Market Roundup
- Investors gird for an attack on weak yen at US-Japan talks – Nikkei.
- Japan probing regional banks for overexposure to foreign debt - Nikkei.
- MoF flow data week-ended March 4 – Japanese buy net Y76.3 billion foreign stocks, sell Y1.1306 trillion bonds, buy Y61.1 billion bills; foreign investors sell net Y167.1 billion Japanese stocks, buy Y608.3 billion JGBs, sell Y1.7805 billion bills.
- Japan Jan total cash earnings +0.5% y/y, real wages unch, overtime pay +0.2%, regular pay +0.8%, biggest gain since March 2000.
- Japan Feb money supply M2 +4.2% y/y, M3 +3.6%, broadest liquidity +2.6%, Jan +4.0% (revised), +3.5%, +2.3% (revised).
- Japan’s economy seen expanding by a majority of corporate executives – Nikkei.
- Japan’s small-cap stocks hit a 25-year high amid win streak – Nikkei.
- Traders - China state banks sell USD in onshore FX market – Reuters.
- China Feb CPI -0.2% m/m, +0.8% y/y, +0.6% and +1.7% forecast, slowest y/y pace since Jan’15, food CPI -4.3% y/y, non-food +2.2%, Lunar New Year distortions.
- China Feb PPI +0.6% m/m, +7.8% y/y, +7.7% y/y forecast, y/y rise most since September ’08.
Economic Data Ahead
- (0130 ET/0630 GMT) France Q4 non-farm payrolls – revisions, +0.4% q/q forecast; prelim +0.3%.
- (0145 ET/0645 GMT) Switzerland Feb unemployment, +3.3% sa forecast; last 3.7% nsa, 3.3% sa.
- (0230 ET/0730 GMT) France BdF business sentiment index, 102 forecast; last 101.
- (0730 ET/1230 GMT) United States Feb Challenger layoffs; last 45.93k.
- (0830 ET/1330 GMT) United States w/e initial jobless claims, 235k forecast; last 223k.
- (0830 ET/1330 GMT) United States Feb import prices, +0.1% m/m forecast; last +0.4%.
- (0830 ET/1330 GMT) United States Feb export prices, +0.2% m/m forecast; last +0.1%.
- (1645 ET/2145 GMT) New Zealand Feb electronic card retail sales; last +2.7% m/m, +5.6% y/y.
Key Events Ahead
- N/A China National People’s Congress.
- N/A EU Summit in Brussels (till tomorrow), ECB Pres Draghi to attend.
- N/A US TsySec Mnuchin meeting with German FinMin Schaeuble in Berlin.
- (0400 ET/0900 GMT) Ireland E1.0-1.25 bln 1.0% and 2.0% 2026 and 2045 IGB auctions.
- (0400 ET/0900 GMT) Sweden 4.25% and 3.5% 2019 and 2039 government bond auctions.
- (0530 ET/1030 GMT) UK DMO GBP 725 mln 0.125% 2036 index-linked Gilt auction.
- (0745 ET/1245 GMT) ECB policy announcement, no change in zero% refi, -0.4% depo rate forecast.
- (0830 ET/1330 GMT) ECB Pres Draghi press conference.
- (1230 ET/1730 GMT) Riksbank DepGov Kerstin speaks in Balsta, Sweden.
FX Beat
DXY: The dollar rallied across the board after better-than-expected ADP jobs report boosted expectations of U.S. interest rate hike in March. The greenback against a basket of currencies traded 0.21 percent up at 102.21, having hit an early high of 102.23. FxWirePro's Hourly Dollar Strength Index stood at 101.65 (Highly Bullish) by 0500 GMT.
EUR/USD: The euro tumbled, extending losses for the fourth consecutive session, as the dollar strengthened on growing expectations of March Fed interest rate hike after ADP survey added 298,000 new jobs during February, surpassing estimates of 190,000 jobs. Meanwhile, markets attention will shift towards the ECB monetary policy meeting due later in the day, where it is expected to keep the bond buying program and rates unchanged. The European currency traded 0.1 percent lower at 1.0530, having hit a low of 1.0528 earlier. FxWirePro's Hourly Euro Strength Index stood at -64.05 (Bearish) by 0400 GMT. Investors’ attention will remain on ECB policy decision, ahead of U.S. economic fundamentals. Immediate resistance is located at 1.0549 (38.2 % retracement of 1.0639 and 1.0494), a break above targets 1.0566 (10-DMA). On the downside, support is seen at 1.0528 (28.3 % retrace), a break below could drag it near 1.0500.
USD/JPY: The dollar rallied for the fourth straight day, as an unexpected rise in the US ADP jobs data boosted expectations of a Federal Reserve rate hike in March. However, the major retreated from day's high as poor Chinese CPI figures triggered a renewed risk-off wave across the global markets. The pair traded 0.1 percent up at 114.50, hovering towards a high of 114.75 hit in the previous session, its highest since Feb. 15. FxWirePro's Hourly Yen Strength Index stood at -24.11 (Neutral) by 1100 GMT. Investors’ will continue to track overall market sentiment, ahead of the U.S. unemployment benefits and import/export data. Immediate resistance is located at 114.75 (Previous Session High), a break above targets 115.00. On the downside, support is seen at 114.13 (5-DMA), a break below could take it lower 114.00.
