Market Roundup
- Fed minutes see June hike unlikely owing to weak Q1, sees Q1 weakness as temporary; USD initially rallies then reverses to pre-Fed levels
- Greece’s Filis says it will default in June without aid from lenders
- Greece’s Varoufakis if can’t pay IMF and salaries we shall prioritize pensioners & workers
- Moody’s high likelihood that capital controls and a deposit freeze as savers flee Greek banks over fears of a national bankruptcy and a Greek euro zone exit
- BOE minutes show 2 members policy remains finely balanced between a rate hold or hike, expects inflation to rise toward YE 2015
- Canada Wholesale Trade MM Mar 0.8%, (consensus 0.9%, previous -0.4%), 1st gain in 3-mos
- Brazil w/e foreign exchange flows increase to -1.575 bln vs previous -2.558 bln
- Reuters Poll Brazil govt likely misses key budget target according to median of 19 forecast
- ECB raises emergency funding (ELA) cap for Greek banks by 200 mln EUR to 80.2 bln – banking source
- Swedish cbanker Af Jochnick says can cut rates further, cut rate path and buy more bonds if more easing needed
Economic Data Ahead
- (1950 ET/ 2350 GMT) Japan Foreign Bond Investment w/e (previous 492.6b)
- (1950 ET/ 2350 GMT) Japan Foreign Invest JP Stock w/e (previous 72.7b)
- (2135 ET/ 0135 GMT) Japan Manufacturing PMI Flash May (previous 49.9)
- (2145 ET/ 0145 GMT) China HSBC Mfg PMI Flash May (consensus 49.3, previous 48.9)
Key Events Ahead
- (1900 ET/ 2300 GMT) Australia RBA Asst Gov Malcolm Edey speaks at the 20th Annual Cards & Payments conference
FX Recap
EUR/USD mixed on FOMC, ECB. The common currency is attempting another bull run at the end of the NA session post FOMC, pushing EUR/USD close to 1.1140. On the Greek front, the ECB increased the ELA for Greek banks by ‘just’ €200 million to €80.2 billion and left unchanged the haircut on Greek collateral. EUR/USD is down 0.29% on the day, currently trading at 1.1117. Next support is at 1.1062 (low May 20) ahead of 1.0994 (50% of 1.0521-1.1468) and then 1.0960 (low Apr 29). Resistance is at 1.1151 (3821-d MA), 1.1166 (100-d MA) and then 1.1237 (38.2% of 1.1468-1.1095). Option expiries for Thursday 21 May: 1.1000 (521M), 1.1075 (447M), 1.1100 (250M)1.1200 (210M)
GBP/USD: Greenback initially gained momentum but quickly erased gains as Fed outlook remains unclear. Cable initially dropped to 1.5489 but then bounced to 1.5566, area located below daily highs. GBP/USD headed toward the first daily gain since last Thursday and giving signs of short term stabilization above 1.5450. The pair currently trades at 1.5540/50, up 40 pips from yesterday’s close. Option expiries for Thursday 21 May: 1.5400 (467M)
USD/JPY falls as reaction following the FOMC minutes to test 121.00 support. FOMC minutes showed that members see a rate hike unlikely in June, also expects that a moderate growth will resume in the Q2. USD/JPY pair briefly peaked to its 2-month highs at 121.50 during the day and is now trading at 121.11, up 0.36% on the day. Daily high was at 121.49 and low at 120.58. Declines below 121.00 will find supports at 120.75, 120.60 and 120.40. Resistances are at 121.30, 121.50 and 121.60. Option expiries for Thursday 21 May: 121.00 (321M)
NZD/USD recovered ground, trimed losses after Fed minutes. The pair dropped to 0.7280, hitting a fresh 2-month low post FOMC minutes, but then rebounded and climbed to 0.7334, where the hourly 20-SMA capped the upside. At the time of writing the pair trades at 0.7320, as it holds some bullish tone and above 0.7300, still down for the day and about to suffer fifth decline in a row.
EUR/JPY has risen to the 134.80 resistance again while the greenback is back peddling somewhat. Fundamentals however remain persistently bearish for the Euro with Greece a cause for concern and the recent acknowledgment of the ECB’c intention to be front loading QE before the summer months. EUR/JPY is currently trading at 134.64 with a high of 134.87 and a low of 133.91. 133.10 is initial key support ahead of 132.99 and then 126.08.
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