Sample Category Title

GBP/USD – 1.2897

Recent wave: Wave V of larger degree wave (III) has ended at 1.1986 and major correction has commenced from there for gain to 1.3000 and 1.3140-50

Trend: Near term up

Original strategy :

Buy at 1.2710, Target: 1.2910, Stop: 1.2650

Position: -
Target:  -
Stop: -

New strategy :

Buy at 1.2850, Target: 1.3000, Stop: 1.2790

Position: -
Target:  -
Stop:-

As cable has risen again and broke above indicated previous resistance at 1.2906, adding credence to our bullish view that recent upmove is still in progress and upside bias remains for further gain to 1.2950, then towards psychological resistance at 1.3000 but near term overbought condition should limit upside and 1.3050 and price should falter below 1.3100. We are keeping our view that the wave c as well as larger degree wave B has ended at 1.2109, hence impulsive wave C has commenced from there with wave i of C ended at 1.2616, follow by a correction to 1.2365 (end of wave ii) and wave iii rally is unfolding, hence further gain to indicated upside targets would be seen. 

Our preferred count on the daily chart is that cable's rebound from 1.3500 (wave (A) trough) is unfolding as a wave (B) with A ended at 1.7043, followed by triangle wave B and wave C as well as wave (B) has ended at 1.7192, the subsequent selloff is the larger degree wave (C) which is still unfolding with minor wave (III) of larger degree wave 3 ended at 1.1986, hence wave (IV) correction is in progress which could either be a triangle wave (IV) of a complex formation but upside should be limited to 1.3500 and price should falter well below 1.4000, bring another decline in wave (V) of 3 for weakness to 1.1500, then 1.1200.

On the downside, whilst initial pullback to 1.2845-55 is likely, as long as support at 1.2805 holds, bullishness remains for another upmove. A drop below this level would defer and suggest top is possibly formed but only break of support at 1.2757 would add credence to this view, bring retracement of recent upmove to 1.2700-10 later. 

The European Central Bank is set to keep its ultra-easy policy stance firmly in place this Thursday afternoon (11:30 AM GMT) but may acknowledge better growth prospects, setting the stage for a small signal as early as June about an eventual reduction of stimulus. Volatility on EUR/USD could be expected.

Technically the EUR/USD 4h chart shows bullish momentum but anything can happen during the ECB conference. Yesterday we had a successful live EUR/USD entry on Wednesday's Live webinar that made more than 40 pips as of now. The break of 1.0950 should retest 1.0965 and possibly 1.0990-1.1020. However, the break of 1.0820 could close the retail gap around 1.0777 level. Be careful with risk allocation and using of VPS tool is advised

GBP/JPY - 143.68

Recent wave: Medium term low formed at 120.50 and (A)-(B)-(C) major correction has commenced with (A) leg ended at 148.45, hence wave (B) is unfolding for retreat to 131.00-10.

Trend: Near term up

Original strategy:

Buy at 141.70, Target: 143.70, Stop: 141.00

Position: -
Target: -
Stop: -

New strategy :

Buy at 142.30, Target: 144.30, Stop: 141.70

Position: -
Target:  -
Stop:-

As sterling has surged again after brief pullback, adding credence to our view that recent upmove from 135.60 has resumed and upside bias remains for this move to extend further gain to 144.00-10, however, near term overbought condition should prevent sharp move beyond 144.40-50 and reckon previous chart resistance at 144.75 would remain intact, bring retreat later.

In view of this, would not chase this rise here and would be prudent to buy sterling on pullback as 142.30-40 should limit downside. Below 141.60-65 would defer and suggest top is possibly formed instead, risk correction to 141.00-10 but downside should be limited to 140.55-60 and price should stay well above support at 140.10, bring another rally.

Our preferred count is that larger degree wave V with circle is unfolding from 251.12 with wave (I) 219.34, (II): 241.38 and wave (III) is subdivided into 1: 192.60, 2: 215.89 (23 Jul 2008) and wave 3 ended at 118.87 earlier in 2009. The correction from there to 162.60 is wave 4 which itself is a double three and is labeled as first a-b-c ended at 151.53, followed by wave x at 139.03, 2nd a ended at 162.60, 2nd b at 146.75 and 2nd c leg of wave 4 ended at 163.00. Therefore, the decline from 163.00 to 116.85 is now treated as wave 5 which also marked the end of larger degree wave (III), hence wave (IV) major correction has commenced for retracement of the wave (III) from 241.38 and upside target at 183.95-00 (50% Fibonacci retracement of the wave (II) from 241.38) had been met, a drop below 160.00 would suggest wave (IV) has ended at 195.85, bring decline in wave (V) for initial weakness to 130 (already met) and 120.


