Market Roundup
- Japan FinMin Aso – To start Japan-US economic dialogue as early as April, natural for currencies to weaken when CB aggressively ups cash supply, US-UK caused their currencies to weaken through QE after Lehman – Reuters, Nikkei.
- Japan Feb Reuters Tankan mfg index +20, non-mfg +26, Jan +18, +30, mfg index highest since Aug ’14, export-led recovery, forecast at +19 in May, non-mfg +26, recovery still seen fragile.
- China January PBOC net FX sales CNY208.8 bln – Reuters.
- Foreign CB US debt holdings +$21 mln to $3.169 trln Feb 15 week, Treasury holdings -$3.544 bln to $2.847 trln, agencies +$3.433 trln to $259.210 bln.
- NY Fed – FX swaps with foreign CBs $236 mln Feb 15 wk, BoJ $1 mln, rest ECB.
- Lipper – US-based stock, bond funds attract cash in latest week.
- Australia readies ’28 syndication via ANZ, CBA, Deutsche and Westpac - IFR.
- New Zealand Jan BNZ/BNZ PMI -2.6 pts to 51.6, lowest since Jan ’15, bad weather and holidays cited.
- New Zealand Q4 retail sales volume +0.8% q/q, +1.1% forecast, motor vehicles shine, Q3 rev +0.8% (+0.9), Q4 core sales +0.6% q/q, value +1.1%, Q3 +0.2%, +0.8%.
Economic Data Ahead
- (0330 ET/0830 GMT) Sweden Jan CPI, -0.6% m/m, +1.5% y/y forecast; last +0.5%, +1.7%.
- (0330 ET/0830 GMT) Sweden Jan CPIF, -0.7% m/m, +1.7% y/y forecast; last +0.5%, +1.9%.
- (0400 ET/0900 GMT) Eurozone Dec current account balance; last E40.5 bln surplus nsa, E36.1 bln sa.
- (0400 ET/0900 GMT) Eurozone Dec net investment flow; last E6.3 bln outflow.
- (0430 ET/0930 GMT) Great Britain Jan retail sales, +0.9% m/m, +3.4% y/y forecast; last -1.9%, +4.3%.
- (0430 ET/0930 GMT) Great Britain Jan - ex-fuel, +0.7% m/m, +3.9% y/y forecast; last -2.0%, +4.9%.
- (0900 ET/1400 GMT) Belgium Feb consumer confidence index; last zero.
- (1000 ET/1500 GMT) United States Jan leading indicators index, +0.5% m/m forecast; last +0.5%.
Key Events Ahead
- (0600 ET/1100 GMT) UK DMO GBP0.5/1.0/1.0 bln 1/3/6-month treasury bill auctions.
- N/A Chicago Fed VP Sullivan speaks at Sarasota, Florida event.
- (0830 ET/1330 GMT) Canada December international securities transactions.
- (1230 ET/1730 GMT) Riksbanks DepGov Kerstin presentation in New York.
- Sunday Cleveland Fed Mester speaks at Singapore event.
FX Beat
DXY: The dollar attempted a minor recovery across the board, supported by upbeat economic data and expectations of a near-term U.S. interest rate hike. The greenback against a basket of currencies traded flat at 100.49, having hit a low of 100.41 in the previous session, it’s weakest since Feb. 9. FxWirePro's Hourly Dollar Strength Index stood at -114.45 (Highly Bearish) by 0500 GMT.
EUR/USD: The euro steadied after rising to a 1-week high in the previous session, as the dollar attempted a minor recovery following better-than-expected economic data and rising U.S. bond yields. The European currency traded flat at 1.0672, having hit a high of 1.0679 on Thursday, it’s highest since Feb. 9. FxWirePro's Hourly Euro Strength Index stood at 74.21 (Bullish) by 0400 GMT. Investors’ will closely watch Eurozone's current account and construction output data, ahead of the U.S. leading indicator for further momentum on the pair. Immediate resistance is located at 1.0696 (21-DMA), a break above targets 1.0710 (61.8 % retracement of 1.0828 and 1.0521). On the downside, support is seen at 1.0638 (38.2 % retracement of 1.0828 and 1.0521), a break below could drag it near 1.0599 (trendline).
USD/JPY: The dollar rose after declining from a 2-week high touch on Wednesday, as indicators released in the previous session shed more positive light on the U.S. economy, with the Philadelphia manufacturing index rising to a 33-year high. Moreover, a rise in Treasury yields and expectations of a near-term U.S. interest rate hike supported the major. The pair trades 0.15 percent higher at 113.36, having hit a low of 113.07 the previous day, it’s lowest since Feb 10. FxWirePro's Hourly Yen Strength Index stood at 92.57 (Bullish) by 0400 GMT. Investors’ will continue to track treasury price action, amid a lack of relevant data from the U.S. docket. Immediate resistance is located at 113.70 (5-DMA), a break above targets 114.00. On the downside, support is seen at 113.03 (10-DMA), a break below could take it near 112.77.
