Overnight Headlines
- US-China sent tentative timeline for next round of trade talks for the week of April 29
- Aussie employment beat expectations printing 26,000 new jobs versus 12,000 expected
- Japan Manufacturing PMI contracted for a third consecutive month as export demand remained weak
- European cash markets open lower as North Korea test tactical guided weapon
US Markets
USD was mixed against most of the major currencies as market attention remains on the US corporate earnings releases on Thursday, whilst key US economic data include March retail sales and the usual initial jobless claims.
US Equities were initially buoyed by better-than-expected China data including Q1 GDP and blowout industrial production but the indices eventually edged lower on renewed concerns about tighter health care regulation.
US bonds also initially saw yields picking up on the positive Chinese economic figures but that eventually reversed at the start of the US trading session as buyers returned to the market. Yields ended the day lower on the short end and little changed on the long end of the curve.
Note that Good Friday is not a Federal holiday in the US, so we will get some data but the US financial markets will be closed and there will be no US company earnings reports. We have one Fed speaker (Raphael Bostic, non-voter in 2019 FOMC) on Friday before the Fed enters its blackout period from 20 April to 2 May.
Currency Majors
EUR/USD traded to an intraday high of 1.1324 in the NY session before paring some of the gains to finish at 1.1296 (from 1.1281 in the prior session). Interesting that for the first time in a year, a hedging instrument we look at (EUR/USD 3 month risk reversal) is indicating improving sentiment in the single currency. Data today will be important in determining if the EUR can climb above 1.13 and close strongly on the week, to take on 1.1450 and above. Support below comes in at 1.1280 on the intraday chart.
GBP traded weaker against the USD with cable in a tight trading range before ending lower at 1.3043 (from 1.3048). Slightly softer than expected March CPI, unchanged from February at 1.9%, had little impact on trading. Markets had been expecting to see a slight uptick. Cable continues to find support on dips at or just below 1.30 with resistance at 1.3300/50. However, it does appear to be struggling to put short-term trend resistance at 1.3115 under any real pressure and the charts retain some clear bear trend momentum on the hourly and daily studies. Given the lack of Brexit news during the current parliamentary recess, expect more low-volume, directionless technical trading for the coming days.
JPY also ended marginally weaker against the dollar as the USD/JPY pair ended the session at 112.06 (from 112.0). Crucial for this pair is get beyond this year’s highs around at 112.13 for an attempt at 112.60. Tight ranges have characterised recent trading which normally results in a bout of volatility. Note that markets in Japan will remain open on Friday, with the release of March CPI data due.
Key Event(s)
Today’s Eurozone PMI figures will be the main focus this morning as they are expected to show tentative
signs of bottoming out, although (manufacturing) gauges will remain in contraction territory.
Across the pond, US retail sales are forecast to rebound following a dismal February print. Higher oil prices and strong car sales will benefit the headline measure, but strong winter weather could possbily still impact.