USD lower as commodity prices rise

Market Brief

In Australia, private capital expenditure (capex) contracted 5.2%q/q in the first quarter of 2016, missing consensus for a smaller decrease of -3.5% and also below the upwardly revised figure of +1.8% in the last quarter of 2015. On a year-over-year basis capex contracted -15.4% as spending on equipment plant and machinery slid 9.2%y/y (s.a.), while spending on buildings and structures collapsed 18.8%y/y (s.a.). Initially, AUD/USD fell sharply on the news as it hit 0.7162. However, the Aussie bounced back above the 0.72 threshold, supported by rising commodity prices.

Crude oil continued to rally hard as the supply glut issues continue to fade as US stockpiles dropped 4.2k over the last week, missing forecast for a smaller reduction of 2k barrels. In London, futures rose 0.70% to $50.09 a barrel, while US futures stumbled on the $50 threshold as it stabilised at around $49.90 a barrel. We still believe there some upside potential for crude oil prices; however it would be difficult to break the $60 level given the elevated amount of inventories.

With crude oil prices moving higher, the Norwegian krone followed the trend. USD/NOK slid 0.70% to 8.3070 after hitting 8.4065 amid growing Fed’s expectation for normalising short-term rates. We expect the currency pair to continue moving lower as the NOK will find a strong support from rising oil prices, while the USD should retreat as the market starts to price out a June rate hike.

Precious metals are also taking advantage of the weaker dollar as the yellow metal rose 0.39% in Tokyo. Silver was up 0.72%, while platinum jumped 1.54% and palladium surged 2.05%. Gold has reached the bottom of its medium-term range and should therefore start recovering. A strong support can be found at around the $1,200-$1,220 area, while the top of the range is at $1,300.

In the equity market, Asian regional markets were mostly trading in positive territory. In mainland China, the Shanghai and Shenzhen Composites were up 0.13% and 0.31% respectively. In Japan, the popular Nikkei 225 edged up 0.09% while the Topix index remained unchanged. Offshore, Hong Kong’s Hang Seng edged down 0.04% and Taiwan’s TWSE traded flat (-0.02%). In Europe, equity futures are once again trading in negative territory - just like yesterday - but may turn positive following the Asia lead. US futures are mixed.

Today traders will be watching final reading of Spain’s GDP figures for the 1Q; industrial output from Switzerland; PPI from Sweden; initial jobless claims, durable goods orders and pending home sales from the US; gold and forex reserve from Russia.

Global Indexes	Current Level	% Change
Nikkei 225 Index	16772.46	0.09
Hang Seng Index	20360.91	-0.04
Shanghai Index	2818.68	0.13
FTSE futures	6250	-0.02
DAX futures	10195.5	-0.11
SMI Futures	8166	-0.11
S&P future	2085.7	-0.08

