Market Roundup
Trump speech long on promises, short on detail – Reuters BUZZ/IFR.
Trump promises $1 trln in infrastructure spending, to call for reduced corporate taxes, massive tax relief for middle class – Reuters.
Trump administration would ignore WTO rulings it sees as anti-US – FT.
President Trump signals drastic shift, open to plan to grant legal status to millions of undocumented immigrants – New York Times.
NY Fed Dudley – Case for hike now a lot more compelling – Reuters.
St Louis Fed Bullard – Balance sheet reductions should start now, inflation hot but no rush to raise rates, eyeing fiscal policies – Reuters.
SF Fed Williams – March rate hike up for serious consideration, no need to delay hikes, stock market not out of whack – Reuters.
Philly Fed Harker – Repeats he sees three rate hikes in ’17 – Reuters.
BoJ Policy Board Sato – BoJ JGB buys will gradually fall, policy should not be bound by pledge to buy Y80 trln/year, yield curve should be bit steeper, target should be flexible, adjusted to reflect market developments – Reuters.
Japan’s public pension fund snares record Y10 trln return in Q4 – Nikkei.
Japan MoF survey – Q4 CAPEX +3.8% y/y, +3.5% excluding software, recurring profits +16.9%, record high, sales +2.0%.
Japan Feb Mfg PMI – final 53.3, flash 53.5, still highest in 35 months, Jan final 52.7.
BoJ trims purchases of shorter maturities in JGB buying operations – Reuters.
China LaborMin – Confident employment to remain stable in ’17 – Reuters.
China Feb Caixin Mfg PMI 51.7, 50.8 forecast, Jan 51.0, export orders best since February ’14.
China Feb off’l Mfg PMI 51.6, 51.1 forecast, Jan 51.3; services 54.2, Jan 54.6.
Australia Q4 GDP +1.1% q/q, +2.4% y/y, +0.7% and +1.9% forecast, consumption expenditures +0.7%, fixed CAPEX +2.6%, chain price index +2.9%.
Australia Feb AIG PMI up 8.1 points to 59.3, highest since May ‘02.
Australia Feb CoreLogic home prices +1.4% m/m, +11.7% y/y, best in 6 years.
New Zealand Q4 terms of trade index +5.7% q/q, biggest jump since ’13, export volumes -5.8%, import prices -0.8%, export prices +4.8%, terms of trade -1.1% in Q3 (prelim -1.8%).
UK Feb BRC shop prices -1.0% y/y, fall slows, Jan -1.7%, food prices up for the first time since April ’16.
Economic Data Ahead
(0200 ET/0700 GMT) Great Britain Feb Nationwide house price index, +4.1% y/y forecast; last +4.3%.
(0200 ET/0700 GMT) Switzerland Jan UBS consumption indicator; last 1.50.
(0200 ET/0700 GMT) Norway Q4 current account balance; last NOK24.9 bln surplus.
(0230 ET/0730 GMT) Sweden Feb PMI – mfg, 60.0 forecast; last 62.0.
(0300 ET/0800 GMT) Norway Feb PMI – mfg, 51.6 forecast; last 51.4.
(0315 ET/0815 GMT) Spain Feb PMI – mfg, 56.0 forecast; last 55.6.
(0330 ET/0830 GMT) Switzerland Feb PMI – mfg, 55.6 forecast; last 54.6.
(0345 ET/0845 GMT) Italy Feb PMI – mfg, 53.5 forecast; last 53.0.
(0350 ET/0850 GMT) France Feb PMI – mfg, 52.3 forecast; flash 52.3.
(0355 ET/0855 GMT) Germany Feb PMI – mfg, 57.0 forecast; flash 57.0.
(0400 ET/0900 GMT) Germany Feb unemployment, 5.9% sa, -10.0k forecast; last 5.9%, -26.0k.
(0400 ET/0900 GMT) Germany Feb unemployment; last 2.78 mln nsa, 2.61 mln sa.
(0400 ET/0900 GMT) Eurozone Feb PMI – mfg, 55.5 forecast; flash 55.5.
(0430 ET/0930 GMT) Great Britain Feb PMI – mfg, 55.6 forecast; last 55.9.
(0430 ET/0930 GMT) Great Britain Jan mortgage approvals, 68.65k forecast; last 67.9k.
(0430 ET/0930 GMT) Great Britain Jan mortgage lending, GBP3.7 bln forecast; last GBP3.8 bln.
(0430 ET/0930 GMT) Great Britain Jan consumer credit, GBP1.4 bln forecast; last GBP1.04 bln.
(0430 ET/0930 GMT) Great Britain Jan money supply M4; last -0.5%.
(0800 ET/1300 GMT) Germany Feb CPI/HICP – flash, +2.1% y/y forecast for both; last both +1.9%.
