Market Roundup
- EUR/USD -0.4%, USD/JPY -0.6%, GBP/USD -0.2%, DXY +0.3%,DAX +0.1%, CAC +0.1%, Brent -0.6%, Gold +0.1%, Copper -1.2%
- Euro hit by nerves over French election
- Sterling slips on weak UK business investment data
- EUR/GBP techs-Closed under 200-DMA first time since Dec 2015
- Goldman says global crude stocks likely to keep falling
- Eurozone Jan Inflation final -0.8% m/m, 1.8% y/y vs previous 0.5%/1.8%. -0.8%/1.8% forecast
- Great Britain Q4 GDP 2nd release +0.7% q/q. +2.0% y/y vs previous 0.6%/2.2%. 0.6%/2.2% forecast
- Great Britain Q4 Business invest prelim -1.0% q/q, -0.9% y/y vs previous 0.4%/-2.2%
- Germany Feb IFO expectations 104.0 vs previous 103.2. 103.0 forecast
- Switzerland Feb Investor sentiment 19.4 vs previous 18.5
Economic Data Ahead
- (0830 ET/1330 GMT) Statistics Canada is expected to report that retail sales remained changed in December after rising 0.2 percent in November. While excluding autos, retail sales are likely to have risen 0.6 percent, after advancing 0.1 percent in the previous month.
- (0900 ET/1400 GMT) The Conference Board releases China's Leading Economic Index for the month of January. The index stood at 0.8 percent in the previous month.
- (1000 ET/1500 GMT) National Association of Realtors is likely to report that U.S. existing home sales rose 1.1 percent to an annual rate of 554,000 million units in January after dropping 2.8 percent to 549,000 million units in December.
- (1630 ET/2130 GMT) API reports its weekly crude oil stock.
- (1850 ET/2350 GMT) Japan's Ministry of Finance will report foreign bond investment for the week ending February 17.
- (1850 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic stocks for the week ending February 17.
Key Events Ahead
- (0945 ET/1445 GMT) FedTrade operation 15-yr Fannie Mae/Freddie Mac (max $600 mn)
- (1145 ET/1645 GMT) FedTrade operation 30-yr Ginnie Mae (max $1.150 bn)
- (1300 ET/1800 GMT) Federal Reserve Board Governor Jerome Powell speaks on "The Economic Outlook and Monetary Policy" before a Forecasters Club of New York luncheon, in New York.
- (1400 ET/1900 GMT) The Federal Open Market Committee issues minutes of its January 31 - February 1 meeting
FX Beat
DXY: The dollar rallied versus its major peers, expect the yen as growing expectations for a rise in U.S. interest rates boosted markets sentiment. The greenback against a basket of currencies traded 0.2 percent up at 101.62, having hit a high of 101.69 earlier, it’s strongest since Feb. 15. FxWirePro's Hourly Dollar Strength Index stood at 54.22 (Bullish) by 1000 GMT.
EUR/USD: The euro tumbled below the 1.0500 handle for the first time in six weeks as concerns over France's presidential election campaign, combined with growing expectations for a rise in U.S. interest rates weighed on the major. Investors seem to have ignored upbeat Eurozone consumer price index figures, which rose 1.8 percent y/y and 0.9 percent m/m in January, in line with estimates and previous. The European currency traded 0.28 percent down at 1.0498, having hit a low of 1.0493 earlier, it’s lowest since Jan. 11. FxWirePro's Hourly Euro Strength Index stood at -68.92 (Bearish) by 1000 GMT. On the higher side, next immediate resistance is around 1.05560 high made today and any break above will take the pair till 1.05800/1.0617 (10- day MA)/1.06790 (21- day MA). The break below 1.05200 confirms major trend reversal, a decline till 1.04530 (Jan 11 low)/1.03450 (Jan 13 low) is possible.
USD/JPY: The dollar eased after rising for two straight sessions, as investors readjusted their positions ahead of the FOMC meeting minutes. The major failed to benefit from the ongoing risk-on market sentiment as Cleveland Fed President Mester’s cautious comments on the rate hike outlook continued to hurt market sentiment. The pair trades 0.61 percent lower at 112.98, having hit low of 112.96 earlier in the day. FxWirePro's Hourly Yen Strength Index stood at 157.29 (Highly Bullish) by 1000 GMT. The minor resistance is around 113.80 and any break above will take the pair till 114.30 (61.8% retracement of 118.61 and 111.59)/114.95 (Feb 15th high). On the lower side, minor support is around 112 and any break below 112 will drag it till 111.66.
GBP/USD: Sterling eased from an early 5-day high after data showed UK business investment fell in the fourth quarter of 2016. The economy's Q4 GDP second reading came in at 0.7 percent versus 0.6 percent expectations, while preliminary business investment slumped 1.0 percent, against previous 0.4 percent. Sterling trades flat at 1.2454, having hit a high of 1.2507 earlier in the day, its strongest since Feb. 17. FxWirePro's Hourly Sterling Strength Index stood at -34.05 (Neutral) by 1000 GMT. On the lower side, any violation below 1.2400 will drag the pair till 1.234500 (50% retracement of 1.19860 and 1.27060). The minor trend reversal can happen only above that 1.2580 level and any break above will take the pair till 1.2705 (Feb 2 high)/1.27750 (Dec 6 high). Against the euro, the pound trades 0.1 percent down at 84.46 pence, having hit an early 2-month high of 84.02.
