As risk sentiment continues to look up on Tuesday, the most notable move of the day was that of funds flowing out of safe haven assets, with the Chf and Gold both notably lower. Otherwise, markets were choppy, but with little directional bias, and volume is thinning out ahead of Easter, but at the end of the session the US$, stocks, and yields all ended a little firmer. WTI staged a late session rally after the API Weekly Crude Oil Stock Inventory showed a surprise drawdown of inventories, of -3.96 mio barrels, as opposed to the expected build of +2.3 mio barrels.
In the FX markets, the Euro was not helped on Tuesday due to reports that some ECB members remain dovish, despite recent hints at growth, and this ensured that the currency remained heavy. The Aud$ bounced from session lows after a local press report containing the banner; ‘Despite headlines, a rate cut is not imminent. Cable was heavy because of the usual Brexit confusion.
In terms of data, the German ZEW economic sentiment improved to 3.1 in April, up from -3.6, beating the expectation of 0.5, while the current situation index fell to 5.5, down from 11.1, missing expectation of 8.5. The EU economic sentiment rose to 4.5, up from -2.5, while the EU current situation index dropped -6.6 pts to 13.2. The UK unemployment rate remained unchanged at 3.9% in February, the lowest level since 1975.
Looking ahead, Wednesday will be mostly about inflation, with CPI figures to come from NZ (Q1 – exp 0.3%qq, 1.7%yy), UK (March – exp 0.3%mm, 2.0%yy) and EU(March – exp 1.0%mm, 1.4%yy), while the China Q1 GDP (exp 1.4%qq, 6.3%yy), and the monthly (March) Industrial Production (exp 5.9%yy) and Retail Sales (exp 8.4%yy) will also be released. Amongst the secondary data, we get the WBC Australian Leading Index, the Japan Merchandise Trade Balance, Capacity Utilisation and Industrial Production, the EU Current Account and Trade Balance and the US Trade Balance and Wholesale Inventories. Have a good day.
NB The NZ Q1 CPI has just been released @ 0.1% q/q (expected 0.3%) and @ 1.5% y/y (expected 1.7%). The Kiwi has dropped like a rock, currently at 0.6690 having traded down to 0.6665. The Aud$ is 15 points lower @ 0.7160.
Economic data highlights will include:
Wed: NZ Q1 CPI, Japan Merchandise Trade Balance, Capacity Utilisation, Industrial Production, China Retail Sales, Industrial Production, GDP, Press Conference, EU Current Account, Trade Balance, CPI, UK CPI, PPI, RPI, US Trade Balance, Wholesale Inventories, EIA Crude Oil Stocks Weekly Change, Beige Book, Speeches; Carney (BOE), Lautenschlager (ECB), Bullard (Fed)
Market moves, in brief:
FX: DXY 97.09 (+0.15%)
Bonds: US10Y; 2.592% (+1.45%), German 10Y; +0.066% (+16.35%), UK 10Y; 1.22% (+0.05%), Australian 10Y; 1.945% (-0.85%), NZ 10Y; 2.025% (-1.46 %), China 10Y; 3.382% (+0.19%)
Stock Indices: DJI; +0.26%, S+P; +0.05%, NASDAQ; +0.34%, EUStoxx50; +0.33%, FTSE100; +0.44%, Shanghai Composite; +2.39%,
Metals: Gold $1276 oz (-0.90%), Silver $15.00 oz (+0.06%), Copper $2.934 lb (+0.02%), Iron Ore $93.44 per tonne (-0.56%),
Oil: WTI $64.31 pb (+1.20%)
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