April 2015 ~ Forex Watcher

Thursday, April 30, 2015

Gold – Steadies Above Support at $1180

Gold for Friday, May 1, 2015

In in the last 24 hours Gold has fallen sharply back down through the key $1200 level down to below another support level around $1180. It is now consolidating right around $1185 after enjoying some support around $1180. To start this new week Gold was trying to rally higher and regain lost ground from the end of last week which saw it drop to near $1175. The support at $1180 did well to keep it propped up as it has done again in recent hours. In the last couple of weeks, gold has traded in a narrow range right around the key $1200 level and this range had been getting tighter, although to close out last week it drifted lower and fell to a one month low. Gold has had an attraction to the key $1200 level as every time it ventures away it returns quickly to trade right around it. Several weeks ago gold sprung to life surging higher away from the key $1200 level back to a seven week high above $1220 before easing back and finding some support at the key $1200 level. Back at end of March gold eased a little for a few days to below $1185, although for the best part of the last few weeks gold has moved strongly off the support at $1150 and then found some new support from the $1200 level.

Throughout the second half of February gold enjoyed rock solid support from the key $1200 level which held it up on numerous occasions. For about a month gold drifted steadily lower down to a one month low near the key $1200 level before finding the solid support at this key level. At the beginning of December gold eased lower away from the resistance level at $1240 yet again back down to below $1200. During the second half of November gold made repeated runs at the resistance level at $1200 failing every time, before finally breaking through strongly. Throughout the first half of November Gold enjoyed a strong resurgence back to the key $1200 level where it has met stiff resistance up until recently.

Throughout the second half of October gold fell very strongly and resumed the medium term down trend falling from above $1250 back down through the key $1240 level, down below $1200 to a multi year low near $1130. It spent a few days consolidating around $1160 after the strong fall which has allowed it to rally higher in the last couple of weeks. Earlier in October Gold ran into the previous key level at $1240, however it also managed to surge higher to a five week high at $1255. In late August Gold enjoyed a resurgence as it moved strongly higher off the support level at $1275, however it then ran into resistance at $1290. In the week prior, Gold had been falling lower back towards the medium term support level at $1290 however to finish out last week it fell sharply down to the previous key level at $1275.

Gold fell 2 percent on Thursday after better-than-forecast U.S. jobs data encouraged investors to sell the traditional safe-haven market, reviving expectations the Federal Reserve could raise interest rates soon. Data on Thursday showed claims for state unemployment benefits declined 34,000 to a seasonally adjusted 262,000 for the week ended April 25, the lowest reading since April 2000. Separately, U.S. consumer spending rose 0.4 percent last month after rising 0.2 percent in February, while the Chicago Purchasing Management Index jumped more than expected in April. Spot gold was heading for its biggest daily fall since March 6, dropping as much as 2.3 percent to a session low of $1,176.80 an ounce earlier. It was last lower at $1,182.50 an ounce, on track to finish April down a shade for its third straight month lower. U.S. gold futures for June delivery settled down $27.60 an ounce, or 2.3 percent, at $1,182.40. It looks like the trigger (for today’s weakness) was the U.S. data, with strong jobs creation,” Saxo Bank senior manager Ole Hansen said.

(Daily chart / 4 hourly chart below)

g_20150501 g_20150501_4hour

Gold May 1 at 00:50 GMT 1184.6 H: 1207.7 L: 1177.1

Gold Technical

1180

1150

—

1240

1300

—

During the early hours of the Asian trading session on Friday, Gold is consolidating after its recent sharp fall back to the support level around $1180. Current range: trading right around $1185.

Further levels in both directions:

• Below: 1180 and 1150.

• Above: 1240 and 1300.

OANDA’s Open Position Ratios

(Shows the ratio of long vs. short positions held for Gold among all OANDA clients. The left percentage (blue) shows long positions; the right percentage (orange) shows short positions.)

The long position ratio for Gold has moved back to near 75% as it has fallen sharply back through the key $1200 level to below $1180. The trader sentiment is strongly in favour of long positions.

Economic Releases

01:30 AU PPI (Q1)

08:30 UK BoE – Mortgage Approvals (Mar)

08:30 UK BoE – Net Consumer Credit (Mar)

08:30 UK BoE – Secured Lending (Mar)

08:30 UK CIPS/Markit Manufacturing PMI (Apr)

08:30 UK M4 Money Supply (Mar)

13:45 US Manufacturing PMI (Apr)

14:00 US Construction Spending (Mar)

14:00 US ISM Manufacturing (Apr)

14:00 US Univ of Mich Sent. (Final) (Apr)

US Vehicle Sales (Apr)

* All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Asian Equities Slide on Weak U.S. Earnings

Asian shares dipped on Friday after weak corporate earnings dented Wall Street, while the dollar nursed its losses after marking its worst monthly performance in four years against a basket of six major currencies. The dollar index .DXY stood at 94.824 in early trade, after skidding roughly 3.7 percent in April and touching a more than two-month low of 94.399 on the final day of the month.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was down 0.4. Friday’s activity is likely to be subdued, with some of Asia and much of Europe closed for Labour Day and May Day holidays.

Investors will be focused on China’s official Purchasing Managers’ Index report due at 9 p.m. EDT, to gauge the strength of manufacturing activity in the Asian economic powerhouse and the likelihood that the government will take additional stimulus measures. On Wall Street on Thursday, the three major stock indexes posted modest gains for the month of April, but ended the session with losses over 1 percent after weak earnings reports.

Reuters

Japan Inflation Rises However Below BOJ Target

Inflation in Japan rose for the first time in almost a year in March, offering hope of a rebound in price growth, although it remains far below the Bank of Japan’s 2% target, government data showed Friday.

The figures showing 0.2% growth in the core consumer price index come a day after the central bank left its monetary policy unchanged, sticking to the view that it has done enough to generate stable inflation albeit in a slower time frame than originally set out two years ago. Sparking inflation is a key part of Prime Minister Shinzo Abe’s strategy to revitalize the Japanese economy by getting companies and consumers to spend more of their cash.

Other data released Friday also offered modest signs of encouragement for Japan’s economy, with a further tightening of Japan’s labor market potentially adding upward pressure on prices and a smaller-than-expected drop in household spending suggesting domestic consumption may not be as weak as feared.

WSJ

Australia 200 – Drops to Two Month Low Below 5750

Australia 200 for Friday, May 1, 2015

After making another solid run at the key 6000 level earlier this week but again being forced back by overwhelming supply at that level, the Australian 200 index has dropped sharply to move through the 5800 level down to a two month low below 5750. The index will now be hoping for the long term support level around 5800 to kick in and continue to prop it up. A few weeks ago the Australian 200 index showed some positive signs and moved well towards the resistance at 6000 before finishing the week strongly lower. It now looks poised again to test the key 6000 level and if this level is broken, it is reasonable to expect a large shift towards bullish sentiment and potentially the index could really take off – it seems as if everyone is just waiting for it to happen. Several weeks ago the Australia 200 index pushed higher to a multi-year high to just above the key resistance level at 6000, before easing lower throughout the last couple of weeks to below 5900. It is receiving ongoing support at 5800, which is helping its latest push towards 6000. The key 6000 level remains firm and a significant obstacle and the index and markets are firmly fixed on it.

Back in mid-March the ASX200 index found some support at the key 5800 level which has propped it up and allowed it to rally a little and move higher, and of course it will be hoping to receive the same again. Back in early March the ASX200 index reversed from its highs near 6000 and started to establish a new medium term down trend before rallying higher a couple of weeks ago. It enjoyed a strong move higher throughout February moving from below the key 5800 level up to another multi-year high near 6000, where it met stiff resistance. At the beginning of February it spent a week or so battling with resistance at the key 5800 level which repeatedly fended off the index, resulting in it easing back a little. This level has resumed its key role and is currently having an impact on the index.

Throughout the second half of January the Australian 200 index did very well and surged higher to move back above the key 5400 level and push on through to the new highs. At this time, the resistance at 5500 stood tall and fended off all advances, however this now been broken strongly through. Throughout most of November and December, the Australia 200 Index fell steadily lower down towards support around 5150 and two month lows before rallying back above 5400 again. Over the last few weeks the Australia 200 index has struggled with resistance at 5400 which has forced it lower time and time again. The 5400 level has been a major player for the last 12 months and the index must get back above this level to encourage more buying and bullish sentiment.

Australia’s core consumer prices matched economists’ forecasts in the first three months of the year, providing scope for the central bank to reduce interest rates. The trimmed mean gauge of core prices advanced 0.6 percent from the previous quarter, the Bureau of Statistics said in Sydney Wednesday, in line with the median forecast. The consumer price index rose 0.2 percent from the prior period, compared with economists’ forecasts for a 0.1 percent increase. “Australia’s CPI figures aren’t as weak as we expected, but they are unlikely to prompt the RBA to abandon its plans to cut interest rates in early May,” said Paul Dales, chief Australia and New Zealand economist at Capital Economics. “It seems that the boost to inflation from the lower exchange rate is offsetting the drag from weak wage growth and the indirect effects from lower petrol and utility prices.”

