Time | Country | Event | Period | Previous value | Forecast |
---|---|---|---|---|---|
06:00 | Germany | Retail sales, real adjusted | March | 0.9% | -0.4% |
06:00 | Germany | Retail sales, real unadjusted, y/y | March | 4.7% | 2.9% |
06:30 | Switzerland | Retail Sales (MoM) | March | 0.3% | |
06:30 | Switzerland | Retail Sales Y/Y | March | -0.2% | -0.4% |
07:30 | Switzerland | Manufacturing PMI | April | 50.3 | 50.5 |
07:50 | France | Manufacturing PMI | April | 49.7 | 49.6 |
07:55 | Germany | Manufacturing PMI | April | 44.1 | 44.5 |
08:00 | Eurozone | Manufacturing PMI | April | 47.5 | 47.8 |
08:30 | United Kingdom | PMI Construction | April | 49.7 | 50.3 |
11:00 | United Kingdom | BoE Interest Rate Decision | 0.75% | 0.75% | |
11:00 | United Kingdom | Asset Purchase Facility | 435 | 435 | |
11:00 | United Kingdom | Bank of England Minutes | |||
11:00 | United Kingdom | BOE Inflation Letter | |||
11:30 | United Kingdom | BOE Gov Mark Carney Speaks | |||
12:30 | U.S. | Continuing Jobless Claims | 1655 | 1659 | |
12:30 | U.S. | Initial Jobless Claims | 230 | 215 | |
12:30 | U.S. | Nonfarm Productivity, q/q | Quarter I | 1.9% | 2.2% |
12:30 | U.S. | Unit Labor Costs, q/q | Quarter I | 2.2% | 1.5% |
14:00 | U.S. | Factory Orders | March | -0.5% | 1.5% |
17:30 | Germany | German Buba President Weidmann Speaks | |||
17:30 | Eurozone | ECB's Peter Praet Speaks | |||
22:30 | Australia | AIG Services Index | April | 44.8 |
Time | Country | Event | Period | Previous value | Forecast |
---|---|---|---|---|---|
06:00 | Germany | Retail sales, real adjusted | March | 0.9% | -0.4% |
06:00 | Germany | Retail sales, real unadjusted, y/y | March | 4.7% | 2.9% |
06:30 | Switzerland | Retail Sales (MoM) | March | 0.3% | |
06:30 | Switzerland | Retail Sales Y/Y | March | -0.2% | -0.4% |
07:30 | Switzerland | Manufacturing PMI | April | 50.3 | 50.5 |
07:50 | France | Manufacturing PMI | April | 49.7 | 49.6 |
07:55 | Germany | Manufacturing PMI | April | 44.1 | 44.5 |
08:00 | Eurozone | Manufacturing PMI | April | 47.5 | 47.8 |
08:30 | United Kingdom | PMI Construction | April | 49.7 | 50.3 |
11:00 | United Kingdom | BoE Interest Rate Decision | 0.75% | 0.75% | |
11:00 | United Kingdom | Asset Purchase Facility | 435 | 435 | |
11:00 | United Kingdom | Bank of England Minutes | |||
11:00 | United Kingdom | BOE Inflation Letter | |||
11:30 | United Kingdom | BOE Gov Mark Carney Speaks | |||
12:30 | U.S. | Continuing Jobless Claims | 1655 | 1659 | |
12:30 | U.S. | Initial Jobless Claims | 230 | 215 | |
12:30 | U.S. | Nonfarm Productivity, q/q | Quarter I | 1.9% | 2.2% |
12:30 | U.S. | Unit Labor Costs, q/q | Quarter I | 2.2% | 1.5% |
14:00 | U.S. | Factory Orders | March | -0.5% | 1.5% |
17:30 | Germany | German Buba President Weidmann Speaks | |||
17:30 | Eurozone | ECB's Peter Praet Speaks | |||
22:30 | Australia | AIG Services Index | April | 44.8 |
Government policy remains wanting Brexit with a deal
The U.S. Energy Information Administration
(EIA) revealed that crude inventories surged by 9.934 million barrels in the
week ended April 26. Economists had forecast an increase of 1.750 million
barrels.
