Thursday 27th April: European Open Briefing

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Thursday 27th April: European Open Briefing 1

Global Markets:

  • Asian stock markets: Nikkei down 0.30 %, Shanghai Composite fell 0.40 %, Hang Seng lost 0.05 %, ASX 200 gained 0.05 %
  • Commodities: Gold at $1268 (+0.35 %), Silver at $17.52 (+0.50 %), WTI Oil at $49.40 (-0.45 %), Brent Oil at $52.20 (-0.35 %)
  • Rates: US 10 year yield at 2.32, UK 10 year yield at 1.09, German 10 year yield at 0.36

News & Data:

  • PBOC sets USD/CNY reference rate for today at 6.8896 (vs. yesterday at 6.8845)
  • Trump tells Canada, Mexico, he won't terminate NAFTA treaty: White House – RTRS
  • Asian shares retreat from highs on doubts over Trump tax plan – RTRS
  • Oil prices fall on lingering oversupply concerns – RTRS

Bank of Japan Rate Decision:

  • BOJ holds rate at -0.10%, maintains 10yr yield target at 0.00%, as expected
  • Japan's economy turning towards moderate expansion
  • Economy, price risks tilted towards downside
  • Output, exports on upward trend
  • Japan economy likely to continue moderate expansion
  • Momentum towards hitting 2 percent target lacking
  • Long-term inflation expectations remain on weak note

Markets Update:

Stock markets fell after US President Trump’s tax reform announcement fell short of expectations. There was a lack of details and the market is still doubting whether the reform will be able to pass in Congress.

The US Dollar came under pressure too. EUR/USD jumped back above 1.09, while GBP/USD is approaching again the 1.29 level. Meanwhile, USD/JPY retraced back to 111 and briefly fell below that level in the Asian session. No surprises from the BoJ, as they left interest rates and the size of their QE programme unchanged.

Nevertheless, commodity currencies remain weak. AUD/USD broke below 0.7480 support and extended losses to 0.7450 yesterday. The charts suggest a move towards 0.73 could follow in the near-term. Price action in NZD/USD is looking quite bearish as well.

The main event today will be the ECB rate decision. The market is no expecting any changes, and Draghi is likely to remain neutral during the press conference. Inflation is still low in the Euro Zone, and it will take some time for the central bank to switch to a more hawkish bias.

Upcoming Events:

  • 07:00 GMT – Swiss Trade Balance
  • 07:30 GMT – Bank of Japan Press Conference
  • 10:00 GMT – Euro Zone Consumer Confidence
  • 12:45 GMT – ECB Rate Decision
  • 13:00 GMT – German CPI
  • 13:30 GMT – US Durable Goods Orders
  • 13:30 GMT – US Initial Jobless Claims
  • 13:30 GMT – ECB Press Conference
  • 15:00 GMT – US Pending Home Sales

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