Tuesday 19th May: European Open Briefing

Global Markets:

  • Asian stock markets: Nikkei up 0.75 %, Shanghai Composite gained 2.10 %, Hang Seng rose 0.35 %, ASX fell 0.15 %
  • Commodities: Gold at $1222 (-0.50 %), Silver at $15.52 (-1.20 %), WTI Oil at $60.25 (-0.05 %), Brent Oil at $66.15 (-0.20 %)
  • Rates: US 10 year yield at 2.237, UK 10 year yield at 1.954, German 10 year yield at 0.658

News & Data:

  • Australia CB Leading Index -0.1 % m/m, Previous: 0.5 %
  • Australia PPI Input -1.1 % q/q, Expected: -0.7 %, Previous: -0.4 %
  • Australia PPI Output -0.9 % q/q, Previous: -0.1 %
  • New Zealand Inflation Expectations 1.85 % q/q, Previous: 1.8 %
  • Japanese FinMin Aso: Need Further Process On Removing Deflationary Mindset — RTRS
  • BoJ’s Iwata: Easing Having Intended Effects — BBG
  • Iwata: Inflation Expectations Rising In A Longer View
  • San Francisco Fed: Q1 GDP growth was underestimated and really grew 1.8%
  • Iraq Deputy Oil Minister: Iraq to boost crude storage and export capacity – BBG
  • JPMorgan increases Q2 2015 EUR/USD forecast to 1.1200 from 1.0700
  • RBA Minutes: Board Discussed Whether To Cut In May Or Wait For June Meeting
  • RBA Minutes: A Move In May Could Better Be Communicated Through SoMP
  • RBA Minutes: Board Agreed Statement Would Not Include Any Forward Guidance On Rates
  • RBA Minutes: Board Felt Lack Of Guidance Did Not Limit Scope For Action At Future Meetings
  • RBA Minutes: Lower A$ Likely & Necessary To Rebalance
  • RBA Minutes: Economic Growth Seen Below Trend, Unemployment Higher For Longer
  • RBA Minutes: Slow Wages Growth Could Limit Rise In Unemployment
  • RBA Minutes: China Growth Had Slowed, Saw Weakness In Property Market As A Significant Risk

Markets Update:

The USD strengthened in the past 24 hours, just two days ahead of the FOMC minutes release. While there weren’t any important data releases or events yesterday, the combination of positioning adjustments pre-FOMC and renewed worries about Greece were enough to help the Dollar rise against all other major currencies.

Overnight, the RBA released its meeting minutes and the AUD/USD dropped about 40 pips on the initial reaction as the bank kept its dovish bias. However, there was nothing surprising in the minutes and the move was quickly retraced, with AUD/USD now back at 0.7990. The Kiwi Dollar jumped higher after inflation expectations rose to 1.85 % from a previous 1.80 %. NZD/USD reached a high of 0.7425. Meanwhile, the Canadian Dollar gave up all of the previous week’s gains on broad USD strength and slightly weaker Oil prices overnight. Resistance at 1.2170 has held for now, but a break above 1.22 could pave the way for a move back to 1.2350.

EUR sentiment remains negative as the focus has returned back on Greece. EUR/USD fell below the 1.1320 support level, taking out stops in good size below and extended losses towards 1.1285. The Pound has also retraced, but 1.5630 support is holding for now. Traders are looking forward to the UK CPI release this morning, with the headline numbers expected at 0.4 % month-on-month and 0.0 % year-on-year.

Upcoming Events:

  • 09:30 BST – UK CPI
  • 09:30 BST – UK PPI Input & Output
  • 09:30 BST – UK RPI
  • 10:00 BST – German ZEW Economic Sentiment
  • 10:00 BST – Euro Zone CPI
  • 10:00 BST – Euro Zone Trade Balance
  • 13:30 BST – US Building Permits
  • 13:30 BST – US Housing Starts
  • 13:55 BST – US Redbook
  • 16:45 BST – Bank of Canada Governor Poloz speaks

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