Market Roundup
• US Dec International Trade MM $, -53.1B, -52.0B forecast, -50.5B previous, -50.4B revised.
• US Dec JOLTS Job Openings, 5.811M, 5.900M forecast, 5.879M previous, 5.978M revised.
• US Dec Goods Trade Balance (R) $, -72.26B, -71.58B previous.
• US w/e Redbook MM, 0.0%, 0.0% previous.
• US w/e Redbook YY, 3.0%, 3.2% previous.
• Senate Republican Leader McConnell Says lawmakers are near a deal on 2018 spending limits.
• Icahn calls U.S. stock nosedive 'rumblings of an earthquake' -CNBC
• Treasury's Mnuchin not 'overly concerned' about Wall St selloff
• Fed's Bullard says job market strength may not augur higher inflation
• German pay deal heralds end of wage restraint in Europe's largest economy
• CA Dec Trade Balance C$, -3.19B, -2.20 forecast, -2.54B previous, -2.71B revised
• CA Dec Exports C$, 46.51B, 46.21B previous, 46.25B revised
• CA Dec Imports C$, 49.70B, 48.75B prev, 48.96B revised
• CA Jan Ivey PMI, 51.3, 49.3 previous
• CA Jan Ivey PMI SA, 55.2, 61.0 forecast, 60.4 previous
Looking Ahead - Economic Data (GMT)
• 6 Feb 21:45 New Zealand Q4 HLFS Unemployment Rate, 4.6% forecast, 4.6% previous
• 6 Feb 21:45 New Zealand Q4 HLFS Job Growth QQ, 0.2% forecast, 2.2% previous
• 6 Feb 21:45 New ZealandQ4 HLFS
Participation Rate, 70.8% forecast, 71.1% previous
• 6 Feb 21:45 New Zealand Q4 Labour Cost Index - QQ, 0.5% forecast, 0.7% previous
• 6 Feb 21:45 New Zealand Q4 Labour Cost Index - YY, 1.9% forecast, 1.9% previous
• 6 Feb 23:50 Japan Jan Foreign Reserves, 1,264.30B previous
• 7 Feb 00:00 Japan Dec Overtime Pay, 2.6% previous
• 7 Feb 05:00 Japan Dec Coincident Indicator MM, 1.7, 1.5 revised
• 7 Feb 05:00 Japan Dec Leading Indicator, 2.1 prev, 1.8 revised
• 7 Feb 08:00 China Jan FX Reserves (Monthly), 3.168T forecast, 3.140T previous
• 7 Feb 20:00 New Zealand N/A Cen Bank Interest Rate, 1.75% forecast, 1.75% previous
Looking Ahead - Events, Other Releases (GMT)
• N/A ECB Governing Council meeting. No interest rate announcements scheduled - Frankfurt
• 08:00 Riksbank executive board meeting – Stockholm
• 09:00 ECB's Daniele Nouy and board member Sabine Lautenschlager hold news conference - Frankfurt
• 11:00 Fed's Robert Kaplan participates in moderated question-and-answer session before the Institute for Monetary and Financial Stability Working Lunch – Frankfurt
• 11:00 Fed's Robert Kaplan speaks at a business forum in Frankfurt - Frankfurt
• 13:30 Fed's William Dudley participates in panel before event, "Banking Culture: Still Room for Improvement?" organized by the European American Chamber of Commerce and Thomson Reuters - New York
• 16:15 Fed's Charles Evans speaks on current economic conditions and monetary policy before the Iowa Bankers Association Bank Management Conference - Iowa
• 20:00 Reserve Bank of New Zealand's Official Cash Rate (OCR) and Monetary Policy Statement - Wellington
Currency Summaries
EUR/USD is likely to find support at 1.2300 levels and currently trading at 1.2377 levels. The pair has made session high at 1.2404 and hit lows at 1.2311 levels. Euro edged lower against dollar on Tuesday as greenback gained as traders piled back into the greenback after a global stock market rout wiped out $4 trillion in value. The dollar index climbed for a third straight session from a three-year low on buying from traders closing out bearish bets against the dollar versus the euro, sterling and riskier, commodity-linked currencies. On Monday, the Dow and S&P 500 U.S. stock indexes posted their biggest declines since August 2011. This led traders to buy dollars even though the stock sell-off also led investors to moderate their expectations of Federal Reserve rate hikes. Currency traders shrugged off data that showed the U.S. trade deficit widened in December to its biggest level in nine years. The U.S. trade deficit widened more than expected in December, hitting its highest level since 2008 as robust domestic demand pushed imports to a record high. The Commerce Department said on Tuesday the trade gap increased 5.3 percent to $53.1 billion. That was the highest level since October 2008 and followed a slightly upwardly revised $50.4 billion shortfall in November. The deficit surged 12.1 percent to $566.0 billion in 2017, the highest since 2008. The politically sensitive U.S.-China trade deficit increased 8.1 percent to a record $375.2 billion last year.
