Market Roundup
- USD/JPY free-fall to 110.99 before lifting to high 111s.
- USD/CHF hits 4-mth low of 0.9661-Safety flows cited.
- European banks shares slump-Deutsche Bank was down 8% at worst.
- DAX off 2.5%, Brent off 1.0%, Gold up 2.7%, DXY off 0.25%.
- Riksbank cuts 15-bp to -0.5%-Upper end of market expectations.
- EUR/SEK jumps to 9.6145 then fall to 9.50.
- Riksbank's Ingves- Negative rates working well.
- SNB's Jordan- Tying CHF to basket makes no sense.
- Swiss Jan CPI y/y -1.3% vs -1.3% previous, -1.3% expected.
- UK Rics Jan House Price Balance +49 vs Downwardly Revised Dec +49, +52 expected.
- UK Rics-House demand up due to buy-to-let, Investors seek to avoid Apr tax rise.
- Moody's Comfortable With NZ AAA Rating - Moody's Senior Vice President.
- UK CBI Cuts 2016 GDP F.cast to +2.3% (Nov: 2016 2.6%).
Economic Data Ahead
- (0830 ET/1330 GMT) The weekly U.S. initial jobless claims likely dropped to a seasonally adjusted 281,000 for the week ended February 5 against 285,000 in the prior week. While the continuing jobless claims for the week ending January 29 probably edged down to 2.250 mln from 2.255 mln.
- (0830 ET/1330 GMT) The Canada's new home price index likely rose 0.2 percent in December, unchanged from November.
- (0900 ET/1400 GMT) The Mexico's National Statistics Institute will release December industrial production numbers, which likely rose 0.2 pct after shrinking 0.5 pct in November.
- (1600 ET/2100 GMT) Chile's central bank is set to decide the benchmark interest rate. The bank has guided towards a gradual tightening as it looks to fight above target inflation, but analysts expect a hold is likely in February given recent weak economicdata.
Key Events Ahead
- (1000 ET/1500 GMT) The Federal Reserve chairwoman Janet Yellen is set to speak again today and is expected to reiterate the message from yesterday, that the Bank is monitoring the tightening of financial conditions, which may have a negative impact on the outlook for growth in the US economy and lead to a postponement of the next increase in the federal funds rate.
- (1030 ET/1530 GMT) EIA reports its Natural Gas Storage Change for the week ending Feb 5.
FX Recap
USD: The absence of Tokyo for a holiday could not stop the dollar from hitting a 15-month low on the yen, it was down through 111.36 yen to reach depths not delved since October 2014 at 110.99. The dollar index has broken major support 95.60 and declined till 95.37. It was trading around 95.58.
EUR/USD: The euro drove to three-month high of $1.1355 and was trading around 1.13190 at the time of writing. The short term trend is bullish as long as support 1.1250 holds. On the lower side major support is around 1.1250 and break below targets 1.1180/1.1100/1.1050 level. The pair's further bullishness can be seen only above 1.1350 and break above targets 1.1385/1.1430.
USD/JPY: The yen rose 2 percent to its strongest in 15 months against the dollar in another wave of global capital flows into the traditional security of Japan, raising expectations of official intervention to cool the currency's rise. By 0910 GMT, the dollar was 1.8 percent lower at 111.37 yen, having briefly reached 110.99 yen. The short term trend is slightly weak as long as resistance 115 holds. On the lower side major support is around 110.80 and break below targets 109.80/109. The minor resistance is around 113.55 and break above targets 115/116. The euro weakened against the yen, sliding to a 2-1/2 year low of 126.06 yen.
GBP/USD: The Sterling fell as much as 0.7 percent, to $1.4400, after making a high of 1.4578. The short term is weak as long as resistance 1.4580 holds. On the lower side major support is around 1.4450 and any break below targets 1.4400/1. weakness can be seen below 1.4320. Any break above major resistance 1.4580 will take the pair till 1.4650/1.4680 level. The Sterling dropped to a 13-month low against the euro and sank almost 3 percent against the yen to its weakest since 2013 on Thursday as investors worried about global growth and preferred safe havens. The euro rose more than 1 percent against sterling to trade at 78.73 pence, its strongest against the pound since early January 2015. Sterling also dropped below 160 yen for the first time since November 2013, down almost 3 percent and leaving it on track for its biggest one-day fall in five years.
