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Market Update – European Session: IEA Confident That Oil Market Very Close To Balanced


FX in focus as Trump cautions about a too strong USD and withdrew a threat to declare China a currency manipulator

Mar Final CPI readings for France and Germany unrevised and move off multi-year highs

IEA confident that oil market already moving very close to balance



China Mar Trade Balance moved back to surplus (+$23.9B v +$12.5Be) as exports surge to a 2-year high (Reminder: Feb Trade Balance registered its 1st deficit since Feb 2014)

Australia Mar Employment change hits a 16-month high (+60.9K v +20.0Ke; Unemployment Rate in-line at 5.9%

(KR) Bank of Korea (BOK) leaves 7-Day Rep Rate unchanged at 1.25% (as expected) for its9th straight pause in the current easing cycle, Monetary policy to remain accomodative but rate cut less necessary than before

US govt and other officials warned that North Korea reportedly placed a nuclear device in a tunnel and it may be detonated this Saturday Apr 15th


French presidential race tightens further, markets nervious

Germany’s Schaeuble says we need a pro-EU France, hopes Le Pen loses


President Trump: US dollar is getting too strong; Will not label China a currency manipulator

Brazil Central Bank (BCB) cut Selic Target Rate by 100bps to 11.25% for its 5th straight cut.

Economic Data

(DE) Germany Final CPI M/M: 0.2% v 0.2%e; Y/Y: 1.6% v 1.6%e

(DE) Germany Final CPI EU Harmonized M/M: 0.1% v 0.1%e; Y/Y: 1.5% v 1.5%e

(FI) Finland Mar CPI M/M: 0.0% v 0.5% prior; Y/Y: 0.8% v 1.2% prior

(FR) France Mar Final CPI M/M: 0.6% v 0.6%e; Y/Y: 1.5% v 1.5%e

(FR) France Mar Final CPI EU Harmonized M/M: 0.7% v 0.7%e; Y/Y: 1.5% v 1.5%e

(CH) Swiss Mar Producer & Import Prices M/M: 0.1% v 0.1%e; Y/Y: 1.3% v 0.9%e

(CN) China Mar Foreign Direct Investment (FDI): +6.7% y/y

(IT) Italy Mar Final CPI (Including Tobacco) M/M: 0.0% v 0.0% prelim; Y/Y: 1.4% v 1.4% prelim

Fixed Income Issuance:

(IN) India sold total INR147.8B vs. INR180B indicated in 2022, 2026, 2034 and 2046 bonds


Index snapshot (as of 10:00 GMT)

Indices [Stoxx50 -0.6% at 3,451, FTSE -0.5% at 7,312, DAX -0.3% at 12,113, CAC-40 -0.5% at 5,076, IBEX-35 -0.6% at 10,303, FTSE MIB -0.9% at 19,832, SMI -0.4% at 8,631, S&P 500 Futures -0.1%]

Market Focal Points/Key Themes: European equity indices are trading lower ahead of the long Easter weekend amid ongoing geopolitical tensions; Banking stocks trading sharply lower with shares of SocGen, Santander, and BNP Paribas leading losses seen in the Eurostoxx; shares of Standard Life, RBS, Standard Chartered and HSBC trading weighing in the FTSE 100; heavily weighted peripheral lender FTSE MIB index underperforming as a result; energy stocks trading lower as oil consolidates around yesterday’s lows.

Upcoming scheduled US earnings (pre-market) include Apogee Enterprises, Carrefour, Commerce Bankshares, First Horizon National, First Republic Bank, JPMorgan Chase, PNC Financial Services, Wells Fargo, and Yingli Green Energy.

Equities (as of 09:50 GMT)

Consumer Discretionary: [Carrefour CA.FR -0.5% (Q1 sales), Gattaca GATC.UK -10.1% (trading update), Hays HAS.UK -0.7% (Q3 fees), Sodexo Alliance SW.FR +0.3% (H1 results)]

Industrials: [Bauer B5A.DE +3.6% (FY16 results), Scapa SCPA.UK +8.2% (trading update)]


BOE Credit Conditions & Bank Liabilities Surveys noted that Lenders saw corporate demand was subdued in Q1as the pace of business lending had eased in recent months. Demand has been higher than expected since the Brexit

Greece govt official: Possible extra Eurogroup meeting in May is possible

Russia Central Bank Dep Gov Yudayeva reiterated view that taking measures to ensure that inflation stayed near the 4% target in both 2018-19 period

Russia Central Bank’s Polonsky saw room for cautious rate cuts and reiterates Board view that monetary policy to remain moderately tight

Japan Chief Cabinet Sec Suga reiterated financial stability was important and that would pay close attention to market moves. Markets were aware of geopolitical risks but that the US and global economy remained on firm footing. Would not comment on any specific FX levels

IEA Monthly Report noted that it could be argued confidently that oil market was already very close to balance. Trimmed 2017 global oil demand growth from 1.4M bpd to 1.32M bpd. It raised 2017 Non-Opec oil supply growth forecast from 400K bpd to 485K bpd while Opec production declined from 32.0M to 31.68M, -365K bpd; compliance of 99% v 91% m/m


FX markets in the session saw the USD retrace a small fraction of Wed losses after President Trump express concern of a too strong greenback.

