Market Roundup
- BoJ leaves monetary policy as is, as forecast, short rate target -0.1%, 10-year JGB target @zero, vote 7-2, to maintain QQE, Sato-Kiuchi again dissent, economic assessment left mostly as is, housing investment view cut, moving sideways.
- Japan MoF flow data week-ended March 11 – Japanese sold net Y360.5 bln Foreign stocks, Y703.9 bln bonds, bought Y97.2 bln bills; foreign investors sold net Y722.7 bln Japanese stocks, Y47.3 bln JGBs, Y2.1413 trln bills.
- Japan’s Meiji Yasuda plans to invest $7.1 bln overseas – Nikkei.
- China PBOC ups OMO, MLF loan rates by 10 bps, various tenors, move market driven, not “an interest rate hike”, flexibility on rates favorable, no change in policy per se, CNY303 bln MLF loans to 17 financials today.
- Primary dealers see two more Fed hikes this year, 3 in ’18 – Reuters poll.
- US Treasury – Jan net $110.4 bln net overall capital inflow, Dec rev $65.3 bln outflow, net foreign Tsy holdings -$7 bln, China holdings $1.051 trln, Japan $1.103 trln, Dec $1.058 trln, $1.091 trln.
- Trump will detail budget plan Thursday with severe cuts – New York Times.
- Federal judge in Hawaii freezes Pres Trump’s new entry ban hours before it was to take effect – Washington Post.
- In test of European populism, Geert Wilders's anti-Islam party gained seats but a big majority of Dutch voters rejected his views – New York Times.
- Australia Feb employment -6.4k, unemployment 5.9%, participation 64.6%, +16k, 5.7%, 64.6% forecast, full-time employment +27.1k, jobless at 13-mo high.
- New Zealand Q4 GDP +0.4% q/q, +2.7% y/y, +0.7% and +3.1% forecast, Q3 rev +0.8%, +3.3%, growth slower than expected on exports but economy in recovery mode still.
- Non-residents held 60% of NZ government debt in February, Jan 60%.
Economic Data Ahead
- (0430 ET/0830 GMT) Sweden Feb unemployment, 7.4% nsa forecast; last 7.3% nsa, 6.8% sa.
- (0600 ET/1000 GMT) Eurozone Feb inflation – final, +0.4% m/m, +2.0% y/y forecast; flash -0.8%, +2.0%.
- (0600 ET/1000 GMT) Eurozone Feb – ex-food/energy, +0.4% m/m, +0.9% y/y forecast; flash -1.4%, +0.9%.
- (0830 ET/1230 GMT) United States Mar Philly Fed business sentiment index, 30.0 forecast; last 43.3.
- (0830 ET/1230 GMT) United States Feb housing starts, 1.26 mln AR forecast; last 1.25 mln, -2.6% m/m.
- (0830 ET/1230 GMT) United States Feb building permits, 1.26 mln AR forecast; last 1.29 mln, +5.3% m/m.
- (0830 ET/1230 GMT) United States w/e initial jobless claims, 240k forecast; last 243k.
- (1000 ET/1400 GMT) United States Jan JOLTS job openings; last 5.5 mln.
Key Events Ahead
- (0230 ET/0630 GMT) BoJ Gov Kuroda press conference.
- N/A Cape Town BAML Sun City conference (final day).
- N/A ECB Coeure at Baden-Baden G20 sherpas meeting.
- (0400 ET/0800 GMT) ECB/Austria CB Nowotny parliamentary testimony.
- (0400 ET/0800 GMT) ECB Nouy meetings with Greece’s top banks, HFSF in Athens.
- (0430 ET/0830 GMT) SNB policy announcement, no change to -0.75% 3-month LIBOR target forecast.
- (0500 ET/0900 GMT) Norges Bank policy announcement, no change in 0.5% depo rate forecast.
- (0530 ET/0930 GMT) Norges Bank press conference, monetary policy report.
- (0530 ET/0930 GMT) Spain E4-5 bln 0.4/1.3/5.15/2.9% 2022/26/28/46 Bono auctions.
- (0550 ET/0950 GMT) France E6-7 bln zero/zero/2.25% 2020/22/22 OAT auctions.
- (0630 ET/1030 GMT) Ireland E500 mln 12-month treasury bill auction.
- (0650 ET/1050 GMT) France E1.5-2.0 bln 2.1/0.7/1.8% 2023/30/40 index-linked OAT auctions.