(Daily chart below)

asx_20150501

Australia 200 May 1 at 00:15 GMT 5755 H: 5787 L: 5731

Australia 200 Technical

5650

5400

5150

6000

—

During the hours of the Asian trading session on Friday, the Australia 200 Index will be looking to make another run at the long term resistance level at 6000 after finishing last week so strongly.

Further levels in both directions:

• Below: 5650, 5400 and 5150.

• Above: 6000.

Economic Releases

01:30 AU PPI (Q1)

08:30 UK BoE – Mortgage Approvals (Mar)

08:30 UK BoE – Net Consumer Credit (Mar)

08:30 UK BoE – Secured Lending (Mar)

08:30 UK CIPS/Markit Manufacturing PMI (Apr)

08:30 UK M4 Money Supply (Mar)

13:45 US Manufacturing PMI (Apr)

14:00 US Construction Spending (Mar)

14:00 US ISM Manufacturing (Apr)

14:00 US Univ of Mich Sent. (Final) (Apr)

US Vehicle Sales (Apr)

* All release times are GMT

Asian Equities Open Lower after U.S. Selloff

Asian stocks opened lower on the final trading day of the week, pressured by a sell-off on Wall Street overnight and as investors reacted to a batch of economic data from Japan. However, trading volumes are set to be light on Friday as most markets in the region are closed for the Labor Day holiday.

Meanwhile, China’s official Purchasing Managers’ Index (PMI) is forecast to edge down to 50.0 from 50.1 in March, according to the median forecast of 13 economists in a Reuters poll.

Overnight, U.S. equities suffered heavy losses, led by a 1.6 percent plunge in the Nasdaq Composite amid weak earnings from tech and biotech plays. With the blue-chip Dow and the S&P 500 index shaving off 1 percent each, all three indexes finished below their 50-day moving averages on Thursday.

CNBC

Japan’s Inflation would Please BOJ

Japan’s inflation ticked higher in March, coming in slightly above expectations, offering a small sign of progress in the Bank of Japan’s (BOJ) two-year-long effort to kick start the long-moribund economy.

“Inflation may not fall into the negative over the next few months after all,” Koichi Fujishiro, a senior economist at Dai-ichi Life Research Institute (DLRI), told CNBC.

Japan’s core consumer price index (CPI) for March rose 2.2 percent from a year earlier, topping expectations for a 2.1 percent rise from a Reuters poll. Excluding the effects of the consumption sales tax hike in April 2014, the nationwide consumer price index (CPI) rose 0.2 percent, above expectations for a 0.1 percent rise. It was flat in February for the first time since May 2013.

CNBC

Official: Greece Reforms Still Lack Substance

Hopes of a deal between Greece and its creditors this weekend, after months of disagreement, were dampened Thursday, after a euro zone official told CNBC Thursday that reports of an imminent deal were misplaced.

It comes after various media reports suggested that Greece and its lenders were targeting a deal over its bailout in return for aid by Sunday, prompting hopes that the long-running negotiations could be nearing a breakthrough. But that claim was dismissed by a senior euro zone official, who told CNBC that such reports were inaccurate.

“Reports of an agreement to aim for a deal on Sunday were a misunderstanding and not accurate,” the source, who is close to the talks and did not want to be named because of their sensitive nature, said Thursday.

CNBC

EUR/USD Above 1.12 on Fed Expectations

The euro jumped to a two-month high against the dollar on Thursday in a move that analysts said could be attributed to one key factor: a scaling back of U.S. rate hike expectations.

The single currency rose more than 1 percent on the day to about $1.1250 – its highest level since late February. It marks a change in course after falling for several months against a broadly robust dollar.

“The euro’s strength today is not about what’s boosting it but about what’s hurting the dollar,” Geoffrey Yu, a senior currency strategist at UBS, told CNBC. “Federal Reserve rate hike expectations have taken a knock and the debate has switched from how many times will the Fed hike rates this year to if the Fed will hike rates this year.”

CNBC

Surge in German Yields Push EUR/USD to Two Month High

The euro stood at two-month highs against the dollar and yen early on Friday, having rallied for a second session on the back of another surge in German yields as fears of deflation in Europe eased just a little.

The common currency last fetched $1.1215, not far from the overnight peak of $1.1267. It has clearly broken above its recent $1.0457-$1.10625 range and is on track to end the week up more than 3 percent. The euro climbed as far as 134.515 yen, touched a three-week high of 73.35 pence. It scaled a seven-week peak of NZ$1.4769.

Bund yields jumped again on Thursday with the benchmark 10-year yield reaching 0.386 percent , up some 20 basis points in two days.

CNBC

Gold Steady Above $1180 after U.S. Jobs Data

Data on Thursday showed claims for state unemployment benefits declined 34,000 to a seasonally adjusted 262,000 for the week ended April 25, the lowest reading since April 2000.

Separately, U.S. consumer spending rose 0.4 percent last month after rising 0.2 percent in February, while the Chicago Purchasing Management Index jumped more than expected in April.

CNBC

West TX Oil Above $58

U.S. crude closed up 1.79 percent at $59.63 a barrel on Thursday, its highest settle of the year, helped by a weaker dollar and bets that a supply glut would ease.

After the June-till-January selloff that halved oil prices from highs above $100 a barrel, Brent and U.S. crude had their strongest recovery this month, gaining about $11 each, and hitting their highs for 2015. Brent was up 86 cents at $66.70 a barrel by 2:24 p.m. EDT, near a 2015 high of $66.93, which was reached earlier in the session.

The gains came as the dollar fell to a February low, making oil less expensive to holders of other currencies. Crude’s percentage gains in April were the best since May 2009, when prices were just recovering from the financial crisis, and backed oil bulls’ contention that the supply-demand imbalance would level.

CNBC

Japan Core CPI Rises 2.2% on-year in March

Japan’s core consumer price index (CPI) for March rose 2.2 percent from a year earlier, topping expectations for a 2.1 percent rise from a Reuters poll.

Excluding the effects of the consumption sales tax hike in April, the nationwide consumer price index (CPI) rose 0.2 percent, above expectations for a 0.1 percent rise. It was flat in February for the first time since May 2013.

Household spending in March fell 10.6 percent from a year earlier, a narrower fall than the 12.1 percent forecast in a poll of analysts by Reuters. It fell 2.9 percent in February. Japan’s jobless rate declined to 3.4 percent in March, compared with February’s 3.5 percent, coming in slightly better than a 3.5 percent forecast from a Reuters poll.

CNBC

AUD/USD – Enjoying Support from Key 0.7850 Level

AUD/USD for Friday, May 1, 2015

The Australian dollar has eased back towards the key 0.7850 level where it has received some support, after recently moving to a three month high just shy of 0.91. Throughout most of the last couple of weeks the Australian dollar enjoyed a strong surge higher to the three month high at 0.8075. To start this new week the Australian dollar looked poised to break through the long standing resistance level at 0.7850 even though this level has stood up tall for several months now. At the beginning of last week the Australian dollar fell sharply but landed on the previous key level at 0.77 which has offered considerable support since that time. A couple of weeks ago saw the Australian dollar enjoy a solid week moving off support around 0.76 to reach a three week high just shy of the resistance level at 0.7850. In doing so, it moved through the key resistance level at 0.77. Since the beginning of March the Australian dollar has relied heavily on support at the 0.76 level.

Below 0.76 its next obvious support level is down at 0.7550 and it will hoping to be propped up by it. Back in early March the Australian dollar made a statement and broke down strongly through the key 0.77 level which then provided significant resistance for the following few days. It was also able to enjoy some short term support around 0.7550 which propped it up and allowed it to rally strongly back up to above 0.79. Throughout February the Australian dollar made repeated attempts to move up strongly to the resistance level at 0.7850 however it was rejected every time and sent back easing lower, which is why this level remains significant presently. Just prior to that towards the end of February the Australian dollar moved through the resistance at 0.7850 to reach a new four week high around 0.7900. In the second half of January, the Australian dollar fell very sharply and break lower from the trading range that had been established roughly between 0.8050 and 0.8200.

Back in mid-January it made numerous attempts at the resistance level at 0.82 only to be sent back often before finally finishing that week moving through this key level. In doing so it was able to reach a one month high near 0.83 before being sold back down again towards 0.82 as the resistance and selling activity above this level kicked in. Over the Christmas / New Year period, the Australian dollar seemed to have been content with trading in a narrow range below the resistance at 0.82, which continues to remain a key level as it is presently provides resistance. The Australian dollar experienced a disappointing November and December moving from resistance around 0.88 down to the new lows recently. For a couple of months from September through to November, the Australian dollar did well to stop the bleeding and trade within a range between 0.8650 and 0.88 after experiencing a sharp decline throughout September which saw it move from close to 0.94 down to below 0.8650.

(Daily chart / 4 hourly chart below)

a_20150501

a_20150501_4hour

AUD/USD April 30 at 23:55 GMT 0.7901 H: 0.8022 L: 0.7863

AUD/USD Technical

0.7850

0.7700

0.7600

0.8000

0.8200

—

During the early hours of the Asian trading session on Friday, the AUD/USD is enjoying support around the 0.7850 level after easing back from its three month high near 0.81. Current range: trading right at 0.7900.

