Hello
FRANCE: The Telegraph says French President Hollande is facing a growing
"austerity" revolt from his own ministers, as he looks to push through a fresh
round of tax increases and spending cuts in order to meet EU deficit targets.
ITALY: Italian lawmakers begin the process of selecting a new President on
Thursday, the FT says, noting the fractious Parliament will struggle to reach
consensus on a compromise candidate.
GREECE: Greek officials have reached an agreement with the Troika to offer a
fresh agreement to citizens with expired debts to the tax authorities,
eKathimerini reports.
IRELAND: The FT says Ireland's trade unions have rejected a pack of pay cuts and
working practise changes for the public sector.
UK: The UK calendar gets underway from 0830GMT, with the release of the UK
employment data and the Bank of England minutes from the April meeting. Minutes
for the MPC's April meeting will reveal whether more members are considering
backing another dollop of QE and give some sense as to whether a majority for
another stg25bn in May is on the cards. The strength of the UK jobs market has
been a recurring theme as well as mystery, with the productivity puzzle - weak
growth and strong employment - continuing to baffle policy makers as well as
stymie plans for more stimulus.
CANADA:
The Bank of Canada's latest policy decision is expected at 1500GMT.
Although no change is seen in rates, many analysts, including economists at UBS,
expect what is left of the BOC's tightening bias to be "swept away" as data
weakens.
FED: WSJ Fedwatcher Jon Hilsenrath says the latest inflation data could give the
Fed "new reasons" to keep its ultra-easy monetary policies in place.
EURO SUMMARY: Euro-dollar broke above key tech resistance from the 55-day ma and
extended sharp gains on fixing demand. The pair took out stops through $1.3155
and $1.3170 to print highs of $1.3202, but with lack of follow through pared
light gains to close in NY at $1.3180. Euro-dollar volumes were light in Asia
overnight with trade tied to a narrow $1.3171-91 range. Despite strong demand in
the crosses, predominantly in euro-yen, the rate only managed light gains as
traders noted of strong offers into $1.3200 from macro/corporate names. Rate
pared gains throughout the Asian afternoon to $1.3171, before demand in the dip
cushioned lifting to $1.3180 ahead of Europe. On the topside stop buy orders
noted on a break of $1.3205, with more through $1.3220, tech resistance behind
at $1.3227 (50% of $1.3711-1.2743. On the downside support at $1.3157/50
(100-day ma, former 38.2% of $1.4940-1.2043, stops on a break of $1.3140 ahead
of bids into $1.3125/20 ($1.3121/20 - 55 & 5-day ma's).
EURO-DOLLAR: Fundamental levels (orders, options, technicals)
$1.3280 Medium offers
$1.3245/50 Medium offers ($1.3248 - 100-week ma)
$1.3227 50% of $1.3711-1.2743
$1.3220 Strong offers
$1.3205 Stop buy orders
$1.3195/200 Strong offers
$1.3191 Asian high
$1.3170 ***Current mkt rate 0625GMT Wednesday
$1.3157/50 100-day ma, Former 38.2% of $1.4940-1.2043
$1.3140 Stops
$1.3125/20 Medium demand ($1.3121 - 55 & 5-day ma's)
$1.3112 38.2% of $1.3711-1.2743
$1.3100 Medium demand
$1.3080/75 Medium demand
$1.3063 Support line from Apr 4 low
STERLING SUMMARY: Risk appetite continued in the US afternoon as cable bounced
off early European lows of $1.5273. The pair broke its daily range to the upside
and with US stocks extending their bounce this provided added momentum to print
highs of $1.5379, before profit take sales eased to $1.5365 around the NY close.
Euro-sterling took out stops on the way to stg0.8602, later closing around
stg0.8575. Cable like euro-dollar remained on the sidelines amid light Asian
trade, tied to a narrow $1.5349-73 range. Rate initially slipped to $1.5353
before finding support and bouncing to $1.5370. Second wave sales added further
weight taking the pair through $1.5350 but with lack of follow through recovered
to $1.5360 ahead of Europe. Euro-sterling had another look on the topside
printing highs of stg0.8585 in early Asia before the rate stalled, later easing
to stg0.8580.
