Wednesday13th May: European Open Briefing

Global Markets:

  • Asian stock markets: Nikkei up 0.60 %, Shanghai Composite fell 0.15 %, Hang Seng gained 0.25 %, ASX rose 0.50 %
  • Commodities: Gold at $1192 (-0.05 %), Silver at $16.55 (+0.15 %), WTI Oil at $61.25 (+0.80 %), Brent Oil at $67.70 (+0.85 %)
  • Rates: US 10 year yield at 2.256, UK 10 year yield at 2.00, German 10 year yield at 0.68

News & Data:

  • Japan Current Account ¥2.79trln, Expected: ¥2.06trln, Previous: ¥1.44trln
  • Japan Adjusted Current Account ¥2.07trln, Expected: ¥1.34trln, Previous: ¥0.61trln
  • Australia Wage Price Index 0.5 % q/q, Expected: 0.6 %, Previous: 0.6 %
  • Australia Wage Price Index 2.3 % y/y, Expected: 2.4 %, Previous: 2.5 %
  • New Zealand FPI -0.3 % m/m, Previous: 0.1 %
  • RBNZ Governor Wheeler: Don’t Expect Big Rises In Auckland Rents Due To Loan Curbs — BBG
  • RBNZ: Recent Drop In NZD Helpful
  • Asia shares rise before China data, more stimulus seen – RTRS
  • Dollar on the defensive before U.S. data, sterling in favour – RTRS
  • Wall St. ends weaker as global bond worries deepen – RTRS
  • Oil extend gains on bets of second weekly drop in U.S. crude stocks – RTRS

Markets Update:

The New Zealand Dollar strengthened overnight as the RBNZ didn’t discuss monetary policy in their latest financial stability report. The market was already heavily short the Kiwi Dollar, so position covering followed, which brought NZD/USD to a session high of 0.7420. AUD/NZD also dropped quite sharply after hitting a high of 1.0890 in the early Asian session. The pair looks a bit stretched in the short-term and while fundamentals suggest we’ll see further gains in the pair, a technical correction seems likely in the near future.

EUR/USD was bid overnight and is now consolidating around the 1.1250 level. We have plenty of data releases out of the Euro Zone today, as well as the ECB minutes, so there should be a decent amount of volatility. Good resistance noted at 1.13, while to the downside, 1.1130/40 remains the pivotal support area. GBP/USD has stayed steady ahead of the Bank of England inflation report. The market is expecting slightly more hawkish comments from the BoE, but if we do not get that, expect some heavy position covering from short-term longs.

Upcoming Events:

  • 07:00 BST – German CPI
  • 07:00 BST – German GDP
  • 07:00 BST – German HICP
  • 07:45 BST – French HICP
  • 07:45 BST – French Current Account
  • 08:00 BST – Spanish CPI
  • 08:00 BST – Spanish HICP
  • 09:00 BST – Italian GDP
  • 09:30 BST – UK Unemployment Rate
  • 09:30 BST – UK Claimant Count Change
  • 09:30 BST – Average Earnings Index
  • 10:00 BST – Euro Zone GDP
  • 10:00 BST – Euro Zone Industrial Production
  • 10:30 BST – Bank of England Inflation Report
  • 10:30 BST – Bank of England Governor Carney speaks
  • 12:30 BST – ECB Meeting Minutes
  • 13:30 BST – US Retail Sales
  • 15:00 BST – US Business Inventories

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