April 27: Five things the markets are talking about

The not so 'mighty' U.S dollar has pared gains overnight as investors digest details of the Trump administration's tax-reform plan and deal with the Presidents U-turn on NAFTA.

The Presidents tax plan includes deep reductions in business taxes and major changes to the individual tax system. The administration also said it would introduce a one-time tax break meant to encourage U.S corporations to repatriate earnings stashed overseas. However, the market has largely brushed off the plan, weighed by uncertainties over the timeline.

Sticking with uncertainties, Trump, for now, has done a U-turn on pulling out of NAFTA after talking with leaders from Mexico and Canada. Both currencies were able to take back much of yesterday's intraday losses - +1.1% and +0.5% respectively.

On the central bank front, the ECB will set monetary policy later this morning (07:45 am EST rate announcement, 08:30 am press conference). With officials of late indicating little chance of a policy change, the focus will be on any signals from President Draghi that the central bank is debating an exit from its extraordinary stimulus. Overnight, The Bank of Japan (BoJ) remained on hold as expected.

Tomorrow, U.S. GDP is due and it's projected to show the economy expanded at a +1.0% annualized rate in Q1, the weakest pace in a year.

1. Global equities mixed reaction

In Japan, stocks fell for the first time in six days, tracking the retreat on Wall Street's disappointment over the U.S tax plan. The Nikkei fell -0.2%, while the broader Topix dipped -0.05%. The BoJ kept its policies unchanged while lowering its inflation forecast and emphasizing that any exit from its monetary easing remains "far away."

In Hong Kong, financials helped lift the Hang Seng (+0.5%) to its highest close in 20-months, but the China Enterprises Index lost -0.6%.

In China, stocks ended higher with small caps bolstering sentiment. The blue-chip CSI300 index rose +0.1%, while the Shanghai Composite Index added +0.4%.

In Europe, equity indices are trading lower as market participants await the ECB's monetary policy decision. Banking and financial stocks trading notably lower in the Eurostoxx, while energy stocks in the FTSE 100 are trading lower on oil price pull backs.

U.S stocks are set to open relatively flat.

Indices: Stoxx50 -0.5% at 3,560, FTSE -0.5% at 7,250, DAX -0.4% at 12,428, CAC-40 -0.4% at 5,264, IBEX-35 -0.9% at 10,668, FTSE MIB -0.6% at 20,703, SMI -0.2% at 8,815, S&P 500 Futures flat

2. Oil prices fall on oversupply, gold steady

Oil prices again are on the back foot, weighed down by oversupply issues, but the losses remain somewhat contained on hopes that OPEC and non-OPEC members will agree to extend production cuts to try to rebalance the market.

Ahead of the U.S open, Brent crude futures are down -60c at +$51.22 a barrel, while U.S light crude (WTI) is down -55c at +$49.07 - both benchmarks are down -10% from this month's peak.

Inventory reports this week stated ample supplies in all key markets despite efforts led by OPEC and Russia to cut output by -1.8m bpd in H1.

OPEC is discussing extending its cuts into H2, but crude "bulls" are getting concerned as producers face an uphill battle with oil inventories atop of record levels in many parts of the world.

Yesterday's EIA report showed a drop in crude oil stocks, but gasoline inventories surged as refiners produced more fuel than the market could consume.

Gold prices have edged down overnight as global risk sentiment diminishes, but scepticism over Trump's tax reform plan has limited the losses. Spot gold is down -0.3% at +$1,264.60 per ounce.

3. Few surprises from Central Banks rate announcements

The ECB is expected to hold off any 'hawkish' tendencies ahead of France's second round Presidential elections (May 7). Sweden's Riksbank has extended QE for another six-months, while the BoJ did was expected and stood pat.

Sweden Central Bank (Riksbank) has surprised the market with its "dovish" stance - repo rate unchanged (+0.5%), however, it has extended its government bond buying for another six months citing global uncertainties. The policy statement noted that it would take longer before inflation stabilized around +2% and indicated that to support the upturn in inflation, monetary policy "needed to be somewhat more expansionary." The program was set to expire next month.

In Governor Kuroda's post BoJ rate decision press conference he noted that the economic cycle was strengthening and that BoJ would continue with QQE until prices hit its inflation target. He reiterated the view that they would achieve the +2% inflation target during the financial year 2018/19 and that they need to achieve this target before discussing 'exit' strategy.

Next up is the ECB.

4. U.S dollar deflated on Trump U-turn

Ahead of the ECB rate announcement, the EUR is steady trading atop of €1.0900. The focus of the ECB meeting is likely be on the recent run of stronger growth and inflation data out of the Eurozone and possibility that the taper argument could be revisited as the fundamental picture is improving. The consensus doesn't believe that Draghi and co. will alter its policy language.

