EUROPE: Friday is a quieter day, with only limited data on both sides of the
Atlantic although US growth numbers will dominate. The calendar gets underway at
06500GMT, with the release of the German March import prices. At 0645GMT, the
French April consumer confidence survey will cross the wires. At 0715GMT, ECB
Executive Board member Joerg Asmussen delivers a speech, in Frankfurt. At
0800GMT, the ECB will release the March M3 data, while SNB Chairman Thomas
Jordan delivers a speech at a shareholders meeting, in Bern. At 1300GMT, German
Chancellor Angela Merkel speaks at a small-business conference, in Berlin.
Sovereign issuance is limited to an Italian T-bill sale. Italy plan to issue
E8.5 bn in a new 6-month Oct 31, 2013 BOT.
ITALY: The FT says talks will continue in Italy Friday, after initial
discussions between PM-designate Letta and members of the centre-right failed to
reach any agreements.
GREECE: Investment fund Emma Delta has won a time extension until May 1 to
submit a more attractive offer for the 33% government stake in gaming monopoly
OPAP, eKathimerini says.
UK PRESS: The FT says members of the UK banking commission are putting forward
plans for legislation that will hold bankers who cause "catastrophic losses"
personally liable.
UK PRESS: UK lawmakers say the "Big Four" accountants should not be allowed to
advise the UK government on tax law, as it could lead to conflicts of interest,
the Times reports.
US:The day's main release is the preliminary US first quarter GDP data, due at
1230GMT.
First quarter GDP is expected to rise 3.1% in the advance estimate from the very
modest 0.4% rise in the previous quarter, which was impact by a variety of
negative factors. Analysts see PCE, inventories, and residential fixed
investment adding to GDP and non-residential fixed investment, a wider trade gap
and further declines in government spending as modest negative factors. The
chain price index is expected to be up 1.3% for the first quarter, compared with
the 1.0% rise in the fourth quarter.
At 1355GMT, with the release of the April
University of Michigan Consumer Sentiment numbers.
The Michigan Sentiment index is expected to be revised up to a reading of 73.0
in April from the 72.3 preliminary reading. There were large upward revisions to
Michigan from the preliminary to final estimates in each of the last three
months, with a particularly large adjustment in March. There were accompanying
revisions to both the current conditions and expectations readings in those
months. The 1-year inflation expectations reading was 3.0% in the preliminary
April estimate, slightly below the final estimates in recent months.
EURO SUMMARY: Closed in NY Thursday at $1.3011, after rate had been pressured
off intraday highs of $1.3094 on reported macro flow, with Goldman Sachs joining
the call for a 25bp rate cut at next week's ECB decision adding further weight,
which pressed it to lows of $1.2988 ($1.2987 76.4% $1.2954-1.3094) before
recovering back above $1.3000 into the close. Slow start to trade in Asia,
euro-dollar making a brief show under $1.3000 at $1.2998 before recovering, the
move up aided by firmer gold with another low China yuan fix prompting another
round of react dollar sales which took rate on to $1.3048. Pullbacks were
contained by demand at $1.3030, while further upside currently seen capped ahead
of $1.3050. Offers seen placed to $1.3055 ($1.3054 61.8% $1.3094-1.2988), a
break to open a move on toward $1.3070 ($1.3069 76.4%). More stops seen above
this level, which if triggered to expose stronger resistance between $1.3090/00.
Support seen into $1.3000, more at $1.2990/80 with a break to expose stops
through $1.2980-70. Next bids seen at $1.2960/50. EZ M3 data due at 0800GMT,
though US Q1 GDP at 1230GMT the main focus. Some dollar longs seen pared
overnight ahead of this event.
STERLING SUMMARY: Cable closed in NY Thursday at $1.5437 after rate had seen
extended highs of $1.5480 following the release of stronger than forecast Q1 GDP
data, which in turn is suggested to have relieved calls for further QE. Rate had
seen pullback lows in NY of $1.5428 ahead of the close. Early trade into Asia
was contained within a tight $1.5430/40 range before it was taken up to $1.5472
on the back of euro-dollar's recovery. Pullback off this high was buoyed at
$1.5450, with rate holding backa bove $1.5460 into Europe. Euro-sterling was
pressed to react lows of stg0.8410 (matching Apr1 lows), from pre GDP data highs
of stg0.8533, with the market seen mainly positioned long into the numbers. The
flushing out of these positions provided a good part of sterling's strength
Thursday with market now seen moving away from QE extension and focusing on
suggested chance for an ECB rate cut next week. The cross consolidated
Thursday's move between stg0.8422/37 in Asia, trading around stg0.8430 into
Europe. A light data calendar for the UK today with more attention on outside
moves. Comment ahead of next week's ECB meeting will likely influence, but US Q1
GDP at 1230GMT seen as key focus on the day.
