Market Roundup
- Sterling bid heading into EU summit-UK deal decision.
- USD/JPY plays 113.62-114.33-EUR/JPY 126.53-127.11.
- EUR/USD tight and directionless-1.1123-1.1149.
- EZ Dec C/A E41.4 bln vs revised E30.3 bln.
- Swiss Jan Trade Balance bln vs revised CHF 2.589 bln.
- Sweden Jan Core CPI +1.6% vs 1.3% expected, +0.9% previous.
- EUR/SEK falls to 9.4070 from 9.4700 on the strong price data.
- Riksbank's Jansson- The question is how big inflation volatility will be.
- BoJ Kuroda: Negative rates not sign QQE has reached its limit.
- BoJ Ishida warns of cost of prolonging ultra-easing policy.
- Japan PM Abe - Amid signs of trouble, rules out stimulus spending - Nikkei.
- Sources - PBOC asks banks about need for MLF loans, lower rates.
- Fed's Bullard - Unwise to continue hiking rates amid falling CPI expectations.
- RBA Asst Gov Edey - Too much focus on recent market turmoil not good.
Economic Data Ahead
- (0830/1330) The initial claims for U.S. jobless benefits are expected to have risen 6,000 to a seasonally adjusted 275,000 for the week ended . The continuing claims for the week ended Feb 5 likely rose to 2.250 mln from 2.239 mln.
- (0830/1330) The Philadelphia Federal Reserve is expected to report that its business conditions index improved to a reading of -3.0 percent in February from -3.5 percent in January.
- (0830/1330) The Statistics Canada releases wholesale trade data for December, which likely rose 0.2 percent after gaining 1.8 percent in November.
- (1000 ET/1500 GMT) The Conference Board's Leading Indicator for Jan is likely to remain flat at -0.2 percent.
- (1000 ET/1500 GMT) EIA reports is Natural Gas Storage change for the week ending Feb 12.
- (1100 ET/1600 GMT) EIA reports its Crude Oil Stocks change for the week ending Feb 12.
Key Events Ahead
- (0900 ET/1400 GMT) FHFA's Watt at Bipartisan Policy Center; Washington, DC.
- (1100 ET/1600 GMT) EU summit-UK deal.
- (1530 ET/2030 GMT) The Federal Reserve Bank of San Francisco President John Williams will speak on the economic outlook before a Town Hall Los Angeles event, in Los Angeles. Investors will watch for any signs he is backing away from an earlier view that the economy can withstand as many as five rate hikes this year.
FX Recap
USD: The dollar dropped 0.4 percent to 113.66 yen, having traded around 114.00 yen through the Asian session. The dollar index has made a high of 97.10 and slightly retreated form that level, it jumped till 97.10 and was trading around 96.84.
EUR/USD: The euro was waiting for the ECB minutes of the last meeting, when it signalled it was readying another round of easing measures and U.S. dollar dipped on dovish comments from a top Fed official. It has made a low of 1.11106 yesterday and slightly recovered from that level and was trading around 1.1114. The short term trend is bullish as long as support 1.1050 holds. On the higher side major resistance is around 1.1200 and break above targets 1.1245/1.1280/1.13350. The minor resistance is around 1.1150 and any break below 1.1050 will drag the pair till 1.100/1.0920. The single currency fell a quarter of a percent 126.99 yen.
USD/JPY: The Japanese yen has retreated after making a high of 114.50 and was trading around 113.95. The short term trend is slightly weak as long as resistance 115.05 (55 day 4 H EMA) holds. On the lower side major support is around 113 and break below targets 111.80/110. The minor resistance is around 115 and break above targets 115.60/117.
GBP/USD: The Sterling rose from a 2-week low against the dollar and recovered ground against the euro on Thursday, helped by gains in European stock markets, although worries about Britain's future in the European Union is likely to limit any advance. It was up 0.2 percent at $1.4315 , up from Wednesday's $1.4235. The euro was flat at 77.85 pence with corporate demand lined up around 77.75 pence. The pair has broken major resistance 1.4360 and jumped till 1.437720, the short term trend is slightly bullish as long as support 1.4240 holds. On the lower side the major support is around 1.4240 and break below targets 1.4180/1.4140. Any break above 1.4360 will take it till 1.44400/1.4450 level.