USD/CHF: The Swiss franc declined to a 5-week low as the greenback rallied ahead of Federal Reserve minutes that could provide clues on the U.S. monetary policy. The major trades 0.27 percent up at 1.0125, having touched a high of 1.0135 earlier, it’s highest since Jan 16. FxWirePro's Hourly Swiss Franc Strength Index stood at -68.07 (Bearish) by 1000 GMT. Any break above 1.01180 confirms minor bullishness, a jump till 1.02480 is likely. The declined from 1.03436 has got completed at 0.98600, so further bearishness is only below 0.98600. On the lower side, major support is around 1.00380 and any break below targets 0.9992 (daily Kijun- Sen)/0.9960 (Feb 17th low)/0.9927 (Feb 8th low).
AUD/USD: The Australian dollar trimmed gains after rising above the 0.7700 handle, as the greenback advanced largely on the back of increased expectations of a March Fed rate hike and Trump’s tax cut talks. Moreover, an unimpressive release of the Australian construction work done and wage price index data continued to weaken the bid tone around the major. The Aussie trades 0.1 percent up at 0.7679, having hit an early high of 0.7709, its highest since Feb 17. FxWirePro's Hourly Aussie Strength Index stood at 24.69 (Neutral) by 1000 GMT. On the lower side, the major support stands at 0.7620 (21- day EMA) and any break below will drag the pair till 0.7540 (55- day EMA)/0.7515/0.74450 (Jan 13th low). 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 rallied to a fresh 14-month high, led higher by earnings updates from companies, while the dollar rose ahead of Federal Reserve minutes that could provide clues on the timing of the next U.S. interest rate hike.
The pan-European STOXX 600 index increased 0.16 percent to 373.99 points, while the FTSEurofirst 300 index rallied 0.2 percent to 1,474.62 points.
Britain's FTSE 100 trades 0.3 percent up at 7,298.37 points, while mid-cap FTSE 250 shed 0.17 percent to 18,739.97 points.
Germany's DAX advanced 0.22 percent at 11,994.17 points; France's CAC 40 trades 0.4 percent higher at 4,908.59 points.
Tokyo's Nikkei fell 0.01 percent to 19,379.87 points, Australia's S&P/ASX 200 index rose 0.15 percent to 5,799.80 points and South Korea's KOSPI gained 0.18 percent to 2,106.61 points.
Shanghai composite index rallied 0.2 percent to 3,261.22 points, while CSI300 index jumped 0.2 percent to 3,489.76 points. Hong Kong’s Hang Seng added 1.0 percent to 24,201.96 points.
Commodities Recap
Crude oil prices declined on profit-taking after rallying to multi-week highs in the previous session following OPEC's optimistic signal over its deal with other producers to curb output. International benchmark Brent crude was trading 0.5 percent down at $56.31 per barrel by 0955 GMT, having hit a peak of $57.27 the prior day, its strongest since Feb. 2. U.S. West Texas Intermediate crude fell 0.3 percent at $54.06 a barrel, after rising as high as $55.08 on Tuesday, its highest since Jan. 3.
Gold prices edged up, retreating from a 6-day low hit in the previous session, as the greenback stood tall ahead of the U.S. Federal Reserve's latest meeting minutes. Spot gold added 0.1 percent to $1,236.86 per ounce by 0958 GMT, having dropped as much as 1 percent to touch a near 1-week low of $1,225.93 on Tuesday. U.S. gold futures fell 0.4 percent to $1,234.60.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.4147 percent lower by 0.014 bps, while 5-year yield was down by 0.011 bps at 1.9065 percent.
The gap between short-dated German and U.S. government bond yields stood at its widest in nearly 17 years. German two-year yields dropped to a record low of minus 0.88 percent. Spanish, Italian and Portuguese bond yields all edged up around 3 basis points to 1.70 percent, 2.25 percent, and 4.07 percent, respectively.
The Japanese government bonds firmed after the Bank of Japan made purchase offers under its JGB buying operations that were in line with amounts of previous operations. The 2-year JGB yield fell 2.5 basis points to -0.270 percent, its lowest level since November. The benchmark 10-year JGB yield inched down 0.5 bp to 0.085 percent, while 10-year JGB futures were up 0.21 point at 150.17. Superlong JGBs gained, with the 20-year yield falling 1.5 bp to 0.690 percent and the 30-year JGB yield also shedding 1.5 bp to 0.900 percent.
The Australian government bond futures were also softer, with the 3-year bond contract down 2 ticks at 97.930. The 10-year contract also shed 2 ticks at 97.1500, while the 20-year contract eased 2.5 ticks to 96.5300. The New Zealand government bonds eased, sending yields 3.5 basis points higher at the long end of the curve.