USD/CHF: The pair is trading around 0.9700, the short term trend is slightly weak as long as resistance 0.9835 holds. On the lower side major support is around 0.9650. Any break below 0.9650 will drag it down till 0.9630/0.9550. On the higher side minor resistance is around 0.9725 and break above 0.9725 will take the pair till 0.9750/0.9800.
USD/SEK: The SEK declined today morning after Risk bank cuts interest rates by 15bps to minus 0.5%. The minor supports are seen around 8.4208, 8.4010 and 8.3856 levels. The major resistance is at 8.50 and break above targets 8.54/8.59. The Swedish crown fell 1.5 percent against the euro, dropping to its lowest since late August, while bond yields fell to record lows after Sweden's central bank cut rates deeper into negative territory and said it was ready to do more. It fell to 9.6145 crowns per euro, down 1.5 percent on the day.
AUD/USD: The Australian dollar rose to their highest in nearly a week as the greenback stayed on the defensive after the Fed Chair Yellen gave investors no reason to expect U.S. rates will be lifted any time soon. It climbed as far as $0.7153 and was last 0.4 percent higher at $0.7126. It has bounced off this week's trough of $0.6973 and was holding up surprisingly well despite the current risk averse environment. The sort term trend is slightly bullish as long as support 0.6920 holds. On the higher side major resistance is around 0.7170 and break above targets 0.7240/0.7300. The minor support is around 0.6980 and break below will drag the pair till 0.6920.
NZD/USD: The New Zealand dollar rose 0.5 percent to $0.6717, having been as high as $0.6736. It has also pulled well away from this week's low of $0.6564.
Equities Recap
The global markets were volatile as investors preferred the safety of Japanese yen, gold and top-rated bonds on bets that Federal Reserve could find it difficult to hike interest rates this year.
Dumping U.S. dollars on bets the Fed could be done with raising interest rates.Europe's FTSEurofirst 300
falls to 1.5 pct, Britain's FTSE 100 was down 2.3 percent, Germany's DAX fell 2.4 percent, France's CAC 40 skid 2.8 percent.
MSCI's broadest index of Asia-Pacific shares outside Japan shed 1.4 percent, and South Korea resumed with a 2.9 percent drop.Australia's S&P/ASX 200 Index closed up 0.80 pct at 4,813.80 points.
Commodities Recap
Oil priced dropped on Thursday on record U.S. crude inventories at the Cushing delivery point, worries about the demand outlook, and Goldman Sachs's low price estimates for H2 2016. Brent crude futures fell 31 cents at $30.53 per barrel at 0850 GMT. U.S. West Texas Intermediate crude futures were at $26.76 per barrel, down 69 cents.
Gold rose to its highest in 8-1/2 months as investors bet that the U.S. Fed could find it difficult to raise interest rates this year. Spot gold climbed to an intra-day high of $1,213 an ounce, its highest since May 22, before paring gains to trade up 0.9 percent at $1,207.60 by 0730 GMT. U.S. gold rose to an intra-day high of $1,215.30 an ounce, a near-nine-month peak.
Treasuries Recap
The yields on 10-year U.S. Treasuries fell to 1.6330 percent, from a top of 1.773, almost exactly matching the lowest close from May 2013.
Germany's 10-year bond yield dropped 7 basis points in early European trading to 0.17 percent, the lowest level since April 2015 and headed towards a record low of 0.05 percent. French, Dutch, Austrian and Finnish equivalents also fell to their lowest levels in over nine months. Swedish 2-year bond yields dropped to a record low of -0.633 percent while the 10-year yield fell to its lowest since April 2015. Portuguese 10-year govt bond yields hit new 16-month high of 3.73 pct.
Japan bond markets were closed on national foundation day.
Talk of resistance on UK March Gilts at the psychological 122.25 proved short lived as the market opened a whopping 60 ticks higher than the settlement of 121.77. Buyers extended gains in these thin markets with China and Tokyo out, to break the next psychological high of 122.50 ahead of 122.75 perhaps.
Australian government bond futures were firmer with the 3-year bond contract up 2 ticks at 98.290. The 10-year contract was edged up 3 ticks to 97.6300. While the safety-seeking supported New Zealand government bonds, pushing yields some 2 basis points lower across the curve.
