Hello
EUROPE: There is a full calendar ahead for Thursday, as G7 central bankers and
finance minister begin to gather in London for the weekend summit. But without
doubt, the main feature ahead of the US open will be the Bank of England policy
decision, expected at 1100GMT. The calendar gets underway from 0700GMT, with the
release of the Spanish March industrial output numbers. That will be followed at
0800GMT by the ECB Monthly Bulletin, which is largely expected to follow the
statement read out by President Draghi at last week's post rate-cut press brief.
At 1430GMT Canadian Finance Minister Jim Flaherty, German Finance
Minister Wolfgang Shauble, French Finance Minister Pierre Moscovici and IMF
Managing Director Christine Lagarde appear on a panel at the GIC conference in
London.
UK: There is UK data set for release at 0830GMT, when the March Industrial
Production numbers will cross the wires.
At 1100GMT, the May BOE Monetary Policy Decision is due. With three of the nine
Monetary Policy Committee members set to vote again for a stg 25 billion
extension of quantitative easing and Martin Weale, who has previously opposed an
increase, saying diminished inflation pressures provide more room for manoeuvre,
this meeting could have been a close call.
However, every analyst in a MNI survey predicted unchanged policy in May. With
recent activity indicators having shown growth coming in better than expected
and financial and money markets unfrozen, the majority on the MPC are expected
to sit tight. The spotlight now is firmly on the August meeting - when new BOE
Governor Mark Carney will preside over a review of forward policy guidance and
may up the pressure for fresh stimulus.
At 1400GMT, the April NIESR Monthly GDP Forecast numbers
are set for release.
UK PRESS: The Telegraph says the EU is set to impose levies on Chinese solar
panels, which is set to trigger a trade war with Beijing.
UK PRESS: The Times says more senior Toty party "Grandees" have taken aim at PM
Cameron's Europe strategy. London Mayor Boris Johnson said it is becoming "much
less clear" that the UK would suffer if there was a break of ties with Brussels.
Former Conservative Cabinet Minister Michael Portillo was scathing of the PMs
referendum tactics and said he would also vote to leave the UK today.
UK PRESS: Writing in the FT Thursday, former UK Chancellor Alistair Darling said
the sale of government stakes in RBS and Lloyds should be ditated by economics,
not politics. Darling, the Chancellor responsible for the part-nationalisations,
says s "Sid-style" sale may make for good politics, but would not currently be
in the best interests of the country.
US/CANADA: The US calendar gets underway at the same time, although the data expected is
largely second tier. Early releases include the April US stores numbers.
At 1200GMT, Richmond Federal Reserve Bank President Jeffrey Lacker is scheduled
to give a speech on ending too big to fail in New York.
At 1230GMT, the US Jobless Claims numbers from the May 4 week will hit the
screens.
Initial jobless claims are expected to rise 11,000 to 335,000 in the May 4 week
after falling 18,000 in the previous week, which resulted in a 16,000 drop in
the four-week moving average. Because the April 6 week's 348,000 level will roll
off the four-week average calculation as the current week's is added, the
average should decline for the third straight week if the median MNI forecast is
realized, all else being equal.
Also at 1230GMT, in Canada, the March New housing price index numbers are
expected. At 1400GMT, the March Wholesale Inventories numbers will cross the
wires.
The EIA Natural Gas Storage data for the May 04 week will
be released at 1430GMT.
More FedSpeak is due at 1715GMT, when Philadelphia Federal Reserve Bank
President Charles Plosser is scheduled to give a speech on monetary policy, to
the Simon NYC conference in New York.
Late data, expected at 2030GMT, sees the release of the April 29 week US money
supply numbers.
