Market Roundup
- EUR/USD +0.3%, USD/JPY -0.5%, GBP/USD +0.4%, DXY -0.4%,
- DAX -0.2%, Brent +0.1%, Gold +0.3%, Copper -0.1%
- Dollar on the retreat after 11 straight days of gains
- Russian RUB steady having hit strongest levels since mid-2015
- Gold improves as the USD backs away from 11-day bull run
- BoJ Gov Kuroda: Low rates may sow seeds of new financial crisis
- EU's Dombrovskis: Swift deal on Greece needed to avert fresh uncertainty
- Swedish unemployment 7.3 pct in Jan, in line with f/c
- Australia jobless rate dips, masks slump in full-time work
- Swiss takeover commission-J&J offer for Actelion meets legal requirements
Economic Data Ahead
- (0830 ET/1330 GMT) The U.S. Department of Commerce is expected to report that housing starts decreased to 1.222 million units in January from 1.1226 million units in December.
- (0830 ET/1330 GMT) The U.S. building permits are likely to have increased to a 1.23 million-unit pace in January from a 1.21 million-unit pace in December.
- (0830 ET/1330 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 11,000 to a seasonally adjusted 245,000 for the week ended Feb. 11 while continuing claims for the week ended Jan. 27 stood at 2.078 m.
- (0830 ET/1330 GMT) Philadelphia Federal Reserve manufacturing survey is likely to show that business activity decreased to 18.0 in February from 23.6 in January.
- (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending February 10.
- (1100 ET/1600 GMT) The Federal Reserve Bank of New York releases the household debt and credit report for the fourth quarter of 2016.
- (1630 ET/2130 GMT) New Zealand will release its Business PMI index for the month of February. The index stood at 54.5 in the previous month.
- (1615 ET/2145 GMT) The Statistics New Zealand will release its Retail Sales figures for the fourth quarter. The indicator stood at 0.9 percent, while retail sales ex-autos were at 1.1 percent in the previous quarter.
Key Events Ahead
- (1145 ET/1645 GMT) FedTrade operation 15-year Fannie Mae / Freddie Mac (max $600 mn)
FX Beat
DXY: The dollar eased versus is major peers as the U.S. Treasury bond yields declined after Fed Chair Janet Yellen offered no additional insight on the timing of the central bank's next rate hike. The greenback against a basket of currencies traded 0.38 percent lower at 100.72, having hit a high of101.76 in the previous session, it’s strongest since Jan. 12. FxWirePro's Hourly Dollar Strength Index stood at -89.12 (Bearish) by 1100 GMT.
EUR/USD: The euro rose, having recovered from a 5-week trough touched on Wednesday, as a drop in the U.S. treasury yields renewed selling pressure around the greenback. The European currency rallied 0.3 percent to 1.0627, after falling as low as 1.0521 in the previous session, it’s lowest since Jan. 11. FxWirePro's Hourly Euro Strength Index stood at 66.03 (Bullish) by 1000 GMT. On the higher side 1.0659 -1.06710 (21- day EMA and 55- day EMA) will be acting as major near-term resistance and any break above confirms minor trend reversal in the short term. Any break above targets 1.0745/1.0800 level. The short term bearish invalidation is only above 1.08735. The next immediate support is around 1.05800 and any break below will drag it 1.05200/1.04500.
USD/JPY: The dollar tumbled below the 114.00 handle after rising to a 2-1/2 week peak in the previous session on the back of better-than-expected U.S. inflation and retail sales data that backed expectations of an early rate hike by the Federal Reserve. However, declining yields in the U.S. money markets weakened the bid tone around the major. The pair trades 0.47 percent lower at 113.57, having hit a high of 114.95 on Wednesday, it’s highest since Jan 30. FxWirePro's Hourly Yen Strength Index stood at -73.53 (Slightly Bearish) 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 113.04 (daily Tenken-Sen) and any break below 113 will drag it till 112.05/111.48.
GBP/USD: Sterling rose above the 1.2500 handle, retreating from a 1-week low hit in the previous session as the dollar extended overnight reversal move. The greenback weakened as the Fed Chair Janet Yellen sounded slightly cautious during her testimony, prompting investors to trim their bullish dollar bets. Sterling trades 0.5 percent up at 1.2512, having hit a low of 1.2383 on Wednesday, it’s weakest since Feb. 7. FxWirePro's Hourly Sterling Strength Index stood at 21.93 (Neutral) by 1000 GMT. The upside remains capped by 100 –day EMA and any break above will take the pair till 1.26750/1.27060 (Feb 2 high). On the lower side, next immediate support is around 1.2380 and any break below will drag it down till 1.2345 (Feb 7 Low)/1.2300. Against the euro, the pound trades 0.1 percent down at 85.08 pence, having hit a low of 85.24 earlier in the day.
USD/CHF: The Swiss franc rose to a 6-day high, recovering from a 4-week low touched in the previous session, as the dollar tumbled across the board. The major trades 0.38 percent lower at 1.0015, having touched a high of 1.0118 the day before, it’s highest since Jan. 19. FxWirePro's Hourly Swiss Franc Strength Index stood at 71.20 (Bullish) by 1000 GMT. The minor weakness can be seen below 1.0000 (100- day EMA) and any break below will drag the pair till 0.9950/0.99297 (Feb 8 low). On the higher side, 1.01225 will be acting as immediate resistance and any break above this level will take it till 1.01588 (61.8% retracement of 1.03435 and 0.98611)/1.0200.
