percent in March.
- (0830 ET/1230 GMT) The U.S. Bureau of Labor Statistics will release labour force participation rate for the month of March. The rate was at 62.9 percent in the previous month.
- (0830 ET/1230 GMT) The U.S. Labour Department is expected to report that average hourly earnings have edged up 0.2 percent in March after declining 0.1 percent in February.
- (0830 ET/1230 GMT) The U.S. Labor Department's employment report is likely to show that nonfarm payrolls gained by 205,000 jobs in March after increasing by 242,000 in February.
- (0930 ET/1330 GMT) The RBC will release its Manufacturing Purchasing Managers' Index for the month of March. The index has been below 50 for the past seven months, which is the threshold for growth.
- (0945 ET/1345 GMT) The Markit Economics' Manufacturing Purchasing Managers Index (PMI) for U.S. is expected to edge up slightly to 51.5 in March from 51.4 in prior month.
- (1000 ET/1400 GMT) The Institute for Supply Management is likely to report that U.S. manufacturing index increased to 50.7 in March from a reading of 49.5 in February.
- (1000 ET/1400 GMT) The U.S. Census Bureau is expected to report that Construction Spending have declined to 0.1 percent in February after posting a rise of 1.5 percent in January.
- (1030 ET/1430 GMT) The Bank of Canada will release its business outlook survey and senior loan officer survey.
- (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count.
- N/A Mexico's central bank publishes its March monetary policy meeting minutes and its monthly poll of analysts on inflation and growth.
Key Events Ahead
- (1300 ET/1700 GMT) Cleveland Federal Reserve Bank President Loretta Mester speaks on the economic outlook and monetary policy before the New York Association for Business Economics.
FX Beat
USD: The dollar continues to decline, recording its worst quarter in 6 1/2 years, with investors doubtful that a monthly U.S. jobs report will convince them to move up expectations for when interest rates will rise again. Against a basket of currencies, the dollar index was 0.21 percent down at 94.43.
EUR/USD: The euro was 0.36 percent up at 1.1417, after gaining more than 4 percent for the quarter and hitting a more than 5-month high of $1.4120 on Thursday. The pair has made a high of 1.4124 and slightly retreated from that level. The short term trend is slightly weak as long as resistance 1.1437 holds. Market awaits US Non Farm Payroll data which will provide further direction on the pair. US NFP is expected to show 208k growth in March as compared to 242k in February. Any break above 1.14375 will take the pair to next level around 1.1500/1.15486. On the lower side major support is around 1.1345 and break below targets 1.1280/1.1200/1.1155. The short term trend reversal is only below 1.1050.
USD/JPY: The Japanese yen extended gains against the dollar, up 0.40 percent at 112.15 yen, from a low of 113.80 hit early in the week. It gained more than 6 percent against the dollar in the first quarter, its biggest gain since 2009, as market turmoil sent investors into the perceived safety of the Japanese currency. The pair has retreated after making a high of 112.65. The short term trend is slightly bearish as long as resistance 113 holds. On the lower side major support is around 112 and break below targets 111/110.60. The major resistance is around 113 and break above targets 113.80/114.25.
GBP/USD: Sterling hit a 16-month low against the euro, weighed down by downbeat economic data, suggesting that growth in the manufacturing sector missing expectations amid persistent concerns of Brexit. The Markit manufacturing Purchasing Managers' Index (PMI) rose to 51.0 in February, against market forecasts of 51.2. The new export orders contracted while the manufacturing sector stagnated. Sterling declined 0.55 percent to $1.4284 and was 0.5 percent lower against the euro at 79.65 pence, its lowest since December 2014. That put trade-weighted sterling at 85.1. Cable started to retreat after making a high of 1.4426 in the previous session. The level 1.4320 is acting as major intraday support and break below confirms intraday weakness, decline till 1.4250/1.4196 is possible. On the higher side any break above 1.4370 will take the pair to next level till 1.4400/1.4430/1.4480
USD/CHF: The Swiss franc extended gains against the dollar, trading around 0.9584, drifting further away from a low of 0.9786 hit on Mar 28. The pair has broken major support 0.9600 and declined till 0.9573. The short term trend is slightly weak as long as resistance 0.9666 holds. Major support is around 0.9580 and any break below 0.9580 will drag the pair down till 0.9530/0.9475 in short term. On the higher side any trend reversal can happen only above 0.9800. The minor resistance is around 0.9660 and break above targets 0.9720/0.9750/0.9780 level. The minor resistance is around 0.9630.
