Market Roundup
- EUR/USD -0.2%, USD/JPY -0.4%, GBP/USD +0.2%, DXY +0.2%,
- DAX -0.4%, CAC -0.8%, Brent -0.1%, Gold +0.2%, Copper -0.1%
- GBP/USD sharply lower after retail sales. 1.2502-1.2388 in Europe
- EZ Dec Current Account S/A 31.0bln vs previous 36.4bln revised
- EZ Dec Net Investment flow 121.9bln vs previous -13.8bln revised
- Great Britain Jan Retail sales -0.3% m/m, +1.5% y/y vs previous -2.1%/+4.1% revised0.7%/3.4% forecast
- ONS - In 3mths to Jan, retail sales saw first sign of fall in trend since Dec 2013
- Japan PM Abe: Monetary policy up to BOJ
- Abe: Hope progress to be steadily made through BOJ bold monetary easing
- Swedish Jan y/y Core CPI 1.6% and headline 1.4%
Economic Data Preview
- (0830 ET/1330 GMT) The Statistics Canada will report foreign portfolio investment in domestic stocks for the month of December.
- (0830 ET/1330 GMT) The Statistics Canada will release investment in foreign securities figures for the month of December.
- (1000 ET/1500 GMT) The Conference Board is likely to report that U.S. leading indicator rose 0.5 percent in the month of January after posting similar gains in December.
- (1300 ET/1800 GMT) Baker Hughes reports U.S. Oil Rig Count.
Key Events Ahead
- N/A Federal Reserve Bank of Chicago Executive Vice President and Director of Research Daniel Sullivan will speak on the economic outlook before a Central Banking Series event hosted by the Global Interdependence Center in Sarasota, Florida.
- (0945 ET/1445 GMT) FedTrade operation 30-year Ginnie Mae (max $1.150 bn)
FX Beat
DXY: The dollar touched a fresh 1-week low versus the Japanese yen following a drop in the U.S. Treasury yields. The greenback against a basket of currencies traded 0.2 percent higher at 100.70, 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 0.63 (Neutral) by 1100 GMT.
EUR/USD: The euro declined, reversing some of its previous session gains as the dollar attempted a minor recovery on the back of growing expectations of a near-term rise in the U.S. interest rates. Market seem to have ignored upbeat Eurozone construction output and current account data for the month of December, as headlines from Greece and developments regarding the upcoming elections in France weighed on market sentiment. The European currency traded 0.2 percent down at 1.0649, having hit a high of 1.0679 on Thursday, it’s highest since Feb. 9. FxWirePro's Hourly Euro Strength Index stood at 26.92 (Neutral) by 1000 GMT. On the higher side 1.0700-1.07210 (21- day EMA and 61.8% retracement will be acting as major near-term resistance and any break above targets 1.0745/1.0800 level. The next immediate support is around 1.05800 and any break below will drag it the 1.05200/1.04500.
USD/JPY: The dollar declined to a fresh 1-week low below the 113.00 handle as renewed fall in the U.S. Treasury bond yields weakened the bid tone around the major. Moreover, weaker sentiment surrounding European equity markets triggered a fresh bout of risk aversion, which boosted the Japanese Yen's safe-haven demand. The pair trades 0.32 percent lower at 112.83, having hit a low of 112.70 earlier in the day, it’s lowest since Feb 9. FxWirePro's Hourly Yen Strength Index stood at 177.07 (Highly Bullish) by 1000 GMT. The major resistance is around 115 and any break above will take the pair till 115.35/116. On the lower side, minor support is around 112 and any break below 112 will drag it till 111.66.
GBP/USD: Sterling tumbled below the 1.2400 handle after data released earlier indicated Britons unexpectedly cut back on their spending in January as the government got ready to launch talks on leaving the European Union. Retail sales volumes fell by 0.3 percent in January, much weaker than forecasts for a 0.9 percent increase. Sterling trades 0.65 percent down at 1.2406, hovering toward a low of 1.2383 hit on Wednesday, its weakest since Feb. 7. FxWirePro's Hourly Sterling Strength Index stood at -164.55 (Highly Bearish) by 1000 GMT. The upside is capped by 100 –day EMA and any break above will take the pair till 1.26750/1.27060 (Feb 2nd high). On the lower side, next immediate support is around 1.2380 and any break below will drag it down till 1.2345 (Feb 7th low)/1.2300. Against the euro, the pound trades 0.4 percent down at 85.80 pence, having hit a 10-day low of 85.91 earlier in the session.
