Monday 20th April: European Open Briefing

Global Markets:

  • Asian stock markets: Nikkei up 0.20 %, Shanghai Composite gained 1.00 %, Hang Seng rose 0.10 %, ASX declined 0.85 %
  • Commodities: Gold at $1203.60 (+0.05 %), Silver at $16.24 (+0.05 %), WTI Oil at $58.12 (+1.40 %), Brent Oil at $64.20 (+0.70 %)
  • Rates: US 10 year yield at 1.871, UK 10 year yield at 1.582, German 10 year yield at 0.072

News & Data:

  • New Zealand CPI -0.3 % q/q, Expected: -0.2 %, Previous: -0.2 %
  • New Zealand CPI 0.1 % y/y, Expected: 0.2 %, Previous: 0.8 %
  • Japan Tertiary Industry Activity Index 0.3 %, Expected: -0.6 %, Previous: 0.7 %
  • Japan Reuters Tankan Index 12.0, Previous: 16.0
  • China makes big cut in bank reserve requirement to fight slowdown
  • ECB’s Draghi rejects talk of Greek exit
  • China considers implementing an ECB type credit move to boost liquidity: WSJ

CFTC Positioning Data:

  • EUR net short 212K vs short 215K prior
  • JPY net short 23K vs short 24K prior
  • GBP net short 36K vs short 34K prior
  • AUD net short 42K vs short 29K prior
  • CAD net short 31K vs short 30K prior
  • CHF net short 0K vs long 0K prior

Markets Update:

Over the weekend, China cut the bank reserve requirements. The move was expected, but came a bit earlier than analysts expected. While most of the major currencies slightly weakened against the US Dollar overnight, the Australian Dollar gained on further Chinese stimulus. Immediate resistance seen at 0.7840, but the next major hurdle lies at 0.7940. A clear break above that level could lead to a larger short squeeze above 0.80. Meanwhile, the Kiwi Dollar initially dropped on weaker than expected inflation data, but quickly rebounded and traded higher along with the Aussie Dollar. Next major resistance seen at 0.7890, which is the current yearly high.

Looking ahead, it could be a rather quiet day in FX, given the lack of data/events. In the European session, the German PPI is the only notable data release. In the US session, there will be no tier 1 or 2 data releases, but BoC Governor Poloz will speak, followed by RBA Governor Stevens later in the day.

Upcoming Events:

  • 07:00 BST – German PPI (0.2 % m/m, -1.6 % y/y)
  • 15:05 BST – Bank of Canada Governor Poloz speaks
  • 17:30 BST – RBA Governor Stevens speaks

The Week Ahead (Key Data Releases/Events)

Tuesday, April 21st

  • 02:30 BST – RBA Meeting Minutes
  • 10:00 BST – German ZEW Economic Sentiment

Wednesday, April 22nd

  • 02:30 BST – Australian CPI
  • 09:30 BST – Bank of England Meeting Minutes
  • 15:00 BST – US Existing Home Sales

Thursday, April 23rd

  • 02:45 BST – China HSBC Manufacturing PMI
  • 08:30 BST – German Manufacturing PMI
  • 08:30 BST – German Services PMI
  • 09:00 BST – Euro Zone Manufacturing PMI
  • 09:00 BST – Euro Zone Services PMI
  • 09:30 BST – UK Retail Sales
  • 13:30 BST – US Initial Jobless Claims
  • 14:45 BST – US Manufacturing PMI
  • 15:00 BST – US New Home Sales

Friday, April 24th

  • 09:00 BST – German IFO Business Climate Index
  • 13:30 BST – US Durable Goods Orders
  • 15:30 BST – Bank of Canada Governor Poloz speaks

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