Hello
EUROPE: European markets are back from the Easter vacation and a full data
calendar awaits, with the eurozone manufacturing PMI numbers set to dominate.
Also expected Tuesday are the German flash HICP numbers. Other early releases
include France March car registrations and Spain Mar unemployment numbers, both
at 0700GMT. The manufacturing PMI numbers start from 0713GMT with the release of
the Spanish data, followed by Italian numbers at 0743GMT, the French data at
0748GMT and German numbers at 0753GMT. Overall eurzone numbers are set for
release at 0758GMT, with analysts looking for a number of 46.6, unchanged on
previous. Eurozone unemployment numbers are expected at 0900GMT.
SPAIN: The Telegraph is set to downgrade growth forecasts next week, the
Telegraph says, before asking the EU for further time to address its budget
deficit.
UK PRESS: The latest Lloyds Bank barometer of forward looking business sentiment
rose 9 points in March to 41, the Scotsman reports, with the current economic
optimism indec higher by 7 at 20, a three month high.
UK PRESS: The Times says UK ministers are set to give the go ahead to plans for
the m4 toll motorway in South Wales as a stg 1 bn plan to help boost the economy
with capital spending.
UK PRESS: UK "high end" bank Coutts and Co has warned clients on over-exposure
to high-yield bond markets, the Telegraph says, as the bank expresses concern
over another global debt market bubble and a credit squeeze.
EURO-DOLLAR: Closed in NY Friday at $1.2842 after rate had extended recovery
highs to $1.2868 following the release of weaker than expected US ISM data. The
recovery had begun in a holiday thinned European market with Asian sales of
dollar-yen providing the main drive as the dollar came under general pressure.
Rate began the Asian session between $1.2840/50, consolidating the NY move until
another round of strong dollar-yen sales again influenced the rate higher. Rate
pushed up to $1.2876 where it encountered reported sell interest placed above
$1.2875, though the corrective pullback was shallow, touching $1.2864 before it
edged on to $1.2878. Rate trades around $1.2865 into early Europe.
Eurozone PMI
manufacturing data begins with Spain at 0713GMT with others released through to
EZ at 0758GMT. German state CPI's due for release through the day, culminating
in national CPI at 1200GMT. EZ unemployment due for release at 0900GMT. Offers
begin from $1.2880 and said to extend to $1.2910, though some report stops mixed
in above $1.2885. Support remains into $1.2840 with stronger interest noted into
$1.2800. Corporate demand then seen placed from below $1.2800 to $1.2750.
Cyprus
and Italy headlines to be watched for.
EURO-DOLLAR: German name seller reported as rate eases itself back below
$1.2850. Rate touches $1.2848 but meets willing buyers here. Stronger demand
seen into the overnight low at $1.2840.
EURO-DOLLAR: Fundamental levels (orders, options, technicals)
$1.2930/50 Medium offers/Stops
$1.2920 Medium offers
$1.2900/10 Medium offers/Stops
$1.2880/90 Medium offers/$1.2889 200-dma/Stops $1.2885 mixed in
$1.2878 Int.Day high Asia
$1.2849 ***Current mkt rate 0735GMT Tuesday
$1.2840 Int.Day low Asia/Stops
$1.2800 Strong demand on approach
$1.2780/70 Medium demand/Corporate interest noted
$1.2755/50 Strong demand/Stops
$1.2735/25 Medium demand/Stops mixed in below $1.2730
$1.2700 Option barrier/Strong bids ahead
$1.2680 Tech 61.8% $1.2043-1.3711
$1.2662 Tech Nov13 2012 low/$1.2043 July24 2012 low
CABLE: Closed in NY Monday at $1.5230 after rate had seen extended recovery
highs of $1.5242 as it was pulled higher by euro-dollar as it reacted to the
release of weaker than expected US ISM data. Rate continued its corrective
pullback into early Asia, the rate touching a low of $1.5218 before picking up
fresh demand, the buying able to lift the rate through reported resistance
between $1.5240/50 and on to $1.5259 as another round of strong dollar-yen sales
prompted general dollar sales. Rate eased off highs to $1.5235, holding between
$1.5235/40 into Europe. Cable moves were generally influenced by euro-dollar as
euro-sterling was contained by stg0.8437/47.
The BCC quarterly economic survey
released overnight showed modest growth in Q1, reinforcing their assessment that
the recent NS GDP overstated the weakness in the UK economy. However, release
today of UK mfg PMI data at 0828GMT will provide the key domestic data on the
day with most expecting a pessimistic reading. UK borrowing data also due at
0830GMT. Cable offers seen into $1.5280, a break to open a move toward $1.5300.
Support $1.5235/30 ahead of the Asian low of $1.5219 then $1.5205/00 and recent
lows of $1.5187-78.
YEN: Dollar-yen continued Monday's corrective pullback through Asia, the rate
opening the overnight session at Y93.25 before touching an early low of Y93.06.
The initial dip was repulsed back to Y93.31 before fresh selling emerged as the
Nikkei opened in negative territory. Stops through Y93.00 were targeted and
triggered but rate met support at Y92.96 on this initial move. Another round of
selling emerged that triggered stops through Y92.90, then Y92.70 and Y92.60
before rate found a base at Y92.57. Rate recovered to Y92.86 but underlying tone
remains heavy. Next support seen into Y92.50 with more stops below, with traders
suggesting that the Y92.12/10 area of more interest being the 23.6% retrace of
the Sep lows-Mar highs as well as the top of the ascending Ichimoku cloud.
