Market Roundup
- Trump seeks $25 bln for border wall, offers 'Dreamer' citizenship.
- Trump says he is willing to testify under oath in U.S.-Russia probe.
- US Treasury Secretary backs weak dollar amid fears of trade war.
- Beijing plans to boost scrutiny of Chinese offshore private equity funds.
- Investors put back Chinese property bonds on refinancing fears.
- Surging euro forces ECB's Draghi to tread carefully on policy.
- German industrial wage talks stall in fourth round.
- MoF flow data week-ended Jan 20 – Japanese net buyers of foreign bonds/stks.
- Net Y411.1 bln bonds, Y379.8 bln stocks bought, Y21.9 bln bills too.
- Foreigners sell net Y413.4 bln Japan stocks, Y148.2 bln JGBs.
- Net Y836.1 bln bills bought however – temporary parking.
Economic Data Ahead
- (0200 ET/0700 GMT) Germany Feb GfK Consumer Sentiment f'cast 10.8, last 10.8
- (0300 ET/0800 GMT) Spain Q4 Unemployment Rate f'cast 16.15%, last 16.38%
- (0400 ET/0900 GMT) Germany Jan Ifo Business Climate f'cast 117.1, last 117.2
- (0400 ET/0900 GMT) Germany Jan Ifo Current Conditions f'cast 125.4, last 125.4
- (0400 ET/0900 GMT) Germany Jan Ifo Expectations f'cast 109.4, last 109.5
- (0600 ET/1100 GMT) Great Britain Jan CBI Distributive Trades f'cast 12, last 20
Key Events Ahead
- N/A Riksbank's attends the World Economic Forum (to Jan. 26) in Davos.
- (0830 ET/1330 GMT) ECB Governing Council meeting, followed by an interest rate announcement and a press conference by President Mario Draghi in Frankfurt.
- (1850 ET/2350 GMT) Bank of Japan releases the minutes of its Dec. 20-21 monetary policy meeting in Tokyo.
FX Beat
DXY: The dollar index declined to a 3-year low after U.S. Treasury secretary Steven Mnuchin told the World Economic Forum in Davos that a weaker dollar was good for the economy as it relates to trade and opportunities. The greenback against a basket of currencies traded 0.3 percent down at 88.98, having touched a low of 88.95 earlier, its lowest since December 2014. FxWirePro's Hourly Dollar Strength Index stood at -142.02 (Highly Bearish) by 0400 GMT.
EUR/USD: The euro rallied to a fresh 3-year peak above the 1.2400 handle, ahead of the European Central Bank policy meeting later in the day as markets seek for any signs that the central bank is worried about the rapidly appreciating euro. The European currency traded 0.2 percent up at 1.2431, having touched a high of 1.2440 earlier, its highest since Dec. 2014. FxWirePro's Hourly Euro Strength Index stood at -4.88 (Neutral) by 0400 GMT. Investors’ attention will remain on series of economic data from Eurozone economies and ECB monetary policy decision, ahead of U.S. unemployment benefit claims, goods trabe balance and new home sales figures. Immediate resistance is located at 1.2450, a break above targets 1.2490. On the downside, support is seen at 1.2332 (78.6% retracement of 1.1916 and 1.2440), a break below could drag it lower 1.2243 (61.8% retracement).
USD/JPY: The dollar slumped to a 4-1/2 month low as the greenback slumped to 3-year lows on comments from US Treasury Secretary Mnuchin. The major was trading 0.2 percent down at 109.00, having hit a low of 108.92 earlier, its lowest since Sept 11. FxWirePro's Hourly Yen Strength Index stood at 25.19 (Neutral) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. unemployment benefit claims, goods trabe balance and new home sales figures for further momentum. Immediate resistance is located at 109.47 (78.6% retracement of 111.49 and 108.92), a break above targets 109.90 (61.8% retracement). On the downside, support is seen at 108.60, a break below could take it near 108.00.
