Daily FX Update, 21 April 2016

OVERNIGHT MARKET UPDATE:

·         US – The existing home sales rebounded in March, rising 5.1% to an annual rate of 5.33 million. In Q1, existing home sales rose 4.8% y/y, with the median house price rising by 5.7% to US$222,700. Sales were strongest in the Northeast (+11.1%), and in the Midwest they also rose by 9.8%.

·         Euro area – The German Government left its 2016 GDP forecast unchanged at 1.7%, but cut its 2017 forecast to 1.5%. The latest forecast points to strong private consumption and imports helping to offset weaker growth in exports to China and other emerging economies.

·         Euro area – The Germany producer prices in March were unchanged from February, but fell 3.1% y/y, the sharpest annual decline since January 2010, pulled lower by energy prices. Excluding energy prices, producer prices declined 0.9% y/y.

·         UK – The labour market report for February was softer than market expectations. Jobs rose 20,000 in the three months to February vs 116,000 a month earlier. The average earnings rose by just 1.8% y/y (vs 2.1% y/y in January) although ex-bonuses they held steady at 2.2% y/y. The unemployment rate was unchanged at 5.1%.

·         Currencies – Markets were in consolidation mode overnight, with EUR the biggest mover as markets prepared for the ECB.

·         Equities – US stocks closed higher as a turnaround by crude oil prices and upbeat housing data provided support. On average, US bourses closed 0.1%-0.2% higher.

·         Rates – Japanese bond yields hit new record lows, with the 10-year yield currently -0.140%. On the other hand, US 10-year benchmark yield up 6 bps, the largest increase since 1st March 2016.

·         Energy – Crude oil turned around early losses after data showed US output continued to fall. EIA data showed that US output fell to 8.95 million barrel per day and inventory rose by a less-than-expected 2 million barrels to 538.6 million barrels.

·         Precious Metals – Gold prices closed marginally lower as investors await cues from key central bank meetings on tap in the coming days.