10 Apr: Stocks lower on IMF growth downgrade, Trump tweet. Big day ahead. ECB, FOMC Minutes, US CPI.

By | April 10, 2019

 

The US DXY is more or less unchanged at the end of Tuesday trade, currently at 97.02 although it has been a choppy session with various factors influencing the price action. The dollar has jumped around a bit on the back of another tweet from Donald Trump, who confirmed his intention to escalate a trade war with the EU and now wants to put tariffs on $11 billions of EU products. The Tweet sent the dollar, yields and stocks lower, and while the dollar has mostly recovered, yields and stocks are generally lower, which is weighing on US$Jpy.

In other major factors, the IMF has downgraded its 2019 global growth outlook to 3.3% from 3.5%, and although this was largely expected, it did not assist the Aud$ in particular, which turned lower after making a new 3 week high. The IMF stated that risks to the downside are based on Brexit and US/China talks, while today’s Donald Trump tweet will also not assist risk-sentiment. 2019 Eurozone growth outlook was cut to 1.3% from 1.6%, the US to 2.3% from 2.5%. 2020 forecasts remain unchanged at 3.6%. The quarterly US reporting season are underway  this week and there is some apprehension ahead of banks/financials results, which will begin at the end of the week (JP Morgan/Wells Fargo; Friday), which did nothing to help today’s equity markets.

In the latest Brexit news, it looks as though the UK’s membership of the EU is likely to be extended to 31st December after Theresa May failed to impress, with her cross-party plans, on her dash to Paris and Berlin on Tuesday. This does not impress the Brexiteers at all and it seems the mess is set to continue ad-infinitum. The EU Summit, due today, will propose a longer delay to Brexit despite the fact that this will mean that the UK has to provide contenders, and to vote, in the upcoming EU elections. Sterling was whippy, but largely confined to a 100bp range.

Looking ahead, Wednesday kicks off with the WBC Australian Consumer Confidence for April and speeches from the RBA’s Debelle and the BOJ’s Kuroda. Europe will begin with the UK Manufacturing data, Goods Trade Balance and February GDP (exp 0.0%mm), ahead of the main action of the day, in which the ECB Interest Rate Decision/Statement/Press Conference will be released ahead of US CPI and the FOMC Minutes. The ECB is expected to leave rates unchanged, but to have a fairly dovish outlook after having  revised down significantly its forecasts for GDP and inflation at its previous meeting; and the potential extension for the Brexit negotiations would seem to do little to help the situation. Tthe FOMC Minutes are likely to confirm that the Fed are happy to sit on their hands and do nothing, with future policy moves to be data driven, possibly for the rest of the year and into H1 2020, while the US CPI figure is expected to come in at 0.3%mm/1.8%yy, with the Ex F/E figure to be at 0.2%mm/2.1%yy.

Economic data highlights will include:

Wed: WBC Australian Consumer Confidence, RBA’s Debelle Speech, Japan Machinery Orders, Machine Tool Orders, BOJs Kuroda Speech, UK Manufacturing/Industrial Production, Trade Balance, Goods Trade Balance, GDP, ECB Interest Rate Decision/ Statement/Press Conference, European Council Meeting, US CPI, Monthly Budget Statement, FOMC Minutes, EIA Crude Oil Stocks Weekly Change

Market moves, in brief:

FX: DXY 97.01 (-0.01%)

Bonds: US10Y; 2.507% (-0.82%), German 10Y; -0.007% (-215%), UK 10Y; 1.106% (-0.28%), Australian 10Y; 1.908% (+1.00%), NZ 10Y; 2.025% (+2.02%), China 10Y; 3.330% (+1.88%)

Stock Indices: DJI; -0.72%, S+P; -0.61%, NASDAQ; -0.41%, EUStoxx50; -0.68%, FTSE100; -0.35%, Shanghai Composite; -0.16%,

Metals: Gold $1304 oz (+0.5%), Silver $15.22 oz (-0.18%), Copper $2.933 lb (-0.03%), Iron Ore $92.72 per tonne (-0.97%),

Oil: WTI $64.21 pb (-0.33%)

CURRENCIES
EURUSD: 1.1262
Res  1.1285  1.1300  1.1325
Sup  1.1245  1.1220  1.1200
USDJPY: 111.14
Res  111.35  111.60  111.80
Sup  111.00  110.80  110.60
GBPUSD: 1.3054
Res  1.3120  1.3190  1.3270
Sup  1.2990  1.2920  1.2860
USDCHF: 0.9997
Res  1.0010  1.0035  1.0060
Sup  0.9975  0.9950  0.9920
AUDUSD: 0.7122
Res  0.7135  0.7150  0.7165
Sup  0.7120  0.7105  0.7090
NZDUSD: 0.6743
Res  0.6760  0.6780  0.6805
Sup  0.6720  0.6695  0.6670
INDICES / COMMODITIES
S&P.fs: 2882.03
Res  2890.00  2900.00  2910.00
Sup  2875.00  2865.00  2855.00
DJ30.fs: 26152.00
Res  26220.00  26280.00  26350.00
Sup  26100.00  26035.00  25960.00
SPI200.fs: 6179
Res  6195  6215  6235
Sup  6170  6150  6130
XAUUSD: 1303.96
Res  1310.00  1315.00  1320.00
Sup  1300.00  1295.00  1290.00
XAGUSD: 15.22
Res  15.35  15.50  15.65
Sup  15.15  15.05  14.95
WTI.fs: 64.25
Res  64.70  65.35  66.25
Sup  63.50  62.85  61.95