Market Roundup
- Australia central bank holds rates at 1.5 pct
- Australia Q4 Retail Trade, 0.1%, 0.4% f'cast, 0.2% prev
- Australia Dec Retail Trade MM, -0.4%, -0.1% f'cast, 0.4% prev, 0.5% rvsd
- Australia Dec Trade Balance (A$), 3,681 mln, 2,300 mln f'cast, 1,925 mln prev
- N.Korea protecting nuclear missiles, U.N. monitors say, ahead of summit talks
- Trump to choose Treasury's Malpass to lead World Bank -sources
- Fed Chair Powell and Trump met Monday to discuss economy -Fed
- U.S. trade agency sees negotiating new WTO rules to rein in China as futile
- Prosecutors subpoena Trump inaugural committee for documents
- UK shoppers cautiously up their spending in January -BRC
- EU nations back Venezuela's Guaido as Maduro faces rising pressure
- Japan Jan Services PMI, 51.6, 51.0 prev
Economic Data Ahead
- (0355 ET/0855 GMT) Germany Jan Markit Services PMI, 53.1 f'cast, 53.1 prev
- (0355 ET/0855 GMT) Germany Jan Markit Comp Final PMI, 52.1 f'cast, 52.1 prev
- (0400 ET/0900 GMT) EZ Jan Markit Comp Final PMI, 50.7 f'cast, 50.7 prev
- (0400 ET/0900 GMT) EZ Jan Markit Serv Final PMI, 50.8 f'cast, 50.8 prev
- (0430 ET/0930 GMT) Great Britain Jan Markit/CIPS Serv PMI, 51.0 f'cast, 51.2 prev
- (0500 ET/1000 GMT) EZ Dec Retail Sales YY, 0.5% f'cast, 1.1% prev
Key Events Ahead
- (0300 ET/0800 GMT) Riksbank's Stefan Ingves participates in open hearing on financial stability held by the Riksdag Committee on Finance – Stockholm
- (0400 ET/0900 GMT) ECB's Peter Praet chairs Session 1 "Can the EU respond adequately to the next crisis with its current instruments” - Paris
- (0515 ET/1015 GMT) Riksbank's Kerstin af Jochnick participates in panel discussion on Banking Union – Stockholm
- (0515 ET/1015 GMT) ECB's Pentti Hakkarainen participates at event "A deepening EMU - where will it leave Sweden and Denmark?" - Stockholm
FX Beat
DXY: The dollar index edged higher, extending gains for the fourth consecutive session, amid optimism over recently concluded U.S.-China trade talks. The greenback against a basket of currencies trades 0.05 percent up at 95.86, having touched a low of 95.16 on Thursday, its lowest since December 10. FxWirePro's Hourly Dollar Strength Index stood at 8.62 (Neutral) by 0500 GMT.
EUR/USD: The euro eased, extending previous session losses after data showed Germany is facing a budget shortfall of around 25 billion euros ($29 billion) by 2023 as an economic slowdown indicated tax revenues will come in below previous estimates. The European currency traded 0.05 percent down at 1.1434, having touched a high of 1.1514 on Thursday, its highest since Jan. 11. FxWirePro's Hourly Euro Strength Index stood at -15.08 (Neutral) by 0500 GMT. Investors’ attention will remain on a series of data from the Eurozone economies, EZ retail sales, Markit service PMI, ahead of the U.S. service PMI from both Markit and ISM. Immediate resistance is located at 1.1474 (December 21 High), a break above targets 1.1540 (January 11 High). On the downside, support is seen at 1.1422 (Jan. 8 Low), a break below could drag it till 1.1370 (Jan. 17 Low).
USD/JPY: The dollar edged lower after the Federal Reserve in a statement stated that Chairman Jerome Powell had told President Donald Trump and Treasury Secretary Steven Mnuchin that the path of policy will depend entirely on incoming economic data. The major was trading 0.05 percent down at 109.86, having hit a high of 110.16 on Monday, its highest since December 31. FxWirePro's Hourly Yen Strength Index stood at -43.22 (Neutral) by 0500 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. service PMI from both Markit and ISM. Immediate resistance is located at 110.47 (Dec. 31 High), a break above targets 111.19 (Dec. 24 High). On the downside, support is seen at 109.16 (Jan. 28 Low), a break below could take it lower at 108.80 (Jan. 30 Low).
