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Americas Roundup: Dollar declines against euro, yen on risk aversion, oil sinks for 2nd day on fading hopes of output deal -February 3rd,2016

Market Roundup

  • Fed's George: George holds fast to hawkishness, calls for more rate hikes.

  • ECB's Mersch: will continue to have an accommodative monetary policy, have no constraint in the use, diversity or the volume of toolbox as we see fit. 

  • Britain confident of an EU deal with proposals, GBP rises.

  • SNB's Jordan: Swiss franc still 'significantly overvalued'.

  • Dairy prices fall as global oversupply weighs, Fonterra's GDT Price Index fell 7.4%, with an avg selling price of $2,276 per tonne.

  • Yields drop to nine-month lows as oil prices resume slide, Friday's employment report in focus.

  • Gold steadies near three-month high as global economy concerns persist.

Looking Ahead - Economic Data (GMT)

  • 21:45 New Zealand HLFS Unemployment Rate* Q4 forecast 6.1%, 6%-previous 

  • 21:45 New Zealand HLFS Job Growth QQ* Q4 forecast 0.8%, -0.4%-previous 

  •  21:45 New Zealand HLFS Participation Rate* Q4 forecast 68.9%, 68.6%- previous 

  •  21:45 New Zealand Labour Cost Index - QQ*Q4 forecast 0.5%, 0.4%- previous 

  •  21:45 New Zealand Labour Cost Index - YY*Q4 forecast 1.6%, 1.7%- previous 

  •  22:30 Australia AIG Services Index*Jan 46.3- previous 

  • 00:30 Australia Trade Balance G&S (A$)*Dec forecast -2500m, -2906m-previous

  • 00:30 Australia Goods/Services Imports* Dec -1%- previous 

  • 00:30 Australia Goods/Services Exports* Dec 1%- previous 

  • 01:45 China Caixin Services PMI *Jan 50.2- previous 

  •  05:00 Japan Consumer Confidence. Index* Jan 42.7- previous

Looking Ahead - Events, Other Releases (GMT)

  • 23:50 Japan BOJ will publish the minutes of its December policy meeting

  • 02:30 Japan BOJ Gov Haruhiko Kuroda speaks at event hosted by Japan's Kyodo news agency.

Currency Summaries

EUR/USD is likely to find support at 1.0880 levels and currently trading at 1.0916 levels. The pair has made session high at 1.0940 and hit lows at 1.0891 levels. Euro edged higher against US dollar on Tuesday indicated that U.S. inflation would remain low that would discourage the Federal Reserve from hiking interest rates this year, while risk aversion due to global economic growth concerns also helped euro. The dollar index, which measures the greenback against a basket of six major currencies, was last down 0.12 percent at 98.89. The dollar was last 0.60 percent lower against the yen at 120.280 yen, while the euro was last up 0.33 percent against the dollar at $1.09240. German unemployment fell by more than expected in January, with the jobless rate sinking to a new record low, pointing to steady growth in Europe's largest economy despite an economic slowdown in emerging markets. Meanwhile German unemployment fell by more than expected in January, with the jobless rate declining to a new record low, indicating to strong growth in Europe's largest economy despite an economic slowdown in emerging markets. The seasonally adjusted unemployment total declined by 20,000 to 2.732 million. That compared with the analyst forecast for a drop of 7,000.

GBP/USD is supported in the range of 1.4356 levels and currently trading at 1.4408 levels. It reached session high at 1.4429 and dropped to session low at 1.4356 levels. Sterling inched to three-week high on Tuesday after the outline of a proposed EU deal said Britain does not have to integrate further politically with the rest of the European Union if it wants to stay in.The proposals addressed all four areas where Prime Minister David Cameron has demanded reform, but they were viewed with a mixed reception that underlined the challenge of convincing Britons they should stay in the bloc. The pound jumped to as high as $1.4447 from $1.4380 levels after the draft proposals were published, up immediately beforehand, and its strongest since Feb. 13. However after a short while eased back to reach, $1.4400, leaving it lowers by 0.2 percent against the dollar on the day. Earlier Sterling had declined to as low as $1.4328 after data showed Britain's construction slowed in January, denting expectations of a pick-up in gross domestic output.