At the same time, gasoline stocks rose by 0.917
million barrels, while analysts had expected a drop of 0.950 million barrels.
Distillate stocks declined by 1.307 million barrels, while analysts had
forecast a decrease of 0.750 million barrels.
Meanwhile, oil production in the U.S.
increased by 100,000 barrels a day to 12.300 million barrels a day.
U.S. crude oil imports averaged 7.4 million
barrels per day last week, up by 265,000 barrels per day from the previous week.
The Commerce Department said on Wednesday
construction spending decreased 0.9 percent m-o-m in March after a downwardly
revised 0.7 percent m-o-m gain in February (originally a 1.0 percent m-o-m advance).
Economists had forecast construction spending
increasing 0.1 percent m-o-m in March.
On a y-o-y basis, construction spending declined
0.8 percent in March.
According to the report, investment in public
construction dropped 1.3 percent m-o-m, while spending on private construction fell
0.7 percent m-o-m
A report from the Institute for Supply Management (ISM) showed on Wednesday the U.S. manufacturing sector expanded in April at a slower pace than in March.
The ISM's index of manufacturing activity came in at 52.8 percent last month, down 2.5 percentage points from the March reading of 55.3 percent, missing economists' forecast for a 55.0 percent reading.
The latest reading pointed to the weakest growth in manufacturing activity since October 2016.
A reading above 50 percent indicates expansion, while a reading below 50 percent indicates contraction.
The monthly drop by the headline index was primarily attributable to slower increases in new orders (-5.7 percentage points m-o-m to 51.7 percent in April), production (-3.5 percentage points m-o-m to 52.3 percent) and employment (-5.1 percentage points m-o-m to 52.4 percent) indicators. Meanwhile, supplier deliveries index (+0.4 percentage point m-o-m to 54.6 percent) and the inventories index (-1.1 percentage points to 52.9 percent) recorded increases.
Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee said, “The past relationship between the PMI and the overall indicates that the PMI for April (52.8 percent) corresponds to a 2.9-percent increase in real gross domestic product (GDP) on an annualized basis.”
The latest report by IHS Markit revealed on Wednesday
the seasonally adjusted IHS Markit final U.S. Manufacturing Purchasing
Managers’ Index(PMI) rose to 52.6 in April, up slightly from 52.4 in March and the
“flash” figure of 52.4.
The reading signaled that the latest improvement
in the health of the U.S. manufacturing sector was the second-slowest since
June 2017.
Economists had forecast the index to stay
unrevised at 52.4.
According to the report, expansions in output
and new orders picked up from March's recent lows, with new business growth the
fastest for three months. Despite a further rise in backlogs of work, the rate
of job creation was the slowest since June 2017. On a price front, inflationary
pressures continued to soften for a sixth month running.
The
employment report prepared by Automatic Data Processing Inc. (ADP) and Moody's
Analytics showed on Wednesday the U.S. private employers added 275,000 jobs in April.
That was the largest monthly jobs gain since July 2018.
Economists
had expected a gain of 180,000.
The
increase for March was revised up to 151,000 from the originally
reported 129,000.
“April
posted an uptick in growth after the first quarter appeared to signal a
moderation following a strong 2018,” said Ahu Yildirmaz, vice president and
co-head of the ADP Research Institute. “The bulk of the overall growth is with
service providers, adding the strongest gain in more than two years.”
Meanwhile,
Mark Zandi, chief economist of Moody’s Analytics, noted, “The job market is
holding firm, as businesses work hard to fill open positions. The economic soft
patch at the start of the year has not materially impacted hiring. April’s job
gains overstate the economy’s strength, but they make the case that expansion
continues on.”
"Bank of Canada Governor will continue his Parliamentary testimony with a 16:15 ET appearance before the Senate Banking Panel, which is likely to echo the message from Tuesday's session in the House of Commons. Manufacturing PMI for April is the lone data release," analysts at TD Securities suggest.