AUD/USD: The Australian dollar was steady at 0.7656, not far from a peak o $0.7722 set on Thursday. The Aussie hovered close to 9-month peaks following upbeat manufacturing data from China. It has gained 7.2 percent in March, the largest monthly increase since 2011, largely due to a dovish Fed. The pair has slightly recovered after making a low of 0.7645. The short term trend is slightly bullish as long as support 0.7630 holds. On the higher side major resistance is around 0.7710 and break above targets 0.7750/0.7800. The minor support is around 0.7630 and break below will drag the pair till 0.7570/0.7530.
NZD/USD: The New Zealand dollar trades around 0.6904, from a fresh 9-month high of 0.6966 struck on Thursday. It rose nearly 5 percent in March, the biggest monthly gain since November.The kiwi made a high of 0.6937, before falling down to its current levels. Immediate resistance is located at 0.6966 (Previous Session High), while on the downside, support is located at 0.6859 (5-DMA).
Equities Recap
European shares were weighed down by downbeat Japanese manufacturing data, sending investors towards safe-haven assets like gold and the Japanese yen.
The pan-European index of leading 300 shares declined to a 1-month low of 1,303 points, Germany's DAX and France's CAC 40 both lost around 1.7 percent. Britain's FTSE 100 was down 1.2 percent.
Tokyo's Nikkei slumped 3.55 pct at 16,164.16. MSCI's broadest index of Asia-Pacific shares outside Japan lost 1.5 percent.
Shanghai Composite index gained 0.2 pct at 3,009.53 points, while CSI300 index edged up 0.1 pct at 3,221.89 points. HK’s Hang Seng index ended down 1.3 pct at 20,498.92 points.
Commodities Recap
Oil futures edged down to below $40 per barrel, with the market growing increasingly sceptical that a deal to freeze crude production can aid to clear a global glut. Brent crude for June delivery declined to $39.57 a barrel as of 1049 GMT. Brent rose 6 percent in the first quarter of this year, its first such increase since a 15 percent rally in the second quarter of 2015. U.S. crude dropped 64 cents to $37.70 a barrel.
Gold rose higher as Asian shares declined, adding to its biggest quarterly gain in nearly 30 years, though caution prevailed ahead of the U.S. non-farm payrolls report. Spot gold was steady around $1,231.90 an ounce as of 1053 GMT, following a 0.6 percent rise overnight.
Treasuries Recap
The 10-year U.S. treasury yield stood at 1.800 percent versus previous close of 1.784 percent. Yields on 10-year notes dropped 50 basis points in the 3-months to March.
Euro zone bond yields were flat to marginally higher. The 10-year German Bund yield was steady at 0.15 percent , close to this year's low of 0.102 percent and not far off record lows hit last year at 0.05 percent. German bond yields ended March with their biggest quarterly fall in 4-1/2 years, with fresh rounds of central bank monetary easing and concerns about the
global economy driving demand for the top-rated debt.
Japanese government bond prices gained on bargain-hunting following strong results of the Bank of Japan's debt-buying operation. The benchmark 10-year yield was down 2.5 basis points at minus 0.075 percent, after spiking to a 2-week high of minus 0.030 percent.
Gilts opened 17 ticks lower than the settlement of 121.22, but only 1 tick lower than the close of 120.06.
Australian government bond futures eased, with the 3-year bond contract falling 4 ticks to 98.080. The 10-year contract also shed 4 ticks to 97.4750, while the 20-year contract lost 3.5 ticks to 96.8950. New Zealand government bonds gained, sending yields 5 basis points lower sending yields 5 to 6 basis points lower across the curve.
