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Global Markets:

• Asian stock markets: Nikkei down 0.20 %, Shanghai Composite fell 0.35 %, Hang Seng declined 0.40 %, ASX 200 lost 0.15 %
• Commodities: Gold at $1266.30 (+0.05 %), Silver at $17.37 (+0.20 %), WTI Oil at $49.40 (+0.90 %), Brent Oil at $52.20 (+0.80 %)
• Rates: US 10 year yield at 2.29, UK 10 year yield at 1.06, German 10 year yield at 0.30

News & Data:

• Japan Mar National CPI (YoY): 0.2% Est. 0.3%
• Japan Mar National CPI Ex-Fresh Food (YoY): 0.2% Est. 0.2%
• Japan Mar Unemployment Rate: 2.8% Est. 2.90%
• Japan Mar Job/Applications Ratio: 1.45 Est. 1.43
• Japan Mar P Industrial Production (MoM): -2.1% Est. -0.80%
• Japan Mar P Industrial Production (YoY): 3.3% Est. 3.90%
• Japan Mar Retail Sales (MoM): 0.2% Est. -0.30%
• Japan Mar Retail Sales (YoY): 2.1% Est. 0.5%
• Australia Q1 PPI (YoY): 1.3%
• Australia Q1 PPI (QoQ): 0.5%
• New Zealand March Trade Balance NZD (MoM): 332m Est. 370m
• New Zealand March Trade Balance NZD (YoY): -3.67bn Est. -3.706bn
• New Zealand March Exports NZD (MoM): 4.65bn Est. 4.66bn
• New Zealand March Exports NZD (YoY): 4.31bn Est. 4.016bn
• New Zealand March Building Permits (MoM): 1.8%
• South Korea March Industrial Production (MoM): 1.5% Est. 1.5%
• South Korea March Industrial Production (YoY): 3.0% Est. 4%
• South Korea May Business Survey Manufacturing: 84
• South Korea May Business Survey Non-Manufacturing: 78

Markets Update:

The ECB kept rates and their QE programme unchanged, as expected by the market, but maintained their easing bias. This put the Euro under pressure again. EUR/USD fell from 1.0920 to a low of 1.0857 in Asia. Key support is now seen at 1.0780, followed by the weekend gap at 1.0730.

Meanwhile, the Pound is showing strength again, also party driven by strong cross flows (GBP buying against commodity currencies). GBP/USD broke above 1.29 resistance and should test 1.30 soon. Further gains beyond that seem likely in the near-term.

The USD/JPY rally has paused. Overnight, the pair consolidated in a 111.10-35 range. Should it break below 111 support, a retest of 110 seems likely. Overall, the downtrend is still alive, and the technical outlook for the pair negative.

NZD/USD is under a lot of pressure. It broke below key support at 0.6860, which suggests that losses will extend to at least 0.6670 in the near-term.

Upcoming Events:

• 06:30 GMT – French GDP
• 07:00 GMT – German Retail Sales
• 07:45 GMT – French CPI
• 09:00 GMT – SNB Chairman Jordan speaks
• 09:30 GMT – UK GDP
• 10:00 GMT – Euro Zone CPI
• 13:30 GMT – US GDP
• 13:30 GMT – Canadian GDP
• 15:00 GMT – US Michigan Consumer Sentiment
• 14:45 GMT – US Chicago PMI

US Session Highlights

Stock were subdued today, with little change in Blue chips and broader market indices. Techs, instead, continued to rally, pushing the NASDAQ to a new all-time high at 6,050, before closing slightly lower. Of the S&P sectors, Energy showed the largest decline at 1.1%, while Consumer Discretionary posted the largest gain at 0.5%.

