Market Roundup
- Government shutdown fizzles on spending, immigration deal in U.S. Congress.
- BOJ leaves policy as is, QQE/YCC included, CPI sideways for now but to rise.
- CPI forecasts left unchanged – FY ‘18/19 +1.4%, FY ‘19/20 +1.8%.
- Reuters poll – Japan Inc sees strong growth but wary of market estimates.
- 40% see no decisive end to deflation, 68% want BOJ Kuroda reappointment.
- S.Korea to ban cryptocurrency traders from using anonymous bank accounts.
- China must win 'three tough battles' while pursuing reforms - Premier Li.
- UK government under fire for leaving finance sector in dark on Brexit.
- Hurry up, German conservative urges Social Democrats on coalition.
- S.Korea, China look for WTO support over U.S. tariffs on washing machines, solar cells
Economic Data Ahead
- (0430 ET/0930 GMT) Great Britain Dec PSNB Ex Banks GBP f'cast 5.000 bln, last 8.694 bln
- (0430 ET/0930 GMT) Great Britain Dec PSNB, MM GBP f'cast 4.400 bln, last 8.118 bln
- (0500 ET/1000 GMT) Germany Jan ZEW Economic Sentiment f'cast 17.8, last 17.4
- (0500 ET/1000 GMT) Germany Jan ZEW Current Conditions f'cast 89.8, last 89.3
- (0600 ET/1100 GMT) Great Britain Jan CBI Trends - Orders f'cast 12, last 17
Key Events Ahead
- (0130 ET/0630 GMT) BOJ Gov Haruhiko Kuroda press conference.
- (1000 ET/1500 GMT) Senate Banking Committee holds a hearing on the nomination of Marvin Goodfriend to be a member of the Federal Reserve Board of Governors in Washington.
- (1830 ET/2330 GMT) Fed's Charles Evans gives introductory remarks before the Chicago Council on Global Affairs conf: "The Future of Monetary Policy: Embracing the Unconventional" in Chicago.
- N/A EU Economic and Financial Affairs Council meeting in Brussels.
- N/A ECB Vice President Vitor Constancio attends an ECOFIN meeting in Brussels.
FX Beat
DXY: The dollar index steadied after the U.S. House of Representatives passed a short-term measure on Monday to lift a three-day government shutdown. The greenback against a basket of currencies traded flat at 90.39, having touched a low of 90.11 on Thursday, its lowest since January 2015. FxWirePro's Hourly Dollar Strength Index stood at -30.79 (Neutral) by 0500 GMT.
EUR/USD: The euro consolidated within a narrow range on expectations that the European Central Bank may withdraw its stimulus after the accounts of its last policy meeting showed it could shift its policy communication early this year. The European currency traded flat at 1.2257, having touched a high of 1.2322 on Wednesday, its highest since Dec. 2014. FxWirePro's Hourly Euro Strength Index stood at 57.61 (Bullish) by 0500 GMT. Investors’ attention will remain on Eurozone's ZEW Survey, ahead of Richmond Fed manufacturing index. Immediate resistance is located at 1.2300, a break above targets 1.2370. On the downside, support is seen at 1.2120 (50.0% retracement of 1.1916 and 1.2322), a break below could drag it lower 1.2072 (38.2% retracement).
USD/JPY: The dollar eased against the Japanese yen after the Bank of Japan kept policy rates and price outlook unchanged, and offered a more upbeat view on inflation expectations than three months ago. The major was trading 0.1 percent down at 110.78, having hit a low of 110.19 on Wednesday, its lowest since Sept 15. FxWirePro's Hourly Yen Strength Index stood at -40.00 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the Richmond Fed manufacturing index for further momentum. Immediate resistance is located at 111.41 (38.2% retracement of 110.19 and 113.38), a break above targets 111.78 (50.0% retracement). On the downside, support is seen at 110.32 (Jan. 15 Low), a break below could take it lower 110.00.
