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Asia Roundup: Kiwi slumps on downbeat building permits, euro gains on ECB policy tightening speculation, Asian shares off highs - Friday, February 2nd, 2018

Market Roundup

  • Japan FinMin Aso – BOJ to leave policy easy until 2% CPI target achieved
     
  • BOJ – Unlimited JGB 10 buys at 0.110%, ups QQE buys of 5-10s to Y450 bln
     
  • Purchases of JGB 10-25s, 25s+ left at Y190 bln, Y80 bln
     
  • Japan to rack up 8th straight quarter of growth – Nikkei
     
  • Japan's regulator urged Coincheck to fix flaws before $530 mln cyber theft
     
  • White House poised to approve release of explosive Republican memo
     
  • U.S. fund investors race into stocks despite sell-off -Lipper
     
  • U.S. muni bond funds post $235.9 mln in inflows-Lipper
     
  • Are you OK, Aunty May? China warms to UK Prime Minister
     
  • Foreign CB US debt holdings +$14.420 bln to $3.366 trln Jan 31 week
     
  • Treasuries +$14.460 bln to $3.03 trln, agencies -$121 mln to $261.216 bln

Economic Data Ahead

  • (0430 ET/0930 GMT) Great Britain Jan Markit/CIPS Cons PMI forecast 52.0, last 52.2
     
  • (0500 ET/1000 GMT) Italy Jan Consumer Price Prelim MM forecast 0.3%, last 0.4%
     
  • (0500 ET/1000 GMT) Italy Jan Consumer Price Prelim YY forecast 0.8%, last 0.9%
     
  • (0500 ET/1000 GMT) Italy Jan CPI (EU Norm) Prelim MM forecast -1.8%, last 0.3%
     
  • (0500 ET/1000 GMT) Italy Jan CPI (EU Norm) Prelim YY forecast 0.9%, last 1.0%

Key Events Ahead

  • (0500 ET/1000 GMT) ECB's Benoit Coeure speaks at a conference on "Deepening of EMU" organized by the University of Ljubljana in Kranju
     
  • (0900 ET/1400 GMT) French Central Bank's François Villeroy, Ireland's Central Bank's Philip Lane speak in Dublin
     
  • (1330 ET/1830 GMT) Fed's Robert Kaplan participates in the Teacher Retirement System of Texas Annual Conference in Austin
     
  • (1530 ET/2030 GMT) Fed's John Williams speaks on the economy before the Financial Women of San Francisco

FX Beat

DXY: The dollar index steadied as investors awaited the U.S. January nonfarm payrolls report for the latest clues on the strength of the U.S. labor market. The greenback against a basket of currencies traded 0.1 percent up at 88.76, having touched a low of 88.44 last week, its lowest since December 2014. FxWirePro's Hourly Dollar Strength Index stood at 26.56 (Neutral) by 0500 GMT.

EUR/USD: The euro eased below the 1.2500 handle, after rising to a 1-week high in the previous session on news that some ECB officials are calling for a clearer interest rate guidance and could consider ending its QE program. The European currency traded 0.1 percent down at 1.2493, having touched a low of 1.2336 on Tuesday, its lowest since Jan. 24. FxWirePro's Hourly Euro Strength Index stood at 17.69 (Neutral) by 0400 GMT. Investors’ attention will remain on Eurozone producer price index, ahead of U.S. nonfarm payroll, unemployment and factory orders. Immediate resistance is located at 1.2530, a break above targets 1.2590. On the downside, support is seen at 1.2351 (50.0% retracement of 1.2264 and 1.2537), a break below could drag it lower 1.2307 (38.2% retracement).

USD/JPY: The dollar rose, extending gains for the third consecutive session, as investors await the U.S. nonfarm payrolls report for January, which is expected to show nonfarm payrolls probably rose by 180,000 jobs after increasing 148,000 in December, while the unemployment rate is forecast to be unchanged at a 17-year low of 4.1 percent. The major was trading 0.2 percent up at 109.63, having hit a low of 108.28 last week, its lowest since Sept 11. FxWirePro's Hourly Yen Strength Index stood at -48.01 (Neutral) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. nonfarm payroll, unemployment, factory orders and FOMC member William's speech for further momentum. Immediate resistance is located at 109.90 (50.0% retracement of 111.49 and 108.28), a break above targets 110.27 (38.2% retracement). On the downside, support is seen at 108.20, a break below could take it lower 108.00.

