Sample Category Title

• Rates: Chinese growth data put worst growth scenario's (temporarily?) to bed
  Core bonds edge lower this morning as Chinese eco data shelve most pessimistic growth scenarios, at least for now. The US 10-yr yield regains the 2.5%-2.55% area, turning the technical picture more neutral again. European investors build in some more caution ahead of tomorrow's EMU PMI's.
• Currencies: EUR/USD holds ground above 1.13 after strong Chinese data
  EUR/USD slipped below 1.13 yesterday, yet temporarily. This morning's Chinese growth figures displayed economic resilience and pushed the couple back above 1.13. Market moves stay fairly subdued however as more important data and earnings are due in short notice. Sterling stays in defensive mode even as Brexit temporarily moved to the background

The Sunrise Headlines

• US equity markets closed yesterday's session little higher with technology shares outperforming (Nasdaq +0.30%). Asian equities are largely trading higher this morning with Chinese indices struggling to profit on strong growth data.
• The US government is considering other potential nominees for the two open seats on the Fed board as President Trump's preferred candidates, Cain and Moore, have drawn widespread criticism, incl. from Republican Senators.
• US crude inventories unexpectedly decreased (-3.1m barrels) last week, adding to the concerns of a shrinking global market. The news pushed the price for one barrel Brent crude oil to $72, the highest level in five months.
• Chinese GDP grew faster than expected in the first quarter of this year. The economy expanded 6.4% (YoY) vs. 6.3% expected. Industrial production and retail sales both beat estimates in March, supporting the growth.
• New Zealand's first quarter inflation dropped to 1.5% (YoY), down from 1.9% the quarter before and below market expectations (1.7%). The New Zealand dollar slid on the result to a three-month low
• The Canadian right-wing United Conservative Party (UCP) retook office in Alberta, Canada's largest oil-producing province. The UCP aims to take Canadian PM Trudeau under fire ahead of the federal elections in October.
• Today's US eco calendar only contains second-tier data. Canada, the UK and the EMU (final) print consumer inflation data for March. Fed governors Harker and Bullard speak, while the Fed's beige book is released. Q1 earnings continue.

Currencies: EUR/USD Holds Ground Above 1.13 After Strong Chinese Data

Chinese growth data supports EUR/USD

A strong Asian session initially supported euro buying yesterday. EUR/USD retreated from its intraday high around 1.1314 however. Reuters reported that “a significant minority” of ECB officials doubt the projected growth recovery in the second half of this year. The couple staged a comeback on a lack of enthusiasm within the ECB regarding deposit tiering. EUR/USD eventually did slip below 1.13 (1.1281) as US/German interest rate differentials widened in favour of the dollar, despite weak US industrial data. USD/JPY closed unchanged at 112.

China's growth data took centre stage during today's Asian session. 2019Q1 GDP growth slightly beat estimates and other high profile data equally showed resilience. EUR/USD jumped back above 1.13. The Aussie dollar advanced near 0.72. The Chinese yuan performs rather disappointingly, suggesting some investor fatigue. The kiwi dollar (0.67) slipped after soft (inflation) data before recovering on the Chinese data. The yen traded a similar pattern. USD/JPY changes hands close at 112.

Today's economic data flow basically ran dry after the Chinese batch this morning. The numbers at first sight have further eased investor growth concerns. But will the anedotical evidence in the Fed's beige book later today do so too? Speeches by Fed's Harker and Bullard are wildcards for trading. Meanwhile the earnings season gains traction. The next important point of reference are tomorrow's EMU PMI's.

Global economic sentiment has recently turned for the better. Chinese GDP data did not completely debunk that. Last week's price actions shows the euro is still net benefiter of such circumstances. The currency recaptured 1.13 but the situation remains fragile. We watch for Q1 earnings and EMU PMI's to further confirm the sentiment turnaround. We maintain the view that a EUR/USD break lower isn't evident given the Fed's wait-and-see bias unless EMU/US data come in surprisingly weak/strong. A break above 1.13 introduces resistance at 1.1448.