USD/JPY hit 5-month lows in Asia at 108.71 which corresponded to the 200-day moving average. The pair at its softest level since Trump won the US election back in early Nov. – The Chinese Yuan currency was firmer after Trump backed off from his campaign pledge to label China a currency manipulator

Commodity currencies were firmer as well – aided by the weak USD and geo-political concerns. The CAD currency (Loonie) hit a 6-week high after the Bank of Canada turned less dovish at rate decision on Wed.

Fixed Income

Bund futures trade at 163.66 up 42 ticks marking fresh contract highs, with Trump overnight comments and potential weekend risk including the Turkish referendum, and the French election vote helping keep futures bid. Futures traded a high of 163.77, with a break back above targeting 163.99 followed by 164.20. A reversal continues to target 163.39 former high followed by 163.18.

Gilt futures trade at 128.73 up 22 ticks trading higher with Bunds, with the overall trend higher remaining in tact. Support moves to 128.16 followed by 127.94 then 127.34. A move above 128.80 high targets 128.96 then 129.29. Short Sterling curve continue to flatten with Jun17Jun18 moving lower to 8.5/9bp, a recent new low.

Thursday’s liquidity report showed Wednesday’s excess liquidity rose to €1.596T a rose of €3B from €1.593T prior. Use of the marginal lending facility rose to €271M from €265M prior.

Corporate issuance saw $1B come to market via a sole issuer. Daiwa Securities $1B 5 year notes brought weekly issuance to $11.3B, slightly ahead of estimates.

Looking Ahead

(GR) Eurogroup chief Dijsselbloem and German Fin Min Schaeuble to meet on Greece

05:30 (ZA) South Africa Feb Total Mining Production M/M: No est v 1.7% prior; Y/Y: 1.4%e v 1.3% prior

05:30 (HU) Hungary Debt Agency (AKK) to sell Bonds

06:00 (IE) Ireland Mar CPI M/M: No est v 0.6% prior; Y/Y: No est v 0.5% prior

06:00 (IE) Ireland Mar CPI EU Harmonized M/M: No est v 0.5% prior; Y/Y: No est v 0.3% prior

06:00 (UK) DMO to sell combined £B in 1-month, 3-month and 6-month bills (£0.5B, £0.5B and £1.0B respectively)

07:00 (UR) Ukraine Central Bank Interest Rate Decision: Expected to leave Key Rate unchanged at 14.00%

08:00 (PL) Poland Feb Current Account: €0.0Be v €2.5B prior; Trade Balance: €0.Be v €0.2B prior; Exports: €15.3Be v €15.0B prior; Imports: €15.3Be v €14.8B prior

08:00 (BR) Brazil Feb IBGE Services Sector Volume Y/Y: No est v -7.3% prior

08:15 (UK) Baltic Dry Bulk Index

08:30 (US) Mar PPI Final Demand M/M: 0.0%e v 0.3% prior; Y/Y: 2.4%e v 2.2% prior

08:30 (US) Mar PPI Ex Food and Energy M/M: 0.2%e v 0.3% prior; Y/Y: 1.8%e v 1.5% prior

08:30 (US) Mar PPI Ex Food, Energy Trade M/M: 0.2%e v 0.3% prior; Y/Y: No est v 1.8% prior

08:30 (US) Initial Jobless Claims: 245Ke v 234K prior; Continuing Claims: 2.02Me v 2.028M prior

08:30 (US) Weekly USDA Net Export Sales

08:30 (CA) Canada Feb New Housing Price Index M/M: 0.2%e v 0.1% prior; Y/Y: 3.1%e v 3.1% prior

08:30 (CA) Canada Feb Manufacturing Sales M/M: -0.7%e v +0.6% prior

09:00 (RU) Russia Gold and Forex Reserve w/e Apr 7th: No est v $397.9B prior

10:00 (US) Apr Preliminary University of Michigan Confidence: 96.5e v 96.9 prior

10:30 (US) Weekly EIA Natural Gas Inventories

11:00 (BR) Brazil to sell Fixed Rate 2023 and 2027 Bonds

11:00 (BR) Brazil to sell 2017, 2019 and 2020 LTN Bills

17:00 (CL) Chile Central Bank (BCCH) Interest Rate Decision: Expected to leave Overnight Target Rate unchanged at 3.00%

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