Note: The market is speculating that the ECB could discuss removing some of its easing biases in the June statement.

EUR/SEK (€9.6400) is trading +1% higher after the Riksbank surprised with an extension of its QE bond buying. The market was betting that monetary policy did not need to be more expansionary at this time.

Elsewhere, USD/JPY (¥113.35) is a tad higher after the BoJ announcement while the CAD (C$1.3576) and MXN ($19.00) are firmer after President Trump noted that he would "not" scrap NAFTA, but renegotiate the trade agreement.

5. Eurozone confidence hits post crisis high

Euro data this morning shows eurozone confidence was stronger than expected in this month, with the European Commission's ESI measure jumping to 109.6 from 108.0 in March. It's the highest level in a decade.

The market was expecting a modest rise to 108.1. The pickup suggests that the eurozone's economic recovery is gaining momentum this year, and will reinforce the ECB's view that the outlook has improved.

The survey also showed household inflation expectations have fallen back this month, reaching their lowest level in five-months - This will likely support the ECB's caution over winding down its stimulus programs.

EUR/GBP         –  0.8452

EUR/GBP – The major (A)(B)(C)-(X)-(A)(B)(C) correction from 0.9805 is unfolding and 2nd (A) has possibly ended at 0.6936.

Although the single currency fell to as low as 0.8312 last week, failure to penetrate indicated previous support at 0.87304 and the subsequent gap-up opening this week suggest further consolidation above 0.9304 would be seen and above this week’s high at 0.8531 would bring a stronger rebound to 0.8592 but break of latter level is needed to signal the fall from 0.8857 has ended instead, bring further subsequent gain to 0.8650-60 and possibly towards resistance at 0.8735 but price should falter well below resistance at 0.8788.

Our latest preferred count is that the wave V of a 5-wave series from 0.5682 ended at 0.9805 earlier and major from there has possibly ended at 0.8067 as A-B-C-X-A-B-C. We are keeping our view that the entire correction from 0.9805 has possibly ended at 0.7756 and as labeled as the attached daily chart and impulsive move from 0.9084 has ended at 0.7756 as a 5-waver which marked either the (C) wave or the A leg of (C), a daily close above resistance at 0.8831 would suggest (C) leg has ended and headway towards 0.9084.

On the downside, whilst the pullback from 0.8531 may bring initial weakness to 0.8410-20, reckon downside would be limited and support at 0.8351 should hold, bring another rebound later. A drop below 0.8351 support would signal the rebound from 0.8312 has ended but only break of said support at 0.8304 would revive bearishness and signal early decline from 0.9576 top (2016 high) has resumed for weakness to 0.8251 support, then 0.8200.
 
Recommendation: Stand aside for this week.

Euro's long term uptrend started in Feb 1981 at 0.5039 and is unfolding as a (A)-(B)-(C) move with (A): 0.8433 (Feb 1993), (B): 0.5682 (May 2000) and impulsive wave (C) should have ended at 0.9805 with wave III ended at 0.7254 (May 2003), triangle wave IV at 0.6536 (23 Jan 2007) and wave V as well as wave (C) has ended at 0.9805.

We are keeping an alternate count that only wave III ended at 0.9805 and the correction from there is the wave IV and may extend weakness to 0.7700, however, it is necessary to see a daily close above resistance at 0.9143 would change this to be the preferred count.

USD/CAD – 1.3278

USD/CAD – Wave v ended at 0.9407 and a-b-c correction may extend gain to 1.4700

As the greenback has surged again after brief pullback to 1.3411 initially this week and broke above resistance at 1.3535 and 1.3599, signaling the rise from 1.2461 (2016 low) is still in progress and bullishness is seen for this move to bring at least a correction of the fall from 1.4690 (2016 high), hence further gain to 1.3700 and later 1.3750-60 would be seen, however, near term overbought condition would limit upside to 1.3790-00 and reckon upside would be limited to 1.3835-40 (61.8% Fibonacci retracement of 1.4690-1.2461) and bring retreat later.

We are keeping our view that the wave b from 1.0657 (a leg top) has possibly ended at 0.9633 with (a): 0.9800, wave (b): 1.0447 and wave c at 0.9633, the subsequent rise from there is now treated as wave c exceeded indicated upside target at 1.3770-80 and 1.4000 and wave (3) has possibly ended at 1.4690 and wave (4) correction has commenced for retracement back to 1.2832 support, then 1.2410-20.

