Market Roundup
- Japan Jan flash mfg PMI 54.4, near 4-year high, Dec final 54.0.
- Dec trade surplus Y359bln, Y530bln eyed, exports +9.3% y/y, imports +14.9%.
- Exports to US +3%, China +15.8%, Asia +9.9%, to China/Asia records.
- Trans-Pacific trade pact, without U.S., to be signed in March -Japan.
- U.S. Senate confirms Jerome Powell as Federal Reserve chair.
- Job creator, or job killer? Trump angers solar installers with panel tariff.
- U.S. Democrats withdraw offer to fund Trump's border wall.
- Trump Cabinet member Sessions interviewed in U.S. Russia probe.
- China's Premier Li calls for more targeted economic policy.
Economic Data Ahead
- (0300 ET/0800 GMT) France Jan Markit Mfg Flash PMI f'cast 58.7, last 58.8
- (0300 ET/0800 GMT) France Jan Markit Serv Flash PMI f'cast 58.9, last 59.1
- (0300 ET/0800 GMT) France Jan Markit Comp Flash PMI f'cast 59.4, last 59.6
- (0330 ET/0830 GMT) Germany Jan Markit Mfg Flash PMI f'cast 63.0, last 63.3
- (0330 ET/0830 GMT) Germany Jan Markit Service Flash PMI f'cast 55.6, last 55.8
- (0330 ET/0830 GMT) Germany Jan Markit Comp Flash PMI f'cast 58.6, last 58.9
- (0430 ET/0930 GMT) Great Britain Dec Claimant Count Unemp Chng f'cast 5.4k, last 5.9k
- (0430 ET/0930 GMT) Great Britain Nov ILO Unemployment Rate f'cast 4.3%, last 4.3%
- (0430 ET/0930 GMT) Great Britain Nov Employment Change f'cast -13k, late -56k
- (0430 ET/0930 GMT) Great Britain Nov Avg Wk Earnings 3M YY f'cast 2.5%, last 2.5%
- (0430 ET/0930 GMT) Great Britain Nov Avg Earnings (Ex-Bonus) f'cast 2.3%, last 2.3%
Key Events Ahead
- (0315 ET/0815 GMT) ECB's Daniele Nouy attends the European Banking Federation Boardroom Dialogue in Frankfurt.
- (0530 ET/1030 GMT) Riksbank's Martin Floden to discuss current monetary policy at Moody's seminar on Credit Trends in Stockholm.
FX Beat
DXY: The dollar index slumped to a new 3-year low, weighed down by rising concerns that the U.S. currency's yield advantage will start to fade as major central banks head toward unwinding their massive stimulus. The greenback against a basket of currencies traded 0.3 percent down at 89.88, having touched a low of 89.82 earlier, its lowest since December 2014. FxWirePro's Hourly Dollar Strength Index stood at -136.12 (Highly Bearish) by 0500 GMT.
EUR/USD: The euro rallied to a fresh 3-year high above the 1.2300 handle after data from the European Commission showed Eurozone consumer confidence jumped much more than expected in January. The European currency traded 0.2 percent up at 1.2318, having touched a high of 1.2335 earlier, its highest since Dec. 2014. FxWirePro's Hourly Euro Strength Index stood at -14.97 (Neutral) by 0500 GMT. Investors’ attention will remain on Eurozone's prelim Markit manufacturing and service PMI's, ahead of U.S. preliminary manufacturing and service PMI's and existing home sales figures. Immediate resistance is located at 1.2350, a break above targets 1.2390. On the downside, support is seen at 1.2245 (78.6% retracement of 1.1916 and 1.2335), a break below could drag it lower 1.2175 (61.8% retracement).
USD/JPY: The dollar slumped to a fresh four-month low as better-than-expected Japanese trade data and flash manufacturing PMI report boosted the sentiment around the yen. The major was trading 0.3 percent down at 109.92, having hit a low of 109.80 earlier, its lowest since Sept 15. FxWirePro's Hourly Yen Strength Index stood at 71.50 (Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. preliminary manufacturing and service PMI's and existing home sales figures for further momentum. Immediate resistance is located at 110.58 (78.6% retracement of 110.19 and 113.38), a break above targets 111.18 (61.8% retracement). On the downside, support is seen at 109.54 (Sept. 15 Low), a break below could take it near 109.00.
