Global Markets: 

  • Australia CPI 0.6 % QoQ vs 0.8 % expected
  • Australia CPI 2.9 % YoY vs 3.2 % expected
  • China HSBC Manufacturing PMI 48.3 vs 48.4 expected
  • As of 05:00 GMT, the Nikkei is up 0.70 % while the Shanghai Composite lost 0.50 %
  • Australia’s ASX gained 0.60 % on the day
  • Gold at $1284 (+0.26 %)
  • US 10 year yield at 2.71

 FX Flows/Orders: 

  • AUD/USD – has fallen almost 100 pips going into the London open, after a lower CPI print and a slightly disappointing Chinese PMI figure. Strong selling from leveraged funds, specs covering long positions + large stops triggered sub-0.93. Some bids expected at 0.9250, but no major support seen until 0.9220.
  • EUR/USD – dealers see stops in good size resting above 1.3830 and are reporting solid selling interest from leveraged names towards the 1.3850 level. 1.3880 remains pivotal resistance, while 1.3780 is the level to watch to the downside.
  • USD/JPY – traded with an offered tone during the Asian session, but flows have been rather light the past few sessions. Bids from Japanese names resting at 102.20, while offers are lined up in front of 103.00.

 Market Sentiment:

 Australian inflation came in much lower than expected. The figures were likely weaker than the RBA had projected into their outlook, as the bank had expected underlying inflation to rise further through Q1 and Q2 of the year. However, the improving domestic labour market is likely to increase pressure on costs. The CPI print was followed by the Chinese HSBC Flash PMI, which came in slightly lower than forecast. Domestic demand in China showed some improvement, but new export orders and employment saw a further decline. The recent data confirms a slowdown in growth momentum and might lead to a reaction from the PBoC soon.

Looking ahead, we have a series of PMI data out of the Euro Zone. Most banks are expecting that the EZ Composite PMI will edge higher, confirming a moderate recovery of the economy. However, the ECB made it clear that inflation data is critical for decisions on further easing. Hence, traders are focusing on next week’s CPI figures and PMIs are unlikely to move the Euro a lot in either case.

The Bank of England will release their April meeting minutes and analysts expect that it will contain little new information. Later in the day, the RBNZ is expected to hike interest rates from 2.75 % to 3.00 %.

Upcoming Events: 

  • 08:00 GMT – French Manufacturing PMI (51.9)
  • 08:00 GMT – French Services PMI (51.5)
  • 08:30 GMT – German Manufacturing PMI (54.0)
  • 08:30 GMT – German Services PMI (53.3)
  • 09:00 GMT – Euro Zone Manufacturing PMI (53.0)
  • 09:00 GMT – Euro Zone Services PMI (52.4)
  • 09:30 GMT – Bank of England Meeting Minutes
  • 13:30 GMT – Canada Retail Sales (1.0 % MoM)
  • 15:00 GMT – US New Home Sales (451k)
  • 22:00 GMT – New Zealand Interest Rate Decision (3.00 %)