GBP/USD: Sterling steadied after falling to a near 2-week low on news that British customs will avoid checking goods from the European Union for a temporary period to avoid hold-ups at ports. The major traded flat at 1.3038, having hit a low of 1.3026 earlier; it’s lowest since January 24. FxWirePro's Hourly Sterling Strength Index stood at -95.60 (Slightly Bearish) 0500 GMT. Investors’ attention will remain on developments surrounding Brexit deal, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3103 (February 4 High), a break above could take it near 1.3160 (January 31 High). On the downside, support is seen at 1.3012 (January 24 Low), a break below targets 1.2964 (November 5 Low). Against the euro, the pound was trading flat at 87.68 pence, having hit a low of 87.93 on Friday, it’s lowest since Jan. 22.
AUD/USD: The Australian dollar rebounded from a 6-day low after the Reserve Bank of Australia held rates at record lows at its first meeting of the year but sounded less dovish than expected. The Aussie trades 0.5 percent up at 0.7260, having hit a high of 0.7295 on Thursday; it’s highest since December 5. FxWirePro's Hourly Aussie Strength Index stood at 124.48 (Highly Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7159 (Jan. 18 Low), a break below targets 0.7115 (Jan. 22 Low). On the upside, resistance is located at 0.7300 (November 20 High), a break above could take it near 0.7327 (November 28 High).
NZD/USD: The New Zealand dollar bounced back, halting a 2-day losing streak amid expectations the annual wage growth will pick up slightly to 2.0 percent, which could provide comfort for the Reserve Bank of New Zealand which is set to release its first monetary policy decision of the year next week. The Kiwi trades 0.2 percent down at 0.6890, having touched a high of 0.6941 on Friday, its highest level December 5. FxWirePro's Hourly Kiwi Strength Index was at 39.23 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6944 (Dec. 5 High), a break above could take it near 0.6998 (May 30 High). On the downside, support is seen at 0.6856 (Dec. 6 Low), a break below could drag it below 0.6799 (Jan. 15 Low).
Equities Recap
Asian shares surged amid subdued trading as many markets across the region remain closed for Lunar New Year holidays for much of the week.
MSCI's broadest index of Asia-Pacific shares outside Japan rallied 0.4 percent.
Tokyo's Nikkei fell 0.2 percent to 20,844.45 points, Australia's S&P/ASX 200 index rose 1.9 percent to 6,005.90 points.
Commodities Recap
Crude oil prices surged, supported by expectations of tightening global supply due to U.S. sanctions on Venezuela and production cuts led by OPEC. International benchmark Brent crude was trading 0.1 percent up at $62.77 per barrel by 0456 GMT, having hit a high of $63.61 on Monday, its highest since December 7. U.S. West Texas Intermediate was trading 0.1 percent higher at $54.86 a barrel, after rising as high as $55.73 on Monday, its highest since the November 21.
Gold prices steadied after falling to a near 1-week low touched in the previous session on a firmer dollar and as investor appetite for riskier assets improved in the wake of strong U.S. economic data. Spot gold was trading 0.2 percent up at $1,314.50 per ounce at 0502 GMT, having touched a low of $1,318.89 on Monday, its lowest level since April 29. U.S. gold futures dipped 0.1 percent to $1,318.40 an ounce.
Treasuries Recap
The Japanese government bonds remained mixed during late Asian session ahead of the country’s super-long 30-year bond auction, scheduled to be held on February 7 by 03:35GMT and the household spending data for the month of December, due for release on the same day by 23:30GMT. The yield on the benchmark 10-year JGB note, which moves inversely to its price, fell 1-1/2 basis points to -0.014 percent, the yield on the long-term 30-year edged 1 basis point higher to 0.617 percent while the yield on short-term 2-year plunged 16-1/2 basis points to -0.164 percent.
The Australian government bond yields pared gains across the curve during Asian trading session as retail sales were much weaker than expected in December, coupled with disappointing volumes for the quarter. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose about 2 basis points to 2.24 percent, the yield on the long-term 30-year bond also climbed 2 basis points to 2.77 percent and the yield on short-term 2-year jumped 1-1/2 basis points to 1.85 percent.
The Canadian government bond prices were little changed across much of the yield curve, with the 10-year flat to yield 1.959 percent. The gap between Canada's 10-year yield and its U.S. equivalent widened by 3.4 basis points to a spread of 76.6 basis points in favor of the U.S. bond.