Further levels in both directions:

• Below: 0.7850, 0.7700, and 0.7600.

• Above: 0.8000 and 0.8200.

OANDA’s Open Position Ratios

(Shows the ratio of long vs. short positions held for the AUD/USD among all OANDA clients. The left percentage (blue) shows long positions; the right percentage (orange) shows short positions.)

The long position ratio for the AUD/USD has moved back to above 50% as the Australian dollar has eased back to the key 0.7850 level. The trader sentiment is in favour of short positions.

Economic Releases

01:30 AU PPI (Q1)

08:30 UK BoE – Mortgage Approvals (Mar)

08:30 UK BoE – Net Consumer Credit (Mar)

08:30 UK BoE – Secured Lending (Mar)

08:30 UK CIPS/Markit Manufacturing PMI (Apr)

08:30 UK M4 Money Supply (Mar)

13:45 US Manufacturing PMI (Apr)

14:00 US Construction Spending (Mar)

14:00 US ISM Manufacturing (Apr)

14:00 US Univ of Mich Sent. (Final) (Apr)

US Vehicle Sales (Apr)

* All release times are GMT

Greenback Swings Hinge on ISM Data

The U.S. dollar is riding a wave started by the Federal Open Market Committee (FOMC) statement last Wednesday.

While not a glowing endorsement of U.S. economic strength, the FOMC did not signal a change of course from its current monetary policy, though Federal Reserve members still see a benchmark interest rate hike as being likely later this year. The question of the timing of a rate hike has remains dependant on economic data. This adds some volatility to data releases, and explains some of the enthusiasm for the U.S. unemployment claims release that marked the best week in 15 years, boosting the USD against all major currencies.

Leading U.S. Manufacturing Indicator Due

The release of the Institute for Supply Management’s (ISM) manufacturing purchasing manager’s index (PMI) on Friday will give the American economy another opportunity to impress despite some concerns as it has failed to beat forecasts on a monthly basis since December 2014.

The Fed mentioned in its statement that a strong USD, and transitory effects such as weather and the oil supply glut, have had negative impacts on the economy. The fact that they are considered transitory factors while others such as employment are still considered resilient continues to build expectations of a rate hike later this year if the U.S. economy manages to awaken from its winter slumber.

The market is expecting a similar situation in 2014 where after a disastrous first quarter, blamed mostly on weather, the U.S. roared back to life in the second quarter. It bears reminding that the USD was not as strong then as it is now, and there are other factors that are hard to quantify like the ongoing European quantitative easing program that didn’t exist last year. The weather might be warmer, but the macroeconomic conditions have changed, expecting a similar reaction might delay positive news from the manufacturing sector and the economy at large.

American Consumers Aren’t Spending

Optimistic forecasters argue that the effect of lower energy prices and strong job growth will be enough to offset a strong currency and increase macro headwinds. So far, U.S. consumers have pocketed the energy savings, as retail sales have been softer. The Fed abandoned its focus on the single employment growth headline, to focus on the various components that did now show such a rosy employment picture.

The USD was able to get a boost after the FOMC and better-than-expected unemployment claims this week versus all major pairs except the EUR. The EUR/USD continues to climb and broke the 1.12 level recently. Major pairs like the USD/JPY march onward to the 120 level, and the Canadian loonie had its wings clipped at 1.20 to trade at 1.2120. The release of the ISM’s PMI is forecast to be still in expansionary territory, but if it fails to beat expectations, the underperforming trend of American economic indicators will continue to pressure the USD.

USD/CAD Canadian GDP and US Unemployment Claims Pressure Loonie

The loonie is falling against the USD after the U.S. employment claims numbers and Canadian GDP figures were published. The Canadian economy showed no growth at 0.0 percent. The USD was in need of some good news and it got them as unemployment claims dropped below forecast to a weekly 262,000 new claims. The combination of economic releases resulted in the USD/CAD gaining some traction and breaking out of the 1.2000 to 1.2050 range and trading upwards of 1.2070.

The Canadian gross domestic product (GDP) was expected to contract at -0.1 percent given the oil price drop. The surprise to the upside was that retail and financial services were able to offset the lower crude prices, but not enough to get the market excited and the U.S. data provided stronger direction. Statistics Canada who provides the growth data issued a revision to the January data with a downward update that leaves the monthly growth at -0.2%. The Canadian economy is heading to a weak first quarter as already forecasted by the Bank of Canada at zero percent growth but no contraction . The silver lining is the fact that although not enough to push GDP into positive territory retail and financials were able to get to a flat reading. With the oil industry under pressure to keep cutting jobs as revenues were hit by the impact of lower prices other exports have yet to take a bold step forward into filling that gap.

The U.S. dollar is riding the wave started by the FOMC statement yesterday. While not a glowing endorsement of U.S. economic strength it did not signal a change of course for the Federal Reserve whose members still see a benchmark interest rate hike later this year. The question of the timing has been left dependant on economic data. This adds some volatility to data releases and explains some of the enthusiasm for the U.S. unemployment claims release that marked the best week in 15 years boosting the USD against all major currencies.

Tomorrow’s release of the Institute for Supply Management Manufacturing Purchasing Manager’s Index will give the American economy another opportunity to impress. Although the ISM Manufacturing PMI has failed to do that on a monthly basis since December of 2014. The Federal Reserve mentioned in their statement that a strong USD and transitory effects such as weather and the oil supply glut have had a negative impact on the economy. The fact that they are considered transitory factors while others such as employment are still considered resilient continues to build expectations of a rate hike later this year if the U.S. manages to awaken from its winter slumber.

There are no Canadian releases on Friday which means the loonie will have to be at the mercy of the ISM index and the reaction it triggers in the market. An above expectations of 52.1 will boost the USD as it breaks the underperforming trend started in 2015. Another failure to print above forecasts can make the USD/CAD stumble again below 1.20 if the manufacturing index continues to show the transitory effects are no so temporary as the Fed thinks.

U.S Weekly Claims Best in 15-Years

Applications for U.S. jobless benefits declined last week to the lowest level in 15 years, showing employers view a first-quarter slowdown in the economy is probably temporary.

First-time filings for unemployment insurance fell by 34,000 to 262,000 in the week ended April 25, the lowest since April 15, 2000, a Labor Department report showed Thursday in Washington. The figure was smaller than the lowest projection in a Bloomberg survey of economists.

With job openings at a 14-year high and prospects for stronger growth after the first-quarter setback, companies are intent on maintaining headcounts. The level of firings is consistent the Federal Reserve’s view of sustained progress in the job market.

“Claims have been quite steady, remaining below this key level of 300,000,” Thomas Costerg, an economist at Standard Chartered Bank in New York, said before the report. “The U.S. labor market is in good shape and has been quite resilient.”

The median forecast of 50 economists surveyed by Bloomberg called for 290,000, with estimates ranging from 275,000 to 300,000. Claims in the prior week were revised to 296,000 from an initially reported 295,000.

The Labor Department, an agency spokesman said as the report was released to the press, estimated claims for Louisiana because of a storm-related power outage. The estimate was close to the actual figure reported later by the state, the spokesman said.

The four-week average of claims, a less-volatile measure than the weekly figure, declined to 283,750 from 285,000 in the prior week.

Bloomberg

US Open – Inflation, Income, Spending, Jobs Eyed

US futures are pointing slightly to the downside again on Thursday ahead of the release of some key inflation, spending, income and labour market data.

I think investors are a little downbeat today following Wednesday’s FOMC statement which may have been more hawkish than some were expecting. While policy makers did acknowledge the slowdown in the economy, the statement stressed that this period of lower growth is believed to be transitory and they see inflation returning to 2% in the medium term.

That would suggest they have not been deterred from raising rates this year as some may have hoped. The first quarter was certainly one to forget for the US but there were so many temporary factors driving that slowdown and companies will adjust to the stronger dollar in time. I think it would have been a big mistake for the Fed to push back plans for a hike based on that quarter alone.

It just comes to show what kind of environment we’re in when unemployment is at 5.5%, job creation has been strong for a long time barring the occasional blip as seen in March, CPI core inflation is at 1.8% and wage growth is good, yet people are still calling for extraordinarily low levels of interest rates. Regardless, I think this still makes a September rate hike likely while June seems off the cards now.

The eurozone managed to escape deflation in April following a four month stretch of falling prices. The ECBs quantitative easing program appears to have been largely responsible for upward price pressure returning, along with the bounce in oil prices. With indicators now pointing to moderate improvements in the eurozone economy going forward, the threat of long term deflation appears to have been reduced. We’ll probably continue to see low levels of inflation due to low oil prices and large amounts of slack in the economy but this is still progress.

The S&P is expected to open 6 points lower, the Dow 60 points lower and the Nasdaq 21 points lower.

Economic Calendar

For a look at all of today’s economic events, check out our economic calendar.

