Market Roundup
- U.S. Congress approves $1.3-trillion spending bill, sends to Trump
- China urges U.S. to "pull back from brink" as Trump unveils tariffs
- Trump temporarily excludes EU, six other allies from steel tariffs
- Trump picks hardliner Bolton to replace McMaster as national security adviser
- Japan EconMin Motegi - Will keep seeking exemptions from US import tariffs – Jiji
- METI Seko – Retaliation against US could destroy free trade system
- Japan Feb core CPI +1.0% y/y, as eyed, overall CPI +1.5%, ex-f/e +0.5%
- BOJ deputy gov says price gains insufficient, wants stronger policy regime
- Foreign CB US debt holdings +$12,171 bln to $3.440 tln Mar 21 week
- Treasuries $11,595 bln to $3.097 tln, agencies +$644 mln to $263.136 bln
- Investors pull $9.6 bln from U.S. stock funds in week –Lipper
- Seize on "new dynamic" to agree Brexit deal, May tells EU
- EU backs Britain in blaming Russia for spy attack, recalls envoy
Economic Data Ahead
- No major economic data releases
Key Events Ahead
- (0800 ET/1200 GMT) Riksbank general council meeting in Stockholm
- (0810 ET/1210 GMT) Federal Reserve Bank of Atlanta President Raphael Bostic speaks on the economic outlook before the Knoxville Economics Forum in Knoxville, Tennessee
- (0830 ET/1230 GMT) Bank of England Monetary Policy Committee member Gertjan Vlieghe gives speech to the Birmingham Chamber of Commerce in Birmingham
- (1030 ET/1430 GMT) Minneapolis Fed President Neel Kashkari participates in a question-and-answer session moderated by Kathleen Hays of Bloomberg in New York
- (1130 ET/1530 GMT) Dallas Fed President Robert Kaplan participates in moderated question-and-answer session before the Trellis Foundation Summit on Postsecondary Access, Affordability and Attainment in Austin, Texas
- (1900 ET/2300 GMT) Boston Fed President Eric Rosengren speaks before the 10th Annual International Research Forum on Monetary Policy co-sponsored by the Federal Reserve Board in Washington, D.C.
FX Beat
DXY: The dollar index slumped after U.S. President Donald Trump announced tariffs on Chinese goods and China retaliated with a pledge to fight to the end any such war. The greenback against a basket of currencies 0.3 percent down at 89.58, having touched a low of 89.40 on Thursday, its lowest since Feb. 20. FxWirePro's Hourly Dollar Strength Index stood at -51.57 (Bearish) by 0500 GMT.
EUR/USD: The euro rose, reversing most of its previous session losses, as the European Central Bank President Mario Draghi cautioned EU leaders at a summit that European governments planning to raise spending even as growth momentum posed a medium-term risk to the economy. The European currency traded 0.3 percent up at 1.2336, having touched a high of 1.2387 the day before, its highest since Mar. 14. FxWirePro's Hourly Euro Strength Index stood at -12.54 (Neutral) by 0500 GMT. Investors’ attention will remain on the U.S. new home sales and Fed officials' speech, amid a lack of data from the Eurozone docket. Immediate resistance is located at 1.2383 (Mar 15 High), a break above targets 1.2412 (Mar. 14 High). On the downside, support is seen at 1.2285 (Previous Session Low), a break below could drag it lower 1.2251 (Mar. 2 Low).
USD/JPY: The dollar slumped to a 16-month low as concerns over rising global trade tensions triggered a bout of investor risk aversion. The major was trading 0.4 percent down at 104.81, having hit a low of 104.63 earlier, its lowest since Nov. 2016. FxWirePro's Hourly Yen Strength Index stood at 67.01 (Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. new home sales and Fed officials' speech. Immediate resistance is located at 105.07 (78.6% retracement of 106.64 and 104.63), a break above targets 105.41 (61.8% retracement). On the downside, support is seen at 104.50, a break below could take it lower 104.05.
