HKD: USD/HKD Continues To Rally, Foward Pts Still Close To Recent Lows
May-19 03:55
The strong uptrend in USD/HKD has continued, spot above 7.8200 in latest dealings. This puts us to fresh highs going back to June last year. Highs from 2024 were close to 7.8400, which may be targeted on a further move higher in the pair. The nearest EMA support on the downside is back near 7.7830, while the low 7.7900 region may act as a support zone, as this region marked highs back in Jan/Feb of this year.
- Even as US-HK yield differentials move off recent highs, the 12 month spread back to around +82bps, from recent highs of +108bps, it has done little to slow USD/HKD's ascent.
- This should slow USD/HKD upside at some stage, although forward points remain close to recent lows for the 12 month, near -1000pts. So we may need to see more adjustment on this front before sentiment stabilizes.
- USD/HKD implied vols have stabilized somewhat, the 1 month last near +1.63%, well above long run averages, but down from recent highs close to 2%.
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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%
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