Focus this morning on the BOE minutes with the voting split seen
key, UK employment data also released at 0830GMT.
YEN SUMMARY: Dollar-yen extended the corrective pullback off earlier highs of
Y98.15 and slipped through the US afternoon to Y97.33. Support in the dip
provided a cushion allowing a bounce to Y97.50 at the NY close. The cross was
dragged higher by the positive risk tone to highs of Y129.03, flushing stops on
the move. The rate later pared some gains to close in NY at Y128.50. Dollar-yen
opened on a bid tone in early Asia with early demand from Japanese importers
through the fix, real money extended gains taking the rate through Y98.00.
Profit take sales stalled, before momentum in the cross dragged the dollar to
highs of Y98.43, consolidating gains ahead of Europe. Stops noted on a break of
Y98.50, ahead of offers at Y98.80. Euro-yen seen the main driver overnight,
opening around Y128.55 and lifting through the fix on CTA demand, Tokyo names
extended gains taking the rate above Y129.10. Risk appetite continued and with
momentum building the cross flushed stops through Y129.60/70, printing highs of
Y129.74, later easing into Europe around Y129.50.
JAPAN STOCKS CLOSE: Japan's benchmark stocks are trading higher Wednesday. The
Nikkei 225 was higher by 161.45 points, or 1.22%, at 13,382.89. Into the close,
the broader-based TOPIX was higher by 14.94 points at 1134.14. Market breadth
indicators saw 182 issue higher, 32 lower and 11 unchanged. Preliminary volume
stood at 2.482 bn shares.
GOLD: Spot gold trimming earlier losses, last up $4.70 at $1,373.59 after Cyprus
Finance Minister Haris Georgiades cited saying the government plans to sell part
of its gold reserves within the next months, a decision that needs to be
approved by the country's central bank. "The exact details of it will be
formulated in due course primarily by the board of the central bank," Georgiades
was cited saying on Bloomberg TV.
OPTIONS: FX: Option expiries for today's 1000ET cut,
* Euro-dollar; $1.3035, $1.3100, $1.3125
* Dollar-yen; Y97.50, Y98.00, Y99.50, Y100.30
* Aussie; $1.0400, $1.0500, $1.0575
* Cable; $1.5300, $1.5310, $1.5385
* Dollar-cad; C$1.0125, C$1.0200
EUROZONE T-BILL ISSUANCE: Slovenia come to the Eurozone sovereign T-bill market
Wednesday with plans to issue new 18-month Oct 16, 2014 T-bill for E500mln. To
recap so far this week, on Monday, Netherlands sold E1.46bln 3-month DTC at
average yield -0.027%, and E1.37bln 6-month DTC at average yield -0.011%. France
sold E3.998bln 3-month BTF at average yield 0.011%, E1.997bln 6-month BTF at
average yield 0.027% & E1.697bln 12-month BTF at average yield 0.060%. On
Tuesday Spain sold E1.191bln 6-month Letra at average yield 0.53% and sold
E3.878bln 12-month Letra at average yield 1.235%. Greece sold E1.625bln 13-week
T-bill at average yield 4.05%. Belgium sold E1.406bln 3-month TC at average
yield 0.015% and E1.602bln 12-month TC at average yield 0.08%. Still to come, on
Thursday Ireland plan to issue E500mln of a new 3-month Jul 22, 2013 T-bill.