The
Mortgage Bankers Association (MBA) reported on Wednesday the mortgage application
volume in the U.S. fell 4.3 percent in the week ended April 26, following a 7.3
percent tumble in the previous week.
According
to the report, the refinance applications dropped 5.0 percent and applications
to purchase a home declined 3.7 percent.
Meanwhile,
the average fixed 30-year mortgage rate decreased to 4.42 percent from 4.46 percent.
“Mortgage
rates were lower last week, as concerns over global growth, particularly in
Germany, outweighed more positive domestic news on first-quarter GDP growth and
business investment,” noted Joel Kan, MBA’s associate vice president of
economic and industry forecasting.
TD Securities' analysts expect Jerome Powell, chairman of the U.S. Federal Reserve, to maintain the central bank's patient stance, keeping all options open at Wednesday's post-FOMC meeting press conference.
Some downside risks have faded but the inflation outlook has softened, leaving Powell to stress the Fed remains ready to adjust policy as needed. We see risks skewed toward a more dovish tone, as Powell is likely to be asked repeatedly about the possibility of rate cuts this year.
We look for a minor drop in the ISM index as the regional Fed surveys suggest manufacturing activity is holding steady. Indeed, the average of the ISM-adjusted regional surveys remained unchanged at 54.2 in April, despite declines in three out of the four surveys published to date. Based on the regional data, we anticipate downward corrections in the employment and inventories components of the survey and a slight improvement in production. Additionally, new orders likely fell slightly. A recent pick-up in durable goods orders ex-transportation also puts a floor under downside risks for the April ISM print.
Analysts at ING note that the UK's firms continue to make preparations for a possible "no-deal" Brexit in October. This makes the outlook for manufacturing to look challenging, excluding the possibility of a Bank of England (BoE) rate hike this year.
Sonia Meskin, US economist at Standard Chartered, suggests that the US economy has remained comparatively insulated from the recent global growth slowdown, but core inflation has declined which are potentially acting a dilemma for the FOMC.
“We believe that both the May FOMC statement and press conference will aim to address this dilemma in the near term, with an emphasis on the Fed’s current “patient” stance with respect to upcoming data. In fact, the May FOMC event may be a good example of both the advantages and drawbacks of having a press conference at every meeting. On the plus side, the Chair will have the opportunity to address recent money-market volatility. On the other hand, the Chair will likely be asked about the possibility of “pre-emptive” cuts to address weak inflation despite above-trend growth. We expect the Chair to demur on this front and to stress “patience” as the FOMC monitors domestic and global data.”
China and the US held “productive” trade talks in Beijing on Wednesday and will continue discussions in Washington next week, U.S. Treasury Secretary Steven Mnuchin said.
Mnuchin, along with U.S. Trade Representative Robert Lighthizer, held a day of discussions, before Chinese Vice Premier Liu He goes to Washington next week for another round of talks in what could be the end game for negotiations.
“Ambassador Lighthizer and I just concluded productive meetings with China’s Vice Premier Liu He. We will continue our talks in Washington, D.C. next week,” Mnuchin wrote on his Twitter account.
Bank of England data showed that lenders approved 62,341 mortgages, down from 65,340 in February and less than forecasts (64,850).
In cash terms, consumer credit increased by a net 549 million pounds in March, the smallest rise since November 2013 and following a 1.229 billion pound increase in February.
Annual growth in consumer credit slowed to 6.4 percent in March from 6.5 percent, marking the weakest growth since October 2014, the BoE said.
The BoE data showed net mortgage lending, which tends to lag behind approvals, rose to 4.120 billion pounds in March, up from 3.314 billion pounds in February.
Low bank profitability remains a concern
Euro banking consolidation remains necessary
The structurally low profitability of the euro area banking sector remains a concern for financial stability and for monetary policy.
Sustained economic expansion over the past six years and greater banking sector resilience have supported financial stability within the euro area.
