Forex - European Highlights - 16 May 2019


 10:59 (GMT) 16 May

  [Forex Highlights]

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European Highlights

European Highlights - 16 May 2019 (0101-LKDB-C01)

16 May 2019

Asia FX and News

+ Australian unemployment rate rose to 5.2% in April, though employment rose a larger than expected 28.4k. But this was all due to temporary rather than fulltime employment, which fell 6.3k. The market focused on the rise in the unemployment rate, though this was due to an increase in the participation rate to a record 65.8%. Rate cut expectations were increased, with the market now fully priced for two rate cuts this year, and AUD/USD fell around 30 pips in response, but recovered most of the decline by the end of the session. NZD/USD softened with the AUD.

+ USD/JPY traded lower through the Asian session, helped by the weaker Australian data and softer equity markets as they responded to Trump's decision to blacklist Huawei.

Nikkei and JGBs

+ Nikkei -0.81%, 10Y JGB at -0.06%

Europe FX and news

+ The USD softened a little through the European morning, seeing small losses against the EUR and significant weakness against the CAD, while the AUD and NZD managed to recover to levels seen ahead of the Australian employment data overnight. The JPY weakened a touch.

+ The Scandis also showed some strength, with EUR/NOK dropping to the lowest level since May 2, helped by a firmer oil price. Strength in the commodity currencies and weakness in the yen also reflected some recovery in equity markets after weakness overnight.

+ GBP remained the weakest of the majors, with EUR/GBP hitting 0.8744 - its highest level since February 19. Concerns are growing about the possibility of May resigning if she fails to pass the Withdrawal Bill in early June, as most believe is overwhelmingly likely.

+ EUR/USD continues to find support at 1.12 following the rally above that level after the report that Trump had decided to delay import tariffs on autos.

+ The Eurozone trade balance increased more than expected in March to 22.5bn from 17.9bn in February. Exports and imports to and from the US and China remained strong, while exports to Turkey, India and South Korea remained weak on a y/y basis.

Bonds and equities

+ While core remains underpinned by trade issues, more stable risk tone and BTP bounce encouraging yield grab in wider periphery. Italy Dep. PM says 5star will not vote for a Budget that increases debt, further helping IT10s pull back to 2.7%-. Large ticket buy noted on ES10s, -5bp to 0.9%-, while PGBs, GGBs also tighter. Pressure on PM May to set exit date also helping to keep gilts firm, GB10s testing into 1.03-5% support.

Data:

JP: PPI (Apr) 0.3% m/m (Mkt: 0.2 Prev: 0.3)

JP: PPI (Apr) 1.2% y/y (Mkt: 1.1 Prev: 1.3)

AU: Employment (Apr) 28.4 chg k (Mkt: 15 Prev: 27.7R)

AU: Unemployment (Apr) 5.2% (Mkt: 5 Prev: 5)

Still to Be Released -

Data:

04:30 GMT - NL: Unemployment (sa) (Apr) % (Prev: 3.3)

07:00 GMT - AT: CPI (Apr) % m/m (Prev: 0.9)

07:00 GMT - AT: CPI (Apr) % y/y (Prev: 1.8)

09:00 GMT - EU: Trade Balance (sa) (Mar) EUR bn (Mkt: 19.4 Prev: 19.5)

09:00 GMT - IT: HICP (Apr F) % y/y (Mkt: 1.2 Prev: 1.2)

Still to Be Released -

12:30 GMT - CA: Manufacturing Sales (Mar) 4cast: 1.5% m/m (Mkt: 1.5 Prev: -0.2)

12:30 GMT - US: Building Permits (Apr) 4cast: 1300k (Mkt: 1295 Prev: 1269)

12:30 GMT - US: Housing Starts (Apr) 4cast: 1210k (Mkt: 1226 Prev: 1139)

12:30 GMT - US: Initial Claims (11 May) k (Prev: 228)

12:30 GMT - US: Philadelphia Fed Survey (May) (Mkt: 10 Prev: 8.5)

Events & Auctions:

02:45 GMT - AU: RBA's Bullock speaks in Sydney

03:30 GMT - JP: 12mth Bills Auction

03:35 GMT - JP: 5yr Bonds Auction

07:30 GMT - EU: ECB's Praet moderates panel in Brussels

08:15 GMT - DE: Bundesbank's Weidmann speaks in Hamburg

08:50 GMT - FR: Tap of OAT 0 2/25/22 (EUR 4.5bn)

08:50 GMT - FR: Tap of OAT 0 3/25/25 (EUR 4.5bn)

08:50 GMT - FR: Tap of OATei 0.1 3/1/29 (EUR 0.5bn)

08:50 GMT - FR: Tap of OATei 0.1 7/25/36 (EUR 0.3bn)

08:50 GMT - FR: Tap of OATi 2.1 7/25/23 (EUR 0.7bn)

11:00 GMT - SE: Riksbank's Ingves speaks in Stockholm

11:15 GMT - UK: BoE's Woods speaks in Lausanne

12:30 GMT - CA: ADP Canada Releases April Payroll Estimates

12:30 GMT - EU: ECB's Guindos speaks in Brussels

14:30 GMT - CA: BoC Publishes Financial System Review

15:30 GMT - US: 4wk Bills Auction (USD 50bn)

15:30 GMT - US: 8wk Bills Auction (USD 35bn)

17:30 GMT - UK: BoE's Haskel speaks in York

18:00 GMT - EU: ECB's Coeure speaks in Geneva


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