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By: Barbara Zigah
The greenback continues to lose ground against major currencies, with the U.S. dollar Index holding close to a 3-year low in Asian trading, and likely to see the biggest weekly drop since mid-January. As reported at 3:00 p.m. (JST) in Tokyo, the U.S. Dollar Index, which measures the greenback’s strength against other major currencies, slipped to 73.030 .DXY, a 0.1% decline and near the 72.871 .DXY low struck yesterday. So far this week, the index has lost about 1.4% of its value, and analysts predict further declines today as investors reposition their portfolios for the month end accounting.
Investor sentiment for the U.S. Dollar is seen as dwindling with the Federal Reserve’s recent reassurance that the central bank has no timetable for tightening the current easy money monetary policy. In support of the Fed’s stance, it was yesterday reported that the U.S. economy saw only minimal growth in the first quarter, while initial claims for unemployment benefits were higher than analysts’ had previously forecast.
The common currency Euro gained 0.2% against the U.S. Dollar trading at $1.4846, close to the 17-month high of $1.4882 struck yesterday on the EBS trading platform. Analysts say resistance is pegged at $1.4906. The Australian Dollar, however, fell against the greenback trading at $1.0901, a decline of 0.3%, yet still within striking distance of a 29-year high of $1.0948.
***Economic Data***
- (CH) CHINA APR HSBC MANUFACTURING PMI: 51.8 V 51.8 PRIOR
- (SI) SINGAPORE Q1 PRELIM UNEMPLOYMENT RATE: 1.9% V 2.0%E (multi-month low)
- (KS) SOUTH KOREA MAR INDUSTRIAL PRODUCTION M/M: 1.4% V 2.4%E; Y/Y: 8.7% V 11.0%E; MANUFACTURING Y/Y: 9.0% V 9.3% PRIOR
- (NZ) NEW ZEALAND MAR TRADE BALANCE (NZ$): 464M V 200ME (10-month high)
- (AU) AUSTRALIA MAR PRIVATE SECTOR CREDIT M/M: 0.6% V 0.4%E (matches highest level since Sept 2008); Y/Y: 3.6% V 3.3%E
- (KS) SOUTH KOREA MAR LEADING INDEX Y/Y: 1.6% V 2.4% PRIOR
- (KS) SOUTH KOREA MAR SERVICE INDUSTRY OUTPUT Y/Y: 0.7% V 0.1% PRIOR
- (NZ) NEW ZEALAND MAR MONEY SUPPLY M3 Y/Y: 5.6% V 5.2% PRIOR
- (SI) SINGAPORE MAR M1 MONEY SUPPLY Y/Y: 20.6% V 18.3%; M2 Y/Y: 8.7% V 8.7% PRIOR
- (SI) SINGAPORE MAR CREDIT CARD BAD DEBTS (S$) 14.6M V 13.7M PRIOR; BILLINGS: 2.9B V 2.4B PRIOR; BANK LOANS ADVANCES Y/Y: 19.9% V 17.4% PRIOR
***Markets Snapshot (as of 04:30GMT)***
- Nikkei225 closed
- SP/ASX -1.4%
- Kospi -1.1%
- Taiex -0.7%
- Shanghai Composite +0.1%
- Hang Seng -0.5%
- Straits Times Index -0.3%
- Jun SP Futures -0.1% at 1,354
- Spot Gold -0.1% at $1,533/oz
- June Crude -0.3% at $112.50
- June Copper -0.4% at $4.23
***FX USD Majors Session Range***
- EUR/USD: 1.4848-1.4804
- GBP/USD: 1.6665-1.6625
- USD/CHF: 0.8750-0.8723
- USD/CAD: 0.9529-0.9500
- AUD/USD: 1.0942-1.0882
- NZD/USD: 0.8053-0.8002
- USD/JPY: 81.65-81.47
***Overview/Top Headlines***
- Markets were mixed mostly to the downside, lingering concerns on how China will deal with their mounting inflation and a possible rate or RRR hike. Nikkei225 was closed for holiday, Shanghai Composite was the only market that ventured into positive territory. ASX fell 1.4% as the AUD continued its rise almost hitting $1.0950. Crude and Brent both fell 0.3%, spot gold traded in a tight range, silver touched $48.50. China April HSBC Manufacturing PMI was flat m/m at 51.8, however Input costs fell to an 8-month low. For the second day in a row the PBoC set a new yuan high since the July 2005 revaluation at 6.4990 v 6.5015 prior close, this is also the first time below 6.50 since 1993.
- New Zealand March trade balance came in at a 10-month high at NZ$464M v 200Me. Both imports and exports came in stronger than expected and significantly higher than prior month. NZD/USD tested $0.8050, rising 25 pips on the news. Chinese press citing China State Researcher Wei Jianguo: Domestic inflation is not due to excessive money supply; Further tightening will not slow inflation.
- Some of the major Korean names reported today, Samsung Electronics was slightly weaker than expectations with Net profit KRW2.8T v KRW2.9Te and Rev KRW37.0T v KRW31Te, shares fell 1.8%. Samsung noted that it does expected conditions to remain challenging in Q2, not expecting much impact from Japan’s supply chain issues. Kia Motors sees huge difficulties if USD/KRW falls below 1,000 won/dollar, expecting to pass sales target of 2.43M units in 2011. Results were strong, Net profit KRW953B v KRW499B y/y and Rev KRW10.7T v KRW7.8T y/y.
***Speakers/Geopolitical/In the press***
- JGB: (JP) Japan PM Kan: Reconstruction bonds are an attractive option for funding
- (JP) According to a Nikkei News survey, about 60% of Japan’s 45 prefecture governors are not satisfied with PM Kan’s response to earthquake/tsunami
- (JP) Japan Center for Economic Research: March GDP likely fell about 3.3% m/m – the biggest drop in 17 years – Nikkei News
***Equities***
- Cosco: 1919.HK: Reports Q1 Net loss CNY503.3M v loss CNY617Me
- FGL.AU: 98.6% of shareholders vote in favor for the Treasury Wine Estate demerger
- MQG.AU: Reports FY10 Net profit A$956M v A$944Me; Rev A$7.64B v A$7.7Be
- China Steel Corp: Reports Q1 Net profit NT$6.68B v NT$11.1B y/y, Rev NT$56.5B v NT$53.2B y/y
***US Equities***
- NTGR: Reports Q1 $0.65 v $0.52e, R $278.8M v $256Me; +16.9% after hours
- SWKS: Reports Q2 $0.41 v $0.39e, R$325.4M v $317Me; +13.7% after hours
- CSTR: Reports Q1 $0.46 (unclear of comp) v $0.22e, R$424M v $409Me; Raises FY11 guidance; +8.6% after hours
- RIMM: Guides Q1 EPS $1.30-1.37 v $1.48e, Rev slightly below prior $5.2-5.6B range v $5.4Be ($1.47-1.55 prior guidance), Cites smartphone sales; -11.1% after hours
***FX/Fixed Income/Commodities***
- (CH) China Iron and Steel Association’s (CISA): Expects demand to rise 2.6%-4.6% per year from 2011-2015; Controlling excess capacity is a big factor facing the industry
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