GBP/USD: Sterling rose, extending gains from the previous session, as absent developments in the government's move towards launching Brexit talks next month eased market fears. Sterling trades 0.16 percent up at 1.2507, pulling further away from a low of 1.2383 hit on Wednesday, it’s weakest since Feb. 7. FxWirePro's Hourly Sterling Strength Index stood at -48.89(Neutral) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of the UK retail sales figures. Immediate resistance is located at 1.2526 (50.0 % retracement of 1.2706 and 1.2383), a break above could take it over 1.2582 (Feb 9 High). On the downside, support is seen at 1.2463, a break below targets 1.2400. Against the euro, the pound trades 0.1 percent up at 85.36 pence, having hit a 10-day low of 85.52 in the previous session.
AUD/USD: The Australian dollar hovered near a 3-month high, however, struggled to trade above 0.7700 handle after breaching that level three times in the week. The major largely gained this week on the back of rising iron ore prices, upbeat Chinese data and board weakness in the U.S. dollar. The Aussie rose 0.2 percent to 0.7709, drifting closer to a high of 0.7731 hit in the previous session, its highest since Nov. 10. FxWirePro's Hourly Aussie Strength Index stood at 9.71 (Neutral) by 0400 GMT. Markets will continue to track board based market sentiment, ahead of economic data from the U.S. docket. Immediate support is seen at 0.7674 (5-DMA), a break below could drag it near 0.7614 (21-DMA). On the upside, resistance is located at 0.7730, a break above targets 0.7778.
NZD/USD: The New Zealand dollar tumbled after rising to a 1-week high in the previous session as the dollar attempted a minor recovery across the board. Moreover, the bid tone around the major weakened after data showed New Zealand's retail sales rose 0.8 percent in the fourth quarter, missing estimates of 1.1 percent rise. The Kiwi trades 0.1 percent lower at 0.7205, having hit a high of 0.7242 on Thursday, it’s highest since Feb. 9. FxWirePro's Hourly Kiwi Strength Index was at -27.34 (Neutral) by 0400 GMT. Markets will continue to digest poor New Zealand's economic data, ahead of the U.S. macro fundamental drivers. Immediate resistance is located at 0.7246 (21-DMA), a break above could take it near 0.7282 (61.8 % retracement of 0.7375 and 0.7134). On the downside, support is seen at 0.7191 (23.6 % retracement), a break below could drag it till 0.7150.
Equities Recap
Asian shares declined from a 19-month peak as investors booked profits, while the dollar steadied as optimism over possible renewed supply cuts by OPEC lifted oil prices and boosted market sentiment.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.1 percent but was on track to end the week up 1.3 percent, its fourth straight weekly gain.
Tokyo's Nikkei tumbled 0.64 percent to 19,223.38 points, Australia's S&P/ASX 200 index fell 0.21 percent to 5,804.10 points and South Korea's KOSPI was trading 0.20 percent down at 2,077.72 points.
Shanghai composite index eased 0.57 percent to 3,211.61 points, while CSI300 index was trading 0.29 percent down at 3,430.94 points.
Hong Kong’s Hang Seng was trading 0.53 percent lower at 23,983.16 points. Taiwan shares shed 0.10 percent at 9,759.76 points.
Commodities Recap
Crude oil prices steadied, supported by a report that producer cartel OPEC could extend an output cut which would result in reducing a global fuel supply overhang. International benchmark Brent crude was trading flat at $55.74 per barrel by 0410 GMT, having hit a low of $55.11 hit in the previous session, its weakest since Feb. 8. U.S. West Texas Intermediate crude was at $53.42 a barrel, after falling as low as $52.66 on Thursday, its lowest since Feb. 9.
Gold prices held gains after rising to a 1-week high in the previous session, as the greenback hovered near 1-week lows amid political uncertainties in the United States and Europe. Spot gold was trading at $1,238.10 per ounce at 0415 GMT, having hit its highest since Feb. 9 at $1,242.18 on Thursday. U.S. gold futures were down 0.2 percent at $1,239.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.4594 percent higher by 0.009 bps, while 5-year yield was up by 0.01 bps at 1.9499 percent.
Australian government bond futures eased, with the 3-year bond contract down 1 tick at 97.93, while the 10-year contract slipped 1.5 ticks to 97.155.
New Zealand government bonds gained, sending yields three basis points lower at the short end of the curve.
Canadian government bond prices were higher across the yield curve in sympathy with U.S. Treasuries. The 2-year rose 3.5 Canadian cents to yield 0.799 percent and the 10-year climbed 33 Canadian cents to yield 1.744 percent. On Wednesday, the 10-year yield touched a two-week high at 1.801 percent.
