Market Roundup
- CFTC IMM CTA data - Specs reduce USD bets again in latest week, lowest since late May '14, EUR net shorts lowest since mid-June '14, 48,205 contracts from 63,314, JPY longs up to 47,901 contracts from 43,232.
- European leaders strike deal to try to keep Britain in EU - Washington Post.
- Swiss referendum February 28 on foreign workers and commodity trading spooks international businesses - Financial Times.
- Change of regulator sets stage for overhaul of China's markets, CSRC Xiao Gang replaced by Liu Shiyu - WSJ.
- BoJ Gov Kuroda - Reiterates recent mantra, excessive risk aversion behind market rout, cites China-crude oil, NIRP to have impact over long run - RTRS.
- Japan Feb flash mfg PMI 50.2, Jan final 52.3, new export orders 47.9 vs Jan 53.1, largest decline in three years, in contraction.
- Japan Inc set to lose momentum on wage growth this year, setback for PM Abe - Reuters poll.
- Japan corp pensions: negative yields loom for first time in 5-yrs - Nikkei.
- IMF Lagarde - G20 should focus on policy spillovers, spillbacks - Reuters.
- United States overtakes France to become Germany's top trading partner - Reuters.
- (0300 ET/0800 GMT) France Feb PMI mfg - flash, 49.9 forecast; last 50.0.
- (0300 ET/0800 GMT) France Feb PMI services - flash, 50.3 forecast; last 50.3.
- (0300 ET/0800 GMT) France Feb PMI composite - flash; last 50.2.
- (0315 ET/0815 GMT) Switzerland Jan producer/import prices; last -0.4% m/m, -5.5% y/y.
- (0330 ET/0830 GMT) Germany Feb PMI mfg - flash, 52.0 forecast; last 52.3.
- (0330 ET/0830 GMT) Germany Feb PMI services - flash, 54.7 forecast; last 55.0.
- (0330 ET/0830 GMT) Germany Feb PMI composite - flash; last 54.5.
- (0400 ET/0900 GMT) Eurozone Feb PMI mfg - flash, 52.0 forecast; last 52.3.
- (0400 ET/0900 GMT) Eurozone Feb PMI services - flash, 53.3 forecast; last 53.6.
- (0400 ET/0900 GMT) Eurozone Feb PMI composite - flash, 53.3 forecast; last 53.6.
- (0400 ET/0900 GMT) Italy Jan CPI - final, -0.2% m/m, +0.3% y/y forecast; flash -0.2%, +0.3%.
- (0400 ET/0900 GMT) Italy Jan HICP - final, -2.2% m/m, +0.4% y/y forecast; flash -2.2%, +0.4%.
- (0830 ET/1330 GMT) United States Jan Chicago Fed national activity index; last -0.22.
- (0945 ET/1445 GMT) United States Feb Markit PMI mfg - flash, 52.3 forecast; last 52.4.
Key Events Ahead
- N/A Germany E1.5 bln 12-month Bubill auction.
- N/A France E3.1-3.5/1.4-1.8/1.1-1.5 bln 3/6/12 month BTF note auctions.
- (0600 ET/1100 GMT) Belgium E2.2-2.8 bln 1.0/1.0/4.25% 2026/31/41 OLO auctions.
- (1200 ET/1700 GMT) Belgium CB Gov presents annual report in Liege.
- (1300 ET/1800 GMT) ECB Lautenschlaeger speech in Stuttgart.
FX Beat
EUR/USD: The euro weakened against the dollar to 1.1107 but stayed within its well-worn range in the past few days. The pair came under renewed downward pressure after Asia shares advanced on surging buying interest, further boosting the risk-on market profile. The EUR/USD pair remains calm against the massive rally witnessed in the EUR/GBP cross, due to broad GBP weakness. Markets now await for Eurozone economies flash manufacturing and services PMI reports and U.S markit manufacturing PMI for further cues on the pair. Currently, the pair trades between a thin range of 1.1104-1.1124. Immediate support is located at 1.1095 (20-DMA), while resistance is seen at 1.1139.
USD/JPY: The dollar trades 0.32 percent higher at 112.89 yen, above its levels at the end of last week, and off Friday's one-week low of 112.30. The improving appetite towards riskier assets weigh on the demand for the safe-haven yen. The Asian markets rose on Monday as a rebound in the commodities' prices aided to strengthen the overall market sentiment. On Friday, the dollar was underpinned as U.S. consumer price inflation accelerated in January by the most in nearly 4-1/2 years. The figures should support the view that the Fed will gradually raise interest rates this year, however, markets remain doubtful amid slowing global growth and market turmoil. Markets will closely watch for U.S. flash manufacturing PMI data due later today for further momentum on the pair. The pair continues to rise, hovering towards sessions's high of 113.05. Immediate resistance is located at 113.34 (5-DMA), while support is seen at 112.30 (Previous Session Low).
