Market Roundup
- Japan Jan services PMI 51.9, Dec 51.1, new order pace quickens, comp PMI 52.8
- BOJ Kuroda repeats need to maintain ultra-easy policy
- China Jan Caixin Services PMI, 54.7, 53.9 last
- Australia Jan AIG Services Index, 54.9, 52.0 last
- Australia green bond market muzzled by policy uncertainty
- Support for Australian PM hits 10-month high, raises prospect of an early election
- German parties to tackle labour, healthcare in extra round of coalition talks
- Republicans differ with Trump on whether memo undercuts Russia probe
- South Africa's ANC meets Zuma as pressure mounts for him to quit
- UK rents rise at slowest pace since 2013 as Brexit vote weighs
Economic Data Ahead
- (0355 ET/0855 GMT) Germany Jan Markit Services PMI, f'cast 57.0, last 55.8
- (0355 ET/0855 GMT) Germany Jan Markit Comp final PMI, f'cast 58.8, last 58.9
- (0400 ET/0900 GMT) EU Jan Markit Services final PMI, f'cast 57.6, last 56.6
- (0400 ET/0900 GMT) EU Jan Markit Comp final PMI, f'cast 58.6, last 58.1
- (0430 ET/0930 GMT) Great Britain Jan Markit/CIPS Services PMI, f'cast 54.3, last 54.2
- (0500 ET/1000 GMT) EU Feb Sentix Index, f'cast 33.0, last 32.9
- (0500 ET/1000 GMT) EU Dec Retail sales, -1.0% m/m, 1.9% y/y f'cast, 1.5%, 2.8% last
Key Events Ahead
- (0540 ET/1040 GMT) Netherlands E1.0-2.0 bln for 6 month auction
- (0855 ET/1355 GMT) France E2.9-3.3/E1.1-1.5/0.9-1.3 bln for 3/6/12 month auction
- (1100 ET/1600 GMT) ECB's Draghi speaks in Strasbourg, France
- NA Greece and EFSF bond issues likely early this week - both benchmarks
FX Beat
DXY: The dollar index held gains as robust U.S. jobs report boosted inflation expectations. The greenback against a basket of currencies traded flat at 89.18, having touched a high of 89.43 last week, its highest since Jan. 30. FxWirePro's Hourly Dollar Strength Index stood at 6.74 (Neutral) by 0500 GMT.
EUR/USD: The euro steadied above the 1.2400 handle as investors focus remained on the German coalition talks after Chancellor Angela Merkel's conservatives and the Social Democrats failed to conclude negotiations in time to meet a self-imposed Sunday deadline. The European currency traded flat at 1.2459, having touched a low of 1.2336 on Tuesday, its lowest since Jan. 24. FxWirePro's Hourly Euro Strength Index stood at 119.69 (Highly Bullish) by 0500 GMT. Immediate resistance is located at 1.2530, a break above targets 1.2590. On the downside, support is seen at 1.2395 (61.8% retracement of 1.2264 and 1.2537), a break below could drag it lower 1.2351 (50.0% retracement).
USD/JPY: The dollar declined after rising to a near 2-week high in the previous session on robust U.S. jobs data that increased the chances of more U.S. interest rate hikes this year. The major was trading 0.2 percent down at 109.92, having hit a high of 110.48 on Friday, its highest since Jan. 23. FxWirePro's Hourly Yen Strength Index stood at -6.42 (Neutral) by 0500 GMT. Immediate resistance is located at 110.48 (Previous Session High), a break above targets 111.17. On the downside, support is seen at 109.28 (5-DMA), a break below could take it lower 109.00.
GBP/USD: Sterling edged down to a 6-day low as investors remained cautious ahead of the UK services PMI, which is expected to show the pace of expansion in the UK service sector remained largely unchanged at 54.2 index points in January. The major traded flat at 1.4116, having hit a high of 1.4278 on Friday, it’s highest since Jan 26. FxWirePro's Hourly Sterling Strength Index stood at -7.72 (Neutral) by 0500 GMT. Immediate resistance is located at 1.4233, a break above could take it near 1.4280. On the downside, support is seen at 1.4025, a break below targets 1.3979. Against the euro, the pound was trading flat at 88.23 pence, having hit a low of 88.28 pence earlier, it’s lowest since Jan. 30.
