Please note and carefully read the
Important Disclosure on the last page
Daily FX & Market Commentary
Apr 15, 2015
Published from Tuesday to Friday
Market Recap
• HK/China stocks fell: HSI and HSCEI fell
1.6% and 2.2% respectively after an 8-day
winning streak. M2 growth in March was
lower than expected at 11.6%.
• European stocks fell: Stoxx 600 fell 0.5%
on worries about the Greece debt, despite
positive news that Nokia announced in
talks with Alcatel-Lucent for a potential
take-over arrangement.
• US stocks rose: S&P 500 rose 0.2% with
the support from energy shares and
quarterly earnings reports by companies
that beat market’s expectations.
Table: Daily Market Movement (Apr 14, 2015)
Equity Market Indices
U.S.
Close Change
% Commodity Futures
Energy & Metals
Close
%
S&P 500 Index
Dow Jones Industrial Average
NASDAQ Composite Index
Europe
2,095.84
18,036.70
4,977.29
+3.4
+59.7
-11.0
+0.2% WTI Crude Oil (USD/bbl)
+0.3% Brent Crude (USD/bbl)
-0.2% Natural Gas (USD/MMBtu)
COMEX Gold (USD/oz)
53.29
58.43
2.53
1,192.6
+2.7%
+0.9%
+0.8%
-0.6%
Stoxx Europe 600 Index
DAX Index
Japan
TOPIX Index
Nikkei 225 Stock Average
China / Hong Kong
Hang Seng Index
Hang Seng China Enterprises
411.70
12,227.60
-1.9
-111.1
5,990.0
0.0%
1,590.82
19,908.68
+4.6
+3.2
27,561.49
14,264.81
-454.8
-325.6
-0.5% LME Copper (USD/MT)
-0.9% Bond Yields & CNY
U.S. Treasuries - Yields
+0.3% 3-Month - Yield (%)
+0.0% 5-Year - Yield (%)
10-Year - Yield (%)
-1.6% 30-Year - Yield (%)
-2.2% USD/CNY
4,135.57
+13.9
+0.3% China Renminbi Spot
Shanghai SE Composite
Close Change
0.02
+0.01
1.34
-0.03
1.90
-0.03
2.54
-0.03
Close
%
6.21
-0.1%
Data Source: Bloomberg L.P.
Hot News: Remain constructive on U.S. equities in the
medium term as earnings season unfolds
Chart: S&P500 EPS Growth Estimates
Source: Bloomberg and Citi Research as of Mar 27, 2015
U.S. stocks up slightly despite weaker retail sales
• Yesterday, U.S. reported retail sales in March, rising
0.9% from the previous month. The figure was lower
than market’s expectation despite a rebound for the
first time after three months of steep declines.
• S&P500’s gained slightly up 0.2% on the day
supported by better than expected earnings
announced from JPMorgan Chase and Johnson &
Johnson, as the first quarter earnings season begins
to unfold.
Citi analysts’ view:
• Market’s bottom-up consensus shows expectations
of the first quarterly earnings decline in six years,
with a 5-6% year-on-year drop (see Chart).
• Meanwhile, Citi analysts’ forecast calls for a 1%
year-on-year pick in first quarter earnings.
• Sectors are expected to be weaker year-on-year
growth across all sectors, with 4 out of 10 sectors
(namely consumer staples, energy, materials and
utilities) potentially seeing a decline.
• Energy sector are expected to plunge 60% YoY
accounting for the entire index’s profit decline. The
trade weighted dollar is also up 10% YoY and is
restraining quarterly results.
• However, looking at short-term EPS revision
momentum, REITs, Software & Services, Capital
Goods and Household & Personal Products may be
poised to bounce off of revision low.
• Over the longer run, job growth and early signs of
wage pickup should bolster the US and it seems
likely that outlooks will improve in 3Q15 and 4Q15.
More market volatility may remain before that.
• Citi analysts remain constructive on U.S. equities
and from a 6 to 12-months investment perspective,
would prefer sectors including technology, banks,
household products and retailing.
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Citibank and Arc Design is a registered service mark of Citibank, N.A. or Citigroup Inc. Citibank (Hong Kong) Limited
1
Please note and carefully read the
Important Disclosure on the last page
Daily FX & Market Commentary
FX & Commodity Technical Corner
YESTERDAY PERFORMANCE
FX TREND
TECHNICAL
CCY
USD
EUR/USD
USD/JPY
GBP/USD
USD/CAD
AUD/USD
NZD/USD
USD/CHF
USD/SGD
GOLD
Close Price
Day High
Day Low
98.73
1.0655
119.40
1.4782
1.2485
0.7626
0.7522
0.9723
1.3605
1192.76
99.70
1.0707
120.18
1.4802
1.2603
0.7649
0.7553
0.9795
1.3732
1201.65
98.37
1.0532
119.07
1.4604
1.2445
0.7555
0.7439
0.9673
1.3573
1184.03
Short Term
Comment
Bullish
Bearish
Neutral
Bearish
Neutral
Bearish
Neutral
Neutral
Neutral
Neutral
Support
Resistance
95.52
1.0458
118.18
1.4231
1.2390
0.7533
0.7177
0.9486
1.3459
$1,131
101.79
1.1098
121.85
1.5000
1.2835
0.7914
0.7631
1.0129
1.3941
$1,255
Citi Foreign Exchange
Forecast:
0-3
Months
99.82
1.06
122.00
1.49
1.30
0.73
0.70
1.02
1.42
1190
6-12
Months
111.14
0.93
130.00
1.37
1.35
0.70
0.66
1.18
1.45
1170
FX Rate Source: Bloomberg L.P. (cut off time is NY Time 5:00pm)
• EUR rose on dollar’s retreat, as U.S. retail sales in Mar grew by 0.9%, weaker than 1.1% forecast, while NFIB
small business sentiment falls to 9-month low at 95.2.
