Closing changes for the main European bourses:
- UK FTSE 100 flat
- German DAX -0.2%
- French CAC -0.3%
- Spain IBEX +0.3%
- Italy MIB flat
Not much in the way of movement. Lots of eyes on the disaster at Deutsche Bank.
Archives of “April 25, 2019” day
rssEURUSD trades to swing low targets going back to 2017
Sellers remain in control
The EURUSD sellers remain in control. The price has moved down to a low of 1.1117. Going back to May and June 2017, there were swing lows at 1.1108 and 1.1118 before the pair started the push higher (ending up at 1.12555 in February 2018).
Staying on the daily chart, if the support lows do not hold the next target would be down at 1.1054. That is the lower trend line connecting lows going back to October 2017, August 2018, November 2018 (see green numbered circles).
Drilling to the hourly chart, in addition to the 1.1108-18 area from the daily, a lower trend line connecting recent lows cuts across at 1.1104 (and moving lower). That too should be considered as a level to get below for the trend to continue it’s run.
A topside trend line on the same chart comes in at 1.1142 (see chart below).
US initial jobless claims 230K vs 200K estimate
Continuing claims 1655K vs 1682K estimate
The initial jobless claims missed, rising to 230K vs 200K estimate. Easter week may have played a role in faulty seasonals.
- prior week revised to 193K vs 192K previous
- 4 week average rose to 206K vs 201.5 last week
- continuing claims 1655K vs 1682K estimate
- prior week was revised to 1654K vs 1653K previously reported
- The largest increases in initial claims for the week ending April 13 were in California (+3,202), Connecticut (+1,125), Arizona (+819), Texas (+775), and Washington (+640),
- The largest decreases were in Tennessee (-2,154), Illinois (-1,148), Michigan (-1,103), Arkansas (-799), and Ohio (-776).
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Iraq oil minister says committed to OPEC production cut deal
Further positive commentary for oil if nothing else
- Keen to keep prices stable and oil markets well supplied
- Will monitor markets to assess the needs at the next OPEC meeting
Iraq has always been seen as a wildcard in the OPEC+ deal talks but the headline comment will at least provide some relief that they’re not planning to stage a mini-coup in the upcoming talks in mid-May. Oil is trading higher today by 0.3% to $66.10 currently with Brent gaining by nearly 1% above $75 at the moment.
These Countries Face the Biggest Trade Risks
China’s Working age population projections
Nikkei 225 closes higher by 0.48% at 22,307.58
The Nikkei bucks the trend in an otherwise sluggish session for Asian equities
Japanese stocks are seeing decent gains on the day despite a weaker close in Wall Street in trading overnight as investors are gearing towards the 10-day break after the end of this week. Other Asian equities are generally more subdued with the Shanghai Composite down by 1% and the Kospi down by 0.4% as global economic conditions remain questionable after South Korea Q1 GDP contracts, slowing to its weakest pace since the global financial crisis.
US equity futures are up slightly by 0.1% while Treasury yields are mostly flat across the curve as we begin the session. I would expect European assets to pick up from sentiment seen here rather than the mixed sentiment from Asia. That should keep USD/JPY close to and around 112.00 ahead of the US durable goods data later today.
Bank of Japan vows to hold rates at zero until spring 2020
The Bank of Japan has promised not to raise interest rates before spring 2020 as it made a series of tweaks to its massive programme of monetary stimulus.
It is the first time Japan’s central bank has put a date on the “extended period” for which it intends to keep rates low, mirroring a policy first used by the US Federal Reserve in 2011. A specific date gives markets greater certainty but with almost nobody expecting a rate rise during the next year, it is unlikely to make a substantial difference to the economy.
The BoJ’s decision, however, shows it is concerned about slowing growth and the lack of progress towards its 2 per cent inflation objective. The underwhelming scale of the action may only add to the perception that it has run out of ideas and tools for stimulus.
Two doves on the BoJ policy board, Yutaka Harada and Goushi Kataoka, voted against the move because it did not send a strong enough signal of the central bank’s commitment to reaching its inflation objective.
“The Bank intends to maintain the current extremely low levels of short- and long-term interest rates for an extended period of time, at least through around spring 2020, taking into account uncertainties regarding economic activity and prices,” the central bank said in a statement. (more…)
The bellwether for global trade continues to send warning signals to markets
South Korea’s economy contracts at its fastest pace since Q4 2008 in the first quarter of this year
If you’re wondering why South Korea is seen as a bellwether for global trade, it is because data from the country tends to be released among the earliest in developed markets and also the fact that South Korea is a key link in global supply chains. Hence, that makes economic data releases from the country a precursor for what markets should expect of the health of the global economy.
Although a slowdown in global economic conditions in Q1 is very much something markets are getting used to by now, April data for South Korea isn’t faring much better. 20-day exports data show a decline of nearly 9% compared to exports in April last year, as global demand continues to show further signs of weakness. In March, the 20-day exports data only declined by 5% year-on-year.
With exports demand still waning to begin Q2, there’s no doubt this will translate to similar sentiment across other major economies as well. I still believe markets are a bit too complacent in reacting to the global economic landscape for the time being as the impending US-China trade deal and better earnings results are blindsiding market participants from the fact that the health of the global economy is still deteriorating.
I reckon this will be a key theme to watch out for in 2H 2019 especially if the much hoped and much awaited global economic rebound is seen to falter.