The economic calendar heats up in the latter half of the week as the European Central Bank (ECB) delivers a verdict on interest rates and the US government reports on durable goods orders and gross domestic product (GDP). What else will drive the markets today? This and more are mentioned in this 25 April Market Moving Fundamental Events Analysis.
25 April, HotForex – 10-year Bund yields are down -0.4 bp at 0.623% in early trade, the 2-year is down -0.5 bp at -0.5685. 10-year Treasury yields pierced the 3% mark overnight, but have fallen back slightly to currently 2.998%, while yields moved broadly higher in Asia with the 10-year JGB up 1.2 bp at 0.054%.
Stock markets headed south in Asia, following a weak close in the U.S. with concerns about the earnings outlook amid warnings on profit outlooks hit sentiment.
European Markets Outlook
With a lack of key data releases in Europe today the focus is on the ECB meeting tomorrow, where Draghi will likely see through the recent run of weak confidence data to keep the ECB on course to end net asset purchases by the end of the year, but repeat once again that inflation is not yet on a sustainable path higher, which means the ECB is not ready to commit just yet.
USDJPY lifted back above 109.00 from yesterday’s correction low at 108.54 but has so far left yesterday’s 10-week peak at 109.20 untroubled. Ditto for EURJPY. Stock markets in Asia have been broadly lower following declines on Wall Street, with investors digesting higher yields — the 10-year T-note finally touched the 3.0% level (and first time here since early 2017) — and doubts about earnings growth.
The USA500 closed out yesterday with a 1.3% loss, while the Nikkie 225 was showing a 0.3% loss in the late PM Tokyo session. This backdrop has likely curtailed yen selling, according to market narratives. In data, Japan’s February industry activity index came in with 0.4% m/m growth, slightly below the median forecast of 0.5%. USDJPY has been trending higher for a month now, from sub-105.00 levels.
The dynamic has been concomitant with rising U.S. yields, with the looser fiscal policy having given added underpinning to Fed tightening expectations.
This comes with the BoJ continuing to peg JGB 10-year yields near 0.0%. Demand for foreign assets by Japanese life insurers has been a factor propping USDJPY up so far in the new fiscal year, while an abatement in concerns about trade tensions and cooling relations on the Korean peninsula has also been in the mix. Overall, we advise following the trend in USDJPY for now. Support comes in at 108.40-42.
Main Macro 25 April Market Moving Fundamental Events Analysis
- Credit Suisse Economic Expectations
- Crude Oil Inventories – Expectations – -2.043M Barrels from -1.1M last week
- BOC Gov Poloz & Wilkins speech – Poloz and Wilkins appear before the Senate Standing Committee on Banking, Trade and Commerce on Wednesday.
Support & Resistance Levels
This article about 25 April Market Moving Fundamental Events Analysis was written by Andria Pichidi, Market Analyst at HotForex. The provided article is a general marketing communication for information purposes only. It does not constitute an independent investment research. Nothing in this communication contains an investment advice or an investment recommendation. It also does not contain a solicitation for the purpose of buying or selling of any financial instrument.
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