Global Markets:

  • Japan (JPY) CGPI (y/y): 4.1%, Expected: 4.0%, Previous: 1.7%
  • New Zealand (NZD) Core Retail Sales (q/q): 0.8%, Expected: 0.9%, Previous: 0.7%
  • New Zealand (NZD) Retail Sales (q/q): 0.7%, Expected: 0.9%, Previous: 1.2%
  • RBNZ Governor Wheeler: Home prices remain overvalued, and an economic slowdown in China would pose stability risks
  • Wheeler: Rate rise will help dampen house price inflation. A rate hike could send $NZD higher
  • Wheeler: New Zealand Dollar carry trade quite strong & may strengthen
  • Asian equity markets are mixed this morning
  • As of 04:00 GMT, the Nikkei is down 0.10 % and Australia’s ASX lost 0.20 %
  • The Shanghai Composite also declined 0.20 %, while the Hang Seng is up 1 % on the day
  • Gold at $1294 (unch), Silver at $19.55 (unch), Crude Oil at $102.00 (+0.30 %)
  • US 10 year yield at 2.616

FX Flows/Orders:

  • AUD – Leveraged funds have been good buyers over the past few sessions and AUD/USD is again approaching the 0.94 barrier option. A breakout above would see sizeable stops getting triggered and there is little resistance on the charts until 0.9450. No risk events out of Australia for the rest of the week, with possible strong US data the only threat to a higher AUD at the moment.
  • CAD – USD/CAD is consolidating with supply coming from real money funds, while local names have been seen as buyers. Some offers noted at 1.0920 and heavier selling interest ahead of 1.0950. Further consolidation seems likely, so buying dips towards 1.0850 and selling rallies pre-1.0950 is probably the best strategy for now.
  • EUR – Comments from the German central bank that they are open to significant ECB stimulus in June if inflation forecasts for 2016 are lowered was another blow to the Euro. EUR/USD hit a low of 1.3688 and a test of 1.3650 seems imminent, though dealers expect to see good demand ahead of that level. Cross flows were also heavy with large EUR/AUD selling by leveraged funds. In EUR/GBP, the remaining stops were cleared and the pair is on its way to 0.81. Bids expected pre-0.81, but next chart support not seen until 0.8080.
  • GBP – Cable got hit by another round of position covering ahead of the Inflation Report and Carney speech, as well as general USD strength. We’ve seen a bounce in Asia, but things are likely to remain quiet ahead of employment data at 09:30 GMT. Bids are rebuilding at 1.6820. Offers noted at 1.6880 and in better size at 1.6920, including supply from sovereign names.
  • JPY – All quiet overnight. Exporter offers reported at 102.50 in USD/JPY, while specs said to be bidding at 101.80.
  • NZD – No surprises from RBNZ governor Wheeler and NZD/USD is performing very well despite the miss in domestic Retail Sales data. A close above 0.87 is needed for bullish momentum to rebuild.

Upcoming Events:

  • 06:00 GMT – German CPI (-0.2 % MoM, 1.3 % YoY)
  • 06:45 GMT – French CPI (0.2 % MoM)
  • 07:00 GMT – Spanish CPI (0.9 % MoM, 0.4 % YoY)
  • 08:30 GMT – UK Claimant Count Change (-30.0K)
  • 08:30 GMT – UK Unemployment Rate (6.8 %)
  • 09:00 GMT – Euro Zone Industrial Production (-0.3 % MoM, 1.0 % YoY)
  • 09:30 GMT – Bank of England Inflation Report
  • 09:30 GMT – BoE Governor Carney speaks
  • 12:30 GMT – US PPI (0.2 % MoM, 1.7 % YoY)
  • 23:50 GMT – Japanese GDP (1.0 % QoQ, 4.2 % YoY)