• JPY rebounded: Koichi Hamada, an adviser to Abe on monetary policy, said a dollar level above ¥120 was
excessively weak for the yen.
• GBP rose, although U.K. Mar core CPI came in at 1.0%, weaker than 1.2% forecast.
Daily FX Focus
EUR/USD may trade inside 1.0458-1.1052:
1.1031-1.1052 (55MA
& 26 Mar top)
1.0458 (Mar low)
1.0113 (bottom of downtrend channel)
Source: Bloomberg L.P., data as of Apr 14, 2015
Technical Analysis:
• The pair is inside the downtrend channel and capped below
55MA
• EUR/USD may trade inside 1.0458-1.1052 with downside
bias. Below 1.0458 may extend weakness to 1.0113
EUR Outlook:
• The weak U.S. retail sales is due to smallerthan-expected rise in motor vehicle sales and a
decline in gasoline station sales.
• The details show the sectors hit by weather
bounced back in Mar, such as furniture,
restaurants etc.
• These reversals confirm the weather
depressed sales in winter and we anticipate
further large gains in retail sales in coming
months.
• The rebound in U.S. economy may fuel
expectation of rate hike by the Fed. Strong
USD may weaken EUR.
• The ECB announces rate decision today.
• Despite the improving in Eurozone data, Citi
analysts believe the outperformance of
Germany and Europe may not sustain as
Chinese trade data showed global trade
remains depressed.
• Therefore, we expect the ECB is unlikely to say
anything about early tapering but talk about the
problem it faces, eg Greece, weak global trade.
NOTE: The brackets are the exchange rates in terms of Hong Kong dollar, with HKD $7.75 exchange rate for reference, and 1,000 yen per unit for JPY/HKD.
© 2015 Citibank
Citibank and Arc Design is a registered service mark of Citibank, N.A. or Citigroup Inc. Citibank (Hong Kong) Limited
2
Please note and carefully read the
Important Disclosure on the last page
Daily FX & Market Commentary
GBP/USD may trade inside 1.4566-1.4981:
1.4981-1.5070 (6 Apr
top & 55MA)
1.4566 (13 Apr low)
1.4231 (May 2010 low)
Source: Bloomberg L.P., data as of Apr 15, 2015
Technical Analysis:
• 1) The pair recovered after a brief breach of 1.4635 support; 2)
RSI: turning up from bottom
• GBP/USD may trade inside 1.4566-1.4981 with mild downside
bias. Below 1.4566 may extend weakness to 1.4231.
GBP Outlook:
• The weakness in core inflation is due to the
decline in clothing prices.
• We expect that YoY CPI inflation will turn
marginally negative in Apr (-0.1% YoY).
• We do not believe the UK is set for sustained
deflation. Wages continue to rise, real
incomes are buoyant, business surveys
suggest that the economy continues to grow
at a solid pace and the weakness in inflation
is exaggerated by declines in prices for food,
energy and imported items.
• Nevertheless, with modest wage gains and
weakness in external costs, the UK probably
is set for a sustained period of “low-flation” –
ie inflation that is above zero but below the
2% target — over the next few years.
• The low inflation may reduce the need for
the BoE to raise the rate, which may be
negative for GBP.
EUR/GBP may test lower to 0.7014:
0.7394 (fibo 0.382)
0.7014 (Mar low)
Source: Bloomberg L.P., data as of Apr 15, 2015
EUR/GBP Outlook:
• The EUR may underperform as the current
ECB’s QE measures may not be big enough
to turn the inflation up.
• Citi analysts expect the ECB may add easing
measures beyond Sep-16 when the current
program finishes.
• The GBP may outperform as the data (eq
composite PMI in Mar rose from 56.7 to 58.8)
shows U.K. economy remains robust,
suggesting the BoE may keep its monetary
policy unchanged until starting rate hike in
2016.
• The divergent monetary policy stance will
likely pressure EUR/GBP in medium term.
Technical Analysis:
• 1) The pair fell sharply after failure to penetrate resistance at 0.7394; 2) RSI; falling
• The technical indicators suggest EUR/GBP may test lower to 0.7014, with resistance at 0.7394.
NOTE: The brackets are the exchange rates in terms of Hong Kong dollar, with HKD $7.75 exchange rate for reference, and 1,000 yen per unit for JPY/HKD.
