Market Roundup
- Treasury yields & USD rally after Core US CPI +0.3% in Apr v 0.2% exp; Overall 0.1% as expected
- Mexico 1st Half-Mth Infl YY May 2.93%, (consensus 3.01%, previous 3.03%), FX cmte extends USD auctions to sep 29 despite weak peso having little affect on inflation
- Brazil Apr caged net payroll jobs decrease to -98 k (consensus 54 k vs previous 19 k)
- United States Apr Cleveland Fed CPI stays flat at +0.2 % vs previous 0.2 %
- Canada Mar retail sales mm decrease to 0.7 % (consensus 0.3 %, previous +1.5 %) (revised from 1.7 %)
- Russia Apr capital investment yy increase to -4.8 % vs previous -5.3 %
- Russia Apr unemployment rate decrease to 5.8 % vs prev 5.9 %
- Yellen says appropriate to hike rates if econ remains n current path, most USD gains in post-CPI
- France's Sapin says there is no plan B for Greece no possibility of parallel currency
- BOE's Carney says conditions merit rate increases that will proceed at a gradual rate
- IMF's Lagarde increase in US rates that reflect robust improvement in US econ likely positive for LatAm
Economic Data Ahead
- (1950 ET/ 2350 GMT) Japan Exports YY Apr (consensus 6.4%, previous 8.5%)
- (1950 ET/ 2350 GMT) Japan Imports YY Apr (consensus -1.5%, previous -14.5%)
- (1950 ET/ 2350 GMT) Japan Trade Bal Total Yen Apr (consensus -318.9b, previous 229.3b)
Key Events Ahead
- Saturday 0800 GMT -1330 GMT a bevy of central bankers speaking on a variety of topics at the ECB Forum on Central banking. Including Mario Draghi, Stanley Fischer & Vito Constancio
FX Recap
EUR/USD: After five consecutive weeks of gains, the pair is now closing this week in the red territory. U.S. April's inflation figures surprised markets to the upside, renewing buying interest around the dollar and relegating EUR/USD spot to trade near the 1.1000 handle. The shared currency accelerated its correction lower vs. the greenback towards the end of the week. Also there was no major news from the EU Leaders Summit in Riga. Support are at 1.1002 (low May 22) ahead of 1.0994 and then 1.0978 (daily cloud top). On the flipside resistance are at 1.1209 (high May 22), 1.1217 and then 1.1243 (10-d MA). Stand out option expiries next week: EUR/USD: Big 1.1000 strikes every day. Smaller scatterings 1.1150-1.1250
USD/CAD: Greenback frim on Friday after good inflation data, lifting USD/CAD to the vicinity of 1.2300 the figure. Canadian retail sales grew 0.7% from Feb to Mar, decelerating from the previous 1.8% gain, while consumer prices rose less than forecasted, adding downside pressure to the CAD. Next hurdle is at 1.2327 (high Apr 16) followed by 1.2570 (high Apr 15) and finally1.2602 (high Apr 14). On the flip side, supports are seen at 1.2173 (low May 22), 1.2170 (low May 20) and then 1.2130 (low May 19).
USD/JPY: Hawkish Yellen's speech with intentions of a rate rise this year underpinned strength in USD/JPY. BOJ upgraded its assessment of the economy, confirming that the ideas of QQE expansion are premature. Nevertheless, US CPI's were the catalyst to undo what damage the BoJ did to the bulls and the major is taking back its seat on the 121 handle. The pair is currently trading at 121.52 with a high of 121.57 and a low of 120.63. 120.80, 120.00/40, 119.00/42 and the 118.80 level come as supports before 118.30, 117.80 and the well defined 116 level. A break on the upside will put 124.13, June 2007 highs, back on the map. Stand out option expiries next week: USD/JPY 121.00 Tuesday in USD 1.6bln and Wed in 912mln
GBP/USD completely surrendered previous day's gains, as the dollar strengthened broadly following upbeat US core inflation data. The pair fell nearly a hundred pips over the minutes that followed the release and hit a low of 1.5559, retracing completely yesterday's advance. Optimistic comments from Carney did little to help the British pound. The pair is now down over 180 pips from the daily high of 1.5688, trading at the day's low of 1.5482. Immediate support is seen at 1.5445, followed by the 200-DMA support at 1.5414. On the flip side, resiatances are at 1.5521 (May 8 high) and then 1.5576 (5-DMA).