- (0730 ET/1130 GMT) Spain EconMin de Guindos at Madrid Spain Summit.
- (0750 ET/1150 GMT) Riksbank DepGov Ohlsson speaks at Vadstena, Sweden event.
- (0800 ET/1200 GMT) BoE MPC policy announcement, no changes, 9-0 vote forecast, bank rate 0.25%.
- (0830 ET/1230 GMT) German FinMin Schaeuble, IMF Lagarde speak at Frankfurt conference.
- (0830 ET/1230 GMT) Canada int’l securities transactions data.
- (1300 ET/1700 GMT) German FinMin Schaeuble, US TsySec Mnuchin brief reporters after talks.
- (1400 ET/1800 GMT) ECB ChiefEcon Praet speaks at Brussels FEBELFIN event
FX Beat
DXY: The dollar steadied after declining to multi-week lows versus its major peers, as the Federal Reserve hiked interest rates in line with expectations, however, did not signal any pick-up in the pace of further rises. The greenback against a basket of currencies traded 0.03 percent up at 100.58, having hit a low of 100.43 earlier, its lowest since Feb. 16. FxWirePro's Hourly Dollar Strength Index stood at -108.80 (Highly Bearish) by 0500 GMT.
EUR/USD: The euro eased after rising to a 5-week high earlier in the session, as the dollar regained some ground post-FOMC following a slight recovery in the U.S. treasury yields across the curve. The major failed to benefit from Dutch election exit polls, which gave the country's prime minister a big lead over his far-right rival. The European currency traded 0.1 percent lower at 1.0723, having hit a high of 1.0746 earlier, its highest since Feb. 7. FxWirePro's Hourly Euro Strength Index stood at -24.52 (Neutral) by 0400 GMT. Investors now await Eurozone consumer price index figures, ahead of the U.S. housing starts, building permits, unemployment claims and JOLTS job opening data. Immediate resistance is located at 1.0750, a break above targets 1.0791 (Feb 6 High). On the downside, support is seen at 1.0693 (23.6% retrace of 1.0746 and 1.0525), a break below could drag it near 1.06616 (38.2% retrace).
USD/JPY: The dollar steadied after the Bank of Japan kept interest rates unchanged and maintained 10-year JGB yield target around zero percent. On Wednesday, the major slumped after the Fed hiked rates by 25 bps to a range of 0.75 percent to 1 percent as widely expected, but stuck to their projections of three total rate hikes in 2017. The major traded flat at 113.39, having hit a low of 113.15 earlier, its lowest since Mar 1. FxWirePro's Hourly Yen Strength Index stood at 75.90 (Slightly Bullish) by 0400 GMT. Investors’ will continue to track price action in the U.S. Treasury yields, ahead of the BoJ Governor Kuroda’s press conference and the U.S. economic fundamentals. Immediate resistance is located at 113.64 (78.6% retracement of 115.50 and 113.15), a break above targets 114.00. On the downside, support is seen at 114.15 (Session Low), a break below could take it lower 113.00.
GBP/USD: Sterling eased after rising to a 2-week high against the dollar, as fears of prolonged political uncertainty over Brexit terms weighed on the British currency. Investors attention now shifts on Bank of England rate decision, where it is expected keep rates steady. Sterling trades 0.2 percent down at 1.2267, having hit a high of 1.2308 in the previous session, its highest since Mar. 1. FxWirePro's Hourly Sterling Strength Index stood at -48.66 (Neutral) by 0400 GMT. Investors’ focus will remain on BoE policy outcome and developments surrounding the Brexit process, ahead of the U.S. economic data. Immediate resistance is located at 1.2333 (21-DMA), a break above could take it near 1.2393 (61.8 % retracement of 1.2569 and 1.2109). On the downside, support is seen at 1.2250, a break below targets 1.2200. Against the euro, the pound traded 0.1 percent down at 87.44 pence, hovering towards an 8-week low of 87.87 hit on Monday.
