Market Roundup
- End-Dec Japan household assets up 0.9% y/y to record Y1800 trln, corporate deposits Y244 tln (+7.5%), BoJ holdings of JGBs Y421 tln (39.1% of total), JGBs held by offshore accounts Y113 tln (10.5%).
- GPIF, other off’l pension funds sell net Y589.3 bln in JGBs, buy Y56.4 bln domestic stocks, buy Y259.4 bln in foreign securities in Q4.
- Foreign CB US debt holdings +$15.084 bln to $3.197 trln March 15 week, Treasuries +$16.383 bln to $2.869 trln, agencies -$1.196 bln to $265.309 bln.
- NY Fed – Swaps with foreign CBs $917 mln Mar 15 week, ECB $915 mln, rest BoJ.
- Lipper – Investors pull $5 bln from US-based taxable bond funds latest week.
- Trump budget plan would scrap energy grants, auto loan program – Reuters.
- BoE MPC Forbes – Weak wage growth may reflect temporary Brexit caution -Telegraph.
- New Zealand Feb BNZ/BNZ PMI up to 55.2, Jan 52.2, weak mfg in Q4 GDP data transitory?
Economic Data Ahead
- (0345 ET/0745 GMT) France Q4 wages, +0.2% q/q eyed; last +0.1%.
- (0600 ET/1000 GMT) Eurozone Jan trade balance; last E28.1 bln surplus.
- (0915 ET/1315 GMT) United States Feb industrial production, +0.2% m/m eyed; last -0.3%.
- (0915 ET/1315 GMT) United States Feb capacity utilization, 75.5% eyed; last 75.3%.
- (1000 ET/1400 GMT) Belgium Mar consumer confidence index; last -2.0.
- (1000 ET/1400 GMT) United States Mar U.Mich sentiment index – prelim, 97.0 eyed; last 95.7.
- (1000 ET/1400 GMT) United States Feb leading indicators index, +0.4% m/m eyed; last +0.6%.
Key Events Ahead
- N/A G20 FinMins/central bankers meet in Baden-Baden, Germany (till Saturday).
- (0500 ET/0900 GMT) Scottish National Party Spring Conference in Aberdeen (till Saturday).
- (0700 ET/1100 GMT) UK DMO GBP0.5/0.5/1.0 bln 1/3/6-month treasury bill auctions.
FX Beat
DXY: The dollar eased versus its major competitors after the Federal Reserve indicated it was unlikely to speed up monetary tightening. The greenback against a basket of currencies traded 0.01 percent up at 100.27, having hit a low of 100.21 in the previous session, its lowest since Feb. 9. FxWirePro's Hourly Dollar Strength Index stood at -97.43 (Slightly Bearish) by 0500 GMT.
EUR/USD: The euro rallied to a fresh 5-1/2 week high earlier in the session as the dollar continues to ease after the Federal Reserve signalled fewer interest rate hikes than some investors had expected. The major gained momentum after Governing Council member of the European Central Bank Ewald Nowotny stated that a rate hike from the ECB may be on its way and affirmed that it could be done in a different approach from Fed. The European currency traded 0.1 percent higher at 1.0772, having hit a high of 1.0774 earlier, its highest since Feb. 6. FxWirePro's Hourly Euro Strength Index stood at 38.99 (Neutral) by 0400 GMT. Investors now await Eurozone trade balance and construction output figures, ahead of the U.S. economic data. Immediate resistance is located at 1.0791 (Feb 6 High), a break above targets 1.0830. On the downside, support is seen at 1.0715 (23.6% retrace of 1.0774 and 1.0525), a break below could drag it near 1.0679 (38.2% retrace).
USD/JPY: The dollar steadied after declining to a 2-week low in the previous session, following a rise in the U.S. treasury yields as the dust settles over the Fed and BoJ policy decisions aftermath. However, a slightly risk-averse market environment ahead of G20 meeting and Trump-Merkel meeting boosted the safe-haven appeal of the yen. The major traded 0.1 percent up at 113.41, having hit a low of 112.90 on Thursday, its lowest since Mar 1. FxWirePro's Hourly Yen Strength Index stood at -34.83 (Neutral) by 0400 GMT. Investors’ will continue to track price action in the U.S. Treasury yields, ahead of the U.S. industrial production, capacity utilization, Michigan preliminary consumer sentiment index and labour market conditions index. Immediate resistance is located at 113.65 (21-DMA), a break above targets 114.20 (50.0% retracement of 115.50 and 112.90). On the downside, support is seen at 112.80 (trendline), a break below could take it near 112.50.
