13 April 2017. Daily Market Updates

dailyreport
Headlines-International
Trump says China not FX manipulator, sees USD too strong. President Donald Trump said he won’t brand China a currency manipulator, retreating from core campaign promise, though he argued that a strong dollar is hampering the ability of American firms to compete. Trump, in an interview with the Wall Street Journal on Wednesday, appeared to acknowledged that China hasn’t been intervening to weaken its currency recently. “They’re not currency manipulators,” he said. It’s a shift of opinion after Trump accused China during last year’s election campaign of manipulating its currency to gain the upper hand in trade and vowed to label the country a manipulator on his first day.
Putin meets Tillerson as Russia bashes U.S Foreign Polcy  –  Bloomberg
Commercial satellite imagery of North Korea’s Punggye-ri Nuclear Test Site from April 12 shows continued activity around the north portal, new activity in the main administrative area, and a few personnel around the site’s command center, according to two analysts writing for 38 North.
China Banking Regulatory Commission (CBRC) has ordered a crackdown on improper banking practices in a work notice distributed in early April, Shanghai Securities News says in online report, without citing anyone. CBRC to focus on correcting banks’ improper practices in innovation, transactions, incentives, charges/feesCBRC ordered banks’ self examinations on issues including mechanism, rules, procedures, personnel, businesses; reports are due by July 15 NOTE: April 10, China Regulator to Strengthen Banks’ Risk Control
The Bank of Canada (BoC) left CAD rates on hold last night at 0.5% which is interesting given the rate increase cycle the US is going through at the moment. The BoC said after leaving rates on hold that economic growth is picking up but it is too early to conclude the Canadian economy is on a sustainable growth path. They also said that it was too early to rely on any modelling of possible outcomes of potential US trade policies.
UK data showed stronger-than-expected wage growth. Workers’ total earnings including bonuses rose by an annual 2.3 per cent in the three months to February, unchanged from the previous period and beating economists’ expectations. The unemployment rate held steady at an almost 12-year low of 4.7 per cent, in line with forecasts. Sterling touched $US1.2521, its highest level in nine days, after the data. Markets remain pretty steady but it is the lingering political issues which continue to be the big drivers for the risk outlook at the moment.
Market in details
FX:
The dollar plunged to new session lows after Trump said the currency “is getting too strong.” The Bloomberg Dollar Index abruptly fell more than 0.5%, the most on an intraday basis since March 27, after the WSJ reported Trump’s comments on the dollarTrump also said that China won’t be named a currency manipulator, he would prefer the Fed keep interest rates low and that he is open to renominating Fed Chair Yellen
VIX higher for fourth day, to 15.5. VIX Tuesday rose to its highest since the U.S. election amid heightened geopolitical tensions.
USD/JPY TO NEW LOW BELOW 109.00; SUPPORT AT 108.71 200-DMA
USD/CAD is trading at ~1.3263 after earlier dropping to 1.3254 following the Bank of Canada’s decision to hold rates.
** The BOC said the output gap will close in 1H 2018, earlier than previously projected
EUR/USD is trading at ~1.0667 after filling offers above Tuesday’s 1.0630 high. The shared currency reached a session low 1.0589 as the Tillerson/Lavrov press conference began, while bids are positioned below 1.0595
Rates:
10Y yield, previously little changed on day, quickly shed about 4bp to YTD low 2.257% as dollar index tumbled after Trump said U.S. currency is too strong. 10Y futures volumes surged on the move, with nearly 25k contracts trading over 1 minute at 3:18pm ET. USTs also drew support from haven flows following earlier report North Korea told foreign journalists visiting the country to prepare for a major event
German 10-year yields were little changed at 0.2 percent, near the lowest level since February.
Banks in China, the biggest investors in the nation’s bonds, are increasingly selling their holdings, the Wall Street Journal reports, without citing a source. The move is an unintended consequence of the central bank/s rate hikes this year, which have sent borrowing costs between banks soaring, paper saysIn the first quarter, 130 companies dropped or delayed 119.95b yuan ($17.4b) in bond-issuance plans, the paper says, citing Wind Information Co.
Equities:
U.S. stocks fell as investors assessed geopolitical developments from France to Russia and Korea, as well as comments from President Trump on the future of Fed Chair Janet Yellen.
S&P 500 down 0.4% to 2,345. Closes below 50-DMA for first time since Nov. 8 after longest streak above since 2011. S&P 500 has struggled to sustain a rally after last reaching a record in early March; it hasn’t posted gains or losses exceeding 1% in the past three weeks. Dow Industrials off 59 to 20,592
European stocks advanced to a 16-month high as investors assessed earnings reports and gains in defensive shares outweighed declines in miners and banks.
The Stoxx Europe 600 Index added 0.2 percent at the close, after jumping as much as 0.7 percent earlier in the day. Food and beverage shares and media companies posted the biggest advances among industry groups.
Commodities:
Spot gold rises as much as 0.7% to $1,283.67/oz, extending 5-month high.
West Texas Intermediate crude fell 0.97 percent to $52.89 a barrel after a government report showed stockpiles dropped from record levels while production increased.
Iron ore plunged 8.5% overnight after steel and iron ore futures were hit in China, and worries about weaker demand for steel from slowing growth. AUD has showed resilience overnight amid metals weakness, and is up 0.3%. Overnight range between 0.7473-0.7518. 10-year bond yield: US 2.29%, Germany 0.19%, Australia 2.50%
Regards All.
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