EUR Supported by Plummeting Sovereign Bond Prices

German Bund Yields disrupt all asset classes

Yield backup driven by “hot” money accounts

EUR expected to remain better bid through month-end

Kiwi Tries to Fly but Crashes

Sovereign bonds have been selling off hard over the past two-days as a number of factors send yields higher. For the first time in nearly a month, the US 10-year yield is trading outside the +1.8-2.0% range (+2.05%) while the German 10-year Bund has backed up +18bps to +0.29%.

The start of the broad dollar weakness can be attributed to the dovish shift in Fed expectations, but the EUR rally over the past two-session in particular is being supported by the assertive rally in German Bund yields. The ECB’s aggressive QE program has encouraged investors to own core Eurozone bonds and stocks, alongside a massive build up in EUR short positions (+78% of USD longs have been against the EUR).

The yield rally can be attributed to a number of factors. First, more and more money managers have been talking about the rich potential of the “short” position on European bonds.

Over the past ten-day’s, 10-year German debt has backed up +23bps as investor’s appetite for fixed income with a negative or flat return diminishes. The loss in fixed income has pressured the DAX and in turn has encouraged some aggressive EUR/USD short covering. The rise in German yields is also encouraging investors to consider switching from EUR to JPY as the funding currency of choice.

Second, yesterday’s euro zone March money supply report was stronger than estimated, with M3 growth rising more than expected to +4.6%, putting it back into the ECB’s comfort zone for the first time in six-years. Finally, there is and has been a plethora of euro-denominated corporate issuance this week. When supply is greater than demand, dealers will make room to take it down.

EUR: Where to from here?

The powerful back up in German yields has naturally forced the liquidation of more “hot” money long positions and not necessarily “real” money accounts that have been established before the introductions of the ECB’s QE program. In reality, the violent price action has not given real account holders the time, or the opportunity over the past two-sessions. It would require more than a couple of days of poor price action to convince the real account holders to bail on these positions – from their perspective, the ECB is still providing monthly support. Once month end requirements are out of the way, investors should expect some price consolidation, which will allow Bunds to stabilize in the near term.

The EUR’s moves after the disappointing U.S. GDP print (+0.2% vs. +1%) and the Fed statement yesterday has certainly surprised many of the dollar bulls and has resulted in greater uncertainty. The EUR’s extension this morning, breaking through the psychological €1.1200 handle with momentum, certainly forced some investors to reduce their risk exposure and reassess expectations – short EUR position continue to be the largest forex position (+78% of all dollar longs). It would not come as a surprise to see the 19-member single unit continue to experience a period of outperformance, as month-end extension needs to be dealt with. For the time being, the EUR will be expected to be well bid on dips (low of the week €1.0816/60 April 27), at least until various asset classes stabilize.

Kiwi Tries to Fly but Crashes

The NZD ($0.7600) trades under pressure this morning after dairy giant Fonterra (responsible for 30% of the world’s dairy exports) cut its forecast payout to its +10.6k co-op farmers and the RBNZ moved to an easing bias.

The Kiwi has fallen from lofty heights (NZD$0.7752) despite the RBNZ Assistant Governor preparing the market for such a shift in monetary bias last week. For some time now, investors had been less bullish than the central bank as inflation missed expectations. But, traders obviously needed the message in black and white to justify the overnight currency move.

The RBNZ said that it would focus on the medium trend in inflation while noting downside risks to GDP, including from the high valued NZD. This would suggest that the chance of a rate cut would rise if core-inflation does not gradually pick up. The market is now beginning to price in a rate cut from +3.5% to +3% by year-end.

Next week the RBA meet and their below average GDP growth and inflation expectations have encouraged a split decision of an RBA rate cut. The Aussie trading near AUD$0.80c should look expensive to a Governor that has been very vocal about it being overvalued.

Forex heatmap

U.S. Dollar Gains Slightly after Fed Statement

The dollar index gained slightly immediately after the Federal Reserve released its April statement. The U.S. dollar index was trimming losses at 95.12, down about 1 percent, following a dovish FOMC statement. It was previously at 94.84 before the statement’s release. The euro, meanwhile, continued trading at about $1.11 against the greenback.

The Fed acknowledged the soft patches in the U.S. economy, making it more likely it will not be ready to raise rates until at least September. But it did say the slowdown in the U.S. economic growth during the winter months was due partly to transitory factors, a statement that supported the dollar.

“The fact that policymakers continue to view the key drivers of the slower growth as ‘transitory’ suggests that their view of the economy may be slightly more upbeat than the color of recent economic reports may suggest,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

CNBC

Brent Oil Eases Below $65 as Japan’s Industry Stutters

Oil prices slipped away from five-month highs in early Asian trading on Thursday as Japanese factory output weakened for the second straight month. Japanese industrial output fell 0.3 percent in March adding to mounting evidence of an export-driven economy struggling to regain momentum amid slowing global growth.

Brent crude futures dropped 26 cents from their last settlement to $65.58 a barrel by 0307 GMT. U.S. WTI crude was virtually flat at $58.67 a barrel. The drops followed a session in which prices hit five-month highs after the first crude stock draw in almost half a year at the U.S. Cushing hub.

“Brent and WTI prices closed at the highest level in nearly five months as U.S. crude oil inventories rose by just 1.9 million barrels (compared to more than 5.5 million barrels the previous week),” ANZ bank said on Thursday. “WTI prices outperformed Brent as crude oil stocks at key US storage hub Cushing fell for the first time in five months,” it added.

Reuters

EUR/USD Jumps Above 1.11 as German Yields Soared

The euro was broadly higher on Thursday as German yields soared on easing deflation fears, while doubts about the strength of the U.S. recovery took a temporary toll on the dollar. Bund yields posted their biggest daily rise in two years after German annual inflation accelerated faster than forecast in April, suggesting the euro zone is pulling away from deflation.

The euro came within a whisker of $1.1200, pulling well away from this month’s low of $1.0521. It also powered toward 133.00 yen, reaching highs last seen on March 5. Against sterling, the common currency scaled a two-week peak of 72.28 pence. In contrast, data showed the U.S. economy nearly stalled in the first quarter. A statement from the Federal Reserve, issued a few hours after the GDP data, said the slowdown was probably transitory but still suggested any interest rate hike will not happen soon.

“Our assessment is that September remains the next most likely time for the Fed to move,” said David de Garis, senior economist at NAB. The dollar index .DXY fell as far as 94.678, reaching a low not seen since late February. It was last at 95.194.

Reuters

Asian Equities Lower after Downbeat U.S. Economic Growth

Asian stocks stumbled on Thursday while the euro held near two-month highs against the dollar after surprisingly downbeat first quarter economic growth in the United States dimmed the mood. The disappointing news on the world’s biggest economy, coming on top of a worrying slowdown in China, found expression in a warning by New Zealand’s central bank that it could cut rates if domestic momentum weakened.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.9 percent. Japan’s Nikkei shed 1.9 percent and South Korean, Australian, Chinese and Hong Kong shares also suffered losses. The drop in Asian equities followed Wednesday’s slide in U.S and European stocks, with Germany’s DAX – which hit a record high earlier this month – tumbling 3.2 percent on the euro’s surge.

The U.S. economy grew just 0.2 percent in the first quarter, down sharply from the previous quarter’s 2.2 percent growth. The disappointing data further dimmed already faint prospects for an interest rate hike in June by the Federal Reserve. “If the U.S. was the main source of the slowdown in Asian export growth in the first quarter we should see growth start to accelerate,” analysts at ING wrote.

Reuters

U.S. Economy Stumbles in Q1

U.S. economic growth nearly stalled in the first quarter as harsh weather dampened consumer spending and energy companies struggling with low prices slashed spending. Gross domestic product expanded at an only 0.2 percent annual rate, the Commerce Department said on Wednesday. That was a big step down from the fourth quarter’s 2.2 percent pace and marked the weakest reading in a year.

A strong dollar and a now-resolved labor dispute at normally busy West Coast ports also slammed growth, the government said. While there are signs the economy is pulling out of the soft patch, the lack of a vigorous growth rebound has convinced investors the U.S. Federal Reserve will wait until late this year to start hiking interest rates.

The recovery is the slowest on record and the economy has yet to experience annual growth in excess of 2.5 percent. “The U.S. economy has yet to demonstrate the self-sustaining resilience that the Fed wants to see before raising interest rates,” said Diane Swonk, chief economist at Mesirow Financial in Chicago. “A June liftoff is now off the table, our forecast for a September move holds but even that has become tenuous.”

Reuters

Japan Factory Output Down

Japanese industrial output fell for a second straight month in March, adding to mounting evidence of an economy struggling to regain momentum after last year’s sizable hit to consumption from a sales tax hike. The 0.3 percent decline in output compared with a median market forecast for a 2.3 percent drop and a 3.1 percent fall in the prior month, government data showed on Thursday.

Analysts had expected factory output to have eased again last month after posting its biggest gain in nearly four years in January, thanks to a pick in exports. However, slowing global growth continues to raise doubts about the outlook for external demand. On top of this, tame private consumption – which accounts for about 60 percent of the economy – is pushing the Bank of Japan into a tight corner even as it is expected to hold off on offering fresh stimulus at Thursday’s policy review.

