Market Roundup

  • Japan ChiefCabSec Suga – Excessive FX volatility undesirable, no comment on recent moves, could impact market, economy recovering, changing.
  • Japan April retail sales +5.0% y/y, +5.4% eyed, still strong.
  • Japan investors resume foreign bond buys, longer-term demand intact.
  • MoF flow data week-ended May 23 – Japanese buy net Y265.1 bln foreign stocks, Y911.8 bln bonds, sell Y29.1 bln bills; foreign investors buy net Y561.2 bln Japanese stocks, Y39.2 bln bonds, sell Y737.8 bln bills.
  • Nordea launches Y81.8 bln 5/10-yr samurais via MUFJ/MS, Mizuho, and Nomura et al.
  • British car production dips slightly in April as exports fall.
  • Australia Q1 new CAPEX -4.4% q/q, -2.4% eyed, ’15/16 2nd estimate A$104.0 bln, previous estimate A$109.8 bln, bldg CAPEX -6.5%, plan/machinery -0.5%.
  • NZ Fonterra forecasts NZ$5.25 dairy payout for coming year, ’14/15 NZ$4.40.

Economic Data Ahead

  • (0200 ET/0600 GMT) Switzerland April trade balance; last bln surplus.
  • (0300 ET/0700 GMT) Spain Q1 GDP, +0.9% q/q, +2.6% y/y eyed; flash +0.9%, +2.6%.
  • (0300 ET/0700 GMT) Spain April retail sales; last +2.8% y/y.
  • (0400 ET/0800 GMT) Italy May business confidence index, 104.5 eyed; last 104.1.
  • (0400 ET/0800 GMT) Italy May consumer confidence index, 108.2 eyed; last 108.2.
  • (0400 ET/0800 GMT) Norway March labour force survey – unemployment, 4.1% eyed; last 4.1%.
  • (0430 ET/0830 GMT) UK Q1 GDP – 2nd release, +0.4% q/q, +2.5% y/y eyed; prelim +0.3%, +2.4%.
  • (0500 ET/0900 GMT) Euro zone May industrial sentiment index, -3.0 eyed; last -3.2.
  • (0500 ET/0900 GMT) Euro zone May economic sentiment index, 103.5 eyed; last 103.7.
  • (0500 ET/0900 GMT) Euro zone EZ May services sentiment index, 6.7 eyed; last 6.7.
  • (0500 ET/0900 GMT) Euro zone May business climate index, 0.35 eyed; last 0.32.
  • (0500 ET/0900 GMT) Euro zone EZ May consumer confidence index, -5.5 eyed; last -4.6.
  • (0530 ET/0930 GMT) BE May CPI; last +0.38% m/m, +0.29% y/y.
  • (0830 ET/1230 GMT) US w/e initial jobless claims, 270k eyed; last 274k.
  • (1000 ET/1400 GMT) US April pending home sales, +0.9% m/m eyed; last +1.1%.

Key Events Ahead

  • (0220 ET/0620 GMT) SF Fed Williams speech at Singapore MAS conference.
  • N/A Dresden G7 FinMins, central bankers meeting (to May 29).
  • (0400 ET/0800 GMT) ECB financial stability report release, VP Constancio press conference.
  • (0500 ET/0900 GMT) Italy E2-2.5/1.75-2.5 bln 0.7/1.5% 2020/25 BTP auctions.
  • (0500 ET/0900 GMT) Italy -2 bln 0.369% 2022 index-linked BTP auction.
  • (0515 ET/0915 GMT) ECB/Austria CB Nowotny press conference following CB annual meeting.

FX Recap

EUR/USD is supported around 1.0900 levels and currently trading at 1.0908 levels. It has made intraday high at 1.0919 and low at 1.0888 levels. Today German Import Prices, Euro zone consumer confidence and Italian bond auction will me main news from the Europe.  Initial support is seen at 1.0859 and resistance is seen around 1.1041 levels.USD/JPY broke the 124.00 levels and posted a daily high at 124.28 levels and low at 123.48 levels. Pair is currently trading at 124.11 levels. Today Japan released retail sales data with negative numbers. Pair hit the June ’07 high of 124.14, stops from 124.15 taken out. 124.28 new trend/multi-year high, 125.65-75 Oct/Dec ’02 highs now eyed. Presumed option barriers are ahead at 124.50, 125.00 (large), 125.50. Japan investor interest in foreign bonds will remain strong. Near term resistance is seen at 124.85 levels and support is seen at 123.22 levels.GBP/USD is trading around at $1.5357. It made an intraday high at 1.5365 and low at 1.5337 levels. The pair took a breather in its downslide and is seen struggling around 1.54. Today UK will release 2nd estimate of GDP data, which gives further direction to the parity. Initial support is seen at 1.5324 and resistance is seen around 1.5471 levels.USD/CHF is supported below 0.9500 levels and trading at 0.9476 levels and made intraday low at 0.9475 and high at 0.9502 levels. Today Switzerland will release trade balance as well as Industrial output data. Near term support is seen at 0.9285 levels and resistance is seen at 0.9571 levels.AUD/USD is supported below 0.7700 levels and trading at 0.7688 levels. It has made intraday high at 0.7759 levels and low at 0.7670 levels. Australia’s capex second estimate 2015/16 was lower-than-expected. Pair opened Thursday 0.7733 and traded 0.7683-0.7762; last at 0.7690. Pair was in gently recovery mode ahead of capex reaching 0.7762 – prior 0.7756. Pair hit 76.4% Fibonacci of the 0.7534-0.8164 move before finding support. The Australian dollar was the biggest loser across the FX space, dropping below the key 0.7680 support, after poor capex data highlighted concerns over Australian economy’s transitions from mining to non-mining investment.Initial support is seen at 0.7752 and resistance at 0.7752 levels.

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