Market Brief
Yesterday, the SNB surprised the market by announcing that the number of sight deposit account holders that are exempt from negative interest has been reduced. This decision doesn’t change much the domestic banks’ situation as the “20 times the minimum reserve requirement” rule is still running. On the other side, the institutions associated with the Confederation, such as the pension fund of the Confederation or the pension fund of the SNB, are no longer exempt of negative interest. Consequently, only the account holders of the national social security system are still fully exempt. On the news, EUR/CHF appreciated sharply from 1.0260 to 1.0427, before stabilizing around 1.0385. USD/CHF was to up to 0.9721 and failed to break the 0.9728 resistance (Fib. 38.2% on Mar-Apr sell-off). On the downside, the previous 0.96 strong resistance will now act a support. On the mid-term, the dollar is still stuck in its declining channel but will need a lot of strength to break the 0.95 support.
In Asia this morning, equity indices are mostly higher. The Shanghai Composite is up 0.59% and broke the 4400 level earlier tonight. Honk Kong’s Hang Seng follows the lead and gains 0.47% while the Nikkei edges up by 0.09%, despite a weak Markit Japan manufacturing PMI (49.7 verse 50.7 expected). In China, HSBC (LONDON:HSBA) flash manufacturing PMI confirmed the slowdown of the second-biggest economy as the measure fell to a 12-month low in April (49.2 verse 49.6 expected). Further moves from the PBoC should be expected in the coming weeks.
In Europe, equity futures are mixed this morning. The FTSE 250 is down -0.53%, Euro Stoxx 50 is flat while German equity futures are lower by -0.63%. As suspected, EUR/USD didn’t manage to stay above the 1.0755 resistance (Fib 50% on March rally) and is currently getting closer to the 1.0685 resistance (Fib 61.8%). We expect some sharp moves today as the Markit Eurozone PMIs are due this morning while the initial jobless claims, the Markit Manu. PMI, new homes sales and the Bloomberg consumer comfort are due this afternoon in the US.
Traders are also waiting on the release of the Retail Sales from UK. The market is expecting a figure slightly lower for March (0.5% exp.) compared to February (0.7%). GBP/USD finally broke the 1.4943 resistance (Fib 38.2% on Feb-April sell-off) and tested the following one standing at 1.5060 (Fib 50%). EUR/GBP depreciated sharply yesterday and broke the key resistance standing at .7156 (Fib 61.8% on Mar-Apr rally). The pair is currently sitting on the 0.7120 support (low from March 17). If broken, the next support stands around 0.7015/30 (lows from March 11 and 12).
Today's CalendarEstimatesPreviousCountry / GMT EC Apr P Markit Eurozone Manufacturing PMI 52.6 52.2 EUR / 08:00 EC Apr P Markit Eurozone Services PMI 54.5 54.2 EUR / 08:00 EC Apr P Markit Eurozone Composite PMI 54.4 54 EUR / 08:00 SW Bloomberg April Sweden Economic Survey - - SEK / 08:00 NO Bloomberg April Norway Economic Survey - - NOK / 08:15 UK Mar Public Finances (PSNCR) - 0.0B GBP / 08:30 UK Mar Central Government NCR - 3.5B GBP / 08:30 UK Mar Public Sector Net Borrowing 6.5B 6.2B GBP / 08:30 UK Mar PSNB ex Banking Groups 7.0B 6.9B GBP / 08:30 UK Mar Retail Sales Ex Auto MoM 0.50% 0.70% GBP / 08:30 UK Mar Retail Sales Ex Auto YoY 5.50% 5.10% GBP / 08:30 UK Mar Retail Sales Incl. Auto MoM 0.40% 0.70% GBP / 08:30 UK Mar Retail Sales Incl. Auto YoY 5.40% 5.70% GBP / 08:30 EC Euro Area Fourth Quarter Government Debt - - EUR / 09:00 EC Euro Area Fourth Quarter Government Deficit - - EUR / 09:00 US Apr 18 Initial Jobless Claims 287K 294K USD / 12:30 US Apr 11 Continuing Claims 2290K 2268K USD / 12:30 US Apr P Markit US Manufacturing PMI 55.7 55.7 USD / 13:45 US Apr 19 Bloomberg Consumer Comfort - 46.6 USD / 13:45 US Mar New Home Sales 515K 539K USD / 14:00 US Mar New Home Sales MoM -4.50% 7.80% USD / 14:00 US Apr Kansas City Fed Manf. Activity -2 -4 USD / 15:00
Currency Tech
EUR/USD
R 2: 1.1114
R 1: 1.1052
CURRENT: 1.0692
S 1: 1.0685
S 2: 1.0504
GBP/USD
R 2: 1.5137
R 1: 1.5059
CURRENT: 1.4995
S 1: 1.4566
S 2: 1.4231
USD/JPY
R 2: 121.52
R 1: 120.18
CURRENT: 119.83
S 1: 118.33
S 2: 117.95
USDCHF
R 2: 0.9948
R 1: 0.9754
CURRENT: 0.9693
S 1: 0.9481
S 2: 0.9450