GBP/USD is supported in the range of 1.3800 levels and currently trading at 1.3944 levels. It reached session high at 1.3997 and dropped to session low at 1.3834 levels. The British pound fell for a third straight day against dollar on Tuesday, hitting two-week lows against a broadly stronger dollar even though investors remained wary of selling it down too far before this week's Bank of England meeting. Currency markets have been relatively calm compared with equity markets which are suffering their fourth straight day of falls, with Britain's FTSE index down almost 2 percent and lower for the sixth day in a row. But as the dollar has strengthened, sterling has struggled, losing as much as 0.8 percent at one point on Tuesday to hit a two-week low of $1.3838 before recovering to trade at $.3944 in the US session, still down 0.1 percent on the day, as the dollar pulled back again. It has now fallen almost 3 percent since peaking at $1.4346 on Jan. 25 and is down more than 2 percent since Friday its worst three-day performance since June 2017.Versus the euro, sterling dropped as much as 0.4 percent to a three-week low 89.10 pence, before recovering to trade at 89.00 pence, still down 0.1 percent on the day. The currency has been hurt by the general flight from risk and also weighed down by this week's surveys confirming the poor shape of Britain's economy and fresh tensions over its divorce negotiations with the European Union.
USD/CAD is supported at 1.2476 levels and is trading at 1.2511 levels. It has made session high at 1.2569 and lows at 1.2505 levels. The Canadian dollar declined against its U.S. counterpart on Tuesday as a sell-off in global equity markets continued and oil prices fell, while domestic data showed a wider-than-expected trade deficit. Canada’s trade deficit in December widened to C$3.19 billion as imports grew faster than exports, Statistics Canada said. Analysts had forecast a deficit of C$2.20 billion. World stock markets nosedived for a fourth day running, having seen nerves about higher interest rates and overcooked valuations wipe $4 trillion off what just eight days ago had been record highs. Commodity-linked currencies, such as the Canadian dollar, tend to underperform when stocks fall, because of the signal that it sends on prospects for global economic growth. In separate data, home sales in Toronto fell 22 percent in January from a year earlier as rising interest rates and tighter mortgage rules weighed on demand, but prices have stabilized as stubborn sellers and tight supply kept the correction in check. The price of oil, one of Canada's major exports, fell for a third day. The Canadian dollar was last trading at C$1.2514 to the greenback. The currency's strongest level of the session was C$1.2505, while it touched its weakest since Jan. 11 at C$1.2569.
AUD/USD is supported around 0.7827 levels and currently trading at 0.7893 levels. It hit session high at 0.7894 and made session lows at 0.7835 levels. The Australian dollar was on the defensive against greenback on Tuesday as a rout in global share markets sparked a flight to safe havens, while local economic data proved too mixed to offer much support. The Reserve Bank of Australia (RBA) went out of its way not to rock any boats, leaving interest rates unchanged as expected at its monthly meeting and omitting any mention of the ructions in markets. The Aussie was last down 0.26 percent at $0.7892 after slipping 0.5 percent overnight. That came on top of a 1.5 percent dive on Friday when world stock markets took fright. The sell off accelerated on Monday with the Dow suffering its largest daily points drop in history, while the S&P 500 shed $1 trillion in market value. The Aussie is often sold during times of stress given the country is an open economy leveraged to commodity prices and global growth that runs a perennial current account deficit. The slump in share markets had only reinforced expectations the RBA would keep rates at 1.5 percent and again signal it was in no rush to change tack. Domestic data out on Tuesday did nothing to change the steady outlook. Retail sales were a little softer than expected with a fall of 0.5 percent in December, but real sales for the whole fourth quarter were still up a solid 0.9 percent helped by widespread discounting.
Equities Recap
European shares hit their lowest level since August 2017 on Tuesday as a global sell-off in equities deepened and volatility spiked on growing worries over inflation and rising bond yields.
UK's benchmark FTSE 100 closed down by 2.4 percent, the pan-European FTSEurofirst 300 ended the day down by 2.37 percent, Germany's Dax ended down by 0.3 percent, France’s CAC finished the day down by 2.4 percent.
U.S. stocks pulled back from earlier losses on Tuesday, as indexes rebounded from the biggest one-day drops for the S&P 500 and the Dow in more than six years that stalled the market's record run.
Dow Jones closed up by 2.33 percent, S&P 500 ended up by 1.74 percent, Nasdaq finished the day up by 2.12 percent.
Treasuries Recap
U.S. Treasury debt prices gained on the day on Tuesday as volatile equity markets led some investors to seek out lower risk bonds, though many investors remained nervous after a week long bond rout sent yields on Monday to four-year highs.
Benchmark 10-year yields surged to 2.885 percent in overnight trading on Monday, the highest since January 2014, before falling as low as 2.707 percent as stock selloff hastened in the New York afternoon session.
Commodities Recap
Gold prices fell 1 percent to a 2-1/2-week low on Tuesday, as investors focused on expectations for higher U.S. interest rates, even as U.S. stock markets swung wildly in both directions a day after the Dow and S&P 500 indexes tumbled.
Spot gold was down 1 percent at $1,326.51 an ounce by 2:41 p.m. EST (1941 GMT), erasing Monday's 0.5 percent gain, having earlier dropped to $1,325.61, its lowest since Jan. 18.U.S. gold futures for April delivery settled down $7, or 0.5 percent, at $1,329.50 per ounce.
Oil fell for a third day on Tuesday as the U.S. dollar rose to its highest in more than a week in the wake of a sharp sell-off on Wall Street and other stock markets, a global rout that wiped out $4 trillion in value.
Brent crude futures for April delivery settled down 76 cents, or 1.12 percent at $66.86 a barrel, after at touching a session low of $66.53, the lowest since Jan. 2.
U.S. West Texas Intermediate futures dipped 76 cents, or 1.18 percent, to settle at $63.39 a barrel, the lowest since Jan. 22.
