The board of Banxico kept it reference rate unchanged today

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

07.50am: JPY – Monetary Base YoY (Prev. 28.5%)

10.00am: JPY – Nikkei PMI Services (Prev. 50) Composite (Prev. 49.9)

12:00pm: MYR – Exports YoY (Est. -1%, Prev. 6.7%) Imports YoY (Est. -0.3%, Prev. 1.6%)

12:00pm: MYR – Trade Balance (Est. 7.1B, Prev. 7.35B)

06:00pm: MYR – Foreign Reserves (Prev. 97.2B)

08.30pm: CAD – Net Change in Employment (Est. 1k, Prev. 40.6k)

08.30pm: CAD – Unemployment Rate (Est. 7.2%, Prev. 7.1%)

08.30pm: USD – Change in Non-Farm Payrolls (Est. 200k, Prev. 215k)

08.30pm: USD – Unemployment Rate (Est. 4.9%, Prev. 5%)

 

Speeches

09.30am: AUD – RBA Statement on Monetary Policy

 

Overnight News

• US: Fed Bullard (2016 voter) said that the global headwinds which were partly responsible for the April Fed decision not to raise rates may have dissipated. "Those factors appear to be waning during the first half of 2016," Bullard said. Nonetheless Bullard, said he is undecided on the path forward for interest rates. Bullard said it was difficult to conclude whether predictions by the Fed or by the markets for the central bank's longer-run path of rate rises was more accurate.

San Francisco Federal Reserve President John Williams (non-voting) said two or three Federal Reserve interest rate increases this year would be "reasonable," but the central bank will continue to monitor the incoming data.

Atlanta Fed President Dennis Lockhart said he’s “on the fence” regarding a June rate hike. The remaining three quarters of the year will be much better than the first quarter and therefore the first quarter is an anomaly, meaning it's either statistical noise or it's similar to the way we've seen first quarters in recent years," which have been weak, he said.

US jobless claims for the latest reporting week were 274k (vs 260k expected). Despite this recent sharp rise, earlier improvements signal upside risks to the 200k consensus estimate for tonight’s payrolls.

• ECB Economic Bulletin: “Looking ahead, the economic recovery is expected to proceed. Domestic demand, in particular, continues to be supported by the ECB's monetary policy measures. Their favourable impact on financing conditions, together with improvements in corporate profitability, is benefiting investment. Moreover, the accommodative monetary policy stance, continued employment gains and the still relatively low price of oil should provide ongoing support for households’ real disposable income and private consumption” the Bulletin said.

• UK: April services PMI index dropped to 52.3 vs 53.7 and the composite index consequently dropped to 51.9 vs 53.6. This suggests businesses are becoming cautious ahead of the ahead of the UK referendum on EU membership on 23 June.

• Mexico: The board of Banxico kept it reference rate unchanged today. This had been widely expected as inflation remains under control and the Fed is still on hold. The press release had a neutral tone as the board believes that financial volatility is the main threat amid favourable inflation conditions.

 

Foreign Exchange

	Last	% Overnight	Overnight Range	% 5D	% YTD	52 WK-L	52 WK-H
DXY	93.78	0.56%	93.19 - 93.862	0.0%	-4.9%	91.92	100.51
EURUSD	1.1405	-0.74%	1.1386 - 1.1491	-0.4%	5.0%	1.0524	1.1714
USDJPY	107.25	0.23%	106.81 - 107.5	0.7%	-10.8%	105.55	125.86
AUDUSD	0.747	-0.44%	0.7456 - 0.7514	-1.7%	2.5%	0.6827	0.8164
NZDUSD	0.6885	-0.29%	0.6876 - 0.6918	-1.3%	0.8%	0.6130	0.7564
USDCHF	0.9679	1.02%	0.9575 - 0.9697	0.8%	-3.4%	0.9079	1.0328
GBPUSD	1.4491	-0.24%	1.4444 - 1.4529	-0.8%	-1.7%	1.3836	1.5930
USDCAD	1.2858	0.27%	1.2786 - 1.2875	2.4%	-7.1%	1.1920	1.4690
USDCNH	6.5203	0.13%	6.5091 - 6.5205	0.5%	-0.7%	6.1934	6.7618
USDSGD	1.3585	0.37%	1.3533 - 1.373	1.1%	-4.2%	1.3164	1.4444

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ahead of payrolls on Friday and despite the disappointing initial claims, the USD maintained a bullish tone. EURUSD rose to 1.1440 after the jobs data release, then dropped back to 1.1385 before finding equilibrium at around 1.1400. USDJPY dropped from ¥107.15 to just ¥106.81 following the release of the jobless claims report, and then bounced back to ¥107.50 before settling in around ¥107.24, where it was when the New York day started.

The reality is that traders were content to do nothing ahead of Friday’s nonfarm payrolls report.

Another key focus was the volatile session for Crude which rose early in the session only for Brent to give off most of its advance finishing just above $45. On the back of that price action, MXN, CAD and RUB were off the intraday highs and consolidated to -0.5%, +0.1% and unchanged, respectively.