US markets on close: Dow flat, S&P500 +0.1%, Nasdaq +0.4%

Best Sector in S&P500: Technology

Worst Sector in S&P500: Telecommunications

Biggest gainers: UA +9.9%; INTU +8.5%; XLNX +7.4%

Biggest losers: TDC -8.2%; FFIV -7.5%; EQT -7.0%

At the close: VIX 10.4 (-0.5pts); Treasuries: 2-yr 1.26% (flat), 10-yr 2.30% (-2bps), 30-yr 2.97% (-1bps)

US movers afterhours

WDC Reports Q3 $2.39 v $2.16e, R$4.65B v $4.54Be; +7.0% afterhours

GOOGL Reports Q1 $7.73 v $7.48e, R$24.8B (includes $4.6B TAC) v $19.7Be; +4.3% afterhours

CERN Reports Q1 $0.59 v $0.58e, R$1.26B v $1.23Be; +4.1% afterhours

AMZN Reports Q1 $1.48 v $1.03e, R$35.7B v $35.4Be; +3.9% afterhours

MSFT Reports Q3 $0.73 v $0.69e, R$22.1B v $23.6Be; -0.5% afterhours

INTC Reports Q1 $0.66 v $0.65e, R$14.8B v $14.8Be; -3.6% afterhours

KLAC Reports Q3 $1.62 v $1.54e, R$913.8M v $894Me; -3.6% afterhours

BIDU Reports Q1 $1.00 v $0.85e, R$2.45B v $2.32Be; CFO to step down, effective on appointment of successor; -3.8% afterhours

SBUX Reports Q2 $0.45 v $0.45e, R$5.3B v $5.42Be; -4.7% afterhours

FTNT Reports Q1 $0.17 v $0.15e, R$340.6M v $335Me; -7.2% afterhours

ATHN Reports Q1 $0.32 v $0.46e, R$285M v $297Me; -16.8% afterhours

Key economic data

(JP) JAPAN MAR JOBLESS RATE: 2.8% V 2.9%E (matches lowest rate since Jun 1994)

(JP) JAPAN MAR OVERALL HOUSEHOLD SPENDING Y/Y: -1.3% V -0.5%E

(JP) JAPAN APR TOKYO CPI Y/Y: % V -0.2%E; CPI EX-FRESH FOOD Y/Y: -0.1% V -0.2%E

(JP) JAPAN MAR NATIONAL CPI Y/Y: 0.2% (5-month low) V 0.3%E ; CPI EX FRESH FOOD (CORE) Y/Y: 0.2% V 0.2%E

(JP) JAPAN MAR PRELIMINARY INDUSTRIAL PRODUCTION M/M: -2.1% (biggest decline since June of 2016) V -0.8%E; Y/Y: 3.3% V 3.9%E

(JP) JAPAN MAR RETAIL SALES M/M: +0.2% V -0.3%E; RETAIL TRADE Y/Y: 2.1% (22-month high) V 1.5%E

(JP) JAPAN MAR VEHICLE PRODUCTION Y/Y: 4.7% V 11.2% PRIOR

(AU) AUSTRALIA Q1 PPI Q/Q: 0.5% V 0.5%; Y/Y: 1.3% (5-quarter high) V 0.7% PRIOR

(AU) AUSTRALIA MAR PRIVATE SECTOR CREDIT M/M: 0.3% V 0.5%E; Y/Y: 5.0% V 5.1%E

(NZ) NEW ZEALAND MAR BUILDING PERMITS M/M: -1.8% V +17.2% PRIOR

(NZ) NEW ZEALAND MAR TRADE BALANCE (NZ$): +332M V +370ME; First surplus in 9 months

(KR) SOUTH KOREA MAR INDUSTRIAL PRODUCTION M/M: 1.0% V 1.5%E; Y/Y: 3.0% V 4.0%E

Asia Session Notable Observations, Speakers and Press

Asian indices are tracking lower despite the modest gains in US indices as traders express caution over geopolitical and policy risks stemming out of Washington and Beijing. In his "100-day in office" milestone interview, President Trump turned his focus to both North and South Korea. On the former, Trump said it is his "biggest worry" and that it would be very difficult to resolve situation diplomatically, adding that "we could end up having a major, major conflict with North Korea." Subsequently, however, Trump criticized the current trade deal with South Korea, noting that US is owed $1B by Seoul for the deployment of THAAD missile defense system. In China, banking regulators have turned more of their focus on the property sector, tightening loans to developers and urging banks to monitor financing risks.

