Daily FX Update, 28 April 2015 OVERNIGHT MARKET UPDATE:

·         US Dallas Fed manufacturing survey remained in contraction territory in April at -16.0, well down from +10.1 in November 2014. The sharp weakening in activity is likely related to the decline in oil prices, which has weighed on profitability and investment within the energy sector.

·         In US, the Markit Services PMI softened to 57.8 in April from 59.2. In combination with the softer manufacturing data last week, today’s data dragged the composite lower to 57.4 from 59.2.

·         Euro area and Greek markets were buoyed by news of the overhaul of the bailout negotiating team overnight. The Athens stock exchange closed 4.4% higher, while yields on 10-year government debt fell around 100 bps to be currently at 11.36%. Peripheral euro area sovereign bonds also rallied sharply. Ten-year yields on Italian, Spanish and Portuguese bonds declined 8.4 bps, 8.3 bps and 8.2 bps respectively. German 10-year yields were effectively unchanged at 0.16%.   

·         In the currency market, the USD started the week on the back foot due to further weakness in April data. The EUR gained as the Greeks reshuffled their negotiating team, and AUD and NZD squeezed higher on USD selling.           

·         US Treasuries sold-off overnight on the back of a two-year note auction. Both 2- and 10-year yields finished 1 bp higher at 0.52% and 1.92%, respectively.                 

·         US stocks were modestly lower as biotech stocks weighed and as data continued to show a worrying softening in economic momentum. The DJIA was down 0.2%, S&P 500 down 0.4% and the NASDAQ down 0.6% ahead of Apple Inc.’s results.         

·         Crude oil markets paused, edging modestly lower after strong gains in the last month. The latest CFTC data showed leveraged money managers increased net longs in both Brent and WTI contracts.              

Gold prices rose strongly, hitting an intraday high of USD1,207/oz before retracing slightly to close at 1,206/oz.