The Japanese stock market fell 3% although the JPY

Market Movers

• The main data release today is the US ISM manufacturing. We have had some mixed signals about the direction in April following the sharp rebound over the past couple of months. While the ISM order-inventory balance in March suggested an increase, Markit PMI declined to the lowest level since 2009 in April. Regional indices point in different directions but on average suggest an unchanged print. We think ISM manufacturing will stay around the current level of 51.8, suggesting that while the manufacturing cycle seems to have turned, we should not expect a sharp rebound in manufacturing production.

• In the euro area, April manufacturing PMI figures for Spain and Italy are due for release. We expect to see a moderate decline as indicated by the flash PMI data last week, where the euro area manufacturing PMI declined marginally but the German manufacturing PMI improved, pointing to a decrease in the remaining countries on aggregate.

• There are also a number of ECB speeches today including Draghi, Weidmann and Lautenschlaeger. We expect all of them to confirm the ECB’s current implementation mode but will watch out for any comment about last week’s mixed data releases, see Mixed euro area data – still pressure on the ECB due to low inflation, 29 April.

• During the rest of the week, focus will be on the US job report, where we expect another solid increase of 210,000. The Bank of England meeting seems likely to be a non-event on paper but any comments on Brexit and uncertainties could potentially move markets.

• In both Norway and Sweden, PMI manufacturing figures are also due for release, see Scandi Markets.

Selected Market News

The Japanese markets continue to take centre stage these days. The Japanese stock market fell 3% although the JPY stabilised in today’s trading after strengthening almost 5% over the past two trading sessions. The Chinese markets were also down despite the official manufacturing index suggesting that the Chinese economy is stabilising. The US treasury sent out a report on currency manipulation on Friday relating to countries’ external accounts and currency policies. In the report the treasury named Japan on a ‘Monitoring List’ alongside Germany, China, Taiwan and South Korea. The inclusion of Germany is due to its large current account surplus amounting to almost 8.5% of GDP. The report is interesting amid ongoing discussion of a currency war by many major central banks struggling with weak growth and subdued inflation pressures. Most commodities traded somewhat lower as traders seem to be trading profits after the surge in prices over the past months. The oil price came under pressure on reports on nearrecord Iraq output increasing fears over excessive oil supply globally.

•  Download Full Daily FX Market Commentary