CURRENCY MARKET WRAP 

As of Thu, Apr 25, Singapore Time zone UTC+8

Dollar Index, +0.42%, $98.05
USDJPY, +0.25%, $112.14
EURUSD, -0.67%, $1.1151
GBPUSD, -0.26%, $1.2904
USDCAD, +0.51%, $1.3493
AUDUSD, -1.24%, $0.7014
NZDUSD, -0.95%, $0.6594 

The U.S. Dollar Index rose 0.42% to 98.05 – its highest level since May 2017. The 2-yr yield declined four basis points to 2.31%, and the 10-yr yield declined five basis points to 2.52%. A further decline in Germany’s Ifo Business Climate Index (99.2 vs exp. 99.9) contributed to some cautious trading and weakness in the euro, which fell 0.67% to 1.1151. 

The Bank of Canada kept its key interest rate unchanged (1.75%), lowered their economic forecast and dropped their hawkish bias.The BoC slashed its GDP growth forecast to 1.2% y/y in 2019, from 1.7% previous, and projected growth of just 0.3% in the first quarter of 2019. The central bank no longer feels that the next move should be higher, according to policy statement that said the “Governing Council judges that an accommodative policy interest rate continues to be warranted.” USDCAD spiked to a high of 1.3521 on the back of the news, but quickly recovered.

Aussie and Kiwi were heavily offered. Australian CPI (0.0% q/q vs exp. 0.2% q/q) was significantly weaker than expected in the first quarter. Speculation the Reserve Bank of Australia will cut rates has increased since February when influential Westpac Banking Corp. Chief Economist Bill Evans made the forecasts for lower interest costs.

 

STOCK MARKET WRAP 

S&P500, -0.22%, 2,927.25
Nasdaq, -0.34%, 7,784.41
Nikkei Futures, -0.14%, 22,208.0     

S&P 500 declined 0.22% on Wednesday in a tight-ranged session. A mixed set of earnings reports, and some defensive positioning, provided little incentive to move higher after the day before’s record-setting day.

There was some defensive positioning in the market in front of key earnings reports and a policy decision from the Bank of Japan. U.S. Treasuries saw increased buying interest, which drove yields lower across the curve and underpinned the outperformance of the rate-sensitive real estate (+0.8%) and utilities (+0.6%) sectors.

The S&P 500 energy sector (-1.9%) was the day’s outright laggard. Selling was broad-based amid a decline in oil prices ($65.83/bbl, -0.50, -0.8%), which pulled back following some bearish inventory data.
There was also some concern about a potential bidding war following Occidental Petroleum’s (OXY 62.00, -0.36, -0.6%) bid to acquire Anadarko Petroleum (APC 71.40, +7.41, +11.6%) for $76.00 per share in cash and stock. The proposal represents a 20% premium to Chevron’s (CVX 118.28, -3.74, -3.1%) prior offer.

Facebook stock rose as much as 9% in after-hours trading despite the company announcing that it could take a one-time charge of as much $5 billion due to an ongoing Federal Trade Commission inquiry. The company exceeded revenue expectations and matched estimates for its daily active user growth. Earnings: 85 cents per share (can’t be compared to analyst expectations because of a one time charge) Revenue: $15.08 billion, vs. $14.98 billion. Daily active users: 1.56 billion, vs. 1.56 billion forecast by FactSet. Monthly active users: 2.38 billion, vs. 2.37 billion forecast by FactSet.