Market Roundup
- Japan FinMin Aso – Need to strengthen controls over cryptocurrency exchanges
- EconMin Motegi – Will continue to eye impact of FX market on economy
- PM advisor Hamada – Favors reappointment of BoJ Gov Kuroda, Abenomics
- Japan Dec household spending -2.5% y/y, -0.1% y/y, weak, -0.6% and +1.7% eyed
- Japan Dec retail sales +3.6% y/y, +1.8% eyed, large-scale retailers +1.1% y/y
- Japan Dec unemployment up to 2.8%, jobs-applicants ratio 1.59, 2.7% and 1.57 eyed
- Japan Jobs-applicants ratio highest since January 1974
- U.S. House panel votes to release Republican memo alleging anti-Trump bias
- FBI's No. 2 official McCabe, blasted by Trump, steps down
- U.S. rejects proposals to unblock NAFTA, will seek 'breakthroughs'
- UK's May promises frank discussions with China amid dash for trade
Economic Data Ahead
- (0130 ET/0630 GMT) France Q4 GDP Preliminary QQ f'cast 0.6%, last 0.6%
- (0245 ET/0745 GMT) France Dec Consumer Spending MM f'cast 0.3%, last 2.2%
- (0300 ET/0800 GMT) Spain Q4 Estimated GDP QQ f'cast 0.7%, last 0.8%
- (0300 ET/0800 GMT) Spain Q4 Estimated GDP YY f'cast 3.2%, last 3.1%
- (0500 ET/0900 GMT) Italy Jan MFG Business Confidence f'cast 110.3, last 110.5
- (0500 ET/0900 GMT) Italy Jan Consumer Confidence f'cast 116.3, last 116.6
- (0530 ET/0930 GMT) Great Britain Dec BOE Consumer Credit GBP f'cast 1.300 bln, last 1.400 bln
- (0530 ET/0930 GMT) Great Britain Dec Mortgage Lending GBP f'cast 3.450 bln, last 3.499 bln
- (0530 ET/0930 GMT) Great Britain Dec Mortgage Approvals f'cast 63.500k, last 65.139k
- (0800 ET/1300 GMT) Germany Jan CPI Prelim MM f'cast -0.6%, last 0.6%
- (0800 ET/1300 GMT) Germany Jan CPI Prelim YY f'cast 1.7%, last 1.7%
- (0800 ET/1300 GMT) Germany Jan HICP Prelim MM f'cast -0.7%, last 0.8%
- (0800 ET/1300 GMT) Germany Jan HICP Prelim YY f'cast 1.6%, last 1.6%
Key Events Ahead
- N/A U.S. Federal Reserve's FOMC starts its two-day meeting on interest rates (to Jan. 31) in Washington
- (0600 ET/1100 GMT) ECB policymaker Francois Villeroy de Galhau speaks at a Fintech conference in Paris
- (1030 ET/1530 GMT) BoE's Mark Carney makes an annual appearance before the House of Lords Economic Affairs Committee in London
- (1100 ET/1600 GMT) French Finance Minister Le Maire, Belgium's Overtveldt, Lithuania's Sapoka, Luxembourg's Gramegna speak at a fintech conference in Paris
- (1130 ET/1630 GMT) ECB board member Yves Mersch speaks at the Goethe University
- (1850 ET/2350 GMT) BOJ to release a summary of opinions from board members at its Jan. 22-23 policy meeting in Tokyo
FX Beat
DXY: The dollar index extended rebound from multi-year lows, following a rise in U.S. bond yields, while traders awaited the U.S. Federal Reserve policy meeting for fresh clues. The greenback against a basket of currencies traded 0.1 percent up at 89.46, having touched a low of 89.01 the day before, its lowest since December 2014. FxWirePro's Hourly Dollar Strength Index stood at 85.85 (Slightly Bullish) by 0500 GMT.
EUR/USD: The euro eased ahead of Eurozone preliminary 4th quarter GDP figures, with analysts forecasting 0.6 percent growth over the previous quarter and a 2.6 percent increase over the same period last year. The European currency traded 0.1 percent down at 1.2373, having touched a high of 1.2538 on Thursday, its highest since Dec. 2014. FxWirePro's Hourly Euro Strength Index stood at -58.31 (Bearish) by 0500 GMT. Investors’ attention will remain on Eurozone preliminary gross domestic products and economic sentiment indicator, ahead of U.S. home prices indices. Immediate resistance is located at 1.2500, a break above targets 1.2590. On the downside, support is seen at 1.2307 (38.2% retracement of 1.2264 and 1.2537), a break below could drag it lower 1.2252 (23.6% retracement).
