OVERNIGHT MARKET UPDATE: · Daily FX Update, 10 April 2015

OVERNIGHT MARKET UPDATE:

·         US initial jobless claims increased to 281k from 267k, unwinding most of the decline recorded last week. Overall, jobless claims remain at low levels and continue to point to further improvement in labour market conditions.    

·         German industrial production rose 0.2% m/m in February, but January’s 0.6% m/m gain was revised to a 0.4% m/m decline, taking the annual rate to -0.3% y/y. Overall, industrial production is likely to strengthen going forward, given the recent improvement in business confidence and PMI data.   

·         While the Greek government honoured its EUR450m repayment to the IMF, Greek officials have acknowledged that its cash reserves are likely to run out by the end of the month, unless it can reach an agreement with its European creditors that would unlock EUR7.2bn in bailout funds.

·         The UK trade deficit widened to GBP2.9bn in February from a revised GBP1.5bn in January. The widening of the trade deficit was largely driven by a decline in goods exports. Meanwhile the Bank of England left its policy settings unchanged.  

·         In the currency market, USD broadly gained, but the NZD and AUD were notably resistant to the early part of the gains. EUR weakened as negative revisions restated German industrial production and GBP followed on election jitters.  

·         US Treasuries initially rallied, but another solid initial jobless claims report and a mildly disappointing 30-year US Treasury auction drove a sell-off across the curve.    

·         The Dow Jones and S&P 500 were up 0.3% and 0.5% respectively.  

·         Crude oil markets were stable to firmer, with WTI prices unchanged but Brent prices nearly 2% firmer. Brent crude oil markets were supported by strong buying from ChinaOil. ChinaOil, a state-owned Chinese trader, is reported to have bought 17 cargoes or 8.5 million barrels of crude oil so far in April.     

Gold prices fell to USD1,195/oz, with prices struggling under the weight of a stronger US dollar. An absence of geopolitical headlines also kept gold volatility low, with gold intraday volatility just USD10/oz or 0.8%.