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Indexes	Current Level	% Change
Gold	1229.37	0.4
Silver	16.44	0.73
VIX	13.9	-3.61
Crude wti	49.88	0.65
USD Index	95.2	-0.16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Today's Calendar	Estimates	Previous	Country/GMT
SW May Consumer Confidence	98	97,1	SEK/07:00
SW May Manufacturing Confidence s.a.	108,6	107,9	SEK/07:00
SW May Economic Tendency Survey	105,5	104,6	SEK/07:00
SP 1Q F GDP QoQ	0,80%	0,80%	EUR/07:00
SP 1Q F GDP YoY	3,40%	3,40%	EUR/07:00
SZ 1Q Industrial Output WDA YoY	-	-4,50%	CHF/07:15
SZ 1Q Industry & Construction Output WDA YoY	-	-4,50%	CHF/07:15
SW Apr PPI MoM	-	0,80%	SEK/07:30
SW Apr PPI YoY	-	-3,70%	SEK/07:30
SW Apr Trade Balance	2.5b	3.9b	SEK/07:30
TU Bloomberg May Turkey Economic Survey (Table)	-	-	TRY/07:50
NO Norges Bank Releases 2Q Inflation Expectations	-	-	NOK/08:00
NO Norway Releases 2Q Oil Investment Survey	-	-	NOK/08:00
IT Mar Retail Sales MoM	-	0,30%	EUR/08:00
IT Mar Retail Sales YoY	-	2,70%	EUR/08:00
UK Apr BBA Loans for House Purchase	44700	45096	GBP/08:30
UK 1Q P GDP QoQ	0,40%	0,40%	GBP/08:30
UK 1Q P GDP YoY	2,10%	2,10%	GBP/08:30
UK 1Q P Private Consumption QoQ	0,50%	0,60%	GBP/08:30
UK 1Q P Government Spending QoQ	0,40%	0,30%	GBP/08:30
UK 1Q P Gross Fixed Capital Formation QoQ	0,90%	-1,10%	GBP/08:30
UK 1Q P Exports QoQ	0,10%	0,10%	GBP/08:30
UK 1Q P Imports QoQ	1,00%	0,90%	GBP/08:30
UK Mar Index of Services MoM	0,20%	0,10%	GBP/08:30
UK Mar Index of Services 3M/3M	0,60%	0,70%	GBP/08:30
UK 1Q P Total Business Investment QoQ	-	-2,00%	GBP/08:30
UK 1Q P Total Business Investment YoY	-	3,00%	GBP/08:30
IT Apr Hourly Wages MoM	-	0,00%	EUR/09:00
IT Apr Hourly Wages YoY	-	0,80%	EUR/09:00
SA Apr PPI MoM	0,90%	0,70%	ZAR/09:30
SA Apr PPI YoY	7,30%	7,10%	ZAR/09:30
US Fed's James Bullard Speaks at Monetary Forum in Singapore	-	-	USD/10:10
UK BOE Publishes FPC Record, Systemic Risk Buffer Paper	-	-	GBP/11:30
US May 21 Initial Jobless Claims	275k	278k	USD/12:30
US May 14 Continuing Claims	2142k	2152k	USD/12:30
US Apr P Durable Goods Orders	0,50%	0,80%	USD/12:30
US Apr P Durables Ex Transportation	0,30%	-0,20%	USD/12:30
US Apr P Cap Goods Orders Nondef Ex Air	0,30%	0,10%	USD/12:30
US Apr P Cap Goods Ship Nondef Ex Air	0,10%	0,50%	USD/12:30
RU May 20 Gold and Forex Reserve	-	390.9b	RUB/13:00
AU RBA's Debelle, Fed's Potter, BOE's Salmon on FX Code Launch	-	-	AUD/13:00
US May 22 Bloomberg Consumer Comfort	-	42,6	USD/13:45
US Apr Pending Home Sales MoM	0,70%	1,40%	USD/14:00
US Apr Pending Home Sales NSA YoY	0,20%	2,90%	USD/14:00
US May Kansas City Fed Manf. Activity	-3	-4	USD/15:00
US Fed's Powell Speaks About Economy at Peterson Insitutute	-	-	USD/16:15
IN Apr Eight Infrastructure Industries	-	6,40%	INR/22:00
AU SURVEY: Private Capital Expenditure 2016-17 A$86.7B	-	-	AUD/22:00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Currency Tech

EURUSD
R 2: 1.1479
R 1: 1.1349
CURRENT: 1.1171
S 1: 1.1058
S 2: 1.0822

GBPUSD
R 2: 1.4969
R 1: 1.4770
CURRENT: 1.4732
S 1: 1.4404
S 2: 1.4300

USDJPY
R 2: 111.91
R 1: 110.59
CURRENT: 109.88
S 1: 108.23
S 2: 106.25

USDCHF
R 2: 1.0257
R 1: 1.0093
CURRENT: 0.9900
S 1: 0.9751
S 2: 0.9652

• S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot