Been Added To Our
Quiet session in Europe; EU27 Car Registrations rise for first time in over 18 months
Notes/Observations
BoJ will discuss the related risks and potential effect on its 2% inflation target at its two-day policy meeting next week
EBA to delay EU bank stress tests until 2014, timing of stress tests to depend on EU approval of the ECB as banking supervisor in the euro zone
France President Hollande: Cannot request ECB lower interest rates further; confident Draghi knows what he is doing
China Vice Commerce Minister Jiang: EU is the main instrument for diversifying China FX reserves
EU27 Car Registrations rise for first time in over 18 months
Economic Data
(RU) Russia Narrow Money Supply w/e May 13th (RUB): 7.71T v 7.74T prior
(EU) EU27 Apr New Car Registrations: +1.7% v -10.2% prior; ...
- Japan's GDP in Q1 13 expanded 3.5% q/q AR so the country appears to have embarked upon a relatively strong recovery. The major impact from Abenomics has yet to work its way through the economy, so the outlook for the coming quarters, where we expect GDP growth to continue to exceed 3% q/q AR, remains strong. We revise our GDP forecast for 2013 higher to 2.0% from previously 1.6%.
- The big question is whether the strong recovery in the coming quarters will be an argument for Bank of Japan to scale down the aggressive expansion of its monetary base soon. In our view not. Fiscal policy will be tightened aggressively next year when GDP growth is poised to slow markedly and the output gap will not close enough to reach Bank of Japan's 2% inflation target. Hence the case for continuing the ...
Euro Zone Trade runs surplus in March
Notes/Observations
Japan Preliminary Q1 GDP shows Abeonomics working with YoY growth at 3.5% vs. 2.7%e
China Apr Actual FDI YoY registers 0.4% vs. 6.2% cons
IMF approves €1.0B aid for Cyprus with €110.7M to be disbursed immediately but adds the country's outlook still highly uncertain
New Zealand budget to return to surplus in 2014/15
EU Trade Balnce handily beats expectations to record level
Economic Data
(FR) France Q1 Preliminary Wages Q/Q: 0.7% v 0.2% prior; Non-Farm Payrolls Q/Q: -0.1% v -0.3%e
(FR) France Survey of Industrial Investments: Executives see 2013 Manufacturing Investment -4% y/y vs. 0.0% (flat) prior Jan view
(CZ) Czech Mar Export Price Index Y/Y: 2.6% v 0.8% prior; Import Price Index Y/Y: +1.1% v -0.5% prior
(CZ) Czech Apr ...
Q1 European GDP data disappoints; UK quarterly inflation report a bit more upbeat but still cautious
Notes/Observations
Nikkei225 surged to fresh multi-year highs, climbing above the 15,000-level for the first time since Jan 2008 on the back of a weak JPY currency
JGBs reversed sharp rise after BoJ announced it would inject ¥2.8T in market operation on Friday (3x ordinary amount)
ECB's Asmussen: SMEs must get better access to bank loans; ECB considering ways to achieve this
Bank of France official seeks to help banks securitize loans for use as ECB collateral via a simple special purpose vehicle; process already possible but complex
Fitch upgrades Greece to B- from CCC; Outlook stable; clear progress eliminating twin deficits
Italy mandates banks for 30y syndicated bond
Major ...
European Market takes heart that Spain 10-year syndicated order book surges to over €14B and offsets weaker-than-expected German ZEW survey
Notes/Observations
No surprises at Eurogroup with members approving Greece next tranche of €4.2B but noted the following €3.3B tranche would be subject to conditions; reassured Italy will follow up reforms effort; commitment to work as quickly as possible on a bank union
French Fin Min: bank union did not require a treaty change and debate must not slow progress
UK PM Cameron said to put forward a Tory backbenchers bill to make a 2017 EU referendum legally binding
Australia released its FY12/13 and FY13/14 Federal Budget update which forecasted larger than expected deficits. It pledged to return to balanced budget by 2015-16 period
Germany May ZEW ...
European Market Update
Quiet start to trading week; Italy bond auction seen as 'ok'
Notes/Observations
US policymakers have "mapped out" stimulus exit strategy with emphasis on managing market expectations
G-7 meeting continues to turn a blind eye to the impact of Abenomics on the currency markets
China's investment slows as production trails estimates
New rules taking effect May 13th seems to have China move closer to making the yuan convertible under the capital account.
Italy bond auctions mixed with Treasury selling upper end of indicated range at lower borrowing costs but softer bid-to-cover ratio
Economic Data
(IN) India Apr CPI Y/Y: 9.4% v 9.7%e
(CN) China Apr Industrial Production Y/Y: 9.3% v 9.4%e; Industrial Production YTD Y/Y: 9.4% v 9.5%e
(CN) China Apr Fixed Urban ...
European Market Update
UK continues with string of better economic data as production exceeds expectations ahead of BOE rate decision; Spain 3-tranche bond auction results were decent but not impressive
Notes/Observations
Australia April Employment Report come in much stronger than expected (+50K v +11Ke); Unemployment Rate dips for first time since Nov
New Zealand also registers a better employment report
China April CPI comes in a touch higher than expected (Y/Y: 2.4% v 2.3%e); PBOC official says no rate cut in near future
South Korea surprises market with a 25bps rate cut in its 7-day Repo Rate (1st cut in 8 meetings); took into account recent moves by ECB and RBA
Spain 3-tranche bond auction seen as decent. Sells more than indicated at lower yields but lower bid-to-cover ratios
...
Fundamental Analysis
EUR
"German industry has entered the current quarter with a lot of momentum."
- Heinrich Bayer, an economist at Deutsche Postbank AG
Output at German manufacturers improved unexpectedly in March, reviving hopes about the strength of Europe's biggest economy. Production increased 1.2% from February, when it gained 0.6%, the Economy Ministry said Wednesday.
Read more: FULL REPORT - Fundamental Analysis
Technical Analysis
EUR/USD
"The concerns recently from the policy makers in the euro zone have been that the core has been slowing."
- Royal Bank of Scotland (based on Reuters)
EUR/USD is pressed in a channel for more than a month, as the pair is traded between the 100-day at 1.3151 and the 55-day SMA at 1.3007. As the pair is traded flat so long, the both Bollinger ...
What Happens in FX When Doves Cry?
The RBA is the latest central bank to cut interest rates following the ECB's decision last week. The Australian central bank cut rates by 25 basis points to 2.75% - an all time low - earlier attributing the cut to the inflation rate likely to be "a little lower than expected" in the coming months. Weaker inflation pressures gave the RBA scope to cut rates, however the strong exchange rate may have also played a part. The RBA statement noted that although interest rates have already been reduced substantially the exchange rate has been "little changed" and "remains at historically high" levels for more than 18 months. This hurts exports, especially now that the country's mining boom is considered to be close to its peak.
The RBA: potential to cut rates ...