Market Brief
The Chinese CPI accelerated at the slower pace of 1.8% y-o-y in April (vs. 2.1% exp. & 2.4% last), while the PPI declined -2.0% over the same period (vs. -1.9% exp. & -2.3% last). Data further confirmed fears on subdued Chinese demand; the statistics bureau added that the prices “will maintain modest growth”. The probability for more easing from the PBoC rose. The Hang Seng and Shanghai’s Composite lost 0.06% and 0.25% respectively (at the time of writing), USD/CNY came in demand below 6.2300.
In Australia, the RBA SOMP revised the inflation forecasts down to 2.75% mid-2014 and 2.50% year end, the GDP is expected stronger at 3.0% by mid-2014 and 2.75% by year end. AUD/USD sold-off to 0.9348 before the SOMP, and then recovered. The sentiment improves with MACD to step into the green zone for a week close above 0.9372.
The ECB and the BoE kept rates on hold at Thursday’s policy meetings. At his monthly press conference, the ECB President Draghi said that the inflation expectations remain anchored; the CPI is expected to rise towards ECB’s 2% by end-2016. EUR/USD hit 1.3993 before aggressively selling-off below 1.3900 as Draghi added that the council feels comfortable with acting the next time. The pair currently trades below the 21-dma (1.3842), option related offers abound at 1.3830/50 region. The key support stands at 1.3775 (last week low).
GBP/USD made a fresh upside attempt post-BoE, yet remained capped at 1.6975. The overbought conditions (RSI at 70%) trigger pullback on profit takings pre-1.7000, while the broad sentiment is still positive. Option bids trail above 1.6900 pre-weekend. We do not see any upside hurdle on the option side. EUR weakness activates barriers below 0.81750 on EUR/GBP. The next key resistance is the year low of 0.81577.
USD/CAD extends losses to 1.0818, the bearish trend gains more momentum. Canada will publish April jobs data, the unemployment rate is expected to remain stable at 6.90%. The key Fibonacci support of 1.0807 is at risk today. Option barriers trail below 1.0810 for today’s expiry.
This Friday, traders watch German March Trade and Current Account Balance, Norwegian April CPI and PPI m/m & y/y, Italian March Industrial Production m/m & y/y, UK March Industrial, Manufacturing Production, Construction Output m/m & Y/y and Trade Balance, Canadian April Unemployment and Participation Rate, US March JOLTs Job Openings, US March Wholesale Inventories and Wholesale Trade Sales m/m.
| Todays Calender | Estimates | Previous | Country / GMT |
Currency TechEUR/USD | |||
| SW Apr PES Unemployment Rate | 4.20% | 4.30% | SEK / 6:00 AM |
| GE Mar Trade Balance | 17.4B | 16.3B | EUR / 6:00 AM |
| GE Mar Current Account Balance | 14.9B | 13.9B | EUR / 6:00 AM |
| GE Mar Exports SA MoM | 1.30% | -1.30% | EUR / 6:00 AM |
| GE Mar Imports SA MoM | 0.60% | 0.40% | EUR / 6:00 AM |
| FR Mar Budget Balance YTD | - | -25.7B | EUR / 6:45 AM |
| NO Apr PPI including Oil MoM | - | -2.90% | NOK / 8:00 AM |
| NO Apr PPI including Oil YoY | - | 0.10% | NOK / 8:00 AM |
| NO Apr CPI MoM | 0.40% | 0.20% | NOK / 8:00 AM |
| NO Apr CPI YoY | 1.80% | 2.00% | NOK / 8:00 AM |
| NO Apr CPI Underlying MoM | 0.40% | 0.50% | NOK / 8:00 AM |
| NO Apr CPI Underlying YoY | 2.30% | 2.60% | NOK / 8:00 AM |
| IT Mar Industrial Production MoM | 0.30% | -0.50% | EUR / 8:00 AM |
| IT Mar Industrial Production WDA YoY | 1.20% | 0.40% | EUR / 8:00 AM |
| IT Mar Industrial Production NSA YoY | - | 0.40% | EUR / 8:00 AM |
| UK Mar Visible Trade Balance GBP/Mn | -£9000 | -£9094 | GBP / 8:30 AM |
| UK Mar Trade Balance Non EU GBP/Mn | -£3000 | -£2919 | GBP / 8:30 AM |
| UK Mar Trade Balance | -£2000 | -£2058 | GBP / 8:30 AM |
| UK Mar Industrial Production MoM | -0.20% | 0.90% | GBP / 8:30 AM |
| UK Mar Industrial Production YoY | 2.40% | 2.70% | GBP / 8:30 AM |
| UK Mar Manufacturing Production MoM | 0.30% | 1.00% | GBP / 8:30 AM |
| UK Mar Manufacturing Production YoY | 2.90% | 3.80% | GBP / 8:30 AM |
| UK Mar Construction Output SA MoM | 0.60% | -2.80% | GBP / 8:30 AM |
| UK Mar Construction Output SA YoY | 7.10% | 2.80% | GBP / 8:30 AM |
| CA Apr Unemployment Rate | 6.90% | 6.90% | CAD / 12:30 PM |
| CA Apr Net Change in Employment | 13.5K | 42.9K | CAD / 12:30 PM |
| CA Apr Full Time Employment Change | - | 12.8 | CAD / 12:30 PM |
| CA Apr Part Time Employment Change | - | 30.1 | CAD / 12:30 PM |
| CA Apr Participation Rate | 66.3 | 66.2 | CAD / 12:30 PM |
| UK Apr NIESR GDP Estimate | - | 0.90% | GBP / 2:00 PM |
| US Mar JOLTs Job Openings | 4125 | 4173 | USD / 2:00 PM |
| US Mar Wholesale Inventories MoM | 0.50% | 0.50% | USD / 2:00 PM |
| US Mar Wholesale Trade Sales MoM | 1.10% | 0.70% | USD / 2:00 PM |