On the daily chart, our latest preferred count remains that the A of (B) rally from 0.9059 low (7 Nov 2007) unfolded into an impulsive wave with i: 0.9059-1.0380, ii ended at 0.9819, iii at 1.3019 followed by triangle wave iv at 1.2026 , then wave v formed a top at 1.3066 and also ended the wave A. The wave B is unfolding as an double three a-b-c-x-a-b-c and is sub-divided as a: 1.2192, b: 1.2716 and wave c at 1.0784, followed by wave x at 1.1725, another set of a-b-c unfolded with 2nd a at 0.9931, 2nd b at 1.0674. the 2nd c has possibly ended at 0.9407, therefore, consolidation with upside bias is seen for major correction, indicated target at 1.3900 had been met and gain to 1.4700 would follow.

On the downside, whilst pullback to 1.3500-10 cannot be ruled out, reckon downside would be limited to 1.3450-60 and bring another rise later. Only below said this week’s low at 1.3411 would suggest top is formed instead, bring further fall to 1.3380-85 but a daily close below 1.3335-40 is needed to add credence to this view, then test of 1.3262 support would follow, however, key level at 1.3223 should remain intact.

Recommendation: Stand aside for this week and look to turn long on subsequent pullback.

Longer term - The selloff from 1.6194 (21 Jan 2002) to 0.9059 (07 Nov 2007) is viewed as (A) wave which is a 5-waver as labeled on the monthly chart as below, the subsequently rally is labeled as (B) with impulsive A leg of (B) ended at 1.3066, wave B of (B) is unfolding which has either ended at 0.9407 or would extend one more fall but downside should be limited to 0.9200 and 0.9000 should hold.

US oil remains under strong pressure on global oversupply that sent the price significantly lower during past two weeks. Oil price slumped from April's high at $53.74 to the levels below psychological $50%, loss of which has generated another strong bearish signal.

The fall found temporary footstep just under $49.00, above which the price entered consolidation phase.

Long upper shadows of past three day's candles signal strong recovery rejections and keep the downside under pressure, but on the other side, hopes that major oil producers would reach an agreement to extend production cut, balances the market for now.

Extended consolidation could be expected while current lows at $48.93/87 hold, however, thickening daily cloud (base is currently at $50) continues to weigh.

Stronger recovery signals require break above Mon/Wed highs at $50.18 and daily Kijun-sen at $50.41 to ease persisting bearish pressure.

Otherwise, loss of temporary base would look for extension towards 48.64 (Fibo 76.4% of $47.07/$53.74 rally and unmask key short-term support at $47.07.

Res: 50.00, 50.18, 50.41, 51.02
Sup: 48.90, 48.64, 48.37, 47.79

Currency pair EUR/USD

The EUR/USD is in a channel (red/blue lines) which is struggling to break above the 61.8% Fibonacci retracement level of wave 2 (green) near the round level of 1.10. A breakout above or below a trend line could indicate the next direction. A bullish break indicates a continuation within wave C (purple) whereas a bearish break indicates a potential reversal.

The EUR/USD could have completed waves 5 (grey/pink) within wave C (purple) if price manages to break below the support trend line (blue). If that occurs, price could be building either an ABC (orange) or 12345 (red).

Currency pair GBP/USD

The GBP/USD broke the bull flag chart pattern (dotted orange) but the larger sideways zone (red/blue lines) remains intact. A potential bullish breakout could challenge 1.30.

The GBP/USD seems to be in a wave 5 (purple) and its first target is 1.2925 at the 200% Fibonacci level.

Currency pair USD/JPY

The USD/JPY could have completed wave 3 (brown) due to the bearish engulfing twins, which is the candlestick pattern that emerged near the 112 resistance. Price could now be building a potential wave 4 (brown) retracement if price stops at one of the shallow Fibonacci levels (23.6-50%).

The USD/JPY has already made a retracement to and bounce at the 23.6% Fibonacci retracement level of wave 4 (brown). A break below the support trend line (green) could see a larger retracement unfold.

Turkish lira continues to trend higher against the dollar after starting the week with gap-higher opening and being on track for strong bullish weekly close.

Weaker dollar and positive economic environment boosted lira which is attacking key support at 3.5555 (23 Feb trough) which lies near another pivot at 3.5489 (Fibo 38.2% of 2.9137/3.9416 Aug-Jan rally). Break here would generate strong bearish signal for extension of pullback from fresh record high at 3.9416 (11 Jan peak) and expose targets at 3.5159 (weekly Kijun-sen) and psychological 3.5000 support. Pair's session high at 3.5800 and former low of 27 Mar at 3.5850 mark initial resistances, followed by 3.6000 (round-figure barrier) and week's high at 3.6245.

