Global Markets:

  • Asian stock markets: Nikkei down 0.05 %, Shanghai Composite fell 1.10 %, Hang Seng gained 0.05 %, ASX declined 0.80 %

  • Commodities: Gold at $1190.70 (-0.15 %), Silver at $16.12 (-0.25 %), WTI Oil at $53.58 (+0.50 %), Brent Oil at $60.22 (+0.75 %)

  • Rates: US 10 year yield at 1.892, UK 10 year yield at 1.513, German 10 year yield at 0.14

News & Data:

  • China GDP 1.3 % q/q, Expected: 1.4 %, Previous: 1.5 %

  • China GDP 7.0 % y/y, Expected: 7.0 %, Previous: 7.3 %

  • China Industrial Production 5.6 %, Expected: 6.9 %, Previous: 6.8 %

  • China Retail Sales 10.2 %, Expected: 10.9 %, Previous: 10.7 %

  • South Korea Unemployment Rate 3.7 %, Expected: 3.7 %, Previous: 3.9 %

  • Australia Consumer Sentiment -3.2 %, Previous: -1.2 %

  • New Zealand FPI 0.1 %, Previous: -0.7 %

  • Japan PM Adviser Hamada: USDJPY At 120 Acceptable Prior Comments Related To PPP Rate — RTRS

  • China Has Room To Cut Reserve Ratio In Q2 — Securities Journal

  • Fed’s Kocherlakota: Would Be Inappropriate For the Fed To Hike In 2015, Would Delay Inflation Reaching Goal & Harm Full Employment Goal — RTRS

  • RBNZ Deputy Governor Spencer: Action Needed To Reduce Housing Imbalance

  • RBNZ Deputy Governor Spencer: New Housing Market Pressures Emerging — BBG

  • HKMA's Chan: Volatility In Hong Kong Stock Market To Increase – BBG

Markets Update:

The USD weakened across the board after poor Retail sales data yesterday, pushing EUR/USD to 1.07 and GBP/USD to 1.48. Overnight, the Greenback regained some strength, as disappointing Chinese economic data weighed on risk appetite. While the year-on-year GDP figure arrived in line with expectations, the quarter-on-quarter number missed expectations, as did industrial production and retail sales data.

The weak data put the Aussie Dollar under pressure. AUD/USD declined from 0.7630 to a fresh session low at 0.7580. The failure to hold above 0.7630 resistance suggests further weakness in the near-term. NZD/USD followed the pair lower, with 0.7485 the overnight low. The RBNZ deputy governor was speaking, warning that actions are needed to cool the domestic housing market.

USD/JPY bounced off 119.05 and dealers report that macro funds and other leveraged names continue to have good demand for the pair. Immediate tech resistance seen at 120.10 and then 120.80. There is also talk of solid offers from corporate names in the 120.30-40 area.

Looking ahead, the focus will be on the ECB meeting today. The market is not expecting much new from the central bank, but President Draghi is likely to face further questions about the banks’ running QE programme and his latest views on the economy. We will also get a fair amount of US econ data, with industrial & manufacturing production and the NY Empire manufacturing index set to be released today. Further, the Bank of Canada will decide on interest rates today and release their monetary policy report. The BoC is expected to leave rates unchanged at 0.75 % and remain dovish in their statement.

Upcoming Events:

  • 07:00 BST – German CPI (0.5 % m/m, 0.3 % y/Y)

  • 07:00 BST – German HICP (0.5 % m/m, 0.1 % y/y)

  • 07:15 BST – Bank of Japan Governor Kuroda speaks

  • 07:45 BST – French CPI (0.7 % m/m)

  • 07:45 BST – French HICP (0.7 % m/m, 0.0 % y/y)

  • 10:00 BST – Euro Zone Trade Balance (€21.1bln)

  • 12:45 BST – ECB Interest Rate Decision (0.05 %)

  • 13:30 BST – ECB Press Conference

  • 13:30 BST – US NY Empire State Manufacturing Index (7.0)

  • 13:30 BST – Canadian Manufacturing Sales (-0.2 % m/m)

  • 14:15 BST – US Industrial Production (-0.3 % m/m)

  • 14:15 BST – US Manufacturing Production (0.1 % m/m)

  • 15:00 BST – US NAHB Housing Market Index (55.0)

  • 15:00 BST – Bank of Canada Interest Rate Decision (0.75 %)

  • 15:00 BST – Bank of Canada Monetary Policy Report

  • 16:15 BST – Bank of Canada Governor Poloz speaks

  • 19:00 BST – US Beige Book