USD/JPY: The dollar declined, giving back some of the gains made in the previous session, as market participants turned their focus to U.S. President Donald Trump's State of the Union speech. The major was trading 0.1 percent down at 108.80, having hit a low of 108.28 on Friday, its lowest since Sept 11. FxWirePro's Hourly Yen Strength Index stood at 127.33 (Highly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. home prices indices for further momentum. Immediate resistance is located at 109.52 (61.8% retracement of 111.49 and 108.28), a break above targets 109.90 (50.0% retracement). On the downside, support is seen at 108.20, a break below could take it lower 108.00.
GBP/USD: Sterling slumped towards the 1.4000 handle, as renewed concerns over Prime Minister Theresa May's ability to advance her plans for Brexit weighed on the British currency. The major traded 0.2 percent down at 1.4043, having hit a high of 1.4345 on Thursday, it’s highest since June 2016. FxWirePro's Hourly Sterling Strength Index stood at -119.23 (Highly Bearish) by 0500 GMT. Investors’ focus will remain on the UK consumer credit, Mortgage approvals report and BoE governor Carney's speech, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.4121 (5-DMA), a break above could take it near 1.4200. On the downside, support is seen at 1.3995 (10-DMA), a break below targets 1.3904 (50.0% retracement of 1.3458 and 1.4345). Against the euro, the pound was trading 0.1 percent down at 88.07 pence, having hit a low of 88.15 pence in the prior session, it’s lowest since Jan. 22.
AUD/USD: The Australian dollar failed to sustain gains above the 0.8100 handle, despite data showed Australian business conditions remained buoyant in December with both profits and sales surging, while a pick-up in confidence was positive for the investment outlook. The economy's NAB's index of business conditions held steady at a seasonally adjusted +13 in December, but below expectations of +15, while the measure of business confidence bounced 4 points to +11, the highest reading since July. The Aussie trades 0.3 percent down at 0.8066, having hit a high of 0.8135 on Friday; it’s highest since May 2015. FxWirePro's Hourly Aussie Strength Index stood at -67.55 (Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.8012 (61.8% retracement of 0.7807 and 0.8135), a break below targets 0.7973 (50.0% retracement). On the upside, resistance is located at 0.8150, a break above could take it near 0.8200.
NZD/USD: The New Zealand dollar consolidated within a narrow range, supported by a report showing the country's trade balance swung to a surplus of NZ$640 million in December, the largest since March 2015. The Kiwi trades flat at 0.7321, having touched a high of 0.7435 on Wednesday, its highest level since Aug. 3. FxWirePro's Hourly Kiwi Strength Index was at -149.79 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7400, a break above could take it near 0.7490. On the downside, support is seen at 0.7288, a break below could drag it lower 0.7245 (Jan 18 Low).
Equities Recap
Asian shares retreated from record highs following a selloff on Wall Street, while the greenback rose from recent lows as U.S. bond yields climbed to near four-year highs.
MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.4 percent.
Tokyo's Nikkei eased 1.5 percent to 23,278.88 points, Australia's S&P/ASX 200 index slumped 0.9 percent to 6,022.80 points and South Korea's KOSPI dropped 1.1 percent to 2,570.47 points.
Shanghai composite index declined 0.9 percent to 3,488.59 points, while CSI300 index was trading 1.1 percent down at 4,255.07 points.
Hong Kong’s Hang Seng was trading 1.2 percent lower at 32,588.46 points. Taiwan shares shed 1.3 percent to 11,076.78 points.
Commodities Recap
Crude oil prices declined for a second day as rising U.S. output and a strengthening dollar weighed down the demand for crude. International benchmark Brent crude was trading 0.7 percent up at $68.90 per barrel by 0504 GMT, having hit a high of $71.25 on Thursday, its highest since Dec. 2014. U.S. West Texas Intermediate was trading 1.1 percent down at $64.80 a barrel, after rising as high as $66.63 on Thursday, its highest since Dec. 2014.
Gold prices declined to 1-week lows, extending losses into a second session, as the dollar strengthened against a basket of currencies and U.S. bond yields rose. Spot gold was down 0.3 percent at $1,335.85 per ounce at 0510 GMT, having hit a low of 1,334.67 earlier, lowest since Jan 23. U.S. gold futures for February delivery fell 0.2 percent to $1,337.60 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.714 percent higher by 0.015 bps, while 5-year yield was 0.005 bps up at 2.120 percent.
The Japanese government bonds slumped as investors have largely shrugged-off the set of lower-than-expected economic data, out this morning that offset the rise in retail sales and job-to-applicant ratio figures. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose nearly 1-1/2 basis points to 0.09 percent, the yield on the long-term 30-year note also climbed close to 1-1/2 basis points to 0.82 percent and the yield on short-term 2-year traded nearly flat at -0.12 percent.
The Australian government bonds slumped as the global debt sell-off continued amid hopes of a rise in the country’s fourth-quarter consumer price inflation data, which is scheduled to be released on January 31. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 1-1/2 basis points to 2.84 percent, the yield on the long-term 30-year note also surged nearly 1-1/2 basis points to 3.46 percent and the yield on short-term 2-year remained tad higher at 2.09 percent.