USD/CHF: The pair broken major resistance 0.9900 and jumped till 0.99416, it was trading around 0.99314. The short term trend is slightly bullish as long as support 0.9850 holds. On the lower side major support is around 0.9850, any break below 0.9760 will drag it down till 0.9800/0.9770. The minor support is around 0.9900, on the higher side minor resistance is around 0.9950 and break above will take the pair till 1.00/1.00350.
AUD/USD: The Australian dollar was the biggest loser on major currency markets as jobs data data and revived concerns about global growth drove stock markets lower and the yen higher against the dollar. Initially it dipped half a U.S. cent but expectations that the Reserve Bank of Australia would be pushed to cut interest rates drove the Aussie 0.7 percent lower in early trade in Europe to $0.7158. It has broken recent high 0.7181 and jumped till 0.7186 yesterday. The short term trend is slightly bullish as long as support 0.7075 holds. On the higher side major resistance is around 0.7170 and break above targets 0.7240/0.7300. The major support is around 0.7075 and break below will drag the pair till 0.702/0.6970. The Aussie stood tall against the euro, yen and sterling having risen more than one percent against each unit.
NZD/USD: The New Zealand dollar rose to $0.6660, benefiting from improving oil prices. A soft reading on producer prices pared some of the kiwi's gains as it added to pressure on the central bank to cut interest rates further. In the near-term, resistance level will remain at the 200-day moving average of 0.6680, while support will likely be encountered toward 0.6500.
Equities Recap
The European shares were trading higher on Thursday but UK's FTSE slipped as investors are nervous ahead of crunch talks between EU leaders aimed at keeping Britain in the 28-member bloc.
The Europe's FTSEurofirst 300 opened up 0.1 pct, but turned negative, down 0.2 pct by 0810 GMT, London's FTSE fell 0.7 percent, Germany's DAX climbed 0.5 pct and France's CAC gained 0.5 pct.
Tokyo's Nikkei closed up 2.28 percent at16,196.80, MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.9 percent. China's CSI300 Index closed down 0.3 pct at 3,053.70 points and Shanghai Composite Index fell 0.2 pct at 2,862.89 points. Australian shares climbed 2.2 percent and South Korea's KOSPI added 1.1 percent, while HK's Hang Seng Index ended up 2.3 pct at 19,363.08 points.
Commodities Recap
Gold dropped as stocks rebounded but managed to hold above $1,200 an ounce on bets the Federal Reserve could slow the pace of U.S. interest rate hikes. Spot gold eased 0.2 percent to $1,206.60 an ounce by 0718 GMT. It gained 0.7 percent on Wednesday, snapping a 3-day losing streak.
Oil climbed towards $35 a barrel after Iran supported plans by Russia and Saudi Arabia to freeze output and an industry report showed a surprise drop in U.S. inventories. Brent rose 38 cents to $34.88 a barrel by 0959 GMT, having closed 7.2 percent higher in the previous session. U.S. crude rose 69 cents to $31.35.
Treasuries Recap
U.S. 10-year Treasuries yield stood at 1.809 percent vs U.S. close of 1.817 percent on Wednesday.
The Japanese government bond prices firmed and driven by a drop in short-term interest rates following the start of the Bank of Japan's negative interest rates as well as demand from foreign investors. The yield on the benchmark 10-year JGBs fell 3.0 basis points to 0.015 percent, edging back near zero, with bonds of up to nine-and-a-half years trading at negative yields. The 2-year bond yield dropped 4.0 basis points to minus 0.190 percent. The 10-year JGB futures price rose 0.24 point to 151.38.
The UK Gilts opened 31 ticks higher than the settlement of 121.21 as core markets drew support from the FOMC minutes which watered down their recent hawkishness. The 10-year cash yields were operating in a 1.441% to 1.458% range. The yesterday's high on 10-year cash yields at 1.504% will act as resistance with support coming from recent lows around the 1.42% region.
The German 10-year bond yields dropped 2 basis points to 0.25 percent, with analysts saying a dovish tone in the minutes of the U.S. Fed's last meeting were supporting the euro zone's core bond markets. Yields on Portugal's 10-year bond fell 9 basis points to 3.33 percent, down more than one percentage point from last week's peak. Spanish and Italian 10-year bonds were both down about 4 basis points each.
Australian government bond futures dropped, with the 3-year bond contract off 1 tick at 98.170. The 10-year contract dropped 4.5 ticks to 97.4650 in a bearish steepening of the curve. The 20-year contract fell 7.5 ticks to 96.9200. New Zealand government bonds eased sending yields 4 basis points higher at the long end.