“It’s true that the decline was much smaller than expected. Still, factory output was disappointing as it failed to sustain a big gain in January while inventory has piled up,” said Takeshi Minami, chief economist at Norinchukin Research Institute. “U.S. first quarter growth proved poor and China is slowing down, so external demand is weighing on Japan’s production.”

Reuters

China’s Demand for Commodities Return

Chinese demand for a wide range of commodities has been surprisingly strong this year despite worsening economic data, raising questions over how long the demand recovery can last.

For the first three months of the year, oil demand grew an annual 7.7 percent, its biggest gain in over two years while March iron ore imports soared 18.5 percent on month, snapping a two-month run of declines. Imports of refined copper metal rose to a four-month high last month, building on an 11.4 percent gain in copper consumption in February. And in the precious metals sector, March platinum imports jumped 26 percent on year, hitting their highest since December 2013.

The spike in demand seems at odds with recent growth indicators. Manufacturing activity in March remain in contraction territory while April’s figure fell to a one-year low, according to HSBC’s preliminary purchasing manager’s index (PMI) survey. Meanwhile, industrial production logged its worst performance in March since the global financial crisis and first-quarter gross domestic product hit a six-year low.

CNBC

Asia Consumption Likely to Increase Significantly

Consumers in Southeast Asia are “sleeping giants” who will wake up to their full potential over the next 5-10 years, recent reports show.

Robust consumption fueled by rising income levels and urbanization are expected to generate an additional $770 billion as 60 million people join the region’s consuming class or move into more affluent consumer segments by 2020, according to a study this month by Accenture involving more than 1,800 people in the region.

The formation of the Asean Economic Community (AEC), scheduled to take effect this year, will also enhance the attractiveness of Southeast Asia’s consumer markets by making it easier for companies to do business across borders. By 2020, the region could become a $3 trillion economy, making its mark as the world’s sixth biggest, Accenture noted.

CNBC

Moody Cuts Greece’s Rating Further

Ratings agency Moody’s on Thursday cut Greece’s credit rating deeper into junk territory due to uncertainty over whether the indebted country will be able to reach a deal with its international lenders in time to meet upcoming debt repayments.

Moody’s said it downgraded Greece’s government bond rating to ‘Caa2′ from ‘Caa1′ and assigned it a “negative” outlook, reflecting the balance of economic, financial and political risks in the country is “slanted to the downside.”

Fitch, Standard & Poor’s and Moody’s all raised Greece’s rating last year as the economy showed tentative signs of getting back on its feet after six years of recession.

CNBC

Fed Holds Rate at Zero with No Hint for Rise

Following through on indications in March, the Federal Open Market Committee on Wednesday offered no changes to its zero interest rate policy.

Not only did it not hike rates, it also removed all hints for what may lie ahead. Calendar references were deleted completely from the post-meeting statement.

The FOMC indicated after its March meeting that a rate hike in April was unlikely. The U.S. central bank has kept its key funds rate anchored near zero since late 2008, amid the financial crisis.

CNBC

U.S. Q1 GDP up 0.2%

Gross domestic product expanded at an only 0.2 percent annual rate, the Commerce Department said on Wednesday. That was a big step down from the fourth quarter’s 2.2 percent pace and marked the weakest reading in a year. A strong dollar and a now-resolved labor dispute at normally busy West Coast ports also slammed growth, the government said.

Economists polled by Reuters had forecast the economy expanding at a 1.0 percent rate. While the weak GDP figures could rattle financial markets, the growth slowdown is probably not a true reflection of the economy’s health, given the role of temporary factors such as the weather and the ports dispute.

CNBC

European Open – Eurozone Seen Escaping Deflation

European futures are mixed ahead of the open on Thursday despite the negative lead coming from the US and Asia following a mixed message from the FOMC’s latest policy statement.

As always, people are going to drill into the statement and interpret it in whatever way supports their own particular views. This month’s statement makes that very easy because the more dovish among us will focus on the acknowledgement that growth slowed in the winter months and inflation continues to run below the longer term objective. However, the statement also referred to the slowdown in growth as “transitory” and stated that it expects inflation to gradually rise towards 2% over the medium-term.

This is far more important in my view than a reference to a weak quarter that was driven by temporary factors such as weather and lower oil prices. Even the stronger dollar shouldn’t hit the economy as hard going forward as it did in the first quarter. A rebound in the economy in the second quarter should give the Fed comfort to raise rates and I still believe that will come in September. If the slowdown in the first quarter proves not to be transitory or disinflation pressures grow then we may have a problem, but until then I see no reason for the Fed not to raise rates this year.

The full FOMC statement can be viewed here.

We appear to have seen some big strides forward in negotiations between Greece and its creditors in the last couple of days. Greece’s deputy Prime Minister yesterday suggested that a deal could be done in early May and his language suggested it won’t necessarily be a deal the Greek people will be happy with, referring to it as a “minimum agreement” in order to avoid default while stating that in the long term, not just any solution will suffice. This sounds like fighting talk from a group that has been forced to concede on this occasion.

This is far better than the alternative, defaulting on its debt, which according to one eurozone official was days not weeks away. An eventual Greek default and exit is far from off the radar though, the can has potentially just once again be kicked down the road.

There’s plenty of economic data being released today which should provide a small distraction from the usual Greek chatter. German unemployment data will be released early in the session, with the rate seen remaining at 6.4%, as will inflation and GDP figures for Spain and, most importantly, inflation and unemployment figures for the eurozone. Both are expected to offer good news with deflation believed to have ended in April and unemployment fallen to 11.2%. This would suggest that the ECBs quantitative easing program is having a positive impact, helped largely by the depreciation of the euro.

Later on we’ll get the latest jobless claims, income and spending figures from the US, as well as the core personal consumption expenditure price index number March. This is the Fed’s preferred measure of inflation but comes a couple of weeks after the CPI release and therefore doesn’t get the kind of market reaction you would otherwise expect.

The FTSE is expected to open 9 points higher, the CAC 7 points lower and the DAX 19 points higher.

Economic Calendar

For a look at all of today’s economic events, check out our economic calendar.

BOJ Holds on Boosting Stimulus

The Bank of Japan refrained from boosting monetary stimulus even after inflation came to a halt, with Governor Haruhiko Kuroda betting it will re-emerge as the impact from cheaper oil fades.

The central bank kept a plan to expand the monetary base at an 80 trillion yen ($672 billion) annual pace, as forecast by 32 of 34 economists in a Bloomberg News survey. Later today, the BOJ will present updated inflation and growth forecasts and Kuroda will conduct a press briefing.

Holding off for now gives Kuroda time to gauge whether weakness in the U.S. and China last quarter will reverse following American job gains and Chinese stimulus. At the same time, today’s decision — following evidence of declines in consumer spending and industrial output in March that underscored a muted Japanese rebound — raises the risk of escalating political pressure to do more.

Bloomberg

Fed’s Yellen May Not Get a Second Chance

The best-case scenario for the U.S. Federal Reserve’s first interest-rate increase since 2006 is that the economy and markets don’t skip a beat. It’s the worst-case scenario that troubles Fed Chair Janet Yellen, according to Bank of America Corp. economist Michelle Meyer. In that outcome, central bankers increase rates from near zero only to realize that the world’s biggest economy is too fragile to handle even a small tightening of credit.

“If all they were able to do was to go that one time, it would probably have been appropriate for them to wait longer,” she said in a telephone interview Tuesday. “Yes, there’s a desire to not be at zero,” but a fraction of a percentage point higher won’t make much of a difference.

Policy makers — who will announce their latest decision at 2 p.m. in Washington — have held their benchmark rate in a range of zero to 0.25 percentage point since December 2008, and keep pushing out their outlook for a tightening of credit.

Bloomberg

Asian Equities Ease on Fed

Asian stocks dropped, with the regional benchmark paring its biggest monthly gain since September 2013, as the Federal Reserve downplayed weak U.S. economic growth and kept raising interest rates on the table for later this year.

The MSCI Asia Pacific Index fell 0.5 percent to 155.69 as of 9:01 a.m. in Tokyo, heading for a 6.4 percent advance this month. The Standard & Poor’s 500 Index slipped 0.4 percent on Wednesday after data showed the U.S. economy grew just 0.2 percent in the first quarter, with Fed Chair Janet Yellen attributing part of the slowdown to “transitory factors.” E-mini futures on the S&P 500 Index fell 0.1 percent.

“The jury is still out on whether the weakness points to a more structural slowdown in the economy,” Mark Lister, head of private wealth research at Craigs Investment Partners Ltd., which manages about $7.2 billion, said by phone from Wellington. “While plenty of people are expecting the rate hike to be pushed back even to 2016, its important to watch the next piece of economic news to gauge whether the weakness we’ve seen was a one off or the beginning of a trend.”

Bloomberg

Analysts Cut Their U.S. Q2 GDP Forecasts

The U.S. economy had a disappointing start to 2015, data released Wednesday showed. Now, a solid second quarter is looking less and less likely as well, clouding the outlook for Federal Reserve policy makers hoping to raise interest rates later this year.

