· The euro sagged early on Wednesday following a report that some European Central Bank policymakers have expressed dovish views, with the market awaiting Chinese economic data for further cues.
The euro was little changed at $1.1284 after slipping about 0.2 percent overnight to pull away from a 2-1/2-week high of $1.1324 scaled on April 12.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 97.043 after seeing lows around 96.8 earlier in the trading week.
· Several ECB policymakers said the bank’s economic projections are too rosy as weak growth in China and trade tensions linger, four sources with direct knowledge of discussions said.
The “significant minority” of rate-setters in last weeks policy meeting expressed doubt that a long projected growth recovery is coming in the second half of the year and some even questioned the accuracy of the ECBs projection models, given their long history of downward revisions, the sources said.
· The release of Purchasing Managers Indexes (PMIs) for the manufacturing and service sectors in Europe on Thursday will be closely watched as traders look for signals of improving growth in the region.
· Sterling also slipped after the Guardian newspaper reported that talks between Prime Minister Theresa May and the opposition Labour Party regarding Britains exit from the European Union had stalled. The Labour Party denied the report. Traders are also waiting for Chinese gross domestic product data on Wednesday, which may indicate the worst is over for the global economy. Chinese exports and credit data last week signaled some stabilization in economic conditions. The pound edged lower to $1.3070 against the dollar.
· U.S. government debt prices fell on Tuesday as solid corporate earnings results lifted investor risk sentiment.
The yield on the benchmark 10-year Treasury note rose 1.45% to about 2.589%, its highest level since March 20. The yield on the 30-year Treasury bond rose 0.92% to 2.9923%. Bond yields move inversely to prices.
Investors are finding confidence in a slew of first-quarter numbers that are better than expected. UnitedHealth Group and Johnson & Johnson, both Dow components, reported strong quarterly earnings on Tuesday, boosting their shares in pre-market trading. Bank of America and BlackRock’s results also beat expectations.
· Japan’s exports fell for a fourth straight month in March as China-bound shipments slumped again, reinforcing growing anxiety that weak external demand is likely to have knocked first quarter economic growth.
Ministry of Finance data out on Wednesday showed exports fell 2.4 percent in March from a year earlier, compared with a 2.7 percent drop predicted by economists in a Reuters poll, and followed a 1.2 percent decline in February.
The data reinforces worries that weak external demand may hurt company profits and in turn curb business expenditures, workers’ wages and consumer spending in a broad hit to growth.
· The Bank of Japan is ready to deploy monetary policy tools if a financial crisis threatens to destabilize the country’s banking system, its deputy governor Masayoshi Amamiya said on Wednesday.
· Any trade deal between China and the U.S. should comply with multilateral rules, and not doing so may create economic risks for the Asian nation’s other major trading partners should China import less from them, the International Monetary Fund said.
China committing to more American imports “could be a negative impact on third countries whose exports to China would be crowded out,” IMF Asia-Pacific Director Changyong Rhee said Friday at a briefing in Washington.
“The agreement should be consistent with multilateralism, rather than bilateral,” he said. “If the deal involved preferential access for the U.S. to Chinese markets, this could lead to broader worries about the future of the multilateral trading system.”
· Oil prices rose on Tuesday, as fighting in Libya and falling Venezuelan and Iranian exports raised concerns over tightening global supply, but uncertainty surrounding an OPEC-led production cut limited gains.
U.S. West Texas Intermediate crude ended Tuesday’s session 65 cents higher at $64.05. WTI rose 1% on the day, rallying towards last week’s intraday peak at $64.79, its highest level since Nov. 1.
Brent crude, the global benchmark, rose 54 cents to $71.72 a barrel on Tuesday, trading near Friday’s five-month high at $71.87.
· In Libya, fighting between Khalifa Haftar’s Libyan National Army and the internationally-recognized government has raised the prospect of lower supplies from the OPEC member.
· U.S. sanctions on two other members, Iran and Venezuela, are already cutting shipments. Iran’s crude oil exports have dropped in April to their lowest daily level this year, tanker data showed and industry sources said.
Reference: CNBC, Reuters, Bloomberg
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