GBP/USD: Sterling advanced to its highest level since the vote to leave the European Union on growing optimism around Britain's chances of securing a favourable Brexit deal. The major traded 0.2 percent up at 1.4024, having hit a high of 1.4048 earlier, it’s highest since June 2016. FxWirePro's Hourly Sterling Strength Index stood at 10.37 (Neutral) by 0500 GMT. Investors’ focus will remain on the UK labour report, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.4070, a break above could take it near 1.4100. On the downside, support is seen at 1.3910 (5-DMA), a break below targets 1.3823 (61.8% retracement of 1.3458 and 1.4048). Against the euro, the pound was trading flat at 87.81 pence, having hit a high of 87.61 pence the day before, it’s highest since Dec. 15.
AUD/USD: The Australian dollar rose, reversing some of its previous session losses, as a fresh bout of speculative selling took the U.S. dollar to three-year lows. The Aussie trades 0.2 percent up at 0.8014, having hit a high of 0.8038 on Friday; it’s highest since Sept. 20. FxWirePro's Hourly Aussie Strength Index stood at 56.39 (Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7951 (61.8% retracement of 0.7807 and 0.8038), a break below targets 0.7924 (50.0% retracement). On the upside, resistance is located at 0.8050, a break above could take it near 0.8100.
NZD/USD: The New Zealand dollar rallied to a 4-month peak, supported by buoyant global risk appetite and recent rises in dairy prices. The Kiwi trades 0.2 percent up at 0.7365, having touched a high of 0.7376 earlier, its highest level since Sept. 20. FxWirePro's Hourly Kiwi Strength Index was at 118.05 (Highly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7400, a break above could take it near 0.7430. On the downside, support is seen at 0.7306 (5-DMA), a break below could drag it lower 0.7281 (10-DMA).
Equities Recap
Asian shares eased from recent peaks, while the greenback slumped to a 3-year low against the basket of currencies as U.S. Democrats withdrew the offer to fund Trump's border wall.
MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.2 percent.
Tokyo's Nikkei eased 0.8 percent to 23,940.78 points, Australia's S&P/ASX 200 index surged 0.3 percent to 6,054.70 points and South Korea's KOSPI lost 0.05percent to 2,533.94 points.
Shanghai composite index rose 0.1 percent to 3,550.39 points, while CSI300 index was trading 0.01 percent down at 4,381.12 points.
Hong Kong’s Hang Seng was trading 0.05 percent higher at 32,940.66 points. Taiwan shares shed 0.9 percent to 11,152.16 points.
Commodities Recap
Crude oil prices declined, weighed down by data that showed an increase in U.S. crude oil and gasoline inventories. International benchmark Brent crude was trading 0.1 percent up at $69.80 per barrel by 0439 GMT, having hit a low of $68.26 on Friday, its lowest since Jan. 9. U.S. West Texas Intermediate was trading 0.05 percent down at $64.42 a barrel, after easing as low as $62.87 on Friday, its lowest since Jan. 9.
Gold prices steadied, drifting around four-month highs hit last week, as the U.S. dollar slumped to fresh three-year lows against a basket of currencies. Spot gold was nearly unchanged at $1,340.78 per ounce at 0441 GMT, having touched its weakest level since Jan. 12 at $1,324.15 on Thursday. U.S. gold futures for February delivery rose 0.3 percent to $1,340.20 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.616 percent lower by 0.003 bps, while 5-year yield was 0.02 bps down at 2.417 percent.
The Japanese government bonds gained as Bank of Japan announced it was keeping its monetary policy setting unchanged, shooting market theories of an early reduction in QE. Also, firmness in the U.S. Treasuries supported the safe-haven buying. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1/2 basis point to 0.073 percent, the yield on the long-term 30-year note traded nearly flat at 0.826 percent and the yield on short-term 2-year remained steady at -0.134 percent.
The Australian government bonds regained some ground in line with the U.S. Treasuries, where strong demand at an auction of two-year paper supported sentiment. Also, investors will now focus on the fourth quarter inflation data. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 3 basis points to 2.794 percent, the yield on the long-term 30-year note slid 3-1/2 basis points to 3.425 percent and the yield on short-term 2-year down 2 basis points to 2.078 percent.
The New Zealand government bonds jumped at the time of closing as investors clustered safe-haven assets on ongoing global tensions; also, investors are now awaiting the country’s fourth-quarter consumer inflation data, scheduled to be released today by 21:45GMT for further direction in the debt market. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 4-1/2 basis points to 2.95 percent, the yield on 20-year plunged 4 basis points to 3.43 percent and the yield on short-term 2-year ended 1 basis point lower at 2.04 percent.
