EUR/CHF Weekly Outlook

EUR/CHF’s consolidation from 1.1015 temporary top continued last week and outlook is unchanged. Initial bias stays neutral this week first. We maintain the view that rebound from 1.0809 is resuming and favors another rise. Above 1.1023 resistance will …

The Weekly Bottom Line

The last week of April was busy for global markets in the midst of earnings season. Along with two major central bank decisions, investors had to digest the last batch of key economic indicators for the first quarter of the year. The mood was relativel…

Americas Roundup: Dollar Posts Worst Week Vs Yen Since 2008, US Stocks fall april 30th, 2016

Market Roundup

•    US Mar Personal Income 0.4% vs. forecast 0.3% & prior 0.1% (rev from 0.2%)

•    US Mar Personal Consumption 0.1% vs. forecast 0.2% & prior 0.2% (rev from 0.1%)

•    US Mar Core PCE price index m/m 0.1% vs/ forecast 0.1% & prior 0.2% (rev from 0.1%)

•    US Q1 Employment Costs as forecast at 0.6% vs. prior 0.5%

•    US Apr Chicago PMI vs. forecast 53.00 & prior 53.6

•    US Apr U. of Mich. Sentiment final 89.0 vs. forecast 90.0 & prior 89.7

•    US Apr Chicago PMI 50.4 vs. forecast 53.0 & prior 53.6

•    Canada Feb GDP m/m as forecast at -0.1% vs. prior +0.6%

•    Canada Feb Producer Prices m/m -0.6% vs. forecast +0.1% & prior -1.0% (rev from -1.1%)

•    Canada Mar Raw Materials Prices 4.5% vs. forecast 3.7% & prior 0.7% (rev from -2.6%)

•    DBRS confirms Republic of Portugal at BBB (Low), stable trend

•    German Federal Statistics Office corrects Apr HICP to -0.5%m/m from previously reported -0.3%y/y; Corrects April HICP to -0.3% y/y from previously reported -0.1% y/y

•    EZ April flash inflation excluding unprocessed food & energy revised down to 0.7% from 0.8% after German correction

•    Fed’s Kaplan: ‘Will advocate’ raising interest rates

•    Kaplan: Holding interest rates too low for too long could lead to bubble

•    Fed’s Kaplan: Expects GDP rebound in Q2; Brexit will be a factor in Fed’s decision in June- BBG TV

•    NY Fed Nowcast: US GDP seen growing 0.8% in Q2 vs. 1.2% April 15 estimate

•    China Politburo: To keep basic stable yuan exchange rate; Econony still faces relatively large downside pressure-MNSI

•    Russian Central Bank Press Office tells Reuters that rate cut possible within next three setting meetings

•    IMF: Hungary inflation expectations appear to be anchored around 2%, the lower end of CB’s target- Country report

Looking Ahead – Economic Data (GMT)

•    May 1 02:00 China  April NBS Non-Mfg PMI

•    May 1 02:00 China April NBS Manufacturing PMI

•    23:30 Australia Apr AiG Performance of Mfg Index no forecast prior 58.1

•    03:00 Japan Nikkei Mfg PMI no forecast prior 48.0

Looking Ahead – Events, Other Releases (GMT)

•    00:15 Fed’s Dudley speech

Currency Summaries

EUR/USD is likely to find support at 1.1398 levels and currently trading at 1.1452 levels. The pair has made session high at 1.1458 and hit lows at 1.1410 levels. Dollar declined against the euro on Friday as consumer spending remained tepid, making it less likely that the Federal Reserve will be able to follow through on its projected two interest rate increases this year. The consumer spending figures showed the economy grew at a 0.5 percent annual rate in the first quarter, a sharp slowdown from the fourth quarter’s 1.4 percent pace. The dollar tumbled against the euro, with the euro hitting its highest level against the dollar in two and a half weeks, at $1.1459. The euro was last up 0.76percent against the dollar at $1.1451.