EUROZONE ISSUANCE: Germany comes to the bond market on Wednesday with re-opening
of its 10-year benchmark 1.50% Feb 2023 Bund issue for up to E4.0bln. Overall,
sovereign bond issuance in the eurozone this week is now estimate to come in
around E35.59bln after Italy has placed E17.056bln in a new BTP Italia bond - a
four year government bond indexed to domestic inflation -- and compares to
E23.7bln sold last week. As a recap, Slovakia tapped 4.625% 2017 SLOVGB219 and
the 3.00% 2023 SLOVGB225 for E157.3mln and E376mln, respectively. Looking ahead,
France taps the 2-year benchmark 0.25% Nov 2015 OAT and 5-year benchmark 1.00%
May 2018 OAT on Thursday for between E7.0bln-E8.0bln. In addition, France taps
0.45% July 2016 BTANi, 0.10% July 2021 OATi and 1.85% July 2027 OATei issues for
between E1.0bln-E1.5bln. Also on Thursday, Spain taps 3.30% 2016 Bono, 4.50%
2018 Bono, 5.40% 2023 Obligacion bonds for up to E4.5bln. In terms of
reinvestment flows, redemption from Italy E16.7bln, Germany E11.0bln, Ireland
E5.62bln and Greece E2.72bln and coupon payment also from Ireland E1.26bln,
Italy E1.14bln, Germany for E0.89bln, Finland E0.64bln, Portugal E0.58bln,
Netherlands E0.11bln, Greece E0.01bln.
SLOVENIA T-BILL AUCTION PREVIEW: Slovenia's Ministry of Finance will issue new
18-month Oct 16, 2014 T-bill for approximately E500mln on Wednesday. The large
amount to be issued is expected to cover the the buy-back of the Jun 6 T-bill,
and will come as a test for the country following disappointing 6-/12-month
T-bill auction on Apr 9. Accepted yield on the 12-month Apr 10, 2014 T-bill
jumped to 2.99% at the auction, up from 2.02% seen at the Feb 12, 2013 sale.
This will be the first ever 18-month T-bill for Slovenia and domestic banks are
expected to be the biggest buyers once again.
Bids have to be submitted by
1000GMT with results due to be announced at around 1100GMT.
GERMAN AUCTION PREVIEW: The Deutsche Finanzagentur re-opens its 10-year
benchmark 1.50% Feb 2023 Bund issue on Wednesday for up to E4.0bln. The issue
trades at 1.274% mid-yield and is well above recent rich levels of 1.20%. The
record low coupon and fact that the issue isn't the cheapest-to-deliver (CTD)
into June future is seen weighing on sentiment. That said, the strong
reinvestment flows in the eurozone this week, which includes E11.0bln
redemptions and E890mln worth of coupon payments just from Germany is seen
underpinning demand. Historic results show demand has been mixed. The last
auction on Mar 20, where Germany alloted E3.358bln at average yield 1.36%
(1.66%) and was then covered bid-to-cover times 1.6 (1.2), with Buba retaining
16.1% of the sale. Prior to this, the Feb 20 auction was barely covered, with
E4.04bln alloted at an average yield 1.66%, bid-to-cover 1.2 times and the Buba
retaining 19.2% of the sale. The average cover ratio for the past 5 auctions is
1.46 times. This is the final tap of this issue before a new May 2023 is sold on
May 22 for E5.0bln.
Auction results are due after bidding close at 1030GMT.
EUROZONE: Timeline of key events in the eurozone for next few weeks:
- Apr 17 German Chancellor Merkel, Estonian PM Ansip joint press conference
- Apr 18/19 G20 FinMin & Central Bank Governors' meeting
- Apr 18 First round of Italian presidential election
- Apr 18 EU Rehn, ESM Regling, EU Dijsselbloem in Washington
- Apr 18 Spain sells 2016-/2018-/2023 Bonds for between E3.5bln-E4.5bln
- Apr 18 Ireland sells 3-month T-bill for E500mln
- Apr 18 Ireland bond redemption for E5.62bln
- Apr 18 Germany's leading economic research institute joint economic forecasts
- Apr 19/21 IMF/World Bank Spring meetings
- Apr 19 Greek zero coupon bond redemption E2.716bln
- Apr 19 Portugal T-bill redemption for E1.145bln
- Apr 19 Spain T-bill redemption for E7.656bln
- Apr 22 EMU 1st release 2012 general Govt deficit and debt
- Apr 22 Ireland T-bill redemption for E500mln
- Apr 23 Spain 3-/9-month T-bill auctions