(0830 ET/1330 GMT) United States Jan personal income, +0.3% m/m forecast; last +0.3%.
(0830 ET/1330 GMT) United States Jan personal consumption, +0.3% m/m forecast; last +0.5%.
(0830 ET/1330 GMT) United States Jan PCE price index; last +0.2% m/m, +1.6% y/y.
(0830 ET/1330 GMT) United States Jan – core, +0.2% m/m forecast; last +0.1% m/m, +1.7% y/y.
(0900 ET/1400 GMT) United States Jan Dallas Fed PCE; last +1.8%.
(0945 ET/1445 GMT) United States Feb Markit mfg PMI – final; flash 54.3.
(1000 ET/1500 GMT) United States Feb ISM mfg PMI, 56.0 forecast; last 56.0.
(1000 ET/1500 GMT) United States Jan construction spending, +0.6% m/m forecast; last -0.2%.
(1530 ET/2030 GMT) United States Feb total vehicle sales, 17.7 mln AR forecast; last 17.61 mln.
Key Events Ahead
N/A ECB/Buba Weidmann speaks in Ljubljana, Riksbank Feb meeting minutes.
N/A Norges Bank Gov Olsen in Oslo, NOK4 bln 1.75% NST-479 2027 bond auction.
N/A Greece E875 mln 26-week treasury bill auction.
(0530 ET/1030 GMT) Germany E3 bln 0.25% 2027 Bund auction.
(1000 ET/1500 GMT) BoC policy announcement, no changes forecast, overnight rate 0.5%.
(1300 ET/1800 GMT) Dallas Fed Kaplan in moderated Q&A in Dallas.
(1400 ET/1900 GMT) Fed Beige Book.
(1800 ET/2300 GMT) Fed Gov Brainard speaks at JFK School of Government at Harvard.
FX Beat
DXY: The dollar gained versus its major peers after upbeat U.S. GDP figures and hawkish comments by Fed officials boosted expectations for a March U.S. interest rate hike. The greenback against a basket of currencies traded 0.2 percent up at 101.56, having hit an early high of 101.63, it’s strongest since Feb. 22. FxWirePro's Hourly Dollar Strength Index stood at 153.08 (Highly Bullish) by 0500 GMT.
EUR/USD: The euro declined, extending previous session losses, as the dollar rose across the board after Federal Reserve policymakers boosted expectations for a March U.S. interest rate hike. The ongoing rally in the treasury yields following upbeat U.S. GDP figures and hawkish comments by Fed officials Kaplan, Williams, and Dudley continued to strengthen the greenback. The European currency traded 0.23 percent down at 1.0551, having hit a high of 1.0630 on Monday, it’s highest since Feb. 20. FxWirePro's Hourly Euro Strength Index stood at -8.14 (Neutral) by 0400 GMT. Investors’ will continue to assess Trump’s speech, ahead of final manufacturing PMI reports from the eurozone, German Prelim CPI data and series of U.S. economic data. Immediate resistance is located at 1.0600, a break above targets 1.0621 (38.2 % retracement of 1.0828 and 1.0493). On the downside, support is seen at 1.0537 (Feb. 23 Low), a break below could drag it near 1.0500.
USD/JPY: The dollar rose to a 1-week high against the yen, as the buying interest behind the greenback picked up after upbeat US GDP numbers and hawkish comments by Fed officials boosted the prospects of a March Fed rate hike. The major trades 0.7 percent higher at 113.55, having hit high of 113.56 earlier in the session, its highest since Feb. 22. FxWirePro's Hourly Yen Strength Index stood at -138.98 (Highly Bearish) by 0400 GMT. Investors’ will continue to track price action in the U.S. Treasury yields, ahead of the U.S. personal spending and income report and core personal consumption expenditure figures. Immediate resistance is located at 113.78 (trendline), a break above targets 114.00. On the downside, support is seen at 112.50, a break below could take it near 112.00.
GBP/USD: Sterling slumped to a fresh 3-week low following news that Scottish nationalists were preparing to demand for a second independence referendum. Moreover, broad-based strength in the U.S. dollar following President D. Trump and Fed policymakers’ speech continued to weigh on the British currency. The major trades 0.1 percent lower at 1.2365, having hit a low of 1.2362 earlier in the session, its weakest since Feb. 02. FxWirePro's Hourly Sterling Strength Index stood at 13.30 (Neutral) by 0400 GMT. Investors’ attention will remain on developments surrounding Scotland independence referendum, ahead of the UK Markit Manufacturing PMI, consumer credit and mortgage approvals. Immediate resistance is located at 1.2404 (Session High), a break above could take it near 1.2431 (23.6 % retracement of 1.2706 and 1.2346). On the downside, support is seen at 1.2346 (Feb 2 Low), a break below targets 1.2300. Against the euro, the pound trades 0.1 percent up at 85.33 pence, having hit a 1-week low of 85.49 the day before.
