FOREX: USD/JPY Struggles on Approach to Recovery High Ahead of GDP
Apr-30 09:26
- JPY is weaker against all others early Wednesday, however USD/JPY is yet to make any meaningful test on the Friday recovery high at 144.03. With tariff limbo still in place, and no trade negotiations to speak of between the US and China, G10 currencies are awaiting the next macro cue or headline to trade with any real conviction. That said, EUR/GBP continues its losing streak, with the cross hitting a new lower low of 0.8482 in overnight trade.
- Moves follow the cross trading through a major support area we flagged last week at 0.8520-31 - marking both the early April pullback low as well as the 50% retracement of the tariff-inspired upleg off 0.8323.
- Meanwhile, Australian CPI for Q1 came in toward the upper-end of expectations, helping AUD/USD recover well into the European morning. Spot faltered on the approach toward yesterday's 0.6450 highs, however, meaning the pair has traded either side of the 0.64 handle for eight consecutive sessions. The 200-dma defines the first topside level, at 0.6460.
- US data picks up Wednesday, with MNI Chicago PMI for April seen moderating further to 45.9 from 47.6 previously. Advance GDP, Personal income, spending and the latest PCE stats for March are also due. Central bank speak sees BoE's Lombardelli, ECB's Villeroy & Makhlouf as well as the BoC minutes. The Fed remain inside their pre-decision media blackout period.
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ITALY DATA: HICP Surprises to the Upside; EZ HICP Still Tracking Marginally Soft
Mar-31 09:22
- Italy HICP surprised to the upside coming in a 2.1%Y/Y - but we note the Bloomberg consensus was 2.0%Y/Y while Reuters consensus was 1.8%Y/Y - so there is a bit of a disparity between the size of the surprise here, depending upon which survey you follow.
- Assuming that Dutch and German HICP come in in line with consensus and there are no big changes to the Y/Y rates of Austria, Ireland and Portugal (the former two out at 11:00BST) we see the EZ print tracking at broadly 2.1-2.2%. The Bloomberg median is at 2.2% - but there are more analysts forecasting 2.3%Y/Y than 2.1%, so there may be some very modest downside risks.
- Looking more at Italian HICP, core under the Eurostat definition (ex energy, food, alcohol and tobacco) came in at 1.8%Y/Y (1.5% prior) while under the Istat definition of ex energy and unprocessed food, it rose from 1.8%Y/Y to 1.9%Y/Y.
- Services rose 2.7%Y/Y in March (2.6% in February) with energy increasing 3.3%Y/Y (0.6% prior), "food, alcohol and tobacco" 2.7%Y/Y (from 2.4%) and core goods (non-energy industrial goods) increasing 0.5%Y/Y (versus a 0.1%Y/Y decline in February).
- Istat notes that core goods prices were boosted by the end of winter sales of clothing and footwear (which rose 1.3%Y/Y in March versus -0.6%Y/Y in February).
SWAPS: German Long End ASWs Unwind All Of Early March Move Lower
Mar-31 09:07
Modest widening in German ASWs this morning given the risk-off price action detailed elsewhere, spreads across the curve ~0.2-0.5bp wider vs. 3-month Euribor.
- Note that Bund and Buxl spreads have unwound effectively all the sell off that followed the announcement that initially indicated the surprise, expedited debt-brake tweak and related fiscal loosening.
- The combination of a lack of an immediate shift higher in German issuance, already short positioning in ASWs and U.S. tariff risks has countered the initial move lower in ASW spreads and does present risks to any fresh move lower in long end spreads in the immediate term.
- Still, fundamentals appear to continue to screen bearish for long end spreads over the medium-term.
MNI: ITALY MAR FLASH HICP +1.6% M/M, +2.1% Y/Y
Mar-31 09:03
- ITALY MAR FLASH HICP +1.6% M/M, +2.1% Y/Y