Yesterday's UK job report was strong. Nevertheless, sterling traded with a slight negative bias, testing the upper bound of the 0.85/0.865 range (EUR/GBP closed at 0.864). Brexit temporarily moved to the background as British MP's enjoy the Easter holidays. March CPI data might trigger some sterling volatility today. However, it won't change the BoE's assessment. In a broader perspective we stay cautious on sterling as long as Brexit and the political impasse drags on. We assume the EUR/GBP 0.85 support area to be solid.

EUR/USD dipped below 1.13 only temporarily after Chinese growth data does not completely debunk growth optimism for now

The GBP/USD bullish breakout is still the most likely scenario. If the current wave pattern is valid, then price has completed a wave 4 (green) and a bullish breakout could confirm a wave 5 (green) which seems ready to aim for the 50% Fibonacci retracement level of wave 4 vs 3.

The GBP/USD broke below the support trend line (blue) and expanded the wave C (green) correction towards the 61.8% Fibonacci retracement level of wave 2 vs 1. The wave 1-2 (orange) wave outlook is invalidated only if price is able to break below the bottom and 100% Fibonacci level. The wave 3 (orange) pattern requires a strong and impulsive breakout otherwise the range and consolidation might last longer.

Bank of America (BAC) shows an incomplete bullish sequence from December 25,m 2018 low, favoring further upside. In the short term update below, the rally from March 26, 2019 low ($26.61) to $29.50 unfolded as an impulse and ended wave 1. The stock then pullback in wave 2 to $28.74 as an Elliott Wave zigzag structure. It has since resumed higher again within wave 3. Subdivision of wave 3 is in an impulse structure of a lesser degree.

Up from wave 2 low at $28.74, wave ((i)) ended at $30.32 and wave ((ii)) ended at $29. It still needs to break above wave ((i)) high at $30.32 to validate the view and avoid a double correction. Short term, as far as pullback stays above $28.74 in the first degree, expect BAC to extend higher. If pivot at $28.74 fails, then we can count the entire rally from March 26 low ($26.21) to $30.32 as wave 1. In this case, the stock then can do a wave 2 pullback in 3, 7, or 11 swing to correct the cycle from March 26 low before the rally resumes.

1 Hour BAC Elliott Wave Chart Asia Update

General Trend:

• Higher rates weigh on property sector in China
• BHP declines after cutting iron ore production forecast, iron ore prices decline on expected production resumption by Vale
• Australian paint company Duluxgroup rises over 26%, received takeover offer from Nippon Paint
• Softbank declines over 1%, press speculation that Sprint/T-Mobile deal could face regulatory hurdles
• Netflix declines less than 1% in afterhours trading post earnings/guidance
• China government bond futures decline after better data; analysts debate whether China has stabilized and the potential implications for monetary policy
• China money market rates rise despite MLF operation amid better data
• New Zealand Dollar and bond yields decline after Q1 CPI miss, rate cut bets
• Japan and Singapore report declines in March exports to China
• US and Japan plan to continue trade talks
• Australia monthly jobs data due on Thursday amid focus on RBA policy outlook
• Bank of Korea (BOK) expected to leave policy unchanged on Thursday, some focus is expected on central bank’s outlook comments
• US companies expected to report earnings on Wed include Bank of New York, Morgan Stanley and Pepsico

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened -0.1%
• (NZ) NEW ZEALAND Q1 CPI Q/Q: 0.1% V 0.3%E; Y/Y: 1.5% V 1.7%E
• BHP.AU Reports Q3 Iron Ore production (100% basis, Waio) 64Mt v 67.0Mt y/y; Attributable Iron ore production 56.1Mt v 58.0Me; Cuts Iron ore production (100% basis, Waio) 265-270Mt (prior 273-283Mt); Attributable Iron ore production 235-239Mt (prior 241-250MT)
• DLX.AU To be acquired by Nippon Paint at A$9.80/shr
• STO.AU Reports Q1 (A$) Rev 1.02B v 794M y/y; Production 18.4 MMBOE v 13.8 y/y
• (NZ) New Zealand PM Ardern: Will not go ahead with capital gains tax, unable to gain consensus
• (NZ) New Zealand RBNZ Q1 Sectoral Factor Model Inflation Y/Y: 1.7% v 1.7% prior; Sectoral Factor Model Non-Tradeable (core) Y/Y: 2.8% v 2.7% prior