The U.S. Bureau of Economic Analysis reported that gross domestic product expanded at just a 0.2 percent seasonally-adjusted annualized rate in the first quarter. It was below the 1 percent median forecast of economists surveyed by Bloomberg.

After the release, Macroeconomic Advisers cut its GDP growth tracking estimate for the second quarter to 2 percent from 2.2 percent. Its initial forecast, published April 7, was 2.8 percent. In an email to clients, the forecasting firm cited “inventory investment, which was well above expectations, and which points to a larger decline in the second quarter.”

Bloomberg

Fed Still Open to H2 Rate Rise

Federal Reserve policy makers left open the possibility of raising interest rates in the second half of this year by playing down the significance of the economy’s slowdown to a near-standstill in the first quarter.

In a statement issued Wednesday after a two-day meeting, Chair Janet Yellen and her colleagues blamed the winter slump partly on “transitory factors” and reiterated their belief that growth will pick up to a “moderate pace.”

“They were straightforward in acknowledging the weakness in the first quarter but avoided suggesting that ruled out interest-rate increases going forward,” said Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey.

Bloomberg

Japan Stocks Fall as BOJ Refrains From Boosting Record Stimulus

Japanese stocks fell as the Bank of Japan refrained from boosting record stimulus and after the Federal Reserve kept interest rates on hold as data showed the world’s biggest economy barely grew last quarter.

Honda Motor Co. tumbled 6.4 percent and Shin-Etsu Chemical Co. slid 6.3 percent after reporting profit that missed analyst estimates. Takeda Pharmaceutical Co. slumped 2.4 percent after saying it will pay $2.37 billion to resolve U.S. lawsuits accusing the company of hiding cancer risks from its Actos diabetes medicine. TDK Corp. gained 5.5 percent, the most on the Nikkei 225 Stock Average, as its profit forecast beat estimates.

The Topix index lost 1.8 percent to 1,598.77 as of 1:06 p.m. Tokyo, heading for the biggest loss in three months as it reopened after a holiday. All but two of its 33 industry groups fell. Volume on the measure was about 18 percent above its 30-day intraday average. The Nikkei 225 Stock Average dropped 2 percent to 19,652.87.

Bloomberg

Asian Equities Lower on U.S. Growth Concerns

Asian stocks sold down early Thursday on the back of mixed corporate earnings and tracking declines offshore amid renewed concerns over the U.S. economy.

Fresh data showed U.S. economy expanded a meager 0.2 percent in the first three months of the year, thanks to a strengthening dollar and stubbornly frugal consumers amid the harsh winter. The gross domestic product (GDP) print was much lower than the 1.0 percent estimated by Reuters economists and a big step down from the fourth quarter’s 2.2 percent.

Overnight, Wall Street ended lower after the Federal Reserve offered no changes to its zero interest rate policy following weak first-quarter gross domestic product (GDP) data. The Fed’s April statement also removed all calendar references and showed no new guidance on the timing of the rate hike.

CNBC

Gold Steady Above $1200 after Fed

Gold retained losses from overnight on Thursday, as the Federal Reserve characterized the recent slowdown in the U.S. economy as only transitory, not ruling out an interest rate hike this year.

Spot gold was trading flat at $1,204.51 an ounce by 0047 GMT, after losing 0.6 percent on Wednesday. The Fed downgraded its view of the U.S. labor market and economy after its two-day policy meet and said the poor performance was in part due to transitory factors.

The Fed’s guidance differed little from its last meeting, but this time the central bank did not effectively rule out hiking rates at its next meeting.

CNBC

West TX Oil Above $57 as Stockpiles Grow Less

U.S. crude futures held around $58.50 a barrel on Thursday, near their highest this year as U.S. crude stockpiles grew less than expected after the first decline since November in stocks at the main U.S. delivery hub.

U.S. crude futures had edged down 15 cents to $58.43 a barrel by 0013 GMT. They closed up $1.52 at $58.58 a barrel on Wednesday, after hitting a 2015-high of $59.33.

Brent crude futures, the more widely-used benchmark, shed 39 cents to $65.45, after finishing up $1.20 at $65.84 in a session that saw them mark their highest so far this year at $66.72.

CNBC

Japan’s PM Abe to U.S. Congress: Trade Deal is ‘awesome’

Japanese Prime Minister Shinzo Abe reiterated the importance of finalizing agreements on the Trans-Pacific Partnership (TPP) in a historic speech before the U.S. Congress on Wednesday.

“Let us bring the TPP to successful conclusion through our joint leadership,” he said in English. “The TPP goes beyond just economic benefit. It is also about our security. Long-term, its strategic value is ‘awesome.'”

Abe is the first Japanese leader to address a joint session of Congress. His United States visit comes ahead of the 70th anniversary of the atomic bombing of Hiroshima and Nagasaki in August.

CNBC

Gold – Eases Back towards Key $1200 Level

Gold for Thursday, April 30, 2015

Gold is consolidating after its recent surge higher to break through the key $1200 level and then easing back to this level which is where it is presently trading. To start this new week Gold was trying to rally higher and regain lost ground from the end of last week which saw it drop to near $1175. The support at $1180 did well to keep it propped up. In the last couple of weeks, gold has traded in a narrow range right around the key $1200 level and this range had been getting tighter, although to close out last week it drifted lower and fell to a one month low. Gold has had an attraction to the key $1200 level as every time it ventures away it returns quickly to trade right around it. Several weeks ago gold sprung to life surging higher away from the key $1200 level back to a seven week high above $1220 before easing back and finding some support at the key $1200 level. Back at end of March gold eased a little for a few days to below $1185, although for the best part of the last few weeks gold has moved strongly off the support at $1150 and then found some new support from the $1200 level.

Gold fell on Wednesday, extending the session’s losses after the U.S. Federal Reserve signaled it was taking a meeting-by-meeting approach on when to raise interest rates for the first time since 2006. Following a two-day meeting, the Federal Reserve pointed to weakness in the U.S. labor market and economy, a sign it is struggling with plans to raise interest rates this year. Spot gold fell to a session low of $1,201.13 after the Fed statement, and was last trading below $1,204. It had gained nearly 3 percent in the last two sessions, climbing to a three-week high of $1,215 on Tuesday. U.S. gold futures for June delivery closed down $3.90 an ounce to $1,210 an ounce, after rising to their highest level since April 7 in the previous session. “The market is reading that the Fed hasn’t materially moved its liftoff time frame despite recent weakness in economic growth and employment,” said Tai Wong, director of metals trading at BMO Capital Markets in New York. “The market is reading that the Fed isn’t over-emphasizing the winter slowdown and the poor March payrolls.”

(Daily chart / 4 hourly chart below)

g_20150430 g_20150430_4hour

Gold April 30 at 01:10 GMT 1205.2 H: 1214.1 L: 1201.4

Gold Technical

1180

1150

—

1240

1300

—

During the early hours of the Asian trading session on Thursday, Gold is consolidating after its recent easing back to the key $1200 level. Current range: trading right above $1200.

Further levels in both directions:

• Below: 1180 and 1150.

• Above: 1240 and 1300.

OANDA’s Open Position Ratios

(Shows the ratio of long vs. short positions held for Gold among all OANDA clients. The left percentage (blue) shows long positions; the right percentage (orange) shows short positions.)

The long position ratio for Gold has moved back to near 65% as it has eased back to the key $1200 level. The trader sentiment is in favour of long positions.

Economic Releases

23:30 (Wed) AU AIG Manufacturing PMI (Apr)

23:50 (Wed) JP CPI Core (Nation) (Mar)

23:50 (Wed) JP CPI Core (Tokyo) (Apr)

23:50 (Wed) JP Real Household Spending (Mar)

23:50 (Wed) JP Unemployment (Mar)

01:30 AU Export & Import price index (Q1)

01:30 AU Private Sector Credit (Mar)

03:00 JP BoJ Policy Statement and Governor Kuroda Press Conference

05:00 JP Construction orders (Mar)

05:00 JP Housing starts (Mar)

06:00 JP BoJ Publish Semi Annual Outlook Report

08:00 EU ECB Publish Monthly Bulletin

09:00 EU Flash HICP (Apr)

09:00 EU Unemployment (Mar)

12:30 CA GDP (Feb)

12:30 US Core PCE Price Index (Mar)

12:30 US Employment cost index (Q1)

12:30 US Initial Claims (25/04/2015)

12:30 US Personal income & spending (Mar)

13:45 US Chicago PMI (Apr)

* All release times are GMT

Australia 200 – Desperately Hoping for Strong Support around 5800

Australia 200 for Thursday, April 30, 2015

The Australian 200 index has made another solid run at the key 6000 level earlier this week but again it has been forced by overwhelming supply at that level, which has seen it drop sharply back to a six week low below 5800. The index will now be hoping for the long term support level to kick in and continue to prop it up. A few weeks ago the Australian 200 index showed some positive signs and moved well towards the resistance at 6000 before finishing the week strongly lower. It now looks poised again to test the key 6000 level and if this level is broken, it is reasonable to expect a large shift towards bullish sentiment and potentially the index could really take off – it seems as if everyone is just waiting for it to happen. Several weeks ago the Australia 200 index pushed higher to a multi-year high to just above the key resistance level at 6000, before easing lower throughout the last couple of weeks to below 5900. It is receiving ongoing support at 5800, which is helping its latest push towards 6000. The key 6000 level remains firm and a significant obstacle and the index and markets are firmly fixed on it.