GBP/USD: The cable was badly hit following London Mayor Boris Johnson comment that he would back the Brexit campaign over the weekend. PM David Cameron had failed to deliver fundamental reform with the agreement and that he would advocate Britain leave the EU, Boris Johnson added further. The pound fell almost 1 percent against the dollar, euro and yen, nearly reversing gains made on Friday after EU leaders agreed unanimously on a package of measures aimed at keeping Britain in the 28-nation bloc. Sterling tumbled on Monday, hitting a two-year low against the yen, as concern grew that Britain would quit the European Union. The pair currently trades 0.79 percent lower at 1.4285 level, however, drifting away from Friday's low of 1.4247. Earlier in the session it rose to 1.4305, before declining to its current levels. On the downside, immediate support is located at 1.4247 (Previous Session Low), while on the upside, resistance is seen at 1.4321 (5-DMA).
AUD/USD: The Australian dollar trades at 0.7172, up from a low of 0.7069 touched on Friday. It rallied 0.7 percent last week, well above a seven-year trough of 0.6827 hit in January. The Aussie was strengthened by rise in metal prices and iron ore, Australia's top export earner. It was also aided by heavy selling in the pound on concerns that Britain could quit the European Union. The pair will continue to track the commodities' prices in absence of major economic data due later today. Traders are seen bullish, as the pair continues to rise, drifting towards sessions high of 0.7178. Immediate resistance is seen at 0.7183 (Feb 18 High), while support is located at 0.7127 (10-DMA).
NZD/USD: The New Zealand dollar trades 0.53 percent higher at 0.6662 against its their U.S. counterpart on Monday, and advanced versus a battered pound on mounting worries the UK may opt to exit the European Union. The kiwi is facilitated by a rebound in the Asian equities and oil prices. Markets now await New Zealand's Trade data scheduled later in this weeks for fresh cues on the pair. Earlier in the session, the pair made sessions low of 0.6622, before climbing to its current levels. Resistance is located at 0.6694 Feb 10 High), while support is seen at 0.6600 (20-DMA).
USD/CNY: China's yuan barely moved against the dollar on Monday as the central bank set the midpoint rate at 6.5165 per dollar prior to market open, 0.03 percent firmer than the previous fix 6.5186. The spot market opened at 6.5190 per dollar and was trading at 6.5196 at midday, while offshore yuan was trading at 6.5229 per dollar and was moving toward the onshore yuan rate. The spread between the two remained less than 50 basic points by midday. Last Friday, PBoC had reversed preferential reserve requirement ratio cuts for banks that had failed to support certain sectors of the economy as a condition of the more accommodative monetary policy.
Equities Recap
Asian share markets edged higher on Monday as investors awaited a rush of February industry surveys to take the pulse of the global economy, while sterling suffered on concerns the UK might yet vote to leave the European Union.
MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.7 percent, having rebounded more than 4 percent last week, while Taiwan Stocks closed flat at 8,326.68 points.
Australia's S&P/ASX 200 Index closed up 1.05 pct at 5,004.90 points, while Nikkei edged up 0.90 pct at 16,111.05, with Seoul Shares closed down 0.08 pct.
Commodities Recap
Gold extended losses below its highest level in a year on Monday as the dollar and equities strengthened, but the metal remained underpinned above $1,200 an ounce as caution in financial markets prompted investors to channel money into bullion. Spot gold declined to a session low of $1,220.75 an ounce, before paring some losses to trade down 0.5 percent to $1,221.36 by 0304 GMT. It declined 0.3 percent on Friday.
Oil prices partly recovered on Monday following steep losses in the previous session, supported by a drop in the number of U.S. production rigs in use. U.S. West Texas Intermediate crude futures were trading at $29.90 per barrel at 0213 GMT, up 26 cents from their last settlement. International benchmark Brent was up 34 cents at $33.35 per barrel. Both contracts fell almost 4 percent on Friday.
Treasuries Recap
U.S. 10-Year Treasuries Yield stood at 1.766 percent versus previous close of 1.748 percent.
Australian government bond futures eased, with the 3-year bond contract off 4 ticks at 98.190. The 10-year contract shed 3 ticks to 97.5400, while the 20-year contract was also down 3 ticks at 97.0150. The spread between 10- and 3-year government bonds stood at 65 basis points, having contracted to 64 basis points on Friday, the smallest in 10 months.
New Zealand government bonds were a touch softer with yields 1 basis point higher.