Japan

• Nikkei 225 opened +0.1%
• (JP) Bank of Japan (BOJ) Financial Systems Report: Real estate loans to GDP ratio has turned negative (1st time since 1990); financial system maintaining stability as a whole
• (JP) JAPAN MAR TRADE BALANCE: ¥528.5B V ¥363.2BE; ADJ TRADE BALANCE: -¥177.8B V -¥242.5BE
• 6645.JP Omron Automotive Electronics to be acquired by Nidec for ¥100B (after the close yesterday)
• (JP) Japan Trade Min Motegi: Trade talks focused on goods including autos and agricultural, good start to talks, No agreement reached yet; FX is an issue to be discussed by Fin Mins
• (JP) Nikkei report notes that at current pace of asset purchases BOJ will overtake the state-run pension fund (GPIF) as the top shareholder of Japanese stocks as early as 2020
• (JP)) Bank of Japan (BOJ) Deputy Gov Amamiya: Reiterates BoJ will scrutinize potential risks to economy and prices (including financial imbalances) in guiding monetary policy
• (JP) Japan Feb Final Industrial Production m/m: 0.7% v 1.4% prelim; y/y: -1.1% v -1.0% prelim; Capacity Utilization m/m: +1.0% v -4.7% prior

Korea

• Kospi opened flat
• (KR) Russia confirms making preparations for summit between Putin and North Korea leader Kim; US envoy to North Korea will also visit Russia this week – Yonhap
• 020560.KR According to main lender to Kumho Asiana Group, the group intends to sell Asiana Airlines within 6-months - Nikkei

China/Hong Kong

• Hang Seng opened +0.1%; Shanghai Composite opened -0.1%
• (CN) CHINA Q1 GDP Q/Q: 1.4% V 1.4%E; Y/Y: 6.4% V 6.3%E; GDP YTD: 6.5% v 6.3%e
• (CN) CHINA MAR INDUSTRIAL PRODUCTION Y/Y: 8.5% V 5.9%E (fastest growth since July 2014); YTD Y/Y: 6.5% V 5.6%E
• (CN) CHINA PBOC CONDUCTS CNY200B IN 1-YEAR MEDIUM-TERM LENDING FACILITY (MLF) V CNY286B PRIOR AT 3.30% V 3.30% PRIOR (first operation since Dec 2018)
• (CN) China National Bureau of Statistics (NBS) Spokesman Mao Shengyong: Positive factors increased in Q1
• (CN) IMF's Kang: See no more RRR cuts for banks in China - financial press
• (CN) China former PBOC official: China is at risk for a housing price increase - China press
• (CN) China PBoC sets yuan reference rate: 6.7110 v 6.7097 prior
• (CN) China PBoC Open Market (OMO): Injects CNY160B in 7-day reverse repos v CNY40B injected in 7-day prior; Net: CNY160B injection v CNY40B prior
• (CN) China overnight repo rate +10bps to 2.99% (highest level since 2015)
• (CN) CHINA MAR YTD PROPERTY INVESTMENT Y/Y: 11.8% V 11.6% PRIOR
• (CN) CHINA MAR RETAIL SALES Y/Y: 8.7% V 8.4%E; RETAIL SALES YTD Y/Y: 8.3% V 8.3%E
• (CN) CHINA MAR JOBLESS RATE: 5.2% V 5.3% PRIOR
• (CN) CHINA MAR YTD FIXED URBAN ASSETS Y/Y: 6.3% V 6.3%E
• (CN) China Agriculture Ministry Official: Pork prices to rise 70% y/y in H2
• (CN) OECD: Sees China 2019 stimulus equal to 2% of GDP, policy stimulus may worsen economic distortions

