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Asian Markets in Mild Risk-Off Mode Despite Japan and China Data

The financial markets are trading with a mild risk-off tone in Asia today, despite the resilience in US overnight. Solid economic data from Japan and China provided little support to sentiment. The region is generally in deep worry over record coronavirus infections in India. As for the currency markets, Yen and Dollar are set to end the weak as the worst performing ones, while Canadian and New Zealand Dollars would be the strongest.

Technically, Australian Dollar is clearly lagging behind other commodity currencies. Yet, it’s holding firm in range against both Dollar and Euro. A focus before weekly close is whether AUD/USD could break through 0.7815 resistance to resume the rebound from 0.7530, to catch up with the others.

In Asia, at the time of writing, Nikkei is down -0.99%. Hong Kong HSI is down -1.80%. China Shanghai SSE is down -1.22%. Singapore Strait Times is up 0.16%. Japan 10-year JGB yield is down -0.0048 at 0.090. Overnight, DOW rose 0.71%. S&P 500 rose 0.68%. NASDAQ rose 0.22%. 10-year yield rose 0.020 to 1.640, after hitting as high as 1.688.

Japan industrial production rose 2.2% in Mar, PMI manufacturing finalized at 3-yr high in Apr

Japan’s Industrial production rose 2.2% mom in March, much better than expectation of -2.0% mom decline. According to survey by the Ministry of Economy, Trade and Industry, output is expected to rise another 8.4% in April, and then 4.3% in May. Unemployment rate dropped to 2.6%, down from 2.9%, better than expectation of 2.9%. Housing start rose 1.5% yoy, versus expectation of -7.4% yoy. Consumer confidence dropped to 34.7, down from 36.1, above expectation of 34.0. In Tokyo, CPI core slowed to 0.0% yoy, down from 0.3% yoy, missed expectation of 0.3% yoy.

PMI Manufacturing was finalized at 53.6 in April, up from March’s 52.7. That’s the strongest reading since April 2018. Usamah Bhatti, Economist at IHS Markit, said: “Japanese manufacturers continued to report a positive outlook for activity in the medium term. Close to 36% of panellists estimated that output levels would rise over the coming year. This was in line with the current IHS Markit forecast for industrial production to grow 7.7% in 2021, although this does not fully recover the output lost to the pandemic in 2020.”

China Caixin PMI manufacturing rose to 51.9, price pressures to limit policy choices

China’s official NBS PMI Manufacturing dropped to 51.1 in April, down form 51.9, below expectation of 51.4. NBS PMI Non-Manufacturing dropped to 54.9, down from 56.3, below expectation of 52.6. “Some surveyed companies report that problems such as chip shortages, problems in international logistics, a shortage of containers, and rising freight rates are still severe,” NBS statistician Zhao Qinghe said.

Caixin PMI Manufacturing rose to 51.9, up from 50.6, above expectation of 50.9. Wang Zhe, Senior Economist at Caixin Insight Group said: “Policymakers have expressed concerns about rising commodity prices on several occasions and urged adjusting raw material markets and easing businesses’ cost pressure. In the coming months, rising raw material prices and imported inflation are expected to limit policy choices and become a major obstacle to the sustained economic recovery.”

Elsewhere

Australia private sector credit rose 0.4% mom in March, above expectation of 0.1% mom. PPI came in at 0.4% qoq, 0.2% yoy, versus expectation of 0.3% qoq, 0.8% yoy.

GDP data from France, Germany, Italy and Eurozone are the focuses in European session today. Swiss will release retail sales and KOF economic barometer.

Later in the day, Canada will release GDP, IPPI and RMPU. US will release personal income and spending, employment cost index, Chicago PMI.

USD/CHF Daily Outlook

Daily Pivots: (S1) 0.9073; (P) 0.9096; (R1) 0.9113; More….

USD/CHF’s fall from 0.9471 is still in progress. Intraday bias stays on the downside for 61.8% retracement of 0.8756 to 0.9471 at 0.9029. Sustained break there will pave the way to retest 0.8756 low. On the upside, break of 0.9180 minor resistance will indicate short term bottoming and bring stronger rebound.

In the bigger picture, rejection by 61.8% retracement of 0.9901 to 0.8756 at 0.9464 argues that rebound from 0.8756 was probably just a corrective move. That is, larger down trend from 1.0237 might be still in progress. We’ll monitor the downside momentum of the decline from 0.9471, to assess the chance of breakthrough 0.8756 low at a later stage.

Economic Indicators Update

GMT Ccy Events Actual Forecast Previous Revised
23:30 JPY Tokyo CPI Core Y/Y Apr 0.00% 0.30% 0.30%
23:30 JPY Unemployment Rate Mar 2.60% 2.90% 2.90%
23:50 JPY Industrial Production M/M Mar P 2.20% -2.00% -1.30%
0:30 JPY Jibun Bank Manufacturing PMI Apr F 53.6 53.3 53.3
1:00 CNY NBS Manufacturing PMI Apr 51.1 51.4 51.9
1:00 CNY Non-Manufacturing PMI Apr 54.9 52.6 56.3
1:30 AUD Private Sector Credit M/M Mar 0.40% 0.10% 0.20%
1:30 AUD PPI Q/Q Q1 0.40% 0.30% 0.50%
1:30 AUD PPI Y/Y Q1 0.20% 0.80% -0.10%
5:00 JPY Housing Starts Y/Y Mar 1.50% -7.40% -3.70%
5:00 JPY Consumer Confidence Index Apr 34.7 34 36.1
5:30 EUR France GDP Q/Q Q1 P 0.00% -1.40%
6:00 EUR Germany Import Price Index M/M Mar 1.00% 1.70%
6:00 EUR Germany GDP Q/Q Q1 P -1.50% 0.30%
6:30 CHF Real Retail Sales Y/Y Mar -5.40% -6.30%
7:00 CHF KOF Leading Indicator Apr 119.8 117.8
8:00 EUR Italy GDP Q/Q Q1 P -0.40% -1.90%
9:00 EUR Eurozone GDP Q/Q Q1 P -0.80% -0.70%
12:30 CAD Raw Material Price Index Mar 6.60%
12:30 CAD Industrial Product Price M/M Mar 2.60%
12:30 CAD GDP M/M Feb 0.70%
12:30 USD Personal Spending M/M Mar 3.80% -1.00%
12:30 USD Personal Income M/M Mar 20.00% -7.10%
12:30 USD PCE Price Index M/M Mar 0.20%
12:30 USD PCE Price Index Y/Y Mar 1.60%
12:30 USD Core PCE Price Index M/M Mar 0.10%
12:30 USD Core PCE Price Index Y/Y Mar 1.40%
12:30 USD Employment Cost Index Q1 0.80% 0.70%
13:45 USD Chicago PMI Apr 64.6 66.3
14:00 USD Michigan Consumer Sentiment Index Apr F 86.5 86.5

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