In FX, dollar majors traded little changed despite the cautious tone in stocks, with US GDP report coming into focus in early Friday session. NZD/USD remained in a tight range despite New Zealand hitting a trade surplus for the first time in 9 months, as exports to China jumped over 40% y/y. Japan saw a wide range of mixed economic data - national CPI slowed to a 5-month lows and industrial output y/y decline was the biggest in 9 months, while unemployment was better than expected matching 1994 lows and annualized retail trade reaching near 2-year high.

China

(CN) Some China banks said to have tightened loans to property developers - Chinese press

Japan

(JP) Japan Fin Min Aso: Plan to hold bilateral finance dialogue with China on May 6th - press

Australia/New Zealand

(NZ) RBNZ remains concerned by elevated property prices; Expects to publish debt-to-income consultation paper in about 6 weeks - press

Korea

(KR) US State Sec Tillerson: China has told US govt it warned N Korea not to conduct another nuclear test - Fox interview

(KR) BOK: To keep accommodative policy as demand-side inflation pressures are modest; Consumption rising steadily on perception of economic improvement

(KR) US Pres Trump: To renegotiate or terminate the South Korea trade deal; Wants $1B payment for THAAD missile defense system - press

(KR) South Korea Defense Ministry: Unchanged in view that US should pay for THAAD - Korean press

(US) Pres Trump: North Korea is my biggest worry; Would love to resolve situation diplomatically, but its "very difficult" - press interview

Asian Equity Indices/Futures (01:00ET)

Nikkei -0.4%, Hang Seng -0.5%, Shanghai Composite -0.4%, S&P/ASX200 -0.1%, Kospi -0.2%

Equity Futures: S&P500 flat; Nasdaq flat, Dax -0.1%, FTSE100 -0.2%

FX ranges/Commodities/Fixed Income (01:00ET)

EUR 1.0855-1.0875; JPY 111.05-111.35; AUD 0.7460-0.7475; NZD 0.6870-0.6890

June Gold +0.1% at 1,268/oz; June Crude Oil +1.2% at $49.55/brl; July Copper -0.1% at $2.60/lb

SPDR Gold Trust ETF daily holdings fall 0.9 tonnes to 853.4 tonnes

(CN) PBOC SETS YUAN MID POINT AT 6.8931 V 6.8896 PRIOR; 4th straight weaker setting; weakest setting since Apr 12th

(CN) PBOC to inject combined CNY80B v CNY50B prior in 7-day, 14-day and 28-day reverse repos, 9th straight injection; For the week, injects CNY70B v CNY170B in prior week

(CN) China Finance Ministry auctions CNY10B in 3-month bills at avg yield of 2.944% v 2.919% prior

(AU) Australia MoF (AOFM) sells A$800M in 5.75% 2022 Bonds; avg yield: 2.1198%; bid-to-cover: 4.68x

(JP) Japan MoF sells ¥1.99T v ¥2.2T indicated in 2-yr 0.1% JGBs; Avg yield: -0.193% v -0.206% prior; bid to cover: 5.51x v 3.82x prior

For the 24 hours to 23:00 GMT, the AUD declined 0.11% against the USD and closed at 0.7466.

LME Copper prices rose 0.2% or $9.0/MT to $5686.5/MT. Aluminium prices declined 0.2% or $3.0/MT to $1954.5/MT.

In the Asian session, at GMT0300, the pair is trading at 0.7469, with the AUD trading slightly higher against the USD from yesterday's close.

Early morning data showed that Australia's private sector credit rose 0.3% on a monthly basis in March, lower than market expectations for an advance of 0.5%. In the previous month, the private sector credit had registered a similar rise.

The pair is expected to find support at 0.7440, and a fall through could take it to the next support level of 0.7411. The pair is expected to find its first resistance at 0.7495, and a rise through could take it to the next resistance level of 0.7521.

Going ahead, market participants will await the release of Australia's AiG performance of manufacturing index for April, slated to release over the weekend.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the EUR declined 0.36% against the USD and closed at 1.0868, after the European Central Bank (ECB) President, Mario Draghi, gave no hints to curtail its massive bond-buying programme in the coming months.