Other Asia

• (MY) FTSE Russell has placed Malaysia on its fixed income watch list for at least 6 months, FTSE Russell is considering whether to downgrade Malaysia's status - Local press
• (SG) SINGAPORE MAR NON-OIL DOMESTIC EXPORTS M/M: -14.3% V -4.8%E; Y/Y: -11.7% V -1.5%E; Electronic Exports Y/Y: -26.7% v -8.0% prior

North America

• (US) Weekly API Oil Inventories: Crude: -3.1M v +4.1M prior
• AAPL Confirms Qualcomm and Apple agree to drop all litigation; settlement includes payment to Qualcomm from Apple
• INTC To exit 5G smartphone modem business, will focus on 5G network infrastructure, will give more details with Q1 results

Europe

• (EU) Eurogroup chief Centeno: Euro Area budget won't start as a 'bazooka'; Euro is our best and only shot to shape the world financial order
• (UK) Labour Party Spokesperson: Not true that Brexit talks have stalled with the UK Govt (denies Guardian report that had cited Corbyn)
• (CH) Switzerland expected to sign China belt and road deal during Switzerland President Maurer's visit to China - SCMP

Levels as of 1:20 ET

• Nikkei 225, +0.3%, ASX 200 -0.2%, Hang Seng -0.2%; Shanghai Composite +0.1%; Kospi -0.1%
• Equity Futures: S&P500 +0.1%; Nasdaq100 +0.2%, Dax +0.1%; FTSE100 -0.1%
• EUR 1.1306-1.1278 ; JPY 112.16-111.92 ; AUD 0.7206-0.7153 ;NZD 0.6776-0.6667
• Gold +0.2% at $1,279/oz; Crude Oil +0.7% at $64.46/brl; Copper +0.4% at $2.945/lb

Market movers today

In the euro area, focus today is on the final March HICP figures, which will reveal how much of the fall in core inflation to 0.8% was driven by seasonal effects related to the timing of Easter and which will likely reverse in April.

Markets will also keep an eye on Italy today, where Finance Minister Tria will speak about the outlook before Parliament's Budget Committee. Yesterday, we already saw Italian yields coming under pressure on the back of negative headlines on the budget outlook.

In the UK, data will likely show inflation remaining close to 2% in March amid a continued strong labour market, as yesterday's figures showed. Both Bank of England Governor Carney and Bank of France Governor Villeroy de Galhau are due to speak in Paris.

Selected market news

The Chinese economy fared a lot better in Q1 than recently thought. Overnight, Q1 GDP growth was reported at 6.4% y/y, beating the consensus expectation of 6.6% y/y. In addition, industrial production expanded 8.5% y/y in March, which was significantly higher than the consensus expectation of 5.9% y/y. In contrast to the stronger data from China, data out of the rest of the region disappointed. Japanese and Singapore exports contracted and CPI inflation fell in New Zealand.

The price of Brent crude briefly tested the USD72/bbl level overnight. Oil prices rose on the weekly inventory numbers from the American Petroleum Institute, which was said to report that US crude stocks dropped 3.1mb last week. In addition, the forthcoming expiry of Iran sanctions waivers continues to attract attention in the oil market, with reports of countries looking for other sources for crude oil imports.

A number of ECB headlines hit the wires yesterday, suggesting among other things that a significant minority doubts the forecast for a growth recovery in H2, that the ECB has not discussed a rate cut and that members lack enthusiasm regarding a tiered deposit system.

German ZEW expectations surprised on the upside and registered a second consecutive increase from -3.6 to 3.1 in April, in a sign that investors expect the dark clouds over Germany's economy to lift in the coming months. The current situation assessment remains lacklustre, however, amid many lingering headwinds. For the euro area, the ZEW expectations-current conditions spread has turned even more positive with the April print, which historically has pre-signalled turning points in the manufacturing PMI with a 2-5M lead.

Daily Pivots: (S1) 1.5682; (P) 1.5758; (R1) 1.5799; More...