© 2015 Citibank
Citibank and Arc Design is a registered service mark of Citibank, N.A. or Citigroup Inc. Citibank (Hong Kong) Limited
3
Daily FX & Market Commentary
Important Economic Data (Apr 13, 2015 – Apr 17, 2015)
Time
Importance
Event
Period Actual
Survey
Prior
Monday
04/13/2015
CH
!!
Trade Balance
Mar
$3.08B $40.10B
04/13/2015 07:50
JN
!
Machine Orders YoY
Feb
5.90%
04/14/2015 09:30
AU
!
NAB Business Confidence
Mar
-3
--
0
04/14/2015 16:30
UK
!!
CPI YoY
Mar
0.00%
0.00%
0.00%
04/14/2015 20:30
US
!!
Retail Sales Advance MoM
Mar
0.90%
1.00%
-0.50%
4.30%
$60.62B
1.90%
Tuesday
Wednesday
04/15/2015 10:00
CH
!!
Industrial Production YoY
Mar
--
7.00%
--
04/15/2015 10:00
CH
!!!
GDP YoY
1Q
--
7.00%
7.30%
04/15/2015 17:00
EC
!!
Trade Balance SA
Feb
--
--
21.6B
04/15/2015 19:45
EC
!!
ECB Main Refinancing Rate
Apr
--
0.05%
0.05%
04/15/2015 21:15
US
!!
Industrial Production MoM
Mar
--
-0.30%
0.10%
04/15/2015 22:00
CA
!!!
Bank of Canada Rate Decision
Apr
--
0.75%
0.75%
04/16/2015 09:00
NZ
!
ANZ Consumer Confidence Index
Apr
--
--
124.6
04/16/2015 09:30
AU
!!!
Employment Change
Mar
--
15.0K
15.6K
04/16/2015 09:30
AU
!!!
Unemployment Rate
Mar
--
6.30%
6.30%
04/16/2015 20:30
US
!
Building Permits
Mar
--
1080K
1092K
04/17/2015 16:00
EC
!
ECB Current Account SA
Feb
--
--
29.4B
1.80%
Thursday
Friday
04/17/2015 16:30
UK
!!!
Average Weekly Earnings 3M/YoY
Feb
--
1.70%
04/17/2015 16:30
UK
!!!
ILO Unemployment Rate 3Mths
Feb
--
5.60%
5.70%
04/17/2015 17:00
EC
!!
CPI YoY
Mar
--
-0.10%
-0.10%
04/17/2015 20:30
CA
!!
CPI YoY
Mar
--
1.00%
1.00%
04/17/2015 20:30
CA
!
Retail Sales MoM
Feb
--
--
-1.70%
04/17/2015 20:30
US
!!
CPI YoY
Mar
--
0.10%
0.00%
04/17/2015 22:00
US
!!
U. of Mich. Sentiment
Apr
--
93.7
93
For any enquiries, please call (852) 2860-0333.
Source: Source: Bloomberg L.P.
(K = Thousand, M = Million, B = Billion)
This document is based on information provided by Citigroup Investment Research, Citigroup Global Markets, and Citigroup Global Wealth Management. It is provided for your information only. It is
not intended as an offer or solicitation for the purchase or sale of any security. Information in this document has been prepared without taking account of the objectives, financial situation or needs of
any particular investor. Accordingly, investors should, before acting on the information, consider its appropriateness, having regard to their objectives, financial situation and needs. Any decision to
purchase securities mentioned herein should be made based on a review of your particular circumstances with your financial adviser. Investments referred to in this document are not
recommendations of Citibank (Hong Kong) Limited (“Citibank”) or its affiliates. Although information has been obtained from and is based upon sources that Citibank believes to be reliable, Citi
analysts do not guarantee its accuracy and it may be incomplete and condensed. All opinions, projections and estimates constitute the judgment of the author as of the date of publication and are
subject to change without notice. Prices and availability of financial instruments also are subject to change without notice. Past performance is no guarantee of future results. The document is not to
be construed as a solicitation or recommendation of investment advice. Subject to the nature and contents of the document, the investments described herein are subject to fluctuations in price and/or
value and investors may get back less than originally invested. Certain high-volatility investments can be subject to sudden and large falls in value that could equal the amount invested. Certain
investments contained in the document may have tax implications for private customers whereby levels and basis of taxation may be subject to change. Citibank does not provide tax advice and
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between Citi’s foreign exchange, global macro and technical strategy groups and our developed and emerging markets economists. Under normal circumstances, we expect to present Forecasts on a
monthly schedule although we may offer intra month updates if circumstances dictate. Technical Trend: All views, opinions and estimates derived from CitiFX Technicals (i) may change without notice
and (ii) may differ from those views;, opinions and estimates held or expressed by Citi or other Citi personnel, including Citi Foreign Exchange: Forecast. Should CitiFX Technicals not cover any major
currency pairs, the indication of short-term technical "bullish", "bearish", or "neutral" trends will be based on the result of analysis with various widely known short-term technical analysis tools, namely
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4