Trade talks and private sector PMI figures due out of the Eurozone and the U.S will be providing the markets with some further guidance on whether the recent soft patch is likely to extend into the 2nd quarter.
Earlier in the Day:
There were no material stats released through the Asian session this morning to provide the markets with direction, as U.S Treasury yields continued to move northwards, following last week’s U.S Treasury sell-off.
The continued rise in U.S Treasury yields saw the Yen fall back to ¥107.79 against the U.S Dollar, down 0.12% for the morning, while the Kiwi Dollar was down just 0.01% to $0.7206.
For the Aussie Dollar, it was a better start to the day, up 0.08% to $0.7678, the Aussie Dollar finding support from an early rise in the commodities, while crude oil prices eased back slightly through the early part of the day.
While the data was non-existent this morning, it’s a big week ahead on the data front, with the BoJ’s monetary policy decision also to consider later in the week, the latest inflation numbers likely to see a revision to inflation forecasts that could see further weakness in the Yen should geo-political risks continue to abate through the early part of the week.
Progress with North Korea and hopes for a resolution to the trade spat between China and the U.S provided some upside in the equity markets, with risk aversion easing through the morning.
In the equity markets, the Nikkei was down just 0.19%, with the Hang Seng down 0.36% early on, weighed by a slide in tech and oil stocks, while the ASX200 was up 0.38%, with the CSI300 flat, as the markets focused on discussions on trade at the IMF.
Hopes of a favourable outcome to trade discussions have provided support to the U.S Futures, with the Dow, S&P500 and NASDAQ minis in positive territory early on, further gains likely to support the Asian equity markets ahead of the close, with U.S Treasury yields expected to ease from current levels
The Day Ahead:
For the EUR, following a relatively quiet week on the data front, April’s prelim private sector PMI figures are scheduled for release this morning.
There’s been some concern in the markets over recent data out of the Eurozone that has pointed to a soft patch or something more severe. While ECB President Draghi tried to ease market concerns of a more material slowdown, today’s figures will certainly provide the markets and the EUR with some direction, any uptick in wholesale price inflation and pickup in activity a positive for the EUR.
A forecasted softer manufacturing PMI out of Germany may ultimately be to the detriment of the EUR should the numbers be in line with forecasts.
For the Pound, there are no material stats scheduled for release today, leaving the markets to consider what lies ahead from a BoE monetary policy perspective following last week’s disappointing retail sales figures and softer inflation.
At the time of writing, the Pound was up 0.13% to $1.4018, with some confusion over how the BoE will move next month seeing the Pound claw back some of its losses from last week.
While the more dovish have suggested that Carney’s comments last week removes the chance of a rate hike next month, the continued overshoot in inflation and a relatively stable economy could see the hawks take control, the BoE known to give little away too far in advance of an MPC meeting. This week’s release of the 1stquarter GDP numbers likely to have a significant impact on sentiment, with Brexit chatter also there for the markets to consider.
Across the Pond, following some better data out of the U.S last week, focus will shift to prelim April private sector PMI numbers scheduled for release this afternoon, together with existing home sales figures.
Any materially weak figures could see the Dollar take a hit and raise further concerns over the U.S economy going into the 2nd quarter, though anything in line with or better than forecasted should provide Dollar support.
Outside of the data, trade talks will also be a factor to consider, any agreements to avoid a trade war likely to be another Dollar positive event.
At the time of writing, the Dollar Spot Index was up 0.10% to 90.403, driven by the continued rise in Treasury yields and easing geo-political tension.
Across the border, Canada’s wholesale sales figures are scheduled for release, which are forecasted to be Loonie positive, the Loonie in much need of a turnaround following last week’s slide to C$1.27 levels, though the dovish tone of the Bank of Canada is unlikely to inspire too much of a rally on this afternoon’s figures.
At the time of writing, the Loonie was up 0.03% to C$1.2757.