Dollar sales were seen as a continuation of the reacvt to the Monday release of
weaker than expected US ISM data, with comments from Japan PM Abe that it may be
the case that a 2.0% inflation target can't be achieved within two years and
N.Korean leader's comment espousing the virtues of nuclear weaponry (as well as
restarting operations at a closed nuclear plant). Euro-yen eventually broke
below Y119.50 to extend its lows to Y119.20.
JAPAN STOCKS CLOSE: Japan's benchmark stocks are trading lower Tuesday. The
Nikkei 225 was lower by 131.59 points, or 1.08%, at 12003.43. Into the close,
the broader-based TOPIX was lower by 9.11 points at 991.46. Market breadth
indicators saw 57 issue higher, 159 lower and 9 unchanged. Preliminary volume
stood at 2.395 bn shares.
OPTIONS: FX: Option expiries for today's 1000ET cut,
* Euro-dollar; $1.2600, $1.2675, $1.2875
* Dollar-yen; Y92.50, Y94.35, Y94.50
* Euro-Swiss; Chf1.2260
* Aussie; $1.0350, $1.0420
EUROZONE ISSUANCE: Sovereign bond issuance in the eurozone slows down this week
and is only scheduled from France, Germany and Spain -- expected to total
E15.0bln. Germany kicks off supply on Wednesday with re-opening of its 5-year
benchmark 0.50% Feb 2018 Bobl issue for up to E4.0bln. On Thursday, Spain sells
a new 3-year benchmark 3.30% July 2016 Bono and taps its 4.10% July 2018
Obligacion and also 5.50% Apr 2021 Obligacion issues for between
E3.0bln-E4.0bln. Also on Thursday, France conducts its regular OAT auctions,
where the AFT tap its 10-year benchmark 2.25% Oct 2022 OAT and also off-the-run
OAT issues 3.50% Apr 2020 OAT and 3.75% Apr 2021 OAT issues for combined size
of between E6.0bln-E7.0bln. In terms of reinvestment flows, there are no
redemptions due and minor coupon payments from Italy E0.22bln and Spain E0.11bln
-- to leave net cash flow negative to the tune of E14.7bln versus -E1.2bln last
week. For full details of forthcoming issues, please see eurozone bond auction
calendar & MNI Eurozone Net Cash Flow Matrix.
EUROZONE T-BILL ISSUANCE: Eurozone Sovereign T-bill issuance for this week are
planned from Netherlands, France, and Belgium, with supply estimated to be
around E14.0bln. First up on Tuesday, Dutch State Treasury Agency (DSTA), taps
its 3-month DTC, maturing June 28 for target size of between E1.0bln-E2.0bln and
9-month DTC, maturing Dec 30 also for target size of between E1.0bln-E2.0bln.
Belgium taps its 3-month BT, maturing July 18 and also 6-month BT, maturing Sep
19 for target size of between E2.8bln-E3.3bln. In the afternoon France plan to
issue new 3-month Jul 4 BTF for between E3.6-E4.0bln, re-open 6-month Sep 5 BTF
for between E0.6-E1.0bln, re-open 9-month Dec 12 BTF for between E0.6-E1.0bln
and issue new 12-month Apr 3, 2014 BTF for between E1.6-E2.0bln. In terms of
T-bill redemptions for next week, we only have France for E8.182bln giving
potential negative net cash flow of E5.8bln.
DUTCH T-BILL AUCTION PREVIEW: The Dutch State Treasury Agency (DSTA), re-opens
3-month Jun 28, DTC for between E1.0-E2.0bln, and re-open 9-month Dec 30 DTC for
between E1.0-E2.0bln on Tuesday. This will be the second of two taps of Jun 28
DTC and with E5.57bln currently outstanding demand could be on the low side.
Current 3-month DTC mid-yield is seen trading below zero percent at between
-0.01% and -0.02% and was last sold on Mar 18, were E1.2bln was allotted at an
average yield -0.025%. As for the tap of 9-month Dec 30 DTC, this is not
expected to be tapped again until June and could see high demand on save haven
buying. Mid-yield on the Dec 30 DTC is currently seen trading around -0.005% and
-0.01% and was last issued back on Jan 7, where E1.07bln was allotted at average
yield of 0.003%. With no Dutch T-bill redemption this week, cash flow could be
negative to the tune of E4.0bln.
Results due to be announced around 1040GMT.
EUROZONE: Timeline of key events in the eurozone for next few weeks:
- Apr 2 European manufacturing Mar PMI
- Apr 2 Eurozone Feb unemployment data
- Apr 3 Eurozone flash Mar HICP data
- Apr 3 ECB settles E3.845bln in 1st LTRO; E3.16bln in 2nd LTRO
- Apr 4 ECB Governing Council meeting, Draghi press conference
- Apr 4 Eurogroup chair Dijsselbloem speaks in Dutch parl on eurogroup meet
- Apr 4 Spain sells new 3-yr 2016 Bono and taps 2018-/2021 Oblig bonds
- Apr 5 ECB publishes its 3-year LTRO repayment amount for following week
- Apr 7 Italian March Target 2 data and central bank lending figures
- Apr 8 ESM Regling speaks at FDEF Conference on "Is the Euro crisis over?"
- Apr 10 Italy T-bill auction
- Apr 11 Eurogroup meeting in Dublin
- Apr 11 Spanish March Target 2 data and central bank lending figures
- Apr 12/13 Informal ECOFIN meeting in Dublin
- Apr 12 Italy T-bill redemption for E8.8bln