AUD/USD: The Australian dollar eased, extending losses for the fourth straight session, as the greenback gained across the board on the back of rallying treasury yields after the U.S. President announced a $ 1 trillion infrastructure program that will be financed by both public and private capital. The major initially rose to a high of 0.7699 after data showed Australian economy rebounded sharply 1.1 percent in the fourth quarter, versus expectations of 0.7 percent and previous -0.5 percent. The Aussie trades flat at 0.7656, having touched a low of 0.7636 earlier, it’s lowest since Feb. 15. FxWirePro's Hourly Aussie Strength Index stood at -29.61 (Neutral) by 0500 GMT. Markets will continue to digest upbeat economic data, ahead of series of U.S. dataflow. Immediate support is seen at 0.7636 (Session Low), a break below could drag it near 0.7600. On the upside, resistance is located at 0.7700, a break above targets 0.7778 (Nov. 8 High).
NZD/USD: The New Zealand dollar declined to a 1-week low as renewed strength seen behind the treasury yields boosted the bid tone around the U.S. dollar. Investors seem to have ignored upbeat Caixin Chinese manufacturing PMI data, as the greenback dynamics continued to dominate the fx board, in wake of Trump’s Congressional address and hawkish Fed policymakers speeches. The Kiwi trades 0.8 percent lower at 0.7132, having hit a low of 0.7131 earlier, it’s lowest since Feb. 21. FxWirePro's Hourly Kiwi Strength Index was at -110.97 (Highly Bearish) by 0500 GMT. Investors’ will continue to track overall market sentiment, ahead of the U.S. macroeconomic fundamental drivers for further momentum on the major. Immediate resistance is located at 0.7187 (23.6 % retracement of 0.7375 and 0.7129), a break above could take it over 0.7200. On the downside, support is seen at 0.7129 (Feb 21 Low), a break below could drag it till 0.7100.
Equities Recap
Asian shares edged up after falling in early deals after data showed the Chinese manufacturing sector expanded faster than expected in February.
MSCI's broadest index of Asia-Pacific shares outside Japan recovered after declining 0.2 percent in early deals.
Tokyo's Nikkei gained 1.54 percent to 19,413.99 points, Australia's S&P/ASX 200 index dropped 0.29 percent to 5,695.50 points and South Korea's KOSPI was trading 0.29 percent up at 2,091.64 points.
Shanghai composite index rose 0.30 percent to 3,251.68 points, while CSI300 index was trading 0.28 percent up at 3,462.42 points.
Hong Kong’s Hang Seng was trading 0.1 percent higher at 23,761.82 points. Taiwan shares shed 0.8 percent at 9,674.78 points.
Commodities Recap
Crude oil prices rose after touching a near 2-week low hit in the previous session on the back of rising U.S. oil output, however, OPEC production cuts continued to support market sentiment. International benchmark Brent crude was trading 0.23 percent up at $56.63 per barrel by 0415 GMT, having hit a low of $55.60 on Tuesday, its lowest since Feb. 17. U.S. West Texas Intermediate crude gained 0.2 percent at $54.09 a barrel, after tumbling to a trough of $54.20, its weakest since Feb. 17.
Gold prices declined, extending losses for the third consecutive session, as the dollar strengthened following Federal Reserve policymakers speeches, which boosted expectations for a March U.S. interest rate hike. Spot gold dropped 0.4 percent to $1,243.03 per ounce by 0421 GMT, having hit its highest since Nov. 11 at $1,263.74 on Feb. 27. U.S. gold futures fell 0.7 percent to $1,245.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.415 percent higher by 0.057 bps, while 5-year yield was up by 0.087 bps at 1.9674 percent.
The Australian 10-year government bond yields hit a 1-week high, after reading strong Q4 gross domestic product (GDP) of the country, widely beating what markets had initially anticipated.The yield on the benchmark 10-year Treasury note jumped nearly 7 basis points to 2.81 percent, the yield on 15-year note also surged nearly 7 basis points to 3.24 percent and the yield on short-term 2-year rose 3-1/2 basis points to 1.86 percent.
The New Zealand government bonds declined as investors remained sidelined in a subdued session that witnessed data of little economic significance. The yield on the benchmark 10-year bond rose 1 basis point to 3.32 percent at the time of closing, the yield on 7-year note jumped nearly 2-1/2 basis points to 2.87 percent and the yield on short-term 2-year note traded 1 basis point higher at 2.21 percent.
The Canadian government bond prices were higher across a flatter yield curve, with the 2-year up 0.5 Canadian cents to yield 0.76 percent and the 10-year rising 12 Canadian cents to yield 1.634 percent.