USD/CHF: The Swiss franc declined against the dollar, as the greenback attempted a minor recovery on the back of growing expectations of Fed interest rate hike. The major trades 0.24 percent up at 0.9994, having touched a low of 0.9963 earlier in the day, it’s lowest since Fed. 9. FxWirePro's Hourly Swiss Franc Strength Index stood at 118.08 (Highly Bullish) by 1000 GMT. On the higher side, break above 1.01180 will take the pair till 1.0342 in the short term. The major intraday resistance stands at 1.0015 (200- H MA) and any break above will take it till 1.00450/1.0070. Any violation below 0.99297 will drag the pair down till 0.98600. The declined from 1.03436 has got completed at 0.98600, so further bearishness is only below 0.98600.
AUD/USD: The Australian dollar declined below the 0.7700 handle, drifting further away from a 3-month high as concerns about policy under President Donald Trump's administration triggered a fresh bout of risk aversion in the market. The Aussie trades 0.4 percent lower 0.7665, having hit a high of 0.7731 in the previous session, its highest since Nov. 10. FxWirePro's Hourly Aussie Strength Index stood at -122.01 (Highly Bearish) by 1000 GMT. On the lower side, the major support stands at 0.7605 (Feb 7th low) and any break below will drag the pair down till 0.7585 (21- day EMA)/0.7500. The major resistance is around 0.77497 (161.8% fibo) and a break above will take it till 0.77783 (Nov 8th high)/0.7800.
Equities Recap
European shares declined, as a pull-back in banking and mining stocks offset gains in the insurance and pharma stocks, while investors waited for insights on U.S. President Donald Trump's policies on tax and trade.
The MSCI All-Country World index headed for its fourth straight week of gains, while MSCI's index of Asia-Pacific shares outside Japan pulled back 0.2 percent.
The pan-European STOXX 600 index decreased 0.54 percent to 368.10 points, while the FTSEurofirst 300 index slumped 0.63 percent to 1,450.49 points.
Britain's FTSE 100 trades 0.03 percent down at 7,275.88 points, while mid-cap FTSE 250 fell 0.19 percent to 18,669.50 points.
Germany's DAX tumbled 0.37 percent at 11,713.41 points; France's CAC 40 trades 0.78 percent lower at 4,861.33 points.
Tokyo's Nikkei eased 0.58 percent to 19,234.62 points, Australia's S&P/ASX 200 index fell 0.21 percent to 5,804.10 points and South Korea's KOSPI fell 0.06 percent to 2,080.58 points.
Shanghai composite index declined 0.9 percent to 3,202.08 points, while CSI300 index dropped 0.6 percent at 3,421.44 points. Hong Kong’s Hang Seng shed 0.3 percent at 24,033.74 points.
Commodities Recap
Crude oil prices declined, reversing most of its previous session gains as growing fuel inventories and crude production in the United States weighed on market sentiment. International benchmark Brent crude was trading 0.4 percent down at $55.52 per barrel by 0954 GMT, having hit a low of $55.11 hit in the previous session, its weakest since Feb. 8. U.S. West Texas Intermediate crude fell 0.3 percent at $53.26 a barrel, after falling as low as $52.66 on Thursday, its lowest since Feb. 9.
Gold prices rose, extending gains for the fourth consecutive session and was on track for the third week of gains as the dollar hovered near 1-week lows amid political uncertainties in the United States and Europe. Spot gold was trading 0.1 percent higher at $1,240.51 per ounce at 0956 GMT, having hit its highest since Feb. 9 at $1,242.18 on Thursday. U.S. gold futures were down 0.2 percent at $1,238.50.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.4236 percent lower by 0.026 bps, while 5-year yield was down by 0.024 bps at 1.9165 percent.
Euro zone bond yields were slightly lower, with Europe's benchmark and German Bunds yields down 3 basis points at 0.32 percent. Italy's benchmark government bond yield was set for its first weekly fall for over a month as investors pushed back their expectations for snap elections. Italian 10-year bond yields edged up 2 basis points to 2.16 percent, giving up some of the 16 bps fall seen Thursday that pushed yields to a near 3-week low of 2.13 percent.
British 10-year government bond yields fell to a 3-month low on Friday, with prices buoyed by weak retail sales data. The 10-year gilt yields sank 6 basis points on the day to fall as low as 1.202 percent, a level last seen on Nov. 9. The 5-year yields dropped 4 basis points to 0.416 percent, the lowest since Oct. 13.
Japanese government bonds edged up, supported by rising prices for U.S. bonds, while 40-year yield hit 1-year high as the results of the BoJ's buying underscored lingering selling pressure in the longer-end. The price of 10-year JGB futures rose 0.06 point to 149.91, while the 40-year yield rose to 1.075 percent, its highest level since late February last year. The 30-year yield rose 0.5 basis point to 0.910 percent, just below its near 1-year high of 0.915 percent hit last week.
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.
