FX News Today
European Fixed Income Outlook: The 10-year Bund yield is down -1.2 bp at 0.507% in early trade, trailing Treasuries, which are down -1.8 bp at 2.814%. European stock futures are selling off, led by the German DAX future, which is down -0.9%, in the wake of a sell off in U.S. futures after Trump threatened additional USD 100 bln worth of China tariffs. China was quick to threaten retaliation, and while reports of the willingness to talk on the side of the U.S. helped to lift Asian markets off early lows, sentiment remains fragile. The Nikkei closed with a loss of -0.36% in the end, the ASX was unchanged at the close, while the Hang Seng outperformed in catch up trade, after coming back from the holidays. Weaker than expected German production data at the start of the session did nothing to lift sentiment, leaving markets to mull trade developments ahead of key U.S. payroll data in the PM session.
FX Update: The dollar weakened and then firmed during the pre-London open session in Asia, with markets roiled by Trump’s threat for further tariffs against China and a retaliatory pledge to fight back by Beijing before finding some solace form a Reuters report citing a U.S. official saying that Washington was willing to negotiate if China “is serious.” USDJPY recouped to the mid 107.0s after logging a low of 106.99. The pair has remained below the six-week high posted yesterday at 107.49, which capped a three-day run higher. EURUSD traded lower after posting an intraday peak at 1.2260, logging a low of 1.2227, but the pair remain above yesterday’s low at 1.2218. Asian stocks lifted out of intraday lows, though European and U.S. equity index futures are firmly down, with Eurostoxx futures down 0.8% and S&P 500 futures off by over 1%. The offshore CNY extended lower, making $6.3043 today, with the 0.7% loss this week in the Chinese currency marking the biggest weekly decline since last October.
Charts of the Day
Main Macro Events Today
- Canadian Employment Data – the employment report, is expected to show a 25.0k in March after the 15.4k gain in February and 88.0k plunge in January. The unemployment rate is seen holding at a 40-year low 5.8%. Average hourly wages are projected to gain 0.3% in March (m/m, sa) after the 0.3% gain in February, boosting the annual growth rate to 3.4% in March from 3.1%. That would be firmest annual growth rate since the matching pace in November of 2015.
- US NFP data– 193K increase is anticipated after the stellar 313k February surge. The unemployment rate is seen falling to 4.0%.
- US Average Hourly Earnings –Average hourly earnings are projected rising 0.2% after the tepid 0.1% prior gain, which calmed inflation anxiety that followed the strong 0.3% and 0.4% respective gains in January and December.
- BOE Gov Carney & Fed Chair Powell Speeches
Support and Resistance level
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