FOREX: FX Wrap - USD Stuggles On Downgrade
May-19 04:50
The BBDXY has had a range of 1228.00 - 1230.27 in the Asia-Pac session, it is currently trading around 1230. “The ECB’s Christine Lagarde told La Tribune Dimanche the euro’s strength against the dollar is “counterintuitive, but justified” amid Trump’s erratic policies and presents an opportunity for Europe. She said she’s “not at all pessimistic” about the bloc’s economy.”(BBG)
- EUR/USD - Asian range 1.1173 - 1.1199, Asia is currently trading 1.1185. EUR/USD has had a quiet session considering the backdrop. The market is still expected to use dips as a buying opportunity and dips back towards 1.09/1.10 should see buyers remerge.
- GBP/USD - Asian range 1.3267 - 1.3314, Asia is currently dealing around 1.3300. Decent demand for GBP sub 1.3200 has seen it bounce back to the middle of its recent range 1.3150 - 1.3450. Like the EUR the market prefers to buy on dips, building for the next leg higher.
- USD/CNH - Asian range 7.2042 - 7.2180, the USD/CNY fix printed 7.1916. Asia is currently dealing around 7.2160. Sellers should be found on a bounce back towards 7.24/25 again.
- Cross asset : SPX -1.01%, Gold $3215, US 10-Year 4.51%, BBDXY 1229, Crude oil $62.23
Data/Events : ECB Muller & SNB Schlegel to speak, Spain Trade Balance, EZ CPI
Fig 1: GBP/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg
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LOOK AHEAD: Eurozone Timeline of Key Events (Times BST)
Apr-18 05:18
| Date | Time | Country | Event |
| 25-Apr | 0745 | FR | Manufacturing Sentiment |
| 29-Apr | 0700 | DE | GFK Consumer Climate |
| 29-Apr | 0800 | ES | HICP (p) / GDP |
| 29-Apr | 0900 | EU | M3 / Consumer Expectations Survey |
| 29-Apr | 0900 | IT | ISTAT Confidence Indices |
| 29-Apr | 1000 | EU | Consumer Confidence, Industrial Sentiment |
| 30-Apr | 0630 | FR | GDP (p) / Consumer Spending |
| 30-Apr | 0700 | DE | Import/Export Prices / Retail Sales |
| 30-Apr | 0745 | FR | HICP (p) / PPI |
| 30-Apr | 0855 | DE | Unemployment |
| 30-Apr | 0900 | DE | GDP (p) / State level CPI |
| 30-Apr | 0900 | IT | GDP (p) |
| 30-Apr | 1000 | EU | GDP preliminary flash est. |
| 30-Apr | 1000 | IT | HICP (p) |
| 30-Apr | 1100 | IT | PPI |
| 30-Apr | 1300 | DE | HICP (p) |
JGBS: Twist-Steepener Holds Going Into W/E, BoJ Gov Ueda Reiterates Caution
Apr-18 05:16
JGB futures are stronger, +18 compared to settlement levels, sitting near the middle of the range after a choppy session.
- “Governor Kazuo Ueda reiterates his stance that the central bank will carefully monitor if its economic outlook will be realized, accounting for the effects of US tariff measures, without preconception. The BoJ will raise the benchmark rate if the outlook is realized, Ueda says in response to questions in parliament.” (per BBG)
- “Fukoku Mutual Life Insurance Co. plans to invest in Japan's super-long government bonds this fiscal year after their yields skyrocketed. The company aims to increase domestic government bond holdings by ¥30 billion, with gross purchases potentially reaching ¥300-400 billion.” (per BBG)
- Earlier today, Headline CPI for March showed +3.6% y/y versus +3.7% estimate. Core and Core-Core printed +3.2% y/y and +2.9% y/y, respectively, versus estimates of +3.2% and +2.9% and priors +3.0% and +2.6%.
- Cash US tsys are closed today for the Good Friday holiday.
- Cash JGBs have twist-steepened, pivoting at the 20-year, with yields 2bps lower to 5bps higher.
- Swap rates are 2bps lower to 2bps higher, with a steepening bias.
- On Monday, the local calendar will see Tokyo Condominiums for Sale data.
CHINA: Bond Futures Marginally Up Despite Liquidity Injection.
Apr-18 04:02
- China’s bond market reacted very little to a second day of sizeable liquidity injection.
- China’s 10YR bond future is up just +0.03 at 109.04 and remains firmly above all major moving averages. The nearest being the 20-day EMA at 108.61.
- The 2YR bond future is down -0.02 at 102.46; remaining below all major moving averages – the nearest being the 20 day EMA at 102.52.
- The 10YR CGB is marginally lower in yield at 1.64%