YEN SUMMARY: Dollar-yen closed in NY at Y99.30 after rate had been able to
recover off lows at Y98.985 to Y99.50 before slipping back into the close. Early
demand into Asia took rate up to Y99.42 but move quickly saw momentum fade with
the reversal lower seen driven by macro profit take sales. The move lower gained
momentum as weaker longs were squeezed, the break back under Y99.00 taking the
rate to early lows of Y98.58 before importer demand allowed it to bounce back
above the figure. Rate settled back between Y99.00/10 into the BOJ policy
announcement. No change confirmed with attention now seen on the inflation
statement at 0600GMT, followed by the Kuroda news conference after 0715GMT.
Dollar-yen came under another round of sell pressure, some linked to dollar
positioning ahead of this afternoon's US Q1 GDP, with the recent failure to take
out the Y100.00 prompting some to pare back dollar longs. Large stops below
Y98.50 were targeted and triggered to take rate on to extended lows of Y98.22,
though traders reported Asian sovereign demand interest which cushioned the move
and has allowed rate to recover above Y98.50 at writing. If US GDP disappoints
will leave dollar-yen longs exposed, with levels at Y97.50 and Y95.50 mentioned.
DOLLAR-YEN: One Asian trader notes that there has been a strong sell-off in
short-dated gamma so a super heavy liquidation in spot they believe is unlikely.
They add that if can move though Y98.10/00 bids, the initial target on the
downside seen at Y97.50, noting stops away through Y97.70/60. Rate currently
trades around Y98.57 after recovering off a low at Y98.22, with correction seen
helped by Asian sovereign buys off the base.
At 0630GMT, Bank of Japan Governor Haruhiko Kuroda holds a press conference in
the wake of the BOJ's latest policy decision.
BOJ: From the Bank of Japan's semi-annual Outlook Report:
-- "The bank will continue with quantitative and qualitative monetary easing,
aiming to achieve the price stability target of 2%, as long as it is necessary
for maintaining that target in a stable manner.
-- "It will examine both upside and downside risks to economic activity and
prices, and make adjustments as appropriate.
-- "Such conduct of monetary policy will support the positive movements that
have started to appear in economic activity and financial markets, contribute to
a further pick-up in inflation expectations that appear to have risen, and lead
Japan's economy to overcome deflation that has lasted for nearly 15 years."
-- "Examining financial imbalances from a longer-term perspective, there is no
sign at this point of excessively bullish expectations in asset markets or in
the activities of financial institutions. Nevertheless, due attention needs to
be paid to the fact that financial institutions' holdings of government bonds
remain at an elevated level while the amount outstanding of government debt has
shown a cumulative increase."
-- "Japan's economy is judged likely to achieve around 2% inflation and return
to a sustainable growth path toward the latter half of the projection period
(through the end of fiscal 2015).
-- "With regard to economic activity, upside and downside risks can be assessed
as being balanced, although uncertainty remains high, including that regarding
developments in overseas economies.
-- "Risks on the price front also can be assessed as being largely balanced,
although considerable uncertainty surrounds developments in medium- to long-term
inflation expectations."
JAPAN STOCKS CLOSE: Japan's benchmark stocks are lower Friday, following the BOJ
meeting. The Nikkei 225 was lower by 41.95 points, or 0.30%, at 13884.13. Into
the close, the broader-based TOPIX was lower by 11.68 points at 1161.10. Market
breadth indicators saw 41 issue higher, 182 lower and 2 unchanged. Preliminary
volume stood at 2.195 bn shares.
OPTIONS: FX: Option expiries for today's 1000ET cut,
* Euro-dollar; $1.2800, $1.2880, $1.3000, $1.3100, $1.3130, $1.3135, $1.3145
* Dollar-yen; Y97.50, Y98.00, Y99.00, Y99.10, Y99.25, Y99.75, Y100.00 - All
large interest
* Cable; $1.5300
* Euro-sterling; stg0.8480, stg0.8500, stg0.8545
* Euro-Swiss; Chf1.2210, Chf1.2230
* Aussie; $1.0200, $1.0235, $1.0250, $1.0330, $1.0400, $1.0515
* Kiwi-yen; Y82.50
