OpeGlobal Markets:

  • RBNZ Governor Wheeler: If NZD stays high in face of worsening fundamentals, RBNZ could sell currency
  • RBNZ Gov: High FX rate will be a factor in extent, speed of rate increases
  • RBNZ Gov: Exchange rate is overvalued, not sustainable
  • RBNZ Gov: If NZD stays strong, may see low or negative tradable inflation
  • RBNZ Gov: NZD could weaken if US economy improves further, dairy prices fall or China slows
  • Chinese HSBC Services PMI: 51.4, Previous: 51.9
  • New Zealand Employment Change (Q1): 0.9%, Expected: 0.7%, Previous: 1.1%
  • New Zealand Unemployment Rate (Q1): 6.0%, Expected: 5.8%, Previous: 6.0%
  • Australia Retail Sales s.a. (MAR) (m/m): 0.1%, Expected: 0.4%, Previous: 0.2%
  • Australia AiG Performance of Construction Index (APR): 45.9, Previous: 46.2
  • Japan Markit Services PMI (APR): 46.4, Previous: 52.2
  • UK BRC Shop Price Index (APR) (m/m): 1.4%, Previous: -1.7%
  • BOJ Minutes show members will keep easing until 2% inflation is stable, and believe Japan economy likely to continue moderate recovery
  • BOJ Mins: one member believes inflation may rise in April as firms raise prices, firms using sales tax hike to pass on cost rises
  • BOJ Mins: one member said prices have become more susceptible to FX moves, must monitor how halt in $JPY slide affects prices
  • Asian stock markets are all lower this morning
  • The Nikkei lost 2.40 %, while the Shanghai Composite declined 0.40 %
  • The Hang Seng dropped 1.30 % and Australia’s ASX lost 1 % on the day
  • Gold at $1311 (+0.20 %), Silver at $19.68 (+0.20 %), Crude Oil at $100.13 (+0.60 %)
  • US 10 year yield stands at 2.58

FX Flows/Orders:

  • AUD – AUD/USD declined overnight as domestic retail sales data and Chinese Services PMI both came in slightly lower than expected, but bids at 0.9330 held so far. Decent supply seen ahead of 0.94, but with further USD weakness in the near-term highly likely, the Aussie should remain bid. Initial support at 0.9310/15 and better buying interest noted around 0.9280. Cross flows have been supportive overnight with specs good buyers of AUD/NZD.
  • CAD – USD/CAD looks heavy as we have closed the day below the 1.0920 level; Canadian econ data has been solid as of recent CAD short positioning remains fairly crowded, so the risk is to the downside. 1.0850 is now key, with a break below to trigger another round of stops & position covering. Dealers mentioned no larger selling interest noted until above 1.0915.
  • EUR – There is little doubt that Draghi will mention the exchange rate levels tomorrow should EUR/USD continue to rise. However, the market is clearly demanding action and talk alone will have no real effects. Bids are building around the short-term base at 1.3880. Topside, stops above 1.3950, but offers from Asian sovereign names seen at 1.3960. Selling interest is heavy ahead of the 1.40 barrier option. EUR/GBP continues to consolidate around the 0.82 level and while there are minor bids at 0.8180, there is not much support until 0.8150.
  • GBP – GBP/USD nearly reached the 1.70 level, but defense of the barrier option proved to be strong. A breakout looks imminent however, and buying dips towards 1.6920/30 is the preferred strategy.
  • JPY – In USD/JPY, traders saw good bids around 101.50 on the interbank platforms. There is talk of solid buying interest down to 101.20, while to the topside, better offers noted towards 102.10/20.
  • NZD – The Kiwi got hit first by comments from the RBNZ Governor Wheeler, who stated that the NZD is overvalued & exchange rate not sustainable and that the bank could intervene in case of worsening fundamentals. NZD/USD hit an intraday low of 0.8683 earlier as short-term specs who were long had to bail out.

Upcoming Events:

  • 06:00 GMT – German Factory Orders (0.3 % MoM)
  • 06:45 GMT – French Industrial Production (0.2 % MoM)
  • 12:30 GMT – Canadian Building Permits (4.3 % MoM)
  • 14:00 GMT – Fed Chair Yellen testifies