The FOMC's assessment yesterday that the economy has slowed

Economic Data of the Day (Singapore Time – GMT + 8)

08.30am: TWD – GDP YoY (Est. -0.65%, Prev. -0.52%)
09.30am: AUD – PPI QoQ (Prev. 0.3%) YoY (Prev. 1.9%)
01.30pm: EUR – France GDP QoQ (Est. 0.4%, Prev. 0.3%) YoY (Est. 1%, Prev. 1.4%)
02.00pm: EUR – German Retail Sales MoM (Est. 0.4%, Prev. -0.4%) YoY (Est. 2.7%, Prev. 5.4%)
02.45pm: EUR – CPI MoM (Est. 0.1%, Prev. 0.7%) YoY (Est. -0.1%, Prev. -0.1%)
05.00pm: EUR – Unemployment Rate (Est. 10.3%, Prev. 10.3%)
05.00pm: EUR – CPI Estimate YoY (Est. 0.9%, Prev. 1%) Core ( Est. 09%, Prev. 1%)
05.00pm: EUR – GDP QoQ (Est. 0.4%, Prev. 0.3%) YoY (Est. 1.4%, Prev. 1.6%)
08.30pm: USD – Personal Income (EST. 0.3%, Prev. 0.2%) Spending (Est. 0.2%, Prev. 0.1%)
08.30pm: CAD – GDP MoM (Est. -0.2%, Prev. 06%) YoY (Est. 1.5%, Prev. 1.5%)
09.00pm: USD – ISM Milwaukee (Prev. 57.8)
09.45pm: USD – Chicago Purchasing Manager (Est. 52.6, Prev. 53.6)
10.00pm: USD – U of Mich Sentiment (Est. 90, Prev. 89.7)

 

Overnight News

Central Bank Recap:

• Japan: Yesterday the BoJ surprised the market with a decision to not provide further stimulus when further easing was expected. The main takeaway from BoJ meeting is they feel no immediate pressure to use monetary policy or currency intervention to turn around the economy. The BoJ have done enough for the time being and want to see how the economy reacts first, while warning they are still on track to increase stimulus this year especially after weak inflation numbers. We have now seen both the ECB and BoJ show a degree of reluctance to deliver further easing, despite ongoing inflation weakness and currency strength.

• US: On Wed, the Feds left the door open to a resumption of hikes in June, however still seems to be showing a reluctance to pull the trigger again. They acknowledged global markets have improved but will continue to monitor them “closely”.

• New Zealand: Yesterday, thee RBNZ kept the Official Cash Rate (OCR) unchanged at 2.25%, in line with expectations. The central bank retained a dovish tilt with an easing bias. However, the tone of the statement appears slightly less dovish than the one in March, with the notable changes being the language on house prices and near-term inflation outlook.

• US: Q1 GDP rose a soft 0.5%, which was slightly below market expectations (mkt: 0.7%). The data shows the US economy is in the midst of a soft patch and sdds little to the FOMC's assessment yesterday that the economy has slowed. However, initial claims data (at 257k for the week ended 23 April) continue to suggest the labour market remains firm.

• German unemployment fell 16k and the rate was unchanged at 6.2%, showing gradual labour market improvement. Inflation data, on the other hand, continues to point to a benign backdrop, with the German CPI falling 0.2% m/m, to be up just 0.1% y/y, although this was in line with expectations.

• Japan closed today.

 

Foreign Exchange

	LAST	% Overnight	Overnight Range	% 5D	% YTD	52 WK-L	52 WK-H
DXY	93.58	-0.28%	93.685 - 94.087	-1.60%	-5.10%	92.62	100.51
EURUSD	1.1378	0.12%	1.131 - 1.1368	1.40%	4.80%	1.0524	1.1714
USDJPY	107.22	-0.66%	107.87 - 108.95	-4.10%	-10.80%	107.22	125.86
AUDUSD	0.7632	0.21%	0.7594 - 0.7658	-1.00%	4.70%	0.6827	0.8164
NZDUSD	0.6982	0.36%	0.6934 - 0.699	1.90%	2.20%	0.613	0.7629
USDCHF	0.9648	-0.28%	0.9657 - 0.9699	-1.40%	-3.70%	0.9072	1.0328
GBPUSD	1.4633	0.43%	1.4541 - 1.4623	1.60%	-0.70%	1.3836	1.593
USDCAD	1.2538	-0.30%	1.2515 - 1.2606	-1.10%	-9.40%	1.192	1.469
USDCNH	6.4764	-0.17%	6.4808 - 6.4973	-0.40%	-1.40%	6.1934	6.7618
USDSGD	1.3408	-0.02%	1.3416 - 1.373	-1.00%	-5.50%	1.3164	1.4444

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comments from the Bank of Japan provided the catalyst for investors to re-initiate long JPY positions. USDJPY and EURJPY broke below several layers of support to signal scope or a move below the year-to-date lows. With Japan on holiday, lack of buyers could take USDJPY lower ultimately testing 107.

RBNZ could not have been less dovish if they tried and as a result the NZD has sprung back to life.

The USD was broadly on the back foot lending support to the commodity sector. The market has concluded that the Fed remains cautious, supporting a weaker USD theme, at least over the short term.