GBP/USD: Sterling rose above the 1.4300 handle as robust British employment report and broad-based dollar weakness boosted the bid tone around the British pound. The major traded 0.4 percent up at 1.4291, having hit a high of 1.4305 earlier, it’s highest since June 2016. FxWirePro's Hourly Sterling Strength Index stood at 153.65 (Highly Bullish) by 0400 GMT. Investors’ focus will remain on the UK CBI Distributive Trades Survey, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.4370, a break above could take it near 1.4400. On the downside, support is seen at 1.3412 (78.6% retracement), a break below targets 1.3985 (61.8% retracement of 1.3458 and 1.4305). Against the euro, the pound was trading 0.1 percent up at 86.99 pence, having hit a high of 86.95 pence earlier, it’s highest since Dec. 15.
AUD/USD: The Australian dollar advanced to a 4-1/2 month high as the greenback slumped after Treasury Secretary Steve Mnuchin said that a weaker U.S. dollar is good for the US. The Aussie trades 0.4 percent up at 0.8090, having hit a high of 0.8106 earlier; it’s highest since Sept. 8. FxWirePro's Hourly Aussie Strength Index stood at 53.66 (Bullish) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7991 (61.8% retracement of 0.7807 and 0.8106), a break below targets 0.7956 (50.0% retracement). On the upside, resistance is located at 0.8150, a break above could take it near 0.8200.
NZD/USD: The New Zealand dollar rose, after easing from multi-month highs in the previous session on data showing the country's consumer prices rose at a slower-than-expected pace in the fourth quarter. The Kiwi trades 0.6 percent up at 0.7379, having touched a high of 0.7435 the day before, its highest level since Aug. 3. FxWirePro's Hourly Kiwi Strength Index was at -61.98 (Bearish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7450, a break above could take it near 0.7490. On the downside, support is seen at 0.7295 (10-DMA), a break below could drag it lower 0.7245 (Jan 18 Low).
Equities Recap
Asian shares steadied near record highs, while the greenback slumped to a 3-year low against the basket of currencies after U.S. Treasury Secretary Steven Mnuchin welcomed a weaker currency.
MSCI's broadest index of Asia-Pacific shares outside Japan steadied after hitting an all-time peak.
Tokyo's Nikkei eased 1.1 percent to 23,685.43 points, Australia's S&P/ASX 200 index declined 0.1 percent to 6,050.00 points and South Korea's KOSPI lost 0.7 percent to 2,559.33 points.
Shanghai composite index rose 0.1 percent to 3,563.48 points, while CSI300 index was trading 0.2 percent down at 4,382.71 points.
Hong Kong’s Hang Seng was trading 0.2 percent lower at 32,900.36 points. Taiwan shares added 0.1 percent to 11,165.95 points.
Commodities Recap
Crude oil prices rallied to their highest level since December 2014, boosted by a weak dollar and a 10th straight week of declines in U.S. crude inventories. International benchmark Brent crude was trading 0.4 percent up at $70.97 per barrel by 0357 GMT, having hit a high of $71.01 earlier, its highest since Dec. 2014. U.S. West Texas Intermediate was trading 0.6 percent up at $66.24 a barrel, after rising as high as $66.29 earlier, its highest since Dec. 2014.
Gold prices advanced to their highest since August, 2016, as the U.S. dollar slumped to a 3-year low after U.S. Treasury secretary Steven Mnuchin stated that he welcomed a weaker currency. Spot gold was 0.2 percent up at $1,362.51 per ounce by 0403 GMT, after hitting its highest since Aug. 5, 2016 at $1,364.04. U.S. gold futures were up 0.3 percent at $1,360.60 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.639 percent lower by 0.015 bps, while 5-year yield was 0.019 bps down at 2.423 percent.
The Japanese government bonds edged lower ahead of the Bank of Japan’s (BoJ) January monetary policy meeting minutes and the country’s national consumer price inflation index (CPI) for the month of December, scheduled to be released today by 23:50GMT and 23:30GMT respectively.The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1 basis point to 0.08 percent, the yield on the long-term 30-year note traded tad higher at 0.83 percent and the yield on short-term 2-year steadied at -0.13 percent.
The Australian bonds slumped during early Asian session, tracking a similar movement in the U.S. counterpart after Treasury Secretary Steven Mnuchin volunteered that a weaker dollar would support America’s trade in the global perspective. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 2 basis points to 2.83 percent, the yield on the long-term 30-year note surged nearly 3 basis points to 3.47 percent and the yield on short-term 2-year traded flat at 2.09 percent.