The ECB, at its latest monetary policy meeting, maintained the key interest rate at 0.00% and left its monetary stimulus programme unchanged. In a post-meeting statement, the ECB President, Mario Draghi, reiterated that the central bank could increase the size or duration of its asset-buying programme if inflation looks set to fall far back below its target of near 2.0%. Nevertheless, Draghi expressed optimism over the Euro-zone's economic recovery, noting that it was increasingly solid, but stated that inflation pressures in the region remain subdued and are yet to show a convincing upward trend.

On the macro front, the economic sentiment indicator in the common currency region surged to a ten-year high level of 109.6 in April, amid increased optimism over the health of the region's economy. The index had registered a revised reading of 108.0 in the previous month. Additionally, the region's final consumer confidence index was confirmed at -3.6 in April, compared to a reading of -5.0 in the prior month.

Elsewhere, in Germany, the preliminary consumer price index advanced more-than-anticipated by 2.0% YoY in April, highlighting that inflation in the Euro-zone's largest economy is picking up, as an economic upswing continues and the labour market strengthens. Market participants had envisaged for a rise of 1.9%, following a gain of 1.6% in the previous month.

Macroeconomic data released in the US indicated that advance goods trade deficit widened less-than-anticipated to a level of $64.8 billion in March, from a revised deficit of $63.9 billion in the prior month. Also, the nation's initial jobless claims advanced to a level of 257.0K last week, topping market expectations of a rise to a level of 245.0K. In the prior week, initial jobless claims had recorded a revised level of 243.0K. Moreover, the nation's pending home sales eased 0.8% in March, less than market expectations for a fall of 1.0%. In the prior month, pending home sales had registered a rise of 5.5%.

Further, the nation's seasonally adjusted flash wholesale inventories registered an unexpected drop of 0.1% in March, defying investor consensus for an advance of 0.2% and following a rise of 0.4% in the previous month.

Another economic data revealed that the US flash durable goods orders rose less-than-expected by 0.7% in March, growing at its slowest pace since December 2016. Markets expected durable goods orders to rise 1.3%, after recording a gain of 1.8% in the prior month.

In the Asian session, at GMT0300, the pair is trading at 1.0866, with the EUR trading slightly lower against the USD from yesterday's close.

The pair is expected to find support at 1.0833, and a fall through could take it to the next support level of 1.0801. The pair is expected to find its first resistance at 1.0915, and a rise through could take it to the next resistance level of 1.0965.

Ahead in the day, investors will look forward to the Euro-zone's flash inflation figures for April and Germany's retail sales for March. Moreover, in the US, flash annualised GDP for Q1 and final Michigan consumer sentiment index for April, both slated to release later in the day, will garner a lot of market attention.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the GBP rose 0.37% against the USD and closed at 1.2900.

In the Asian session, at GMT0300, the pair is trading at 1.2907, with the GBP trading a tad higher against the USD from yesterday's close.

Overnight data indicated that UK's GfK consumer confidence fell to a four month low level of -7.0 in April, meeting market expectations and compared to a reading of -6.0 in the prior month. Moreover, the nation's Lloyds business barometer climbed to a level of 47.0 in April. In the previous month, the index had registered a level of 35.0.

The pair is expected to find support at 1.2867, and a fall through could take it to the next support level of 1.2828. The pair is expected to find its first resistance at 1.293, and a rise through could take it to the next resistance level of 1.2954.

Looking ahead, traders would focus on UK's flash GDP for Q1 and Nationwide house prices for April, scheduled to release in a few hours.

The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD marginally rose against the JPY and closed at 111.25.

In the Asian session, at GMT0300, the pair is trading at 111.1, with the USD trading 0.13% lower against the JPY from yesterday's close.