GBP/USD: Sterling held firm near 2-week high touched in the previous session after Bank of England policymaker Kristen Forbes surprisingly voted for a hike in interest rates at the bank's March meeting. Moreover, recent optimism on the Article 50 trigger and broad-based dollar weakness following less hawkish FOMC decision continues to support the major. Sterling trades flat at 1.2355, having hit a high of 1.2376 in the previous session, its highest since Mar. 1. FxWirePro's Hourly Sterling Strength Index stood at 76.97 (Slightly Bullish) by 0400 GMT. Investors’ focus now remains on BoE’s quarterly bulletin and developments surrounding the Brexit process, ahead of the U.S. economic data. Immediate resistance is located at 1.2393 (61.8 % retracement of 1.2569 and 1.2109), a break above could take it near 1.2470. On the downside, support is seen at 1.2328 (21-DMA), a break below targets 1.2300. Against the euro, the pound traded 0.07 percent down at 87.15 pence, having hit a high of 86.63 earlier in the week.
AUD/USD: The Australian dollar edged up reversing some of its previous session losses, as the recent selling pressure around the greenback following FOMC less hawkish stance continued to support the major. The Aussie trades 0.1 percent up at 0.7685, hovering towards a high of 0.7719 touched on Wednesday, it’s highest since Feb. 24. FxWirePro's Hourly Aussie Strength Index stood at 126.31 (Highly Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of series of U.S. economic data. Immediate support is seen at 0.7663 (Session Low), a break below targets 0.7629 (21-DMA). On the upside, resistance is located at 0.7720, a break above could take it till 0.7740 (Feb 23 High).
NZD/USD: The New Zealand dollar slightly nudged up after tumbling from a near 2-week high the day before, as investors cheered upbeat domestic business manufacturing data released earlier today. The economy's Business NZ Manufacturing Index came in at 55.2 for February, versus a prior reading of 52.2 that was revised up from 51.6. The Kiwi trades 0.1 percent up at 0.6992, after rising as high as 0.7048 on Wednesday, it’s strongest since Mar. 3. FxWirePro's Hourly Kiwi Strength Index was at -36.47 (Neutral) by 0500 GMT. Investors’ will continue to track board based market sentiment, ahead of the U.S. macroeconomic drivers for further momentum. Immediate resistance is located at 0.7025 (38.2% retrace of 0.7244 and 0.6890), a break above could take it near 0.7073 (21-DMA). On the downside, support is seen at 0.6960 (10-DMA), a break below could drag it lower 0.6950.
Equities Recap
Asian shares climbed and were set to end the week higher, while the dollar continued to ease after the Federal Reserve indicated slower-than-expected interest rate rise path.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3 percent and was set to end the week with a 3.5 percent gain.
Tokyo's Nikkei fell 0.37 percent to 19,518.30 points, Australia's S&P/ASX 200 index gained 0.18 percent to 5,796.30 points and South Korea's KOSPI was trading 0.28 percent up at 2,156.06 points.
Shanghai composite index edged down 0.19 percent to 3,262.90 points, while CSI300 index was trading 0.24 percent lower at 3,473.15 points.
Hong Kong’s Hang Seng was trading 0.32 percent higher at 24,362.73 points. Taiwan shares added 0.7 percent at 9,908.69 points.
Commodities Recap
Crude oil prices edged up after rising to a 6-day high in the previous session as a drawdown in U.S. crude inventory following nine consecutive increases, eased concerns about a global supply glut. International benchmark Brent crude was trading 0.12 percent up at $51.77 per barrel by 0407 GMT, having hit a high of $52.62 on Thursday, its highest since Mar. 10. U.S. West Texas Intermediate crude rose 0.18 percent to $48.83 a barrel, after rising to a peak of $49.59 the day before, its strongest since Mar. 10.
Gold prices stood strong, just within the sight of an over one-week high hit the session before and was on course for their first weekly rise in three. Spot gold edged up 0.05 percent to $1,226.61 per ounce by 0413 GMT, having hit a peak of $1,233.44, the highest since March 6 on Thursday. U.S. gold futures fell 0.2 percent to $1,224.60 per ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.535 percent higher by 0.011 bps, while 5-year yield was 0.019 bps up at 2.048 percent.
The Australian bonds relapsed as investors cashed in profits on the last trading day of the week after witnessing a long rally through the week. The yield on the benchmark 10-year Treasury note jumped 5 basis points to 2.87 percent, the yield on 15-year note also climbed 5 basis points to 3.26 percent and the yield on short-term 2-year traded nearly 2-1/1 basis points higher at 1.84 percent.
The New Zealand bonds remained weak at the time of closing, tracking softness in the U.S. counterparts amid a quiet trading session that witnessed data of little economic significance.
The yield on the benchmark 10-year bond rose 1 basis point to 3.29 percent at the time of closing, the yield on 7-year note jumped nearly 1-1/2 basis points to 2.86 percent while the yield on short-term 2-year note also dived 1 basis point higher at 2.13 percent.
The Canadian government bond prices were lower across a steeper yield curve, with the 2-year down 2.5 Canadian cents to yield 0.818 percent and the 10-year falling 34 Canadian cents to yield 1.803 percent.