(Daily chart below)

asx_20150430

Australia 200 April 30 at 00:55 GMT 5776 H: 5939 L: 5757

Australia 200 Technical

5800

5400

5150

6000

—

During the hours of the Asian trading session on Thursday, the Australia 200 Index will be looking to make another run at the long term resistance level at 6000 after finishing last week so strongly.

Further levels in both directions:

• Below: 5800, 5400 and 5150.

• Above: 6000.

Economic Releases

23:30 (Wed) AU AIG Manufacturing PMI (Apr)

23:50 (Wed) JP CPI Core (Nation) (Mar)

23:50 (Wed) JP CPI Core (Tokyo) (Apr)

23:50 (Wed) JP Real Household Spending (Mar)

23:50 (Wed) JP Unemployment (Mar)

01:30 AU Export & Import price index (Q1)

01:30 AU Private Sector Credit (Mar)

03:00 JP BoJ Policy Statement and Governor Kuroda Press Conference

05:00 JP Construction orders (Mar)

05:00 JP Housing starts (Mar)

06:00 JP BoJ Publish Semi Annual Outlook Report

08:00 EU ECB Publish Monthly Bulletin

09:00 EU Flash HICP (Apr)

09:00 EU Unemployment (Mar)

12:30 CA GDP (Feb)

12:30 US Core PCE Price Index (Mar)

12:30 US Employment cost index (Q1)

12:30 US Initial Claims (25/04/2015)

12:30 US Personal income & spending (Mar)

13:45 US Chicago PMI (Apr)

* All release times are GMT

AUD/USD – Eases From Three Month High Back to 0.8000

AUD/USD for Thursday, April 30, 2015

The Australian dollar has enjoyed a strong surge higher in the last few days moving to a three month high at 0.8075 before easing back in recent hours. The Australian dollar will now be looking to enjoy some support above the key 0.7850 level. To start this new week the Australian dollar looked poised to break through the long standing resistance level at 0.7850 even though this level has stood up tall for several months now. At the beginning of last week the Australian dollar fell sharply but landed on the previous key level at 0.77 which has offered considerable support since that time. A couple of weeks ago saw the Australian dollar enjoy a solid week moving off support around 0.76 to reach a three week high just shy of the resistance level at 0.7850. In doing so, it moved through the key resistance level at 0.77. Since the beginning of March the Australian dollar has relied heavily on support at the 0.76 level.

(Daily chart / 4 hourly chart below)

a_20150430

a_20150430_4hour

AUD/USD April 30 at 00:30 GMT 0.8000 H: 0.8075 L: 0.7976

AUD/USD Technical

0.7700

0.7600

0.7550

0.8000

0.8200

—

During the early hours of the Asian trading session on Thursday, the AUD/USD is trying to find support at the 0.80 level after reaching a new three month high in recent hours. Current range: trading right at 0.8000.

Further levels in both directions:

• Below: 0.7700, 0.7600 and 0.7550.

• Above: 0.8000 and 0.8200.

OANDA’s Open Position Ratios

(Shows the ratio of long vs. short positions held for the AUD/USD among all OANDA clients. The left percentage (blue) shows long positions; the right percentage (orange) shows short positions.)

The long position ratio for the AUD/USD has moved back to close to 50% as the Australian dollar has rallied back to the resistance level at 0.7850. The trader sentiment is in favour of short positions.

Economic Releases

23:30 (Wed) AU AIG Manufacturing PMI (Apr)

23:50 (Wed) JP CPI Core (Nation) (Mar)

23:50 (Wed) JP CPI Core (Tokyo) (Apr)

23:50 (Wed) JP Real Household Spending (Mar)

23:50 (Wed) JP Unemployment (Mar)

01:30 AU Export & Import price index (Q1)

01:30 AU Private Sector Credit (Mar)

03:00 JP BoJ Policy Statement and Governor Kuroda Press Conference

05:00 JP Construction orders (Mar)

05:00 JP Housing starts (Mar)

06:00 JP BoJ Publish Semi Annual Outlook Report

08:00 EU ECB Publish Monthly Bulletin

09:00 EU Flash HICP (Apr)

09:00 EU Unemployment (Mar)

12:30 CA GDP (Feb)

12:30 US Core PCE Price Index (Mar)

12:30 US Employment cost index (Q1)

12:30 US Initial Claims (25/04/2015)

12:30 US Personal income & spending (Mar)

13:45 US Chicago PMI (Apr)

* All release times are GMT

Japan’s Industrial Output Falls 0.3% in March

Japan’s industrial production fell 0.3 percent in March, coming in well above the 2.3 percent decline that had been forecast in a Reuters poll. For the January-to-March quarter, industrial output rose 1.7 percent on-quarter.

Manufacturers expect April’s output will rise 2.1 percent on-month, compared with a previous forecast for 3.6 percent, according to data from Ministry of Economy, Trade and Industry (METI). The country’s economy continues to waver.

In April of 2013, the Bank of Japan launched a massive quantitative easing program, which was later expanded to purchase 80 trillion yen worth of assets a year, as a part of Abenomics – a series of policy measures unveiled under Prime Minister Shinzo Abe to jump start the economy.

CNBC

USD/CAD FOMC Clips Loonie’s Wings

The USD/CAD managed to recover some of the lost ground after the Federal Open Market Committee (FOMC) published its statement. There was no major change in the language from last month’s statement but the American central bank is still leaving an interest rate hike this year. The soft economic data is still seen as being transitory, while the positive indicators continue show a resilient U.S. economy as per the Fed’s statement.

Given the missed GDP advance figures from earlier today the market was expecting a dovish FOMC. While the Federal Reserve did acknowledge a slowdown in the rate of growth, they continue to label it as temporary. The USD/CAD jumped above 1.20 after touching 1.1952 ahead of the FOMC statement release. The reaction from the USD has not been that strong given the weak endorsement from the Fed.

Interest rate divergence lies behind the subdued resurgence of the USD. The Fed is still keeping a June interest rate hike on the table, however unlikely that is, but it serves to keep a September hike as a more likely possibility. June was favoured over July because the earlier Fed meeting does have a press event scheduled after it, just as the September meeting does. Now there are market participants questioning that the Fed could even hike in July, although September still leads the future rate hike polls.

Tomorrow’s Canadian GDP figures could further boost the USD against the CAD if the numbers come in below expectations of a -0.1 percent contraction.

The International Monetary Fund recommended that Canada should maintain its monetary policy to further stimulate its economy. The agency led by Christine Lagarde also added the Canadian housing market is overvalued at 7 to 20 percent contradicting statements made earlier from Bank of Canada Governor Stephen Poloz that there was no “bubble”. The Governor made those remarks even as the BoC published a report on December of 2014 putting the range of 10 to 30 percent of overvalued prices.

The Loonie got an early boost this morning after the GDP figures were released in the US and then it became a waiting game for the FOMC to issue its statement. Commodities were mixed when the GDP figures were released and started to give back some of the gains to the U.S. Dollar.

Unemployment claims on Thursday and the ISM Manufacturing PMI become the next hurdles for the U.S. economy to overcome and prove to the Fed that the economic data justifies an interest rate hike this year.

German Bunds Plummet On Investor Advice

Euro-area government bonds are falling out of favour.

Top money managers are turning against the securities after yields dropped to unprecedented lows across the region. Emerging signs of inflation are dimming demand. And investors failed to show up in sufficient numbers for Germany’s debt office to meet its sales goal at Wednesday’s auction of five-year notes.

Germany’s 10-year yields rose to the highest level in six weeks as securities slumped across the region after DoubleLine Capital’s Jeffrey Gundlach said he’s considering making an amplified bet against the nation’s bonds. His comments echoed those by Janus Capital’s Bill Gross, who said bunds were the “short of a lifetime.”

Their comments reflect growing angst among investors after the European Central Bank’s 1.1 trillion-euro ($1.2 trillion) quantitative-easing program helped send yields below zero on securities from Germany to Spain. Billionaire hedge fund manager Alan Howard said this week it’s “just crazy” to hold bonds with negative yields.

“These are influential voices that offer a contrarian view when the German bond market appears to be at an extreme level, so there’s definitely going to be an impact on the market,” said Salman Ahmed, a global strategist at Lombard Odier Investments Managers in London.

Supply Pressures

German 10-year bond yields rose 11 basis points, or 0.11 percentage point, to 0.27 percent at 2:15 p.m. London time, and touched 0.28 percent, the highest since March 18. The 0.5 percent bund due in February 2025 fell 1.055, or 10.55 euros per 1,000-euro face amount, to 102.215.