GBP/USD: Sterling steadied above the 1.4100 handle after rising to a 7-week peak in the previous session as two Bank of England policymakers unexpectedly backed an interest rate increase, boosting investors' confidence that borrowing costs will rise for only the second time since 2008 as early as May. The major traded 0.1 percent up at 1.4110, having hit a high of 1.4216 the day before, it’s highest since Feb. 2. FxWirePro's Hourly Sterling Strength Index stood at 36.15 (Bullish) by 0500 GMT. Investors’ focus will remain on BoE MPC member Vlieghe's speech, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.4233 (Jan 31 High), a break above could take it near 1.4278. On the downside, support is seen at 1.4041 (5-DMA), a break below targets 1.3981 (10-DMA). Against the euro, the pound was trading 0.1 percent down at 87.37 pence, having hit a high of 86.68 pence the day before, it’s highest since June 2016.
AUD/USD: The Australian dollar steadied after falling from a 6-day peak hit in the previous session amid fears a global trade war is looming and turmoil in the White House. The Aussie trades 0.2 percent down at 0.7711, having hit a high of 0.7783 the day before; it’s highest since Mar. 16. FxWirePro's Hourly Aussie Strength Index stood at -119.09 (Highly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7678 (Mar. 20 Low), a break below targets 0.7653 (Dec. 21 Low). On the upside, resistance is located at 0.7767 (61.8% retracement of 0.7916 and 0.7672), a break above could take it near 0.7796 (50.0% retracement).
NZD/USD: The New Zealand dollar edged up after easing in the previous session on as Trump signed a presidential memorandum that could impose tariffs on up to $60 billion of imports from China, but only after a 30-day consultation period that starts once a list is published. The Kiwi trades 0.3 percent up at 0.7227, having touched a low of 0.7153 on Wednesday, its lowest level since Jan. 10. FxWirePro's Hourly Kiwi Strength Index was at -102.15 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7254 (50.0% retracement of 0.7354 and 0.7153), a break above could take it near 0.7280 (Mar 16 High). On the downside, support is seen at 0.7208 (Mar. 16 Low), a break below could drag it below 0.7176 (Mar 20 Low).
Equities Recap
Asian shares slumped as the Chinese commerce ministry unveiled plans to levy additional duties on up to $3 billion of U.S. imports in response to the steel and aluminium tariffs.
MSCI's broadest index of Asia-Pacific shares outside Japan tumbled 2.2 percent.
Tokyo's Nikkei declined 4.5 percent to 20,617.86 points, Australia's S&P/ASX 200 index eased 1.9 percent to 5,820.70 points and South Korea's KOSPI plunged 3.3 percent to 2,413.80 points.
Shanghai composite index declined 3.9 percent to 3,136.51 points, while CSI300 index was trading 3.6 percent down at 3,877.91 points.
Hong Kong’s Hang Seng was trading 3.3 percent lower at 30,053.31 points. Taiwan shares shed 1.6 percent to 10,823.33 points.
Commodities Recap
Crude oil prices rallied more than 1 percent, boosted by Saudi plans for OPEC and Russian led production curbs introduced in 2017 to be extended into 2019 in order to tighten the market. International benchmark Brent crude was trading 0.9 percent up at $69.51 per barrel by 0521 GMT, having hit a high of $69.96 earlier, its highest since Feb. 2. U.S. West Texas Intermediate was trading 1.2 percent down at $64.97 a barrel, after rising as high as $65.69 the day before, its strongest since Feb 2.
Gold prices rose as investors rushed to safety after U.S. President Donald Trump moved towards long-promised anti-China tariffs, prompting a response from China amid fears of a global trade war. Spot gold climbed 0.7 percent to $1,338.29 per ounce at 0526 GMT, having hit a high of $1,339.02 an ounce earlier, its highest since Mar. 7. U.S. gold futures for April delivery rose 0.8 percent to $1,338.30 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.804 percent lower by 0.028 bps, while 5-year yield was 0.034 bps low at 2.597 percent.
The Japanese 10-year government bond yields slumped to lowest in four months as investors poured into safe-haven instruments amid a slide in riskier equities, following rising tensions over a global trade war, sparked by U.S. President Donald Trump’s tariff plans to be imposed on steel and aluminum exports. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1-1/2 basis points to 0.02 percent, the yield on the long-term 30-year note also slid nearly 1-1/2 basis points to 0.74 percent and the yield on short-term 2-year traded flat at -0.15 percent.
The Australian government bonds gained across the curve on growing angst over trade war between two biggest economies of the world. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 2 basis points to 2.670 percent, the yield on the long-term 30-year note slid 3 basis points to 3.248 percent and the yield on short-term 2-year down 1 basis point to 2.050 percent.
