Friday was generally a choppy session for the FX pairs, dominated by the price action in Sterling taking place around the latest Brexit vote, which ended up making it no clearer as to what direction the UK will be taking. After a volatile ride, Cable finished Friday more or less unchanged from where it had begun the day, just above 1.3000, but looking rather precarious as the prospects of the UK falling out of the EU with a ‘no-deal’ Brexit. It now looks as though there will be yet another attempt to get the Brexit deal thrtough Parliament but the “experts” have their doubts as to whether any progress will be made and chaos continues to reign. Elsewhere, the ranges were narrow, with the Euro looking particularly heavy, but holding support above 1.1200 (EurUsd).
Over the weekend, the China official PMIs came in better than expected, sending the US$ mildly lower at the start of the week. The gap has seen the Euro, Aud$ and Nzd$ open up by around 20 bp higher in early Monday trade. The Mfg PMI Manufacturing was at 50.5 (vs. expected 49.6), while the Services came in at 54.8 (54.0).
In other markets, stocks ended the Friday session around 0.75% higher, with the S+P closing out the quarter with itsbest gains since 2009, underpinned by hopes that the US and China are nearing an end to the trade dispute. Oil did not wish to be left out, with WTI (+1.1%) registering the best quarterly gains in a decade, on the back of the production cuts by Saudi Arabia, Russia and OPEC. The metals were choppy but unchanged as they consolidated their losses of the Thursday session. The hopes of progress in the US/China negotiations added some confidence to the rest of the markets, allowing the US 10Y yield to break back above 2.4%, while Copper (+1.9%), Iron Ore (+3.45%) and the Shanghai Comp (+3.2%) all made decent gains.
Looking ahead, the coming week will be busy throughout, particularly for Australian data, but with plenty else aside, beginning with a particularly busy session today. Monday will kick off with the global manufacturing PMIs, as well as the Australian New Home Sales, TD Inflation and NAB Business Confidence/Conditions (exp 2/4). Later in the day, the EU Provisional CPI (exp 1.5% mm, 0.9% yy – Mar) and the US Retail Sales (exp 0.3% – Feb) will be the main focus. Tuesday will see the RBA Interest Rate Decision – at which no change is expected although a dovish outlook is likely, and then later in the day the main focus will be on the US Durable Goods (exp -1.2% – Feb). Wednesday will begin with the Australian Retail Sales (exp +0.2% – Feb), Trade Balance (exp $3.8 bio) and Caixin Services PMI and then will turn to the Services/Composite PMIs, ahead of the US ADP Employment data(exp 165K). Thursday will be quiet, but Friday will see the US Jobs/NFP/Average Hourly Earnings, where the expectations are for the NFP to come in at +175Kwith a headline rate of 3.8% (unchanged), AWH; 34.5, AHE 0.3%. Have a good week.
Economic data highlights will include:
Mon: Australian AIG Performance of Mfg Index, China Mfg/Non-Mfg PMI, Japan Tankan, Australian New Home Sales, TD Inflation, NAB Business Confidence/Conditions, Caixin China Flash Manufacturing PMI, RBA Commodity Index, EU Mfg PMIs, EU Provisional CPI, US Retail Sales, Business Inventories, ISM Non Mfg PMI, Construction Spending
Tue: NZIER Business Confidence, Australian Building Permits, RBA Interest Rate Decision, UK Construction PMI, EU Unemployment, PPI, US Durable Goods, ISM NY Business Conditions, Global Dairy Trade Index,
Wed: Australian AIG Performance of Services Index, Retail Sales, Trade Balance, Japan Services PMI, Caixin Services PMI, EU/US Services/Composite PMIs, EU Retail Sales, ADP Employment Change, ISM Non-Mfg PMI, EIA weekly crude oil stock change
Thur: NZ Commodity Price Index, German Factory Orders, US Jobless Claims
Fri: China Ching Ming Festival, Australian AIG Performance of Construction Index, Japan Leading Indicator, Coincident Index, German Industrial Production, US Jobs/NFP/Average Hourly Earnings, Consumer Credit Change
Market moves, in brief:
FX: DXY 97.20 (+0.0%)
Bonds: US10Y; 2.412% (+0.62%), German 10Y; -0.07% (+0.43%), UK 10Y; 1.00% (+0.11%), Australian 10Y; 1.791% (+2.94%), NZ 10Y; 1.815% (+3.42%), China 10Y; 3.07% (-0.70%)
Stock Indices: DJI; +0.82%, S+P; +0.67%, NASDAQ; +0.80%, EUStoxx50; +0.55%, FTSE100; +0.65%, Shanghai Composite; +3.2%,
Metals: Gold 1292 oz (+0.20%), Silver 15.13 oz (+0.81%), Copper 2.932 lb (+1.88%), Iron Ore 86.37 per tonne (+3.46%),
Oil: WTI 60.14 pb (+1.09%)
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