Res: 3.5660, 3.5800, 3.5850, 3.6000
Sup: 3.5555, 3.5489, 3.5301, 3.5159

Notes/Observations

Unlikely that ECB would alter its policy language at the April meeting ahead of France 2nd round elections

Sweden Central Bank (Riksbank) surprises with dovish stance; extends govt bond buying for another six months citing global uncertainties

German State Apr CPI data rebounds from month ago levels to around the ECB target area

Overnight:

Trump Tax plan highlights:

Reduces 7 tax brackets to 3 tax brackets of 10%, 25% and 35%; cuts business rate to 15%

Repeals estate tax would be an immediate repeal not a phase out

Repeals deductions on state and local taxes; repeals 3.8% ACA tax

Doubles the standard deduction ($12K for individuals, $24K for families)

Provides tax relief for families with child and dependent care expenses

Repeals Alternative Minimum Tax; repeals inheritance tax "death tax"

Maintains home ownership and charitable gift tax deductions

Offers one-time tax on trillions of dollars of corporate money held overseas

Eliminates tax breaks for special interests

Territorial tax system to level the playing field for American companies

Asia:

(KR) South Korea Q1 Preliminary GDP Q/Q: 0.9% v 0.8%e; Y/Y: 2.7% v 2.6%e

(JP) Bank of Japan (BOJ) keeps policy steady (as expected); Leaves Interest Rate on Excess Reserves (IOER) unchanged at -0.10%; maintained its policy framework of "QQE with Yield Control" and asset purchases at annual pact of ¥80T; Economic Assessment was tweak to economy has been turning towards a moderate expansion (prior continued to recover moderately as a trend); BOJ Outlook Report raised FY17/18 GDP growth outlook from 1.5% to 1.6% and FY18/19 GDP growth outlook from 1.1% to 1.3% (as speculated); Lowered FY17/18 core CPI outlook from 1.5% to 1.4% (as speculated)

US looking at putting North Korea on list of state sponsors of terrorism

Europe:

EU Commission: Juncker and UK PM May had constructive meeting in London on Wed about the Brexit process

Americas:

White House: President Trump agrees to not terminate NAFTA at this time after conversations with Mexico's Nieto and Canada's Trudeau

Economic Data

(DE) Germany Apr GfK Consumer Confidence: 10.2 v 9.9e (matched highest level since Oct 2001)

(CH) Swiss Mar Trade Balance (CHF): 3.1B v 3.1B prior; Real Exports M/M: +2.5 v -1.5% prior; Real Imports M/M: -1.4 v +2.7% prior

(FI) Finland Mar Unemployment Rate: 9.6% v 9.2% prior

(FI) Finland Apr Consumer Confidence: 21.5 v 22.9 prior; Business Confidence: 5 v 4 prior

(DE) Germany Apr CPI Saxony M/M: -0.1% v +0.2% prior; Y/Y: 2.1% v 1.8% prior

(ES) Spain Apr Preliminary CPI M/M: 1.0% v 0.9%e; Y/Y: 2.6% v 2.5%e

(ES) Spain Apr Preliminary CPI EU Harmonized M/M: 0.9% v 0.7%e; Y/Y: 2.6% v 2.3%e

(ES) Spain Q1 Unemployment Rate: 18.8% v 18.6%e

(TR) Turkey Apr Economic Confidence: 99.5 v 96.0 prior

(SE) Sweden Central Bank (Riksbank) left its Repo Rate unchanged at -0.50% (as expected) but extended its govt bond buying program (QE) by SEK15B during the H2 of 2017

(DE) Germany Apr CPI Brandenburg M/M: -0.1% v 0.3% prior; Y/Y: 1.8% v 1.4% prior

(DE) Germany Apr CPI Hesse M/M: 0.0% v 0.0% prior; Y/Y: 2.1% v 1.7% prior

(DE) Germany Apr CPI Bavaria M/M: -0.1% v +0.4% prior; Y/Y: 1.9% v 1.7% prior

(IT) Italy Apr Consumer Confidence: 107.5 v 107.4e; Manufacturing Confidence: 107.9 v 107.3e v 107.1 prior, Economic Sentiment: No est v 105.1 prior

(AT) Austria Apr Manufacturing PMI: 58.1 v 56.8 prior (16th month of expansion and highest since March 2011)

(DE) Germany Apr CPI North Rhine Westphalia M/M: 0.1 v 0.1% prior; Y/Y: 2.1% v 1.7% prior

(PT) Portugal Apr Consumer Confidence: -1.8 v -3.4 prior; Economic Climate Indicator: 1.8 v 1.6 prior

