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Tuesday 28th April: European Open Briefing
Global Markets:
- Asian stock markets: Nikkei up 0.50 %, Shanghai Composite gained 0.35 %, Hang Seng fell 0.10 %, ASX declined 0.35 %
- Commodities: Gold at $1200 (-0.20 %), Silver at $16.37 (-0.40 %), WTI Oil at $56.20 (-1.40 %), Brent Oil at $64.10 (-0.90 %)
- Rates: US 10 year yield at 1.919, UK 10 year yield at 1.679, German 10 year yield at 0.164
News & Data:
- Japan Retail Sales -9.7 % y/y, Expected: -7.3 %, Previous: -1.7 %
- Australia CB Leading Index 0.5 %, Previous: 0.4 %
- Australian Treasurers Hockey: AAA Rating At Risk If Budget Not Returned To Surplus — BBG
- PBOC’s Yi: Market & PBOC Operations Can Offer Ample Liquidity — Securities News
- Greek PM Tsipras: Greece Has Liquidity Problem, Gov’t Dealing With It, Priority To Pay Wages & Pensions — RTRS
- Asian shares at seven-year highs, cheered by Apple earnings – RTRS
- Euro holds gains after rising on Greek hopes, dollar awaits data – RTRS
- Oil falls more than 1 percent as U.S. crude stockpiles expected to hit high – RTRS
Markets Update:
The overnight trading session was rather quiet, with only minor data releases from Australia and Japan. RBA Governor Stevens spoke as well, but did not comment on monetary policy. Overall, we are seeing broad USD weakness in the market, which could be further position adjustments ahead of the FOMC meeting on Wednesday. US economic data has been poor in the recent months and there is little reason for the Fed to be overly hawkish. The FOMC statement tomorrow is likely to have a cautious bias.
EUR/USD rallied above 1.09 yesterday, but failed to sustain momentum. The pair fell back to 1.0880 and has spent most of the APAC session consolidating around that level. The rally in GBP/USD has been far more impressive. Market participants don’t seem too worried about the upcoming elections anymore and the Pound has been very well bid in the past few days. GBP/USD reached a high of 1.5260 yesterday and the next significant tech resistance level now lies around 1.5315, which is the 76 % Fib level of the 1.5550-1.4550 move.
USD/JPY is still stuck in a rather tight range and it could very well stay here in the near-term if the FOMC nor next week’s NFP bring any surprises. Bank analysts think that institutional demand will keep the pair bid overall and the fact that positioning is not as crowded anymore reduces the risk of a large JPY short squeeze.
The commodity currencies have been the best performers yesterday. USD/CAD briefly broke sub-1.21 and a test of the 1.20 level seem inevitable. Beneath there, not much support seen until 1.18. NZD/USD posted fresh highs as well, but the upcoming RBNZ meeting dampened upside momentum.
Looking ahead, the UK GDP release at 0930 BST will be the main event today.
Upcoming Events:
- 07:00 BST – German Consumer Climate (10.2)
- 07:45 BST – French Consumer Confidence (94.0)
- 08:30 BST – Swedish Retail Sales (0.3 % m/m, 3.3 % y/y)
- 08:30 BST – Swedish Trade Balance
- 09:30 BST – UK GDP (0.5 % q/q, 2.6 % y/y)
- 13:45 BST – Bank of Canada Governor Poloz speaks
- 13:55 BST – US Redbook
- 15:00 BST – US CB Consumer Confidence (102.5)
- 15:00 BST – US Richmond Manufacturing Index (-2.0)
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