GBP/USD: Sterling fell back towards a 7-week low against the dollar on worries that Brexit talks that get under way this month are finally having an impact on UK household spending. The major trades 0.1 percent lower at 1.2157, having hit a low of 1.2138 in the previous session, its weakest since Jan. 17. FxWirePro's Hourly Sterling Strength Index stood at -46.55 (Neutral) by 0400 GMT. Investors’ focus will remain on ECB policy meeting and U.S. economic data, amid a lack of economic data from the UK docket. Immediate resistance is located at 1.2200, a break above could take it near 1.2240 (38.2 % retracement of 1.2569 and 1.2139). On the downside, support is seen at 1.2138 (Previous Session Low), a break below targets 1.2100. Against the euro, the pound trades flat at 86.59 pence, having hit a 7-week low of 86.95 the prior session.
AUD/USD: The Australian dollar tumbled to multi-week lows earlier in the session as the greenback strengthened after robust U.S. jobs report cemented the prospects of a Federal Reserve rate hike in March. Moreover, poor Chinese CPI figures hurt market sentiment once again, which intensified the selling pressure around the major. The Aussie trades 0.20 percent down at 0.7510, having touched a low of 0.7508 earlier, it’s lowest since Jan. 19. FxWirePro's Hourly Aussie Strength Index stood at -76.92 (Slightly Bearish) by 0500 GMT. Markets will continue to digest downbeat Chinese CPI number, ahead of U.S. economic data. Immediate support is seen at 0.7500, a break below could drag it near 0.7458. On the upside, resistance is located at 0.7537 (23.6 % retracement of 0.7632 and 0.7508), a break above targets 0.7570 (5-DMA).
NZD/USD: The New Zealand dollar dropped to a fresh 2-month low below the 0.6900 handle, as downbeat Chinese CPI data and rising greenback weighed on Kiwi bull's sentiment. Moreover, divergent monetary policy outlooks between the Federal Reserve and the RBNZ continued to weaken the bid tone around the major. The pair trades 0.3 percent lower at 0.6895, having hit an early low of 0.6892, it’s lowest since Jan. 3. FxWirePro's Hourly Kiwi Strength Index was at -139.38 (Highly Bearish) by 0500 GMT. Investors’ will continue to track board based market sentiment, ahead of the U.S. macroeconomic fundamental drivers for further momentum. Immediate resistance is located at 0.6950, a break above could take it near 0.6993 (5-DMA). On the downside, support is seen at 0.6878 (Dec 27 Low), a break below could drag it near 0.6850.
Equities Recap
Asian shares declined as downbeat Chinese CPI figures triggered a fresh a bout of risk aversion, while the dollar and bond yields spiked after strong U.S. jobs data boosted March Fed rate hike prospects.
MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.6 percent.
Tokyo's Nikkei rose 0.28 percent to 19,309.44 points, Australia's S&P/ASX 200 index fell 0.39 percent to 5,737.20 points and South Korea's KOSPI was trading 0.08 percent down at 2,094.58 points.
Shanghai composite index declined 0.86 percent to 3,212.91 points, while CSI300 index was trading 0.78 percent down at 3,421.38 points.
Hong Kong’s Hang Seng was trading 1.10 percent lower at 23,526.62 points. Taiwan shares shed 0.1 percent at 9,658.61 points.
Commodities Recap
Crude oil prices steadied after witnessing sharp losses the previous session, supported by strong compliance and OPEC production cuts, however, a rise in U.S. crude inventories limited gains. International benchmark Brent crude was trading 0.8 percent up at $53.53 per barrel by 0417 GMT, having hit a low of $52.91 on Wednesday, its lowest since Dec. 8. U.S. West Texas Intermediate crude trades 0.8 percent up at $50.57 a barrel, after falling to a trough of $50.03 the day before, its weakest since Dec. 15.
Gold prices slumped, hitting a fresh 5-week low earlier in the session, as the dollar continued to strengthen on growing March Fed interest rate hike expectations ahead of U.S. non-farm payrolls data on Friday. Spot gold fell 0.2 percent at $1,204.76 per ounce at 0428 GMT, having hit its lowest since Feb. 1 at $1,204.28 earlier in the day. U.S. gold futures fell 0.1 percent to $1,207.60.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.5743 percent higher by 0.023 bps, while 5-year yield was 0.025 bps up at 2.1061 percent.
The Australian 10-year bond yields hit near 1-1/2 year high after strong private employment data from the United States, released late yesterday almost confirmed that the Federal Reserve will adopt an interest rate hike at the March 14-15 monetary policy meeting. The yield on the benchmark 10-year Treasury note jumped nearly 7 basis points to 2.94 percent, the yield on the 15-year note climbed 6 basis points to 3.34 percent and the yield on short-term 2-year traded 3 basis point higher at 1.92 percent.
The New Zealand government bonds slumped, tracking weakness in the U.S. counterpart after reading upbeat data from a private employment report released late yesterday. The yield on the benchmark 10-year bond fell 1 basis point to 3.34 percent at the time of closing, the yield on 7-year note also slipped nearly 1 basis point to 2.90 percent and the yield on short-term 5-year note also traded 1 basis point lower at 2.61 percent.
Canadian government bond prices fell across a steeper yield curve. The 2-year slipped 3.5 Canadian cents to yield 0.819 percent, and the 10-year declined 32 Canadian cents to yield 1.776 percent.