EURO SUMMARY: Euro-dollar closed in NY Wednesday at $1.3155 after rate had been
driven to recovery highs of $1.3194, the release of stronger than forecast
Germany IP providing positive outlook for Q1 GDP was seen as the catalyst,
before drifting off into the close. Trade through Asia was contained within a
relatively tight range of $1.3152/68, opening Europe around $1.3160. Offers said
to remain in place from above $1.3190, with interest said to extend on to
$1.3220. Asian traders mention talk that the $1.3200 level holds the strike of a
decent sized expiry for today's NY cut. A break of $1.3220 exposes stronger
offers at $1.3250. Demand noted into $1.3150, stronger at $1.3125/20 and
$1.3100. Asian traders also note that Asian central banks have been active
dollar intervention buyers overnight, with recycling of those purchased dollars
likely to provide euro-dollar demand into dips. Spain bond auction at 0830GMT
the main event interest this morning. US weekly jobless claims provides early US
interest.
EURO-DOLLAR: Fundamental levels (orders, options, technicals)
$1.3243 Wednesday May1 high/Offers to $1.3250 (barrier?)
$1.3228 Ichimoku daily cloud top
$1.3218 Thursday May2 high/Offers to $1.3220
$1.3200 Medium offers/Large option expiry
$1.3195 Wednesday May8 high
$1.3190 Medium offers
$1.3168 Int.Day high Asia
$1.3161 ***Current mkt rate 0640GMT Thursday
$1.3152 Int.Day low Asia
$1.3150 Medium demand
$1.3125/20 Medium demand
$1.3100 Medium demand
$1.3070/50 Strong demand
$1.3040-10 Medium demand/$1.3037-33 Area of recent lows post ECB and NFP
$1.3018 Tech 55-dma
STERLING SUMMARY: Cable closed in NY Wednesday at $1.5535, the rate having
pulled back from a recovery high of $1.5593, seen as rate tracked euro-dollar's
rise, and as euro-sterling was rejected ahead of its resistance area between
stg0.8490/95 (high stg0.8489), despite a major US investment house putting out a
buy recommendation in this cross, with an entry at that high area. Trade in Asia
was subdued, the rate holding within a tight range of $1.5534/46, while the
cross was held within stg0.8467/74. UK IP and manufacturing production due up at
0830GMT and will provide the early interest, with attention then turning toward
the BOE MPC rate announcement at 1100GMT, though no change in rates/QE expected,
the market now looking toward Carney's Governorship (July 1). Cable offers seen
back in place from $1.5590 through to $1.5610, the area covering recent highs as
well as the key $1.5607 level, high on May1 as well as being the 50% retracement
of the 2013 $1.6381-1.4832 range. A break of $1.5610 to open a move on toward
$1.5630 ahead of $1.5650. Support seen back at $1.5535/30 ahead of $1.5520,
$1.5500 and stronger interest into $1.5480 (76.4% $1.5447-1.5593). Cross demand
seen at stg0.8460/50, offers stg0.8490/00.
YEN SUMMARY: Dollar-yen closed in NY Wednesday around Y99.00 after rate had
recovered off pressured lows of Y98.58. Rate reversed lower again into Asia as
Japanese exporter sales interest emerged again ahead of the Tokyo fix to press
the rate lower through the overnight session to an eventual low of Y98.69,
opening Europe between Y98.70/75. Asian traders note demand in place between
Y98.60/50, though one also reports that stops are seen building below Y98.60.
CTA stops have been noted on a break of Y98.45, though same accounts also have
interest to buy on an upside break above Y99.20. Euro-yen tracked dollar-yen
slippage through the Asian session, easing from an early high of Y130.25 to
Y129.85, holding just off lows into Europe.
JAPAN STOCKS CLOSE: Japan's benchmark stocks are lower Wednesday. The Nikkei 225
was lower by 94.21 points, or 0.66%, at 14191.48. Into the close, the
broader-based TOPIX was higher by 11.43 points at 1182.91. Market breadth
indicators saw 66 issues higher, 149 lower and 10 unchanged. Preliminary volume
stood at 1.959 bn shares.