AUD/USD: The Australian dollar declined after gaining 2 percent to hit a 3-week high in the previous session, as an unexpected drop in the economy's employment weighed on Aussie bulls' sentiments. The country shed 6,400 jobs in February as compared to the expected growth of 16,000 jobs, while the unemployment rate ticked up to 5.9 percent from 5.7 percent. The Aussie trades 0.2 percent down at 0.7688, pulling away from a high of 0.7719 touched on Wednesday, it’s highest since Feb. 24. FxWirePro's Hourly Aussie Strength Index stood at 74.75 (Slightly Bullish) by 0500 GMT. Investors will continue to digest downbeat domestic employment data, ahead of series of U.S. economic data. Immediate support is seen at 0.7676 (Session Low), a break below targets 0.7636 (Mar 1 High). On the upside, resistance is located at 0.7720, a break above could take it till 0.7740 (Feb 23 High).
NZD/USD: The New Zealand dollar tumbled after data showed the economy grew 0.4 percent in the fourth quarter, versus a 0.7 percent forecast. The major gained 1.8 percent in the previous session after the Federal Reserve stuck to its outlook for monetary tightening this year. The Kiwi trades 0.7 percent lower at 0.6992, after rising as high as 0.7048 on Wednesday, it’s highest since Mar. 3. FxWirePro's Hourly Kiwi Strength Index was at -119.06 (Highly Bearish) by 0500 GMT. Investors’ will continue to track board based market sentiment, ahead of the U.S. macroeconomic drivers for further momentum. Immediate resistance is located at 0.7067 (50.0% retrace of 0.7244 and 0.6890), a break above could take it near 0.7100. On the downside, support is seen at 0.6967 (10-DMA), a break below could drag it lower 0.6950.
Equities Recap
Asian shares rallied as the dollar eased after the Federal Reserve hiked interest rates, as expected, however, indicated no pick-up in the pace of tightening.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.9 percent to its highest since mid-2015.
Tokyo's Nikkei rose 0.01 percent to 19,580.82 points, Australia's S&P/ASX 200 index gained 0.04 percent to 5,776.10 points and South Korea's KOSPI was trading 0.60 percent up at 2,145.73 points.
Shanghai composite index edged up 0.66 percent to 3,263.11 points, while CSI300 index was trading 0.34 percent higher at 3,475.69 points.
Hong Kong’s Hang Seng was trading 1.49 percent higher at 24,156.18 points. Taiwan shares added 1.0 percent at 9,837.83 points.
Commodities Recap
Crude oil prices rose, extending gains for the fourth consecutive after official data showed U.S. stockpiles had eased from record highs. International benchmark Brent crude was trading 0.23 percent up at $52.12 per barrel by 0402 GMT, retreating from a low of $50.23 hit on Tuesday, its lowest since Nov. 30. U.S. West Texas Intermediate crude rose 0.37 percent to $49.11 a barrel, after falling to a trough of $47.07 earlier in the week, its weakest since Nov end.
Gold prices rallied to a one-week high earlier in the session, as the dollar eased after the Federal Reserve sounded less hawkish on further interest rate hikes this year. Spot gold rose 0.45 percent to $1,224.79 per ounce by 0411 GMT, having touched a high of $1225.63, its highest since March 7. U.S. gold futures climbed 1.72 percent to $1,221.3.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.493 percent lower by 0.011 bps, while 5-year yield was 0.013 bps down at 2.0031 percent.
The Australian bonds jumped as investors poured into safe-haven assets after reading the higher-than-expected unemployment rate for the month of February. Further, the change in employment dropped steeper than what markets had initially anticipated. The yield on the benchmark 10-year Treasury note slumped 11-1/2 basis points to 2.82 percent, the yield on 15-year note also plunged nearly 11-1/2 basis points to 3.21 percent and the yield on short-term 2-year traded 7-1/2 basis points lower at 1.81 percent.
The New Zealand bonds nose-dived, tracking weakness in the U.S. counterpart, with the 10-year yields sinking to over 2-week low after investors crowded demand in safe-haven assets, following lower-than-expected fourth-quarter gross domestic product (GDP). The yield on the benchmark 10-year bond plunged 10 basis points to 3.28 percent, while the yield on 7-year note also slumped 10 basis points to 2.85 percent while the yield on short-term 2-year note dived 6-1/2 basis points to 2.12 percent.
Canadian government bond prices were higher across the yield curve, with the 2-year up 9.5 Canadian cents to yield 0.804 percent and the 10-year rising 61 Canadian cents to yield 1.762 percent. The 2-year yield was 2.7 basis points closer to its U.S. equivalent, with the spread narrowing to -49.9 basis points. Earlier in March, it had touched its widest gap since January 2016 at -55.2 basis points.