Recent softening of growth prospects heightens risks.
The financial stability environment has become more challenging than it was a year ago.
The risks that have been with us for some time now – a possible disorderly increase in risk premia, debt sustainability concerns, low bank profitability and imbalances in the non-bank financial sector – are still present, but they are no longer being mitigated by an improving macroeconomic outlook.
According to the report from IHS Markit, April saw the recent growth fillip at UK manufacturers show signs of petering out, as rates of expansion in output and new orders slowed and new export business decreased at the second-fastest pace in four-and-a-half years. Brexit stock-building continued, albeit to a lesser extent than in the prior survey month.
The headline seasonally adjusted PMI fell to 53.1 in April, down from March's 13-month high of 55.1. Alongside weaker growth in production, new orders and stocks of purchases, the lower PMI level also reflected job losses in the sector.
The main theme in UK manufacturing in recent months has been accelerated stockpiling in preparation for Brexit, culminating with the survey-record increases in both inventories of inputs and finished products in March. This process largely continued into April, with further substantial expansions to holdings signalled. Output growth slowed from March's ten-month high in April. The upturn in new work received also weakened, as domestic market conditions remained subdued and new export business contracted. Manufacturing employment declined for the third time in the past four months during April. Business optimism improved to a seven-month high in April, with over 50% of companies forecasting that output would increase over the coming year.
The Morgan Stanley analysts expect the US Federal Open Market Committee (FOMC) to make no changes to its interest rates, but expect another 5bps IOER cut.
“We expect the FOMC to leave its target range unchanged at 2.25%- 2.50%. With increased volatility in the effective federal funds rate and a press conference following this meeting, our rates strategists look for the Fed to deliver another 5bp IOER cut. The statement gets only small adjustments to the current conditions paragraph describing the rebound in consumer spending and lower core inflation. The press conference affords Chair Powell the opportunity to respond to concerns about softer readings on inflation and offer his take on the underlying strength of the economy, as well as the Fed's current view on financial stability. He could also provide further details on the Committee's discussion of the longer-run composition of its balance sheet.”
The ECB’s policy arsenal has not been depleted and fiscal policy could help stimulate investment, said the ECB incoming Executive Board member Philip Lane.
Investors fear the ECB’s window to potentially raise interest rates has closed, meaning it has little in its toolkit to face the next recession.
But Lane, Ireland's central bank governor, said the bank still had options. "The idea that the ECB lacks potency is very far from where we are," he told.
Lane added that fiscal policy could also help reduce policy uncertainty, and encourage the private sector to resume investing.
NAB Research discusses USD/JPY tactical outlook and flags a scope for upside after the end of the Golden Week holidays in Japan.
"We noted that Japanese retail FX traders were running extended net long TRY/JPY (and ZAR/JPY) positions into the start of Golden Week - a 6-day holiday period during which the TFE, Gaitame.com and other margin trading exchanges will remain open. This is seen to entail some risk of a repeat of the January 3rd JPY-related ‘flash crashes’ in the event we see violent moves in TRY (or ZAR) this week. But maybe more pertinent is that retail investors are running record short USD/JPY positions on the TFE - perhaps in part as a defensive strategy during Golden Week (or indeed to benefit from another flash crash event). As such, if we are spared a stronger JPY this week, there must be a risk that position unwinds by retail investors support a stronger USD/JPY next week and beyond, at a time when the stronger USD environment in any event suggests that the risks to the prevailing ¥110.50 to ¥112.85 range lies to the upside," NAB adds,
British shop price inflation cooled in early April for the first time in six months as retailers ramped up discounts at the start of the month, an industry survey showed.
The British Retail Consortium (BRC) and market research group Nielsen said shop prices were 0.4 percent higher than a year ago in April, compared with 0.9 percent in March.
"There were more than double the number of product lines on discount this month compared to the previous, as retailers hope to recover ground after March's disappointing sales figures," BRC chief executive Helen Dickinson said.