(EU) Euro Zone Apr Business Climate Indicator: 1.09 v 0.82e; Consumer Confidence (Final): -3.6 v -3.6e , Economic Confidence: 109.6 v 108.2e , Industrial Confidence: 2.6 v 1.3e, Services Confidence: 14.2 v 12.9e

Fixed Income Issuance:

(DK) Denmark sold total DKK700M in 1-month and 4-month Bills

(SE) Sweden sold SEK750M in I/L 2019 bond; Yield: -2.0521% v -0.165% prior; Bid-to-cover: 5.0x v 9.84x prior

(IT) Italy Debt Agency (Tesoro) sold total €5.25B vs. €4.25-5.25B indicated range in 5-year and 10-year BTP Bonds

Sold €2.5B vs €2.0-2.5B indicated in 1.20% Jan 2022 BTP; Avg Yield: 1.04% v 1.04% prior; Bid-to-cover: 1.59x v 1.51x prior

Sold €2.75B vs €2.25-2.75B indicated in 2.2% June 2027 BTP; Avg Yield: 2.29% v 2.25% prior; Bid-to-cover: 1.32x v 1.36x prior

(IT) Italy Debt Agency (Tesoro) sold €3.5B vs. €3.0-3.5B indicated in Feb 2024 CCTeu (Floating Rate Bond); Avg yield: 0.93% v 0.70% prior; Bid-to-cover: 1.29x v 1.33x prior

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Index snapshot (as of 10:00 GMT)

Indices [Stoxx50 -0.5% at 3,560, FTSE -0.5% at 7,250, DAX -0.4% at 12,428, CAC-40 -0.4% at 5,264, IBEX-35 -0.9% at 10,668, FTSE MIB -0.6% at 20,703, SMI -0.2% at 8,815, S&P 500 Futures flat]

Market Focal Points/Key Themes: European equity indices are trading lower after a raft of corporate earnings pre-market and as market participants await the ECB's monetary policy decision due later today; Banking and financial stocks trading notably lower in the major European indices with shares of Deutsche Bank and BBVA leading sector losses after releasing their respective Q1 results, shares of insurer Munich Re the notable laggard in the Eurostoxx; shares of Nokia and Bayer notably outperforming in the index after releasing respective Q1 results; shares of Legal & General the laggard in the FTSE 100 after Credit Suisse initiated with underperform; shares of Lloyds however outperforming trading positive after releasing their Q1 results; Energy stocks trading lower as oil prices trade sharply lower intraday.

Upcoming scheduled US earnings (pre-market) include American Airlines, AllianceBernstein, AbbVie, Asbury Automotive, American Electric Power, Applied Industrial Technologies, Allegion, Ally Financial, Alexion Pharmaceuticals, American Tower, AO Smith, Air Products and Chemicals, Avnet, Brunswick, Bemis, Bristol-Myers Squibb, Boston Scientific, BorgWarner, CBRE Group, Celgene, Check Point Software, Cliffs Natural Resources, Comcast, CME, Carter's, Carpenter Technology, Constellium, Cooper Tire, Deluxe Corp, Dow Chemical, Dominos Pizza, DST Systems, EMCOR Group, EQT Corp, Ford Motor, First American, FTI Consulting, Franklin Electric, Generac, Helmerich & Payne, MarineMax, Intelsat, ICON, International Paper, Iron Mountain, Invesco, Johnson Controls, KKR, Lazard, LKQ, L-3 Technology, Southwest Airlines, Milacron Holdings, Meredith, MGM Resorts, Marsh & McLennan, Marathon Petroleum, MPLX, Maritage Homes, Nord Anglia, Oaktree Capital, Old Dominion, Old Republic, Penn National Gaming, Pinnacle Foods, Parker Hannifin, PolyOne, Potash, Patterson-UTI, Praxair, Radian Group, Reliance Steel and Aluminum, Raytheon, Servicemaster Global Holdings, Sirius XM, Simon Property Group, Extended Stay America, Teradata, Gentherm, Taylor Morrison, Under Armour, Domtar, Universal Logistics, Union Pacific, UPS, USG, Visteon, WESCO International, WEX, West Pharmaceuticals, Xcel Energy, Yandex, and Zimmer Biomet.

