FX News Today
European Outlook: Stocks in Asia traded narrowly mixed, with the Nikkei up a mere 0.02%, the ASX up 0.07% and Hang Seng and CSI 300, which tanked yesterday, underperforming once again and down -0.40% and -0.87% respectively, despite as expected GDP numbers out of China. China’s GDP grew 6.8% y/y in Q1 following the identical 6.8% y/y rise in Q4. The increase in Q1 matched projections and tracks steady, firm growth for China’s economy despite ongoing uncertainties over the trade outlook. Meanwhile, the separate retail sales report showed a 9.8% y/y gain on a year to date basis from 9.7% in February. Industrial production grew at a 6.8% annual pace year to date from 7.2% in February.Trade jitters and geopolitical risks continue to hang over markets and 10-year JGB yields are little changed at 0.30%, while the 10-year Treasury yield up 0.6 bp at 2.832%, as U.S. stock futures move higher.
FX Update: A dollar softening theme has been prevailing, with EUR-USD printing a three-week high just above 1.2380 and USD-JPY pushing to three-day lows below 107.00. AUD-USD has also turned higher after weakening in the wake of the release of the RBA’s minutes to its April policy meeting, which was deemed as showing board members as being relatively less optimistic on the economy than before, helping cement the view that the central bank will likely be on hold through to 2019. There was a mix of other news, including as-expected GDP data out of China, of 6.8% y/y in Q1, an unexpected downward revision in the final release of Japanese February industrial production, to 0.0% m/m from the preliminary estimate of 4.1% m/m, and a report that North and South Korea are apparently set on discussing an official end to the war. Market participants are also gearing up for the meeting between Trump and Abe this week, which is expected to be conciliatory in tone as Trump’s face-to-face meetings with world leaders tends to be, especially with his softening tone on trade with China and NAFTA. Cable has punched out a fresh post-Brexit vote high above 1.4350, today marking the seventh consecutive higher high with markets expecting a perky wages reading in today’s labour market report, which along with tomorrow’s inflation data should seal expectations for the BoE to hike in May.
Charts of the Day
Main Macro Events Today
UK Average Earnings including Bonus (3Mo/Yr) –
German ZEW – expected to fall further, with heightened market volatility likely adding to the error margin for the forecasts. A reading of 2 in April is expected, down from 5.1 in March, while median forecast predicts a dip into negative territory, which would indicate that pessimists outnumber optimists. Anything short of a major surprise to the upside will add to concerns that growth momentum is already starting to slow down, while the ECB is mulling exit steps.
Canadian Manufacturing Sales – February manufacturing is seen rebounding 1.0% (m/m, sa) after the 1.0% drop in January.
US Industrial Production – a 0.4% gain after surging 0.9% in February. Capacity utilization is projected t 77.9% from 77.7%. Risk to production is to the upside, however, given strong factory employment, and still robust manufacturing ISM and PMI data.
FOMC Member Williams, Harker and Bostic Speak, along with Fed’s Quarles
Support & Resistance Levels
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