Clothing and footwear saw the most widespread discounts, followed by home improvement goods and fresh food.
China will further open up its banking and insurance sectors, the country's top banking and insurance regulator said in comments.
Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, said it plans to soon issue 12 new measures. That includes cancelling a requirement for foreign banks to have $10 billion in assets before being allowed to set up a legal entity in China and removing approval procedures for foreign banks to conduct yuan business, Guo said.
China also plans to remove a requirement for foreign banks to have $20 billion in assets before being able to set up a branch, he added.
He said these changes would take place in the near term, but did not give an exact timeframe.
Analysts at TD Securities point out that for the UK economy, April's Manufacturing PMI is released, and they expect that some of the robust activity that led up to the original 29 March Brexit deadline will unwind.
“We look for a decline in the index to 53.5 (mkt: 53.1), leaving it still higher than its Jan/Feb levels. Uncertainty around where the index lands post-29 March remains heightened.”
Danske Bank analysts suggest that today's main event is the FOMC meeting tonight; however, the Fed has stated that it is on hold, so they are expecting it to keep the target range unchanged at 2.25-2.50%.
“Moreover, we get the ISM manufacturing in the US and UK. We still expect US manufacturing to have peaked and to move slightly lower before stabilising (still above 50). Based on a weighted average of the regional PMIs, we expect numbers to come in at 55.0 (currently 55.3).”
According to the report from Nationwide Building Society, annual house price growth remained subdued at 0.9% in April. Economists had expected a 0.7% increase. The data also showed that prices rose 0.4% month-on-month, after taking account of seasonal factors. Economists had expected a 0.2% increase.
Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said: “UK house price growth remained subdued in April, with prices just 0.9% higher than the same month last year. Indicators of housing market activity, such as the number of property transactions and the number of mortgages approved for house purchase, have remained broadly stable in recent months, even though survey data suggests that sentiment has softened. Measures of consumer confidence weakened around the turn of the year and surveyors report that new buyer enquiries have remained subdued. While the number of properties coming onto the market has also slowed, this doesn’t appear to have been enough to prevent a modest shift in the balance of supply and demand in favour of buyers in recent months. April marks the fifth month in a row in which annual house price growth has been below 1%“.
EUR/USD
Resistance levels (open interest**, contracts)
$1.1301 (1495)
$1.1281 (994)
$1.1270 (206)
Price at time of writing this review: $1.1217
Support levels (open interest**, contracts):
$1.1191 (5309)
$1.1169 (1855)
$1.1146 (3304)
Comments:
- Overall open interest on the CALL options and PUT options with the expiration date May, 3 is 89477 contracts (according to data from April, 30) with the maximum number of contracts with strike price $1,1500 (5811);
GBP/USD
Resistance levels (open interest**, contracts)
$1.3163 (1579)
$1.3128 (1751)
$1.3085 (1072)
Price at time of writing this review: $1.3040
Support levels (open interest**, contracts):
$1.2984 (1871)
$1.2942 (1579)
$1.2896 (2068)
Comments:
- Overall open interest on the CALL options with the expiration date May, 3 is 25589 contracts, with the maximum number of contracts with strike price $1,3500 (2424);
- Overall open interest on the PUT options with the expiration date May, 3 is 23718 contracts, with the maximum number of contracts with strike price $1,2750 (2380);
- The ratio of PUT/CALL was 0.93 versus 0.92 from the previous trading day according to data from April, 30
* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.
** - Open interest takes into account the total number of option contracts that are open at the moment.
Pare | Closed | Change, % |
---|---|---|
AUDUSD | 0.7047 | -0.1 |
EURJPY | 125.004 | 0.08 |
EURUSD | 1.12134 | 0.28 |
GBPJPY | 145.3 | 0.64 |
GBPUSD | 1.30344 | 0.83 |
NZDUSD | 0.66716 | 0.09 |
USDCAD | 1.33913 | -0.45 |
USDCHF | 1.01874 | -0.03 |
USDJPY | 111.435 | -0.18 |
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