FX News Today
European Fixed Income Outlook: the 10-year Bund yield is up 0.8 bp at 0.505% in early trade, amid an overall mixed picture on global bond markets. Peripherals are slightly outperforming in Europe, the 10-year JGB yield is up 0.3 bp at 0.026%, but down from earlier highs, the 10-year Treasury yield is up from lows and unchanged at 2.78%. European stock futures struggled initially, but are now broadly higher, after a mixed session in Asia. Traders remain cautious after the sell off in tech stocks and amid the surge in risk appetite, but with the long Easter holiday weekend looming things may quieten down somewhat. This is also the last trading day for Bunds this month and this quarter and after sizeable index extensions in EGBs may have underpinned peripheral bonds in particular, the effect is likely to wane now, although upcoming redemption should keep the ECB in the market. Released overnight U.K. GfK consumer confidence surprised on the upside, while house price data disappointed. The calendar still has key German inflation data as well as German labour market numbers. U.K. lending data and the third reading of U.K. Q4 GDP.
FX Update: The dollar has traded softer in relatively quiet trade into what will be long holiday weekend for many major centres. EURUSD has settled in the lower 1.23s after tipping to a low of 1.2399 late yesterday. USDJPY ebbed back to the mid 106.0s from the upper 106.00s, partly on the softer dollar and partly on yen gains. A mixed session across Asian stock markets spoke of a continued vexed sentiment, with FAANG stocks on Wall Street a prevailing source of bearishness. Japan’s finance minister, Aso, attempted to walk the yen lower by arguing that yield differentials warrant higher levels in USDJPY.
Charts of the Day
Main Macro Events Today
- German Unemployment – the official jobless number is likely to dip by a further -15K (, leaving the jobless rate at a very low 5.4%. German wage growth is indeed picking up, but the doves at the ECB argue that with more people entering the labor market, official figures underestimate the wider level of underemployment.
- German March HICP – German HICP expected to firm back to 1.6% y/y from 1.2% y/y in the previous month, which is in line with consensus and partly based on the assumption that the earlier timing of Easter this year lifted holiday related prices in March rather than April, and thus added positive base effects.
- Canada GDP – GDP expected to expand 0.1% in January (m/m, sa) after the 0.1% rise in December. The risk is to the downside in January, as manufacturing shipments contracted and home sales tumbled. The 1.1% tumble in manufacturing shipment volumes during January is a heavy weight on the January GDP outlook.
- US data – Initial jobless claims may dip 5k to 224k for the March 24 week, with personal income forecast to rise 0.4% in February and spending seen +0.3% (median 0.2%); core PCE prices may remain at a lowly 1.5% y/y for the fifth consecutive time. Chicago PMI is set to rise to 62.0 in March from 61.9 , while final Michigan sentiment may hold at 102.0 in March.
Support and Resistance level
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Andria Pichidi
Market Analyst
HotForex
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