OPTIONS: FX: Option expiries for today's 1000ET cut,
* Euro-dollar; $1.3000, $1.3050, $1.3075, $1.3085, $1.3100, $1.3125, $1.3150/55,
$1.3200(large)
* Dollar-yen; Y98.00, Y98.50, Y98.75, Y98.80, Y98.85, Y99.00, Y99.50, Y100.00
* Cable; $1.5375
* Euro-Swiss; Chf1.2350
* Euro-Nok; Nok7.62
* Aussie; $1.0160, $1.0225, $1.0235, $1.0255, $1.0300
* Canada-yen; Y99.50
SPAIN AUCTION PREVIEW: Spain's Tesoro Publico taps its 3-year benchmark 3.30%
July 2016 Bono, 5-year benchmark 4.50% Jan 2018 Bono and 15-year benchmark 5.90%
July 2026 Obligacion issues Thursday for combined size of between
E3.5bln-E4.5bln. The auction comes in wake of decent tightening in Spanish yield
spreads, where the 10-year Bono yield last week broke below 4.00% level.
However, that said the recent fall in yields now allows the Spanish Tesoro to
perhaps issue a new 10-year benchmark bond issue by syndication. Overall, the
Tesoro is making strong progress in its issuance plans and if it sells the full
indicative size, then it will have achieved around 59% of its gross funding
programme this year. For comparison purposes, the 3.30% July 2016 Bono is
trading at 2.28% and this is the second tap of this issue that was sold on Apr
18 for E1.38bln at an average yield of 2.79% and covered 2.84. The 4.50% Jan
2018 Bono trades at 2.82% mid-yield and was last sold on Apr 18 for E2.04bln at
avg yield 3.26%, cover 2.52. The 5.90% July 2026 Obligacion trades at 4.30%
mid-yield and was last sold on Jan 10 -- therefore not comparable.
Auction
results due around 0840GMT.
EUROZONE: Timeline of key events in the eurozone for next few weeks:
- May 09 Ascension day holiday
- May 09 Spain sells 2016-/2018-/2026 bonds for up to E4.5bln
- May 09 ECB publishes Monthly Bulletin
- May 09 EU Barroso speaks at State of the Union conference, Florence
- May 09 German FinMin Schaeuble speaks at Global Investment Conference, London
- May 10 ECB Draghi & Asmussen attend G7 in Buckinghamshire, UK
- May 10/11 G7 meeting in in Buckinghamshire, UK
- May 10/11 G8 FinMin & central bank governors meeting in the U.K
- May 10 ECB publishes 3-year LTRO repayment amount for following week
- May 10 Italy sells E7bln 12-month BOTs, E3.0bln flexible BOTs
- May 10 Greek T-bill redemption for E1.6bln
- May 10 Cyprus Apr Target2 data and central bank lending figures
- May 10 Ireland Apr Target2 data and central bank lending figures
- May 13 Eurogroup meeting
- May 13 Italy taps 2016-/2026 BTPs, new Nov 2018 CCTeu for up to E8.0bln
US: Timeline of some upcoming key events in the US:
- May 09 Fed Lacker (non-voter) on TBTF in NY at 0800ET
- May 09 UST announces 3/6m bills at 1100ET
- May 09 TIPS Purch July 15 2017-Feb 15 2043 $1.00-$1.50B
- May 09 UST auctions $16Bn 30y at 1300ET
- May 09 FHFA Acting Dir DeMarco at Chicago Fed conf at 1300ET
- May 09 Fed Plosser (non-voter) at Simon NYC conf in NY at 1315ET
- May 09 Money Supply (M2) at 1630ET
- May 10 G8 meeting in UK
- May 10 Fed Chair Bernanke at Chicago Fed conf at 0930ET
- May 10 Tsy Cpn Purchases Feb 15 2036-Feb 15 2043 $1.25-$1.75B
- May 10 Fed George (voter) in Jackson, WY at 1400ET
- May 10 Apr Treasury Statement, Apr'12 was +$59.1Bn, est +$106.5Bn at 1400ET
- May 13 UST announces 4wk at 1100ET
- May 13 UST auctions 3/6m bills at 1130ET
- May 14 Fed Plosser (non-voter) at SNS in Stockholm at 0200ET