GBP/USD: Sterling rallied to a fresh 1-1/2 year high above the 1.4000 handle on optimism that Britain will reach a favourable divorce deal with the European Union. The major traded flat at 1.3976, having hit a high of 1.4003 earlier, it’s highest since June 2016. FxWirePro's Hourly Sterling Strength Index stood at 116.69 (Highly Bullish) by 0500 GMT. Investors’ focus will remain on the UK public sector net borrowing figures, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.4020, a break above could take it near 1.4050. On the downside, support is seen at 1.3869 (5-DMA), a break below targets 1.3795 (61.8% retracement of 1.3458 and 1.4003). Against the euro, the pound was trading flat at 87.67 pence, having hit a high of 87.61 pence earlier, it’s highest since Dec. 15.
AUD/USD: The Australian dollar eased below the 0.8000 handle as news of U.S. tariffs spurred fears of a global trade war. The Aussie trades 0.4 percent down at 0.7985, having hit a high of 0.8038 on Friday; it’s highest since Sept. 20. FxWirePro's Hourly Aussie Strength Index stood at -56.56 (Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7951 (61.8% retracement of 0.7807 and 0.8038), a break below targets 0.7924 (50.0% retracement). On the upside, resistance is located at 0.8050, a break above could take it near 0.8100.
NZD/USD: The New Zealand dollar advanced to a fresh 4-month peak, as investors awaited New Zealand's fourth-quarter consumer price index figures are released on Thursday. Markets expect for a 0.4 percent rise in consumer prices for the December quarter, leaving annual inflation at 1.9 percent. The Kiwi trades flat at 0.7326, having touched a high of 0.7354 earlier, its highest level since Sept. 21. FxWirePro's Hourly Kiwi Strength Index was at 98.62 (Slightly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7360, a break above could take it near 0.7400. On the downside, support is seen at 0.7261 (10-DMA), a break below could drag it lower 0.7182 (Jan 11 Low).
Equities Recap
Asian shares rallied after U.S. senators struck a deal to end a three-day government shutdown, while the dollar declined against the Japanese yen after the Bank of Japan kept policy steady.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.7 percent.
Tokyo's Nikkei gained 1.2 percent to 24,103.67 points, Australia's S&P/ASX 200 index surged 0.8 percent to 6,037.00 points and South Korea's KOSPI climbed 1.1 percent to 2,529.01 points.
Shanghai composite index rose 0.3 percent to 3,513.11 points, while CSI300 index was trading 0.4 percent up at 4,353.79 points.
Hong Kong’s Hang Seng was trading 0.9 percent higher at 32,666.03 points. Taiwan shares added 0.2 percent to 11,253.11 points.
Commodities Recap
Crude oil prices rose, boosted by healthy economic growth and ongoing supply restraint by a group of exporters around OPEC and Russia. International benchmark Brent crude was trading 0.1 percent up at $69.36 per barrel by 0453 GMT, having hit a low of $68.26 on Friday, its lowest since Jan. 9. U.S. West Texas Intermediate was trading 0.1 percent up at $63.93 a barrel, after easing as low as $62.87 on Friday, its lowest since Jan. 9.
Gold prices rallied, as the dollar pared some losses but remained near a 3-year low after a U.S. government shutdown came to an end. Spot gold rose 0.2 percent up at $1,336.04 an ounce by 0459 GMT, having touched its weakest level since Jan. 12 at $1,324.15 on Thursday. U.S. gold futures were up 0.2 percent at $1,333.90.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.640 percent lower by 0.022 bps, while 5-year yield was 0.02 bps down at 2.440 percent.
The Japanese government bonds traded tad higher, after the Bank of Japan remained steady in its first monetary policy decision of this year, although striking a cautious tone over the economy’s ability to reach the 2 percent inflation goal. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slipped 1/2 basis point to 0.07 percent, the yield on the long-term 30-year note edged nearly 1 basis point lower at 0.82 percent and the yield on short-term 2-year traded nearly flat at -0.13 percent.
The Australian bonds jumped as investors poured into safe-haven assets after United States President Donald Trump ignited fears of a global trade war, offsetting upgrades to the world growth outlook and a deal to re-open the U.S. government. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 2-1/2 basis points to 2.82 percent, the yield on the long-term 30-year note also plunged 2-1/2 basis points to 3.46 percent and the yield on short-term 2-year traded nearly 2-1/2 basis points to 2.09 percent.