Equities (as of 09:50 GMT)

Consumer Discretionary: [Beiersdorf BEI.DE +0.5% (Q1 sales), Hermes RMS.FR +1.0% (Q1 sales), Lufthansa LHA.DE -1.9% (Q1 results), Persimmon PSN.UK +1.1% (trading update), WPP WPP.UK -2.1% (Q1 sales)]

Energy: [Total FP.FR -0.1% (Q1 results)]

Financials: [BBVA BBVA.ES -1.8% (Q1 results), Deutsche Bank DBK.DE -3.2% (Q1 results), Legal & General LGEN.UK -5.7% (analyst action), Lloyds Banking LLOY.UK +3.7% (Q1 results), Skandinaviska Enskilda Ban SEBA.SE +0.2% (Q1 results)]

Healthcare: [AstraZeneca AZN.UK -1.2% (Q1 results), Bayer BAYN.DE +3.2% (Q1 results, CFO to step down), Roche ROG.CH +0.8% (Q1 sales)]

Industrials: [Airbus AIR.FR -0.8% (Q1 results), BASF BAS.DE -2.5% (Q1 results), Kion Group KGX.DE -2.4% (Q1 results), Meggitt MGGT.UK -1.3% (Q1 sales), Taylor Wimpey TW.UK +0.2% (trading update)]

Materials: [Clariant CLN.CH +2.1% (Q1 results), Svenska Cellulosa SCAB.SE +1.6% (Q1 results), Wacker Chemie WCH.DE -2.4% (Q1 results)]

Technology: [STMicroelectronics STM.FR +1.7% (Q1 results), Wirecard WDI.DE -1.2% (prelim Q1 results)]

Telecom: [Com Hem COMH.SE +7.6% (Kinnevik acquires 18.5% stake), Nokia NOK1V.FI +6.4% (Q1 results), Orange ORA.FR -1.3% (Q1 results)]

Speakers

German Chancellor Merkel spoke in her in Parliament ahead of EU Brexit Summit noting that Brexit negotiations would be demanding on both sides during the 2-year window. She expected strong signal of unity from EU27 and shared EU's Juncker view that Brexit negotiations could only properly get going after the Jun 8th UK elections. Germany to press for clarity status of Germans living in Britain during negotiation period and added that was ready to give fair offer to Britains living in EU

Sweden Central Bank (Riksbank) policy statement noted that it would take longer before inflation stabilized around 2%, It noted that to support the upturn in inflation, monetary policy needed to be somewhat more expansionary and announced the expansion of its govt bond buying program (QE) by SEK15B into H2 2017 (**Note: program was set to expire in June). - Still considerable uncertainty over political and economic developments abroad. Members Floden, Ohlsson and Skingsley entered reservations against the decision to extend QE bond buying scheme. Believed that monetary policy did not need to be more expansionary. Repo Rate now not expected to be raised until Mid-2018 (pushed out further) and reiterated that saw likelihood of a rate cut over a hike

Sweden Central Bank (Riksbank) Gov Ingves post rate decision press conference reiterated that SEK currency (Krona) should gradually appreciate. Noted that recent wage agreements had been lower than expected

Eurogroup chief Dijsselbloem commeted from EU Parliament that he was confident that an agreement on a full Greek package would be reached soon. Expected Greece payout deal by end of May and foresaw renewed IMF contribution to the Greek bailout rescue

Czech Fin Min Babis: PM Sobotka taking steps to remove him from position

BOJ Gov Kuroda post rate decision press conference noted that the virtuous economic cycle was strengthening and that BOJ would continue with QQE until prices hit its inflation target. Reiterated view to achieve the 2% inflation target during FY18/19 as momentum remained in place but not sufficiently strong. Reiterated view to adjust policy if needed to maintain momentum towards price target. Needed to achieve 2% inflation target before discussing exit strategy as any premature discussion on exit strategy would confuse markets

China PBoC Dep Gov Fan Yifei reiterated govt stance to take measures preventing financial risks; confident it would maintain stability

RBA Gov Lowe: China needs to strike a balance while tightening capital outflows as it runs counter to its longer-run goal of liberalization

Iraq Oil Min Al-Luaibi stated that he supported extension of oil production cuts in H2 'in principle'. OPEC-led production cuts was gradually leading to market balance. He noted that possibility of deeper cuts was not on the table

Libya Sharara oil field said to be back online after pipeline protests end

Currencies

EUR/USD was steady around the 1.09 area ahead of the ECB rate decision. The pair did test a 5-month high earlier in the week at 1.0950. German State Apr CPI data rebounded from month ago levels to around the ECB target area and added to optimism that Europe continued to improve in its recovery. Focus of the ECB meeting likely be on the recent run of stronger growth and inflation data out of the Euro Zone and possibility that the taper argument could be revisited as the fundamental picture in Europe was improving. Dealers believed that it was unlikely that ECB would alter its policy language at the April meeting. There had been speculation that ECB could discuss removing some of its easing biases in the June statement. Outcome of French first round election on Sunday with Macron expected to win outright in May seemed have eased some concerns at ECB thus its overall tone could be more optimistic

The EUR/SEK was higher after the Riksbank surprised with an extension of its QE bond buying program for another 6 months. Dealers had believed that monetary policy did not need to be more expansionary at this time. EUR/SEK higher by 0.5% and approaching the 9.60 area.

