ISSN: 2056-3736 (Online Version) | 2056-3728 (Print Version)

  • Best/worst performers in Commodities today: USOil: 0.5%, UKOil: 0.4%, NGAS: -0.5%, Copper: -0.5%.
  • Best/worst performers in majors vs USD today: NZD: 0.7%, CAD: 0.2%, AUD: 0.2%, CHF: -0.1%, EUR: -0.1%, GBP: -0.1%.
  • RBA: domestic risks moved from home loans to loans for developers. Aussie banks face risk from New Zealand dairy and housing exposure. The RBA Financial Stability Review says financial system remains in good condition overall.
  • Moody’s says the limited information from China makes its assessment challenging
  • IMF’s Rodlauer says China will allow more Yuan flexibility over time. Says currency’s real effective value litte change over past year.
  • Having bottomed at the daily pivot at 0.7683 in the last hour, the AUD/USD pair is seen hovering at session tops following the Chinese economic releases. AUD/USD keeps 0.77 handle post-China data dump Currently, the AUD/USD pair rises 0.25% to fresh session highs at 0.7716, keeping bids intact above 0.77 handle. The Chinese macro updates came in positive, with the GDP figures meeting expectations, while the industrial production, retail sales and fixed asset data outpacing estimates, which triggered a renewed risk-on wave in the markets and send the higher-yielding currencies such as the AUD higher. China’s Q1 GDP y/y came at 6.7% vs 6.7% expected and 6.8% last. March Industrial Production y/y stood at 6.8% vs 5.9% expected and 5.4% last, while March Fixed Assets (excluding rural) YTD y/ came at 10.7% vs 10.4% expected and 10.2% last. As per March Retail Sales y/y, it came at 10.5% vs 10.4% last. The sentiment around the Aussie remains underpinned as the recent upbeat Aus jobs and Chinese trade data continue bolster the AUD bulls. While optimistic RBA’s FSR released earlier on the day also keeps the AUD/USD underpinned.
  • Japan’s Finance Minister Taro Aso said on Thursday he had expressed deep concerns to U.S. Treasury Secretary Jack Lew over one-sided currency moves that earlier this week saw the yen hit its strongest levels in more than 17 months against the dollar. Aso met with Lew on the sidelines of a Group of 20 finance ministers’ meeting in Washington that is expected to put currency policies high on the agenda. “I told (Lew) that excessive volatility and disorderly currency moves would have a negative impact on the economy. I also expressed deep concern over recent one-sided moves in the currency market,” Aso told reporters.
  • The USD has made a tentative recovery against the EUR and JPY this week, supported by US front-end yields and firmer oil prices. We see scope for the USD to extend its gains against the EUR in the near term. This is consistent with STEER, signalling that EURUSD short-term fair value is closer to 1.1206 (see chart). Going forward however, we don’t see scope for a sustained USD recovery, particularly if dovish Fed comments continue to prevent a rebound in Fed tightening expectations. We continue to target 1.16 in EURUSD by mid-year. Next week’s calendar of FOMC speeches features the Fed’s Dudley and Kashkari.
  • The Reserve Bank of Australia (RBA) minutes from its 19 April meeting may shed more light on the recent adjustment to the easing bias signalled at the meeting. We remain bearish on the AUD versus the EUR and NZD, and see significant scope for markets to turn more dovish on the RBA. Elsewhere, Canada March CPI data and retail sales are out on Friday (22 April). The outcome of the Doha oil producer talks on April 17 will be key to crude prices and we remain inclined to fade strength in both CAD and oil.
  • Tokyo businessman Randal Furudera isn’t about to swap his German-made BMW M5 for a “boring” Japanese car, although he’ll give them some grudging respect for their ho-hum dependability. Deep-pocketed buyers like Furudera are driving sales in Japan of high-end foreign brands, which dominate the niche sector in a car market long seen as all but shuttered to overseas automakers. “Most Japanese cars these days are sort of becoming moving appliances,” the 54-year-old told AFP. “They’re very reliable, they’re good quality, they never break and all that, but they’re not very interesting to drive.”
  • The Greek bailout program is not heading for a crisis, the head of the Eurogroup of euro zone finance ministers told CNBC on Thursday, saying that a deal on a reform package that will unlock more loans to the country was near. “We’re getting very close (to an agreement over reform targets) so I’m not for all this crisis talk.
  • World financial leaders sounded a sour note about the global economy on Thursday, pointing to Britain’s possible exit from the European Union as a serious threat alongside rising anti-trade sentiment and China’s bumpy growth path. Concern that British voters are edging closer to leaving the EU in a June 23 referendum has spooked finance ministers, central bankers and other officials gathered here for the International Monetary Fund and World Bank spring meetings. IMF Managing Director Christine Lagarde signaled policymakers’ heightened fears that a “Brexit” could derail Europe’s shaky economic recovery and reverberate further afield. “We have clearly elevated ‘Brexit’ as one of the serious downside risks on the horizon of global growth,” Lagarde said in a press conference just two days after the IMF cut its 2016 global growth forecasts for the fourth time in less than a year.