Overnight data revealed that Japan's jobless rate surprisingly remained unchanged at 2.8% in March, compared to market expectation for a rise to 2.9%. Meanwhile, the nation's national consumer price index (CPI) climbed less-than-anticipated by 0.2% YoY in March, compared to an advance of 0.3% in the prior month, while markets had envisaged for a gain of 0.3%. On the other hand, flash industrial production in Japan slid 2.1% MoM in March, higher than market expectations for a drop of 0.8%. Industrial production had risen 3.2% in the prior month.

Other economic data indicated that the nation's seasonally adjusted retail trade unexpectedly climbed 0.2% in March, confounding market expectations for a fall of 0.3% and compared to a revised advance of 0.3% in the previous month. In contrast, the nation's large retailers' sales fell 0.8% in March, after recording a drop of 2.7% in the prior month.

The pair is expected to find support at 110.88, and a fall through could take it to the next support level of 110.67. The pair is expected to find its first resistance at 111.45, and a rise through could take it to the next resistance level of 111.81.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD rose 0.13% against the CHF and closed at 0.9943.

In economic news, Switzerland’s trade surplus slightly narrowed to a level of CHF3.10 billion in March, compared to a revised surplus of CHF3.12 billion in the prior month.

In the Asian session, at GMT0300, the pair is trading at 0.9941, with the USD trading a tad lower against the CHF from yesterday’s close.

The pair is expected to find support at 0.9918, and a fall through could take it to the next support level of 0.9896. The pair is expected to find its first resistance at 0.9963, and a rise through could take it to the next resistance level of 0.9986.

Moving ahead, investors will eye comments from the Swiss National Bank’s (SNB) Chief, Thomas Jordan, as he is scheduled to speak in a few hours. Also, traders would look forward to Switzerland’s KOF leading indicator for April, slated to release today.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD rose 0.18% against the CAD and closed at 1.3639.

Yesterday, the US President, Donald Trump, pledged to keep the US in the North American Free Trade Agreement (NAFTA).

In the Asian session, at GMT0300, the pair is trading at 1.3642, with the USD trading slightly higher against the CAD from yesterday's close.

The pair is expected to find support at 1.3557, and a fall through could take it to the next support level of 1.3471. The pair is expected to find its first resistance at 1.3699, and a rise through could take it to the next resistance level of 1.3755.

Going ahead, investors will closely monitor Canada's GDP data for February, to gauge strength in the Canadian economy.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

Daily Pivots: (S1) 0.8394; (P) 0.8445; (R1) 0.8474; More...

Intraday bias in EUR/GBP is neutral with focus on 0.8413 minor support. Firm break there will suggest that rebound from 0.8312 has completed. And intraday bias will then bias turned back to the downside for 0.8303 support next. Break will extend the correction from 0.9304 high. On the upside, above 0.8529 will extend the rebound form 0.8312 to 0.8786 resistance. Overall, price actions from 0.9304 are seen as a corrective pattern and there is no clear sign of up trend resumption yet.

In the bigger picture, price actions from 0.9304 are viewed as a medium term corrective pattern. In any case, we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside. Rise from 0.6935 (2015 low) will resume at a later stage to 0.9799 (2008 high). However, sustained break of 0.8116 could bring deeper decline to next key support level at 0.7564 before the correction completes.

Daily Pivots: (S1) 1.4526; (P) 1.4583; (R1) 1.4617; More...

EUR/AUD continues to lose upside moment, as seen in 4 hour MACD, ahead of 1.4721 key resistance. At this point, further rise is still expected as long as 1.4334 support holds. We're holding on to the case of trend reversal after defending 1.3671 key support. Decisive break of 1.4721 will confirm our bullish view. However, break of 1.4334 will suggest rejection from 1.4721 and turn bias back to the downside for 1.3980 support instead.

In the bigger picture, price actions from 1.6587 medium term top are viewed as a corrective pattern. Such correction could be completed after defending 1.3671 key support. Break of 1.4721 cluster resistance (38.2% retracement of 1.6587 to 1.3624 at 1.4756) should confirm this case and target 61.8% retracement at 1.5455 and above. Overall, we'd expect the up trend from 1.1602 to resume later. However, sustained break of 1.3671 will invalidate our bullish view and would turn extend the fall from 1.6587 towards 1.1602 long term bottom.