GBP/USD is supported in the range of 1.4475 levels and currently trading at 1.4608 levels. It reached session high at 1.4667 and hit low at 1.4589 levels. Sterling rose to hit 12 weeks high against the dollar on Friday, as investors sold the U.S. currency on expectations that the Federal Reserve will not rise interest rate in June. The dollar extended losses after data showed U.S. inflation barely rose in March as consumer spending remained tepid, while another report showed labour costs increased at a moderate pace in the first quarter. Sterling climbed to $1.4665, its strongest since early February. It was last trading at $1.4650, up 0.3 percent on the day and on track for a 1.7 percent weekly gain. Meanwhile sooner or later the British pound is set to come under pressure as persistent concerns that a June 23 referendum will lead to a vote for Britain to leave the European Union, which most economists reckon would deal a blow to the British economy and currency.

USD/JPY is supported around 106.00 levels and currently trading at 106.39 levels. It hit session high at 107.38 levels and made session lows at 106.22 levels. The U.S. dollar declined sharply against the Japanese yen on Friday to hit 18 months high as investors expected that investors bet the Bank of Japan might be done adding stimulus to the economy, while stocks in Europe and on Wall Street headed lower as earnings disappointed. The yen was on track for its biggest weekly gain since the 2008 financial crisis, also spurred by a weak reading of U.S. economic growth on Thursday and the Federal Reserve’s cautious tone this week. The dollar was last down 1.12 percent against the yen at 106.87 yen after hitting an 18-month low of 106.70. The dollar is off about 4 percent against the yen for the week, on track to post its biggest weekly loss since October 2008.

USD/CAD is supported at 1.2498 levels and is trading at 1.2540 levels. It has made session high at 1.2587 and lows at 1.2498 levels. The Canadian dollar firmed against its U.S. counterpart on Friday. Canada’s dollar rallied hit high at 1.4689, helped by better-than-expected domestic economic activity, fiscal stimulus and rebounding oil prices. The Canadian economy contracted in February after a strong start to the year, as activity in the manufacturing and natural resource sectors declined, suggesting that low energy prices continue to impede growth. Data from Statistics Canada on Friday showed gross domestic product fell 0.1 percent in the month, in line with forecasts, after increasing for four months in a row. The currency’s weakest level was C$1.2588, while it touched its strongest since July 1, 2015 of C$1.2497.

Equities Recap

European shares fell on Friday to register their biggest weekly drop in more than two months, with travel and leisure stocks among the top losers after updates from British Airways owner IAG and Restaurant Group.

UK’s benchmark FTSE 100 closed down by 1.06 percent, the pan-European FTSEurofirst 300 ended the day down by 2.07 percent, Germany’s Dax ended down by 2.53 percent, France’s CAC finished the day down by 2.53 percent.

U.S. stocks posted their largest weekly drop in more than two months on Friday as earnings reports continued to weigh, but the S&P 500 and Dow managed to close up for April after strong showings mid-month.

Dow Jones closed down by 0.28 percent, S&P 500 ended down by 0.48 percent, Nasdaq finished the day down by 0.62 percent.

Treasuries Recap

U.S. Treasury debt prices rose in choppy trading on Friday as poor domestic data and a drop in U.S. stock prices overshadowed news of strong quarterly growth in the euro zone in the first quarter, which had lifted German and U.S. yields.

U.S. benchmark 10-year Treasury notes gained 5/32 in price for a yield of 1.821 percent, down 2 basis points on the day. The 10-year yield rose 4 basis points in April.

Commodities Recap

Gold  prices rallied 2 percent to hit highest since January last year on Friday as the Bank of Japan’s decision the previous day to hold off expanding monetary stimulus weighed heavily on the dollar,and European and U.S. stocks fell.

Spot gold was up 2 percent at $1,291.11 an ounce at 2:16 p.m. EDT (1816GMT), having reached a 15-month high of $1,296.76. 

U.S. gold futures for June delivery settled up 1.9 percent at $1,290.50 an ounce.

Oil prices ended steady on Friday after hitting 2016 highs but finished April trading about 20 percent higher, with Brent crude having its best monthly gain in seven years.

Brent futures settled just a penny lower at $48.13 a barrel, after reaching a 2016 peak at $48.50. It rose 21.5 percent in April, its largest monthly advance since May 2009.

U.S. crude futures closed 11 cents lower at $45.92 a barrel, after hitting a year-to-date high at $46.78. It gained 20 percent in April, the biggest monthly gain in a year.


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