USD/CAD is supported at 1.3400 levels and is trading at 1.4036 levels. It has made session high at 1.4078 and lows at 1.4000 levels. The Canadian dollar declined against US dollar on Tuesday, pulling back from a nearly four-week high as lower crude oil prices and stock market losses weighed on oil correlated currency. Oil prices slipped more than 4 percent, as the commodity continued to slide on Tuesday, as hopes for a deal between OPEC and Russia on output cuts looked unlikely. Meanwhile, Renewed pressure on crude oil prices has left the market fully discounting a July interest rate cut from the Bank of Canada after implying a 90 percent probability on Monday. The currency's strongest level of the session was C$1.3940, while C$1.4080 was its weakest. The currency touched on Monday its strongest since Jan. 5 at C$1.3908.

USD/JPY is supported around 119.72 levels and currently trading at 120.03 levels. It hit session high at 120.10 and made session lows at 118.83 levels. The U.S. dollar slipped sharply lower against the Japanese yen on Tuesday after a decline in crude oil prices increased concerns about global economic growth. Oil prices declined sharply for the second consecutive day intensifying worries over global economic growth which also suggested falling demand for commodities would lead to negative impact on stocks of energy companies. The dollar hit a session low against the yen of 120.19 after hitting a six-week high on Friday of 121.70 after the Bank of Japan's surprise surprised market with negative interest rates. At the same time, worsening U.S. economic data has raised fears that the United States could fall into recession. Investors this week are waiting for more economic data for further signs of the strength in the U.S. economy, after a bunch of disappointing releases showed slowing growth.

Equities Recap

European equities fell sharply on Tuesday as crude oil prices slipped again and companies like BP reported disappointing earnings.

UK's benchmark FTSE 100 closed down by 2.36 percent, the pan-European FTSEurofirst 300 ended the day down by 2.14 percent, Germany's Dax ended down by 1.95 percent, France's CAC finished the day down by 2.53 percent.

U.S. stocks dropped more than 2 percent in late Tuesday trading after a disappointing forecast from Exxon Mobil and another steep drop in oil prices.

Dow Jones closed down by 1.78 percent, S&P 500 ended up by 1.87 percent, Nasdaq finished the day down by 2.23 percent.

Treasuries Recap

U.S. Treasury yields fell to nine-month lows on Tuesday as oil prices resumed their slide, boosting demand for safe haven bonds, and on concerns about slowing U.S. economic growth before a closely watched employment report on Friday.

Benchmark 10-year notes gained 30/32 in price to yield 1.864 percent, breaking below technical resistance at 1.904 percent and falling to the lowest level since April 28. The yields have dropped from 2.30 percent at the beginning of the year.

Commodities Recap

Gold steadied after touching three-month highs on Tuesday, underpinned by global growth concerns and sharp decline in the oil price pushed investors toward safe-haven assets.

Spot gold touched $1,130.30 an ounce early on Tuesday, its strongest since Nov. 3, and was little changed at $1,128.31 at 3:10 p.m. EST (2010 GMT).

U.S. gold for April delivery settled down 0.07 percent at $1,127.20 an ounce.

Oil slipped for the second straight day on Tuesday, as hopes of a deal to curb supply gluts continued to fade amid concerns that mild winter weather in the U.S. will dampen demand.

Brent crude closed down $1.52, or 4.4 percent, at $32.72 a barrel. It fell as much as 5.9 percent to $32.23 in the session.

U.S. West Texas Intermediate crude (WTI) settled 5.5 percent, or $1.74 lower at $29.88 per barrel, after falling as low as $29.81.


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