EUR/AUD drops to as low as 1.5683 today. Break of 1.5721 support indicates resumption of decline from 1.6765. Intraday bias is back on the downside for 61.8% projection of 1.6765 to 1.5721 from 1.6122 at 1.5477. On the upside, break of 1.5853 resistance is needed to indicate short term bottoming. Otherwise, near term outlook will stay bearish in case of recovery.

In the bigger picture, as long as 1.5346 support holds, outlook will still remain bullish. Uptrend from 1.1602 (2012 low) is expected to resume sooner or later. Break of 1.6765 will target 61.8% retracement of 2.1127 (2008 high) to 1.1602 at 1.7488 next. However, firm break of 1.5346 key support will indicate trend reversal, with bearish divergence condition in weekly MACD, and turn outlook bearish.

Daily Pivots: (S1) 0.8625; (P) 0.8643; (R1) 0.8664; More...

EUR/GBP recovers further as consolidation from 0.8474 is extending. Intraday bias remains neutral first. In case of stronger recovery, upside should be limited by 0.8722 resistance to bring down trend resumption. On the downside, firm break of 0.8474 will resume larger down trend for 0.8416 long term projection next. On the upside, though, sustained break of 0.8722 will suggest near term reversal and bring stronger rise back to 0.8840 resistance and above.

In the bigger picture, EUR/GBP is seen as staying in long term range pattern started at 0.9304 (2016 high). Current fall from 0.9305 (2017 high) is a falling leg inside the pattern. Such decline could extend to 100% projection of 0.9305 to 0.8620 from 0.9101 at 0.8416 and possibly below. But for now, we'd expect strong support around 0.8312 support to contain downside and bring rebound.

Daily Pivots: (S1) 126.14; (P) 126.42; (R1) 126.65; More....

Intraday bias in EUR/JPY remains neutral first. Further rise is expected as long as 125.61 resistance turned supported holds. Above 126.79 will target 127.50 resistance first. . Decisive break there will resume whole rise from 118.62 for medium term channel resistance at 129.15 next. However, break of 125.61 will turn bias back to the downside for 123.65 support instead.

In the bigger picture, there is no confirmation of completion of the down trend from 137.49 (2018 high) yet. In case of an extension, break of 118.62 will target 109.03/114.84 long term support zone. However, break of 127.50 will solidify the case of medium term bullish reversal. Further decisive break medium term channel resistance will affirm reversal and target 133.12 key resistance and above.

Daily Pivots: (S1) 145.84; (P) 146.33; (R1) 146.65; More...

No change in GBP/JPY's outlook as consolidation from 148.87 is extending. Intraday bias remains neutral and more sideway trading could be seen. For now, further rise remains in favor as long as 143.72 support holds. Decisive break of 149.48 key resistance will carry larger bullish in implications and target 156.58 resistance next. However, on the downside, sustained break of 143.72 will indicate near term reversal, after rejection by 149.48 key resistance. In that case, intraday bias will be turned to the downside for 141.00 support first.

In the bigger picture, focus is staying on 149.98 key resistance. Decisive break there should confirm that medium term fall from 156.59 (2018 high) has completed at 131.51 already. Rise from 131.51 is then seen as the third leg of the corrective pattern from 122.36 (2016 low). GBP/JPY should then target 156.59 and above. However, rejection by 149.98 will retain medium term bearishness and could extend the fall from 156.59 through 131.51 to 122.36.

Daily Pivots: (S1) 1.1347; (P) 1.1362; (R1) 1.1384; More...

EUR/CHF surges to as high as 1.1393 so far today. Intraday bias remains on the upside for 1.1444 key resistance next. Decisive break there will indicate larger bullish reversal. On the downside, below 1.1343 minor support will turn intraday bias neutral first, before staging another rally.

In the bigger picture, focus is back on 1.1444 resistance with current rebound. Decisive break there will indicate completion of the decline from 1.2004, with support from 61.8% retracement of 1.0629 to 1.2004 at 1.1154. In this case, further rise should be seen to 1.1713 resistance next. On the downside, firm break of 61.8% retracement of 1.0629 to 1.2004 at 1.1154 is now needed to confirm down trend resumption. Otherwise, medium term outlook will be neutral at worst.