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Better Chinese Data Aiding Risk Appetite

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Fundamental analysis of Forex market

Notes/Observations

  • Better China data in session putting some impetus towards risk appetite
  • China Mar trade surplus larger than expectations as exports beat consensus
  • China Mar New Yuan Loans hit highest level since Feb 2017

Asia:

  • Monetary Authority of Singapore (MAS) semi-annual monetary policy statement maintained a steady policy (as expected) for its 1st pause in 3 meetings in the current tightening cycle
  • Singapore Q1 advance GDP data saw its slowest annual pace in 3 years (Q/Q: 2.0% v 2.2%e; Y/Y: 1.3% v 1.4%e)
  • RBA Financial Stability Review: Domestic economic conditions remain broadly supportive of financial stability

Europe:

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  • ECB policymakers said to be skeptical about tiered deposit rate but leaning towards offering negative rate on TLTRO to banks that achieve lending targets
  • UK Labour Party spokesperson: PM May and Leader Corbyn held short meeting this on Thursday; agreed to continue talks to find compromise plan
  • BOE Gov Carney: lack of a Brexit deal is a sign of global issues, Risk of no deal Brexit lower after Wed’s extension

Americas:

  • US Fed Chair Powell said to reiterate ‘rates in right place’
  • Fed’s Clarida (moderate, voter): Fed did not see elevated recession risk; prospect for an upturn in global growth later in 2019
  • Herman Cain expected to withdraw his name from Fed consideration amid opposition to his nomination

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

  • Indices [Stoxx600 +0.03% at 387.30, FTSE +0.42% at 7,449.25, DAX +0.37% at 11,979.57, CAC-40 +0.14% at 5,493.55, IBEX-35 +0.10% at 9,454.60, FTSE MIB +0.31% at 21,752.50, SMI -0.29% at 9,521.60, S&P 500 Futures +0.40%]
  • Market Focal Points/Key Themes: European Indices trade mostly higher buoyed by stronger Chinese trade data, tracking higher Asian Indices and stronger US futures. On the corporate front shares of Plus 500 declines sharply after a profit warning falling by over 40% at one point before recovering to be down 25% at present, Revenues fell 80% on the year following subdued financial markets. Fagron also declines after Q1 Rev slightly missed forecasts. Elsewhere Games Workshop gains following a trading update, while Swedol gains on March sales metrics. In other news Pets at Home and Searbird Exploration decline after a placing, with Entertainment One also declining after a placing to fund the acquisition of Audio Network Limited. Looking ahead sees the major US banks kick off earnings season with JP Morgan, PNC Bank and Well Fargo among the notable names reporting.

Equities

  • Consumer discretionary: Entertainment One [ETO.UK] -2% (placement), Pets at Home [PETS.UK] -11.5% (placement), Games Workshop [GAW.UK] +10.5% (trading update), Mitie Group [MTO.UK] -1% (CMA notes on acquisition)
  • Consumer staples: Carl Zeiss Meditec [AFX.DE] +3.5% (earnings)
  • Financials: Plus500 [PLUS.UK] -25% (trading update)
  • Technology: Software AG [SOW.DE] +0.5% (prelim earnings), Ekinops [EKI.FR] +5% (discussions between Ekinops and Nokia on possible acquisition of Alcatel Submarine Networks have ended)
  • Materials: Covestro [1COV.DE] +0.5% (AGM)

Speakers

  • Germany Economic Ministry Monthly Report: Indicators point to subdued exports in coming months’ considerable risks remain due to Brexit and trade conflicts. Weakness in German manufacturing was being offset by continued strength in domestic demand
  • Germany Economic Ministry said to cut 2019 GDP growth from 1.0% to 0.5% and saw 2020 growth at 1.5%
  • Sweden Central Bank (Riksbank) Dep Gov Floden: Global uncertainty had eased a bit but concerned about Germany
  • China Customs Administration spokesperson Li Kuiwen: Expects China’s exports and imports to show ‘mild’ growth in Q2; China’s improved economy supports trade

Currencies/Fixed Income

  • Better China data in session putting some impetus towards risk appetite and helps to weaken the USD and JPY currencies.
  • EUR/USD at multi-week highs and back above the 1.13 level in quiet trading.
  • USD/JPY approaching the 112 area on reversal of safe-haven flows following Chinese data.
  • Little expected on the Brexit front as UK Parliament was on recess until April 22nd GBP/USD slightly higher by 0.2% at 1.3070