Germany got bids of 3.649 billion euros at the five-year note auction, short of its 4 billion-euro sales goal. It’s the first time an auction of five-year debt missed the target since Jan. 21, and the third bond sale that was technically uncovered this year, according to data compiled by Bloomberg. The nation sold the securities due in 2020 at an average yield of minus 0.07 percent.

Adding to the supply pressure, Italy auctioned 8.25 billion euros of debt on Wednesday, while Portugal began selling 10- and 30-year bonds via banks.
Bonds extended losses amid signs inflation is reviving in the region, reducing the value of fixed payments on bonds.

Growth in euro-area M3 money supply, which policy makers see as a gauge of the underlying strength in economic activity, averaged an annual 4.1 percent in the first quarter, the fastest pace since 2009, according to ECB data published today.

The annualized inflation rate in Germany quickened to 0.3 percent in April from 0.1 percent the previous month, according to European Union-harmonized data published by the Federal Statistics Office in Wiesbaden on Wednesday.

Portugal Drag

Italian 10-year bond yields climbed 12 basis points to 1.50 percent and Portugal’s 10-year bond yield jumped 20 basis points to 2.17 percent.

“Portugal issuance is dragging the periphery lower,” said Owen Callan, a fixed-income strategist at Cantor Fitzgerald LP in Dublin. “Germany issuing five-year as well into an already weak market. At the same time as some comments from more and more people about the unsustainability of negative euro-zone rates.”

Gundlach said in a Bloomberg Television interview on Tuesday: “let’s say you leverage up the German two-year 100 times, that’s a 20 percent return,” referring to the potential bet against the securities.

Lombard Odier’s Ahmed disagrees with Gundlach. “It might take a long time for these short positions to work. One can’t rule out the possibility of a Japan scenario for Europe. There could be more than one round of QE,” he said.

Bloomberg

US GDP Disappoints Rises Questions Ahead of FOMC

The U.S. economy slowed sharply at the start of the year as businesses slashed investment, exports tumbled and consumers showed signs of caution, marking a return to the uneven growth that has been a hallmark of the nearly six-year economic expansion.

Gross domestic product, the broadest measure of goods and services produced across the economy, expanded at a 0.2% seasonally adjusted annual rate in the first quarter, the Commerce Department said Wednesday. The economy advanced at a 2.2% pace in the fourth quarter and 5% in the third.

Economists surveyed by The Wall Street Journal had expected growth of 1% in the first three months of this year.

The first-quarter figures repeat a common pattern in recent years: one or two strong readings followed by a big slowdown. Before this year, first-quarter GDP growth had averaged 0.6% since 2010 and 2.9% for all other quarters. That has worked out to moderate overall expansion but no sustained breakout for the economy.

via WSJ

Asian Shares Mixed Ahead of FOMC

Asian shares were mixed on Wednesday as investors remained cautious ahead of US growth data and the outcome of the Federal Reserve meeting.

The US central bank will wrap up its two-day policy meeting later in the day and is expected to indicate whether it is on track to raise interest rates.
Trading volume was also thinner with one of the region’s biggest markets – Japan- closed for a public holiday.

Australia’s benchmark S&P/ASX 200 ended 1.85% lower at 5,838.60 points.
Chinese shares headed lower, with Hong Kong’s Hang Seng index ending 0.15% lower at 28,400.34 points, while the Shanghai Composite closed flat at 4,476.62.

In South Korea, the benchmark Kospi index closed 0.2% lower at 2,142.63.

Shares in Samsung Electronics rose 1.4% higher after its earnings came in line with the guidance it released earlier this month.

The tech giant reported a first-quarter operating profit of 6 trillion won ($5.64bn; 3.63bn).

via BBC

Wall Street to Be Impacted by Low US GDP

U.S. stock index futures fell further on Wednesday after data showed that the U.S. economic growth stalled in the first quarter and ahead of the outcome of the two-day Federal Reserve meeting.

U.S. gross domestic product braked more sharply than expected in the quarter and grew at only 0.2 percent annual rate as harsh weather dampened consumer spending and energy companies struggling with low prices cut spending.

The Fed is not expected to raise interest rates. But investors will closely examine the central bank’s statement for clues on when rates are likely to be increased, as a batch of soft data could push back the timing of a hike until the end of the year. The statement is expected at 1400 p.m. EDT (1800 GMT).

“The mixed economic data has been a concern. The low-rate environment is a bubble in itself and its like riding a balloon until the pin pops,” said Andre Bakhos, managing director at Janlyn Capital in Bernardsville, New Jersey.

S&P 500 e-mini futures ESc1 were down 13 points and their fair value – a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract – indicated a lower open.

Dow Jones industrial average e-mini futures 1YMc1 were down 127 points and Nasdaq 100 e-mini futures NQc1 were down 26.25 points.

A number of companies also posted mixed earnings.

via Reuters

Europe’s Earning Season Outshines US and Japan

Europe’s earnings season has so far churned out generally positive results — something that could help regional stocks continue to outshine their U.S. and Japanese peers in the coming months.
On Wednesday, German automaker Volkswagen unveiled a 17 percent jump in first-quarter operating profit on cost cuts and improving demand in Europe. Meanwhile, the U.K.’s biggest household goods retailer – Home Retail Group – posted a 14 percent rise in annual profit.

Of the 107 European companies that reported earnings up to Monday’s close, 60 beat sales estimates, while 18 missed, Barclays said in a note on Wednesday. Some 25 firms beat estimates on earnings per share (EPS), while 16 missed.

“The median sales and earnings surprise is a strong 1.4 percent and 2.8 percent respectively,” Barclays said.

Aided by a 20 percent fall in the euro’s value against the dollar in the past year, a 40 percent slide in oil prices since last June and a one trillion euro ($1.10 trillion) stimulus package from the European Central Bank, European equity markets have had a stellar start to 2015.

The pan-European Euro Stoxx 600 index has soared almost 19 percent so far this year, outpacing a 2.7 percent gain in the S&P 500 index of U.S. stocks, and a 15 percent rally in Japan’s blue-chip Nikkei.

via CNBC

Varoufakis Attached in Greece by Anarchists

Yanis Varoufakis said Wednesday he and his wife were in the Exarhia district, a neighborhood popular with extreme leftists and anarchists, Tuesday night when a group barged into the restaurant.

The group, who had their faces covered, demanded the minister leave the area and threw glass objects at the couple, Varoufakis said, without either of them being hurt.

He said that when some of the group moved in a threatening manner against him, his wife embraced him so that the potential attackers could not get at him without hitting her first.

Varoufakis eventually spoke with the group outside the restaurant, he said, and tempers were calmed.

via CNBC

UK Prices Rise by 1% in April

The price of an average UK home rose by 1% in April, the biggest increase since early summer, figures from the Nationwide show.

The UK’s biggest building society said the pickup in growth had occurred despite a slowdown in activity, which could have been caused by uncertainty over the election.

Nationwide’s monthly snapshot of the market, which is based on mortgages it has approved after valuation adjusted to reflect a typical home, showed the monthly rate of growth at its highest level since June 2014, pushing up the average price of a home to 193,048.

As a result, the annual rate of growth increased for the first time in seven months, rising to 5.2% from 5.1% in March. This compares with its recent peak of 11.8% in June.

In recent months, there has been a marked slowdown in activity in the housing market, with lenders and surveyors reporting falls in buyer numbers, despite a mortgage price war that has driven rates to record lows.

On Tuesday, the British Bankers’ Association said the number of mortgages offered by its members had increased in March but remained 14% lower than the previous year.

via The Guardian

US Economy Slower as Weather and Energy Prices Take Toll

U.S. economic growth braked more sharply than expected in the first quarter as harsh weather dampened consumer spending and energy companies struggling with low prices slashed spending, but there are signs activity is picking up.
Gross domestic product expanded at an only 0.2 percent annual rate, the Commerce Department said on Wednesday. That was a big step down from the fourth quarter’s 2.2 percent pace and marked the weakest reading in a year.

A strong dollar and a now-resolved labor dispute at normally busy West Coast ports also slammed growth, the government said.

via CNBC

BP To Reduce Oil in Storage as Contango Narrows

Oil major BP said it will gradually sell throughout 2015 more than $1.25 billion of oil it had stored earlier this year to seize on a futures market structure to boost profit.

Traders including BP bought and stored oil throughout late 2014 and early 2015 after an oil price collapse as prompt prices dropped below those for further into the future, a market structure known as contango.

Traders have been profiting from the contango by storing crude in the hope of reselling it at a profit at a later date or by simply locking gains via paper trading.

Chief Financial Officer Brian Gilvary said BP’s trading unit had performed much better than in an average quarter, likening the quarter to a strong trading performance in early 2009 when crude prices last crashed.

“The profit we booked in one quarter for contango is relatively modest, in the tens of millions, certainly not the hundreds,” BP’s Chief Financial Officer Brian Gilvary said on a conference call.

BP bought and stored more than $1.25 billion worth of oil, the equivalent of around 23 million barrels, during the first three months of the year, the company said.

BP said it will gradually unwind the stocks as the market structure narrowed.

“We expect the working capital inventory build to unwind over the rest of the year,” a company spokesman said.

via Reuters

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