USD/JPY was marginally higher after BOJ kept its policy steady and slightly amended its economic assessment upwards. Pair at 111.30 just ahead of the NY morning.

The CAD currency (Loonie) and MXP (peso) were firmer after President Trump noted that he would not scrap NAFTA but renegotiate the trade agreement.

Fixed Income

Bund futures trade at 161.30 up 2 ticks trading at the upper end of the today's range with the slight risk off tone helping put a bid in futures. A move lower targets week low at 160.65 followed by 160.15. Resistance moves to 161.63 then 162.02 with eventual target of 162.52 gap fill.

Gilt futures trade at 128.16 down 2 ticks trading off the lows in rangebound trade. Continuation to the downward trend eyes 127.94 followed by 127.74. Resistance stands at 128.58 then 128.81 followed by 129.14. Short Sterling futures trade flat to up 1bp with Jun17Jun18 flattening slightly to 12.0/12.5bp.

Thursday's liquidity report showed Wednesday's excess liquidity rose to €1.608T a rise of €4B from €1.604T prior. Use of the marginal lending facility rose to €313M from €120M prior.

Corporate issuance saw $6.2B come to market via 3 issuers with State Grid $5B 4 part offering accounting for the bulk of the issuance. Issuance for the week tops $12B and monthly issuance tops $68B.

Looking Ahead

(PT) Bank of Portugal Releases Bank Supervision Report

(BR) Brazil Mar Central Govt Budget Balance (BRL): -8.6Be v -26.3B prior

(CO) Colombia Mar Industrial Confidence: No est v -0.1 prior; Retail Confidence: No est v 23.2 prior

05:30 (HU) Hungary Debt Agency (AKK) to sell Bonds (3 tranches)

06:00 (CZ) Czech Republic to sell 6-month Bills

06:00 (UK) Apr CBI Retailing Reported Sales: 6e v 9 prior, Total Distribution: No est v 32 prior

06:00 (IL) Israel Mar Trade Balance: No est v -$1.4B prior

06:00 (IL) Israel Feb Manufacturing Production M/M: No est v 0.0% prior

06:45 (US) Daily Libor Fixing

(ES) Spain Mar YTD Budget Balance: No est v -€10.8B prior

07:00 (BR) Brazil Apr FGV Inflation IGPM M/M: -1.0%e v 0.0% prior; Y/Y: 3.5%e v 4.9% prior

07:45 (EU) ECB Interest Rate Decision: ECB expected to keep key rates unchanged

08:00 (BR) Brazil Mar PPI Manufacturing M/M: No est v -0.3% prior; Y/Y: No est v +0.3% prior

08:00 (DE) Germany Apr Preliminary CPI M/M: -0.1%e v +0.2% prior; Y/Y: 1.9%e v 1.6% prior

08:00 (DE) Germany Apr Preliminary CPI EU Harmonized M/M: -0.1%e v +0.1% prior; Y/Y: 1.9%e v 1.5% prior

08:15 (UK) Baltic Dry Bulk Index

08:30 (US) Initial Jobless Claims: 245Ke v 244K prior; Continuing Claims: 2.02Me v 1.979M prior

08:30 (US) Mar Advance Goods Trade Balance: -$65.2Be v -$64.8B prior

08:30 (US) Mar Preliminary Wholesale Inventories M/M: 0.2%e v 0.4% prior; Retail Inventories M/M: No est v 0.4% prior

08:30 (US) Mar Preliminary Durable Goods Orders: 1.3%e v 1.8% prior; Durables Ex-Transportation: 0.4%e v 0.5% prior; Capital Goods Orders (Non-defense ex aircraft): +0.5%e v -0.1% prior, Capital Goods Shipments (non-defense/ex-aircraft): 0.1%e v 1.0 prior; Durables Ex-Defense: No est v 2.2% prior

08:30 (US) Weekly USDA Net Export Sales

08:30 (EU) ECB chief Draghi post rate decision press conference

09:00 (RU) Russia Gold and Forex Reserve w/e Apr 21th: No est v $398.4B prior

09:00 (MX) Mexico Mar Trade Balance: $1.0Be v $0.7B prior

10:00 (US) Mar Pending Home Sales M/M: -1.0%e v +5.5% prior; Y/Y: No est v -2.4% prior

10:30 (US) Weekly EIA Natural Gas Inventories

11:00 (US) Apr Kansas City Fed Manufacturing Activity: 17e v 20 prior

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

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

13:00 (US) Treasury to sell 7-Year Notes