Economic Data

  • (NL) Netherlands Feb Trade Balance: €5.1B v €2.9B prior
  • (DE) Germany Mar Wholesale Price Imdex M/M: 0.3% v 0.3% prior; Y/Y: 1.8% v 1.6% prior
  • (NO) Norway Q1 House Price Index Q/Q: 0.3% v 0.2% prior
  • (CN) China Mar Trade Balance: $32.6B v $5.7Be; Exports Y/Y: 14.2% v 6.5%; Imports Y/Y: -7.6% v +0.2%e
  • (CN) China Mar Trade Balance (CNY-denominated): 221.2B v 76.6Be; Exports Y/Y: 21.3% v 6.3%e; Imports Y/Y: -1.8% v +2.6%e
  • (ES) Spain Mar Final CPI M/M: 0.4% v 0.4%e; Y/Y: 1.3% v 1.3%e
  • (ES) Spain Mar Final CPI EU Harmonized M/M: 1.4% v 1.4%e; Y/Y: 1.3% v 1.3%e
  • (ES) Spain CPI Core M/M: 0.5% v 0.1% prior; Y/Y: 0.7% v 0.7%e
  • (ES) Spain Feb House transactions Y/Y: +5.3% v -0.2% prior
  • (CN) Weekly Shanghai copper inventories (SHFE): 245.2K v 257.3K prior
  • (RU) Russia Narrow Money Supply w/e Apr 5th (RUB): 10.16T v 10.10T prior
  • (CZ) Czech Feb Current Account Balance (CZK): 26.7B v 26.5Be
  • (CN) China Mar M2 Money Supply Y/Y: 8.6% v 8.2%e; M1 Money Supply Y/Y: 4.6% v 3.0%e; M0 Money Supply Y/Y: 3.1% v 3.5%e
  • (CN) China Mar New Yuan Loans (CNY): 1.690T v 1.225Te (strongest since Jun 2016)
  • (CN) China Mar Aggregate Financing (CNY): 2.86T v 1.900Te
  • (EU) Euro Zone Feb Industrial Production M/M: -0.2% v -0.5%e; Y/Y: -0.3% v -0.9%e

Fixed Income Issuance

  • (IN) India sold total INR170B vs. INR170B in 2024, 2029, 2035 and 2049 bonds

Looking Ahead

  • (US) IMF/World Bank spring meetings begins in Washington
  • JP Morgan and Wells Fargo kick off US corporate earnings season
  • 06:00 (UK) DMO to sell €4.0B in 1-month, 3-month and 6-month bills £0.5B, £1.5B and £2.0B respectively)
  • 06:30 (IS) Iceland to sell 3.8% Apr 2021 inflation-linked RIKS Bonds
  • 06:45 (US) Daily Libor Fixing
  • 07:30 (IN) India Weekly Forex Reserves w/e Apr 5th: No est v $411.9B prior
  • 08:00 (PL) Poland Feb Current Account Balance: -€0.4Be v €2.3B prior; Trade Balance: -0.3Be v +€0.3B prior; Exports: €18.0Be v €18.5B prior; Imports: €18.1Be v €18.2B prior
  • 08:00 (IS) Iceland Mar Unemployment Rate: No est v 3.1% prior
  • 08:00 (BR) Brazil Feb IBGE Service Sector Volume Y/Y: 3.8%e v 2.1% prior
  • 08:00 (IN) India Mar CPI Y/Y: 2.8%e v 2.6% prior
  • 08:00 (IN) India Feb Industrial Production Y/Y: 2.0%e v 1.7% prior
  • 08:00 (IN) India announces upcoming bill issuance (held on Wed)
  • 08:30 (US) Mar Import Price Index M/M: 0.4%e v 0.6% prior; Y/Y: -0.6%e v -1.3% prior; Import Price Index (ex-petroleum) M/M: -0.1%e v +0.1% prior
  • 08:30 (US) Mar Export Price Index M/M: 0.2%e v 0.6% prior; Y/Y: No est v 0.3% prior
  • 08:30 (CA) Canada Mar Teranet/National Bank HPI M/M: No est v -0.4% prior; Y/Y: No est v 1.9% prior House Price Index: No est v 223.00 prior
  • 08:45 (BE) ECB’s Praet (Belgium, chief economist)
  • 10:00 (US) Apr Preliminary University of Michigan Confidence: 98.1e v 98.4 prior
  • 11:00 (CO) Colombia Feb Industrial Production Y/Y: 2.6%e v % prior; Retail Sales Y/Y: 4.3%e v 3.0% prior
  • 11:00 (EU) Potential sovereign ratings after European close – S&P on Germany
  • 13:00 (US) Weekly Baker Hughes Rig Count data – (PE) Peru Feb Trade balance: No est v $0.3B prior

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