FOREX: USD Index Opens Gap With Cycle High, Aids Broader Rebound in G10
Apr-18 09:20
- The USD trades modestly softer, while antipodean currencies and commodity-tied FX extends a rebound off lows into the NY crossover. The USD Index is lower for a second session, opening a 0.6% gap with the cycle high posted earlier this week at 106.517.
- USD/JPY's consolidation just below the cycle highs in recent sessions has prompted a minor unwind of the severely overbought condition, as detailed by the 14-day RSI - which touched 80 at the last session high, putting prices at the most overbought in 18 months. While the technical trend condition in USD/JPY remains positive, the next phase of strength could be harder to come by without another major shift in Fed policy pricing, as positioning looks stretched and diplomatic blockers to potential intervention appear to peel away - evident in the G7 statement overnight.
- Australian jobs data overnight was mixed, as the unemployment rate rose at a slower pace than expected, however far fewer jobs were added over the period - sending mixed signals for RBA policy. AUD/NZD sits lower into the NY crossover, with yesterday's lows of 1.0861 acting as first support.
- The data focus rests on weekly jobless claims ahead of existing home sales numbers for March. Central bank speak picks up, with Fed's Bowman, Williams, Bostic and Collins all on the docket, alongside BoE's Greene and ECB's Centeno, Simkus and Vujcic.
- Policy divergence between the US and Europe/UK is likely to take the spotlight, as both the ECB and BoE look to prep markets for earlier local rate cuts relative to the Federal Reserve, which continues to push back on the timing of the first easing phase.
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EUROZONE ISSUANCE: German Q2 Issuance Update
Mar-19 09:17
- DFA has announced that there are no changes to the previously announced auction schedule for Q2 for Bubills, Schatz, Bobls and Bunds. This is as expected.
- There is no updated guidance on syndications (the annual guidance included a E12bln target including at least one green tap). E10.5bln has already been raised through the launch and tap of the 2.50% Aug-54 Bund (leaving just E1.5bln of the original E12bln available).
- The DFA has also confirmed one of each Bund on offer at each multi-ISIN auction in the quarter:
- 17 April: E1bln of the 2.50% Aug-54 Bund (ISIN: DE000BU2D004) alongside E1bln of another issue.
- 15 May: E1bln of the 1.80% Aug-53 Bund (ISIN: DE0001102614) alongside E1bln of another issue.
- 29 May: E1.5bln of the May-41 Bund (ISIN: DE000BU2F009) alongside E500mln of another issue.
- 19 June: E1bln of the 2.50% Aug-54 Bund (ISIN: DE000BU2D004) alongside E1bln of another issue.
BONDS: Bobl Swap related trade
Mar-19 09:16
- Mostly a two way price action in Govies, given the lack of Data or risks events.
- Most active flows seem to be in Cash and swaps related trade ahead of Syndication and Corp issuance.
Latest Bobl swap related trade, suggest receiver:
- OEM4 3.74k at 117.47.
CHINA-RUSSIA: RTRS-Putin To Visit China In May
Mar-19 09:10
(MNI) London - Reuters claiming that according to its sources, Russian President Vladimir Putin will visit China for talks with President Xi Jinping in May. This would mark Putin's first foreign trip of his latest term in office, and act as a further signal of Putin's intent to develop increasingly close links with China. RTRS: "Another of the sources said Putin's trip to China would probably take place in the second half of May. Two of the sources said the Putin visit would come before Xi's planned trip to Europe."
- On 18 March reports emerged that Xi would travel to France in May for talks with President Emmanuel Macron.
- The 'no limits partnership' between Russia and China continues to be a major source of geopolitical concern in the West. Given the huge resources that Russia has had to funnel into its military to sustain its invasion of Ukraine, Moscow has become increasingly reliant on Beijing as a trading partner in the wake of Western sanctions.
- Indeed, French President Emmanuel Macron stated in May 2023 that “(Russia) has de facto started a form of vassalization with China and has lost access to the Baltic that was critical to it as it has precipitated the decision by Sweden and Finland to join Nato,” Russian gov't officials pushed back on the comments, calling the Sino-Russian relationship is one of strategic partners.
- Xi was one of the first major world leaders to congratulate Putin after his re-election in a contest deemed neither free nor fair by most Western nations.