AUD/USD: The Australian dollar slumped to a 4-week low below the 0.7900 handle amid a global selloff in risky assets and bonds on concerns about faster rate hikes in the United States and other developed economies. The Aussie trades 0.1 percent up at 0.7932, having hit a high of 0.7890 earlier; it’s lowest since Jan. 12. FxWirePro's Hourly Aussie Strength Index stood at -124.48 (Highly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7890 (Session Low), a break below targets 0.7840. On the upside, resistance is located at 0.7973 (21-DMA), a break above could take it near 0.8037 (5-DMA).
NZD/USD: The New Zealand dollar fell to a 2-week low on speculation that the Reserve Bank of New Zealand will hold interest rates at record lows for a long time to come even as global central banks have either already begun or signalled a path to tightening. The Kiwi trades flat at 0.7303, having touched a low of 0.7277 earlier, its lowest level since Jan. 22. FxWirePro's Hourly Kiwi Strength Index was at -32.43 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7343 (5-DMA), a break above could take it near 0.7403. On the downside, support is seen at 0.7267, a break below could drag it lower 0.7245 (Jan 18 Low).
Equities Recap
Asian shares tumbled, recording its largest daily drop since late 2016, while the greenback steadied against a basket of currencies after the U.S. payrolls report showed wages growing at their fastest pace in more than 8-1/2 years and fueled inflation expectations.
MSCI's broadest index of Asia-Pacific shares outside Japan declined 1.7 percent.
Tokyo's Nikkei slumped 2.3 percent to 22,739.70 points, Australia's S&P/ASX 200 index eased 1.6 percent to 6,026.20 points and South Korea's KOSPI tumbled 1.1 percent to 2,502.03 points.
Shanghai composite index rose 0.6 percent to 3,479.94 points, while CSI300 index was trading 0.2 percent down at 4,262.71 points.
Hong Kong’s Hang Seng was trading 1.2 percent lower at 32,224.55 points. Taiwan shares shed 1.6 percent to 10,946.25 points.
Commodities Recap
Crude oil declined to multi-week lows amid a wider market sell-off and a stronger dollar. International benchmark Brent crude was trading 0.5 percent down at $67.93 per barrel by 0548 GMT, having hit a low of $67.68 earlier, its lowest since Jan. 9. U.S. West Texas Intermediate was trading 0.3 percent down at $64.87 a barrel, after falling as low as $63.64 on Thursday, its weakest since Jan. 22.
Gold prices edged up, after falling to 2-week lows in the previous session on robust U.S. jobs data that increased the chances of more U.S. interest rate hikes this year. Spot gold rose 0.1 percent to $1,331.73 per ounce by 0552 GMT, having hit a low of 1,327.36 on Friday, lowest since Jan 19. U.S. gold futures were down 0.3 percent at $1,333.30 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.881 percent higher by 0.029 bps, while 5-year yield was 0.009 bps up at 2.607 percent.
The Australian government bonds suffered at the start of the trading week Monday on hopes of a fall in the country’s retail sales for the month of December, scheduled to be released on February 6 by 00:30GMT. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, remained tad higher at 2.90 percent, the yield on the long-term 30-year note hovered around 3.52 percent and the yield on short-term 2-year traded 1/2 basis point higher at 2.06 percent.
The New Zealand government bonds ended the session on a mixed tone as investors wait to watch the Reserve Bank of New Zealand’s (RBNZ) monetary policy decision, scheduled to be unveiled on February 7 by 20:00GMT, followed by the policy statement and Governor Spencer’s speech at 21:00GMT. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1 basis point to 2.99 percent, the yield on 20-year also slipped 1 basis point to 3.52 percent while the yield on short-term 2-year ended 1 basis point higher at 1.95 percent.