GBP/USD: Sterling consolidated near 6-day highs as concerns over Prime Minister Theresa May's leadership eased and expectations grew that the Bank of England to take a more hawkish tone in its meeting next week. The major traded flat at 1.4258, having hit a high of 1.4278 on Thursday, it’s highest since Jan 26. FxWirePro's Hourly Sterling Strength Index stood at 139.96 (Highly Bullish) by 0400 GMT.  Investors’ focus will remain on the UK construction PMI, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.4280, a break above could take it near 1.4300. On the downside, support is seen at 1.4103 (10-DMA), a break below targets 1.4009 (61.8% retracement of 1.3458 and 1.4345). Against the euro, the pound was trading flat at 87.63 pence, having hit a low of 88.33 pence on Tuesday, it’s lowest since Jan. 22.

AUD/USD: The Australian dollar extended losses for the fifth consecutive session, as speculation about an early policy tightening in Europe weighed on the chances of rate hikes at home. The Aussie trades 0.4 percent down at 0.8005, having hit a high of 0.8135 last week; it’s highest since May 2015. FxWirePro's Hourly Aussie Strength Index stood at -167.10 (Highly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7973 (50.0% retracement of 0.7807 and 0.8135), a break below targets 0.7934 (38.2% retracement). On the upside, resistance is located at 0.8075 (5-DMA), a break above could take it near 0.8150.

NZD/USD: The New Zealand dollar eased below the 0.7400 handle after data showed building permits slumped 9.6 percent in December, reversing prior month’s gains. The Kiwi trades 0.4 percent down at 0.7369, having touched a high of 0.7419 on Wednesday, its highest level since Jan. 24. FxWirePro's Hourly Kiwi Strength Index was at -65.03 (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 edged down, hovering away from a record high, while the euro neared multi-year peaks boosted by talk of policy tightening in Europe.

MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.3 percent.

Tokyo's Nikkei slumped 0.9 percent to 23,274.57 points, Australia's S&P/ASX 200 index surged 0.5 percent to 6,121.40 points and South Korea's KOSPI tumbled 1.6 percent to 2,527.25 points.

Shanghai composite index declined 0.7 percent to 3,423.56 points, while CSI300 index was trading 0.5 percent down at 4,222.91 points.

Hong Kong’s Hang Seng was trading 0.1 percent lower at 32,615.37 points. Taiwan shares shed 0.3 percent to 11,126.23 points.

Commodities Recap

Crude oil prices rose for a third consecutive session after a survey showed strong compliance with output cuts by OPEC and others including Russia, offsetting concerns about surging U.S. production. International benchmark Brent crude was trading 0.2 percent up at $69.81 per barrel by 0447 GMT, having hit a low of $67.82 on Wednesday, its lowest since Jan. 9. U.S. West Texas Intermediate was trading 0.2 percent up at $66.06 a barrel, after falling as low as $63.64 on Wednesday, its weakest since Jan. 22.

Gold prices edged down ahead of U.S. jobs data later in the day, with traders looking for any implications for the outlook for U.S. monetary policy over the rest of 2018. Spot gold declined 0.1 percent to $1,347.67 per ounce by 0450 GMT, having hit a low of 1,332.64 on Wednesday, lowest since Jan 23. U.S. gold futures were up 0.2 percent at $1,351 per ounce.

Treasuries Recap

The 10-year U.S Treasury yield stood at 2.790 percent higher by 0.017 bps, while 5-year yield was 0.016 bps up at 2.574 percent.

The Japanese government bonds pared losses after the Bank of Japan announced early today that it would buy an "unlimited" amount of long-term bonds to curb the effect of rising yields. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slipped 1 basis point to 0.08 percent, the yield on the long-term 30-year note remained tad lower at 0.82 percent and the yield on short-term 2-year traded 1/2 basis point lower at -0.12 percent.

The Australian government bonds slumped on the last trading day of the week after the country’s producer price index for the fourth quarter of 2017 jumped beyond market expectations and higher than the prior figures as well. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 4 basis points to 2.82 percent, the yield on the long-term 30-year note surged 2 basis points to 3.43 percent and the yield on short-term 2-year traded tad higher at 2.01 percent.

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February 21 19:00 UTC Released

ARTrade Balance

Actual

-986 %

Forecast

-464 %

Previous

-847 %

February 21 15:30 UTC Released

BRForeign Exchange Flows

Actual

1.92 Bln USD

Forecast

Previous

2.251 Bln USD

January 31 00:00 UTC 3139831398m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 31 00:00 UTC 3139831398m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 22 19:00 UTC 4321843218m

ARTrade Balance

Actual

Forecast

Previous

-1541 %

January 31 00:00 UTC 3139831398m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 22 19:00 UTC 4321843218m

ARTrade Balance

Actual

Forecast

Previous

-1541 %

January 31 00:00 UTC 3139831398m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 31 00:00 UTC 3139831398m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 31 00:00 UTC 3139831398m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

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