Thursday 23rd April: European Open Briefing

Global Markets:

• Asian stock markets: Nikkei up 1.15 %, Shanghai Composite gained 2.50 %, Hang Seng rose 0.30 %, ASX declined 0.50 %

• Commodities: Gold at $1189 (-1.20 %), Silver at $15.78 (-1.40 %), WTI Oil at $56.80 (+0.35 %), Brent Oil at $62.82 (+1.20 %)

• Rates: US 10 year yield at 1.959, UK 10 year yield at 1.706, German 10 year yield at 0.163

News & Data:

• China HSBC Manufacturing PMI 49.2, Expected: 49.6, Previous: 49.6

• South Korea GDP 0.8 % q/q, Expected: 0.7 %, Previous: 0.3 %

• South Korea GDP 2.4 % y/y, Expected: 2.4 %, Previous: 2.7 %

• Australia NAB Quarterly Business Confidence 0.0, Previous: 2.0

• Japan Manufacturing PMI 49.7, Expected: 50.8, Previous: 50.3

• RBNZ Deputy Governor McDermott: Monetary Policy To Remain Stimulatory

• McDermott: Near-Zero Inflation Mostly Due To Trade

• McDermott: RBNZ Not Considering Any Increase In Interest Rates At Present

• McDermott: Weaker Demand, Prices Would Prompt Rate-Cut Consideration

• McDermott: Inflation Outlook Requires Period Of Supportive Policy

• McDermott: Rising Currency As Export Prices Fall `Is Unwelcome'

• Bank of Japan Governor Kuroda: Letting BoJ's JGB Holdings Mature Is 1 Possible Exit Step For QQE — BBG

• Kuroda: Raising Rate On Excess Reserves A Possible Exit Step

• Kuroda: Doesn’t See Excessive Optimism In Markets

• China April flash HSBC PMI contracts to one-year low – RTRS

• Asia weathers soft China survey on stimulus hopes – RTRS

• China Stocks Swing as Kiwi, Metals Slide on PMI at 12-Month Low – BBG

• Former BP chief says oil prices to soar – FT

Markets Update:

The New Zealand Dollar declined overnight after dovish comments from the RBNZ’s deputy governor McDermott. He warned that weaker demand and prices could prompt a rate cut consideration and that the NZD’s strength is unwelcome given the drop in export prices. NZD/USD fell from 0.7640 to a low at 0.7565, while AUD/NZD rallied above 1.02. There is a A$3.1 billion large option expiry today at 1.02, which is likely to keep price close to the level, especially in the NY session. While the Aussie Dollar had a rather mixed performance against the USD, it remained bid overall amid positive cross flows. Key intraday levels to watch are 0.7720 and 0.7705 to the downside and 0.7810 & 0.7845 to the topside.

The Euro weakened yesterday amid heavy cross flows. Banks reported large selling in EUR/GBP, which declined to fresh multi-week lows. EUR/USD is likely to find some support at 1.0685 and 1.0660, but overall sentiment remains negative. Meanwhile, the Pound strengthened after a more hawkish than expected MPC. GBP/USD has decent intraday support at 1.4980, while the next major hurdle to the topside now lies at 1.5150.

USD/JPY remains very choppy. The pair has broken above the 120 level overnight, but failed to sustain momentum and dropped back to 119.70. While there is a slight upside bias, it seems further consolidation is the more likely scenario, with fading the extremes the appropriate strategy.

Upcoming Events:

• 07:00 BST – Swiss Trade Balance (CHF2.16bln)

• 08:00 BST – French Manufacturing PMI (49.2)

• 08:00 BST – French Services PMI (52.5)

• 08:00 BST – Spanish Unemployment Rate (23.6 %)

• 08:30 BST – German Manufacturing PMI (53.0)

• 08:30 BST – German Services PMI (55.5)

• 09:00 BST – Euro Zone Manufacturing PMI (52.6)

• 09:00 BST – Euro Zone Services PMI (54.5)

• 09:30 BST – UK Retail Sales (0.4 % m/m, 5.4 % y/y)

• 09:30 BST – Hong Kong Unemployment Rate (3.3 %)

• 13:30 BST – US Initial Jobless Claims (290k)

• 14:45 BST – US Bloomberg Consumer Confidence

• 14:45 BST – US Manufacturing PMI (55.5)

• 15:00 BST – US New Home Sales (-5.4 % m/m, 513k)