AUD/USD: The Australian dollar trimmed gains after rising to multi-week highs above the 0.7700 handle following mixed jobs report. Moreover, lack of buying interest in the U.S. dollar, and a pull-back in the U.S. Treasury bond yields limited the downside in the major. The Aussie trades flat 0.7713, having hit a high of 0.7731 earlier in the day, its highest since Nov. 10. FxWirePro's Hourly Aussie Strength Index stood at -15.47 (Neutral) by 1000 GMT. On the lower side, the major support stands at 0.7605 (Feb 7 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 and a break above will take it till 0.77783 (Nov 8th high)/0.7800.
Equities Recap
European shares declined after rising for the past seven sessions, as weaker miners and a fall in British engineering group Cobham following a poor update weighed on market sentiment.
The pan-European STOXX 600 index decreased 0.34 percent to 370.22 points, while the FTSEurofirst 300 index slumped 0.33 percent to 1,460.33 points.
Britain's FTSE 100 trades 0.46 percent down at 7,268.61 points, while mid-cap FTSE 250 fell 0.5 percent to 18,732.53 points.
Germany's DAX tumbled 0.19 percent at 11,771.34 points; France's CAC 40 trades 0.32 percent lower at 4,909.29 points.
Tokyo's Nikkei advanced 0.47 percent to 19,347.53 points, Australia's S&P/ASX 200 index rose 0.10 percent to 5,815.10 points and South Korea's KOSPI fell 0.10 percent to 2,081.84 points.
Shanghai composite index gained 0.5 percent to 3,229.62 points, while CSI300 index rallied 0.6 percent at 3,440.93 points. Hong Kong’s Hang Seng added 0.5 percent at 24,107.70 points.
Commodities Recap
Crude oil prices rose as ongoing supply cuts led by producer cartel OPEC boosted market sentiment, however, rising fuel inventories and crude production in the United States capped the upside. International benchmark Brent crude was trading 0.47 percent higher at $55.89 per barrel by 0950 GMT, having hit a high of $56.85 hit on Friday, its strongest since Feb. 6. U.S. West Texas Intermediate crude rose 0.55 percent at $53.26 a barrel, after rising as high as $54.10 last week, its highest since Feb. 6.
Gold prices rose, having recovered from a 2-week low hit in the previous session as the dollar declined from 1-month highs on profit taking. Spot gold rallied 0.38 percent, to $1,237.54 per ounce at 0955 GMT, having hit its lowest since Feb. 3 at $1,216.58 on Wednesday. U.S. gold futures were up 0.3 percent, to $1,236.2.
Treasuries Recap
The U.S. Treasuries jumped as investors remain cautious ahead of the 30-year auction and expectations of a rise in initial jobless claims, scheduled to be released later in the day. The yield on the benchmark 10-year Treasury plunged 2 basis points to 2.48 percent, the super-long 30-year bond yield also traded nearly 2 basis points lower at 3.07 percent and the yield on short-term 2-year note remained nearly 1-1/2 basis point down at 1.24 percent.
The UK gilts traded modestly higher following expectations of lower retail sales data during the month of January, scheduled to be released on Friday. The yield on the benchmark 10-year gilts, fell 1/2 basis point to 1.29 percent, the super-long 40-year bond yields also slipped nearly 1/2 basis point to 1.84 percent and the yield on the short-term 4-year traded flat at 0.37 percent.
The German government bunds gained as investors covered previous short positions. Also, markets now await to read the European Central Bank’s (ECB) account of a monetary policy meeting, scheduled to be released later in the day. The yield on the benchmark 10-year bond, fell over 1 basis point to 0.36 percent, the long-term 30-year bond yields also plunged 1-1/2 basis points to 1.18 percent while the yield on short-term 3-year bond moved lower by 1/2 basis point to -0.77 percent.
The Japanese government bonds trended slightly lower, as a subdued liquidity-enhancing auction dented investor sentiment, with the market also continuing to feel pressure from the recent retreat by U.S. Treasuries. The benchmark 10-year bond yield, hovered around 0.09 percent, the long-term 30-year bond yields rose over 1 basis point to 0.90 percent and the yield on the short-term 3-year note also traded 1/2 basis point higher at -0.15 percent
The New Zealand government bonds closed modestly higher as investors await to read the country’s fourth-quarter retail sales data, scheduled to be released on Friday. The yield on the benchmark 10-year bond, fell 1 basis point to 3.37 percent at the time of closing, the yield on 7-year note also slid nearly 1 basis point to 2.94 percent and the yield on short-term 2-year note traded 1 basis point lower at 2.25 percent.
The Australian government bonds slumped after reading the better-than-expected January employment report. The detail was mixed, however, with the unemployment rate a touch lower but full-time employment showing renewed weakness. The yield on the benchmark 10-year Treasury note, jumped 1 basis point to 2.81 percent, the yield on 15-year note also rose 1/2 basis point to 3.25 percent and the yield on short-term 2-year moved 1/2 basis point higher to 1.87 percent.
