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Global market watch - 18th April 2019

The Greenback is trading higher in tight ranges against most of its rivals this morning amid a flight to quality in the overnight session coupled with better than expected domestic Retail Sales MoM data.  US Retail Sales came in at +1.6% headline compared to +0.9% forecast consensus while the Core Retail Sales MoM number was an impressive +1.2% versus +0.7% target.   Reports that US trade negotiations with China made a turn for the better with both parties working towards a deal which President Donald Trump and Chinese Premier Xi can sign in May at some point was also taken as a positive.  The Dollar took a turn for the better after Eurozone Flash Manufacturing PMI came in at 47.8 compared to 48.1 forecast and 47.5 previous which is below the 50.0 expansion versus contraction level, EU Flash Services PMI missed at 52.5 on 53.1 target which is getting closer to 50.0 as well, along with German PPI MoM was released at -0.1% versus +0.2% consensus stoking risk aversion and USD purchases also.   The Buck is trading at its eight-day best versus the Euro this morning, its two-day high with the Loonie, a 13-day high against the British Pound, dropped to a six-day low in its pairing with the Yen in razor thin ranges overnight but pared back losses which has left USDJPY still well in striking stance of its four-month high form yesterday morning, rallied to its fresh 39-day peak against the Swiss Franc today,  improved significantly versus the Aussie Dollar after AUDUSD hit its 55-day high yesterday while leveling off closer to the 3.5-month high it touched against the Kiwi on Tuesday evening after worse than expected New Zealand CPI QoQ data, erased losses with the Yuan which pushed USDCNY to a 27-day low yesterday, while it interestingly fell to a two-day trough in its pairing with the Mexican Peso.  Philly Fed Manufacturing Index data was below market expectations at 8.5 compared to 11.2 this morning with the Flash Manufacturing/Services PMI data follows later this morning.

The Canadian Dollar is trading at a two-day low versus the Buck and Yen this morning, while sideways against the softer Euro today. The commodity group was on its back foot as a result of softer risk tolerance coupled with WTI Crude Oil prices falling to a two-day low today form a one-week high yesterday. Better than expected Canadian Retail Sales MoM data was not able to improve the Loonie significantly versus the Buck as the US numbers were even better, but the number was clearly positive as headline came in at +0.8% compared to +0.4% forecast with Core Retail Sales MoM at +0.6% versus +0.2% consensus.  The ADP Non-Farm Employment Change was released at +12.2K with a significant downward revision to -21.3K previous form the 36.2K figure last month.  Tomorrow is the Good Friday Bank Holiday in Canada with the key Bank of Canada monetary policy meeting scheduled for Wednesday morning.

The Euro fell to its eight-day low versus the Buck this morning, traded largely sideways against the Loonie overnight, while also falling to a two-day low in its paring with the Pound this morning as soft data stokes existing apprehension of a broad economic slowdown in the Eurozone at this time. Eurozone Flash Manufacturing PMI was released at 47.8 which is the 3rd consecutive month of below the key 50.0 expansion versus contraction level. German PPI was 0.3% worse than expected at -01% today while EU Flash Services PMI dropped to 52.5 which is that much closer to 50.0 than its previous revision ton 53.3 for the reading last month. The Euro area is heading into a four-day weekend for the Easter Holiday with the European Central Bank (ECB) Economic Bulletin highlighting a light data week coming up.

The Pound fell to its 13-day low versus the broadly firmer Dollar today but manage to erase losses after falling to a 43-day low against the Loonie yesterday, while it hit a two-day peak against the Euro this morning. Sterling was bolstered by UK Retail Sales released at its December high +1.1% this morning compared to -0.3% forecast consensus with an upward revision to +0.6% today form its +0.4% previous.  That said, it does not erase a slew of below forecast inflation data yesterday, including CPI YoY, HPI YoY, and RPI YoY, with the notable fact the ONS reported the first drop in house prices in southeast England since 2011 from yesterday.  The UK is also heading into its 4-day weekend for the Easter Bank Holiday starting tomorrow ahead of a very light data week highlighted by Nationwide HPI MoM on next Friday morning.

The Greenback improved sharply from its 55-day worst versus the Aussie Dollar yesterday morning while it also did settle closer to its 3.5-month high versus the Kiwi from overnight yesterday compared to NZDUSD close rate in the afternoon.  Australian Employment Change was much better than expected yesterday night +35.7K compare to +15.2K consensus with a significant upward revision to 10.7K from +4.6K for the reading last month while the Unemployment Rate was on target at +5.0% which is 0.1% up form previous.  The antipodeans were less changed versus the generally firmer USD due to better than expected Australian employment numbers, rallying copper prices, along with positive reports on US-China trade.

The Yen improved to its six-day high versus the Buck overnight due to risk-off trading in very tight ranges but pared back some gains that sno leaves USDJPY in striking distance of its 4-month peak from yesterday morning.   Meanwhile, the CADJPY level dropped to its two-day low, and EURJPY at its six-day low. Japanese Flash Manufacturing PMI  was released at 49.5 which is under the key 50.0 expansion versus contraction level reflecting concerns about the country’s important export sector.

The Swiss Franc fell to its 39-day low versus the Buck this morning due to Euro weakness despite the better than expected Trade Balance release at +3.18B compared to +2.87B forecast consensus today.

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