Market Roundup
- Italy Dec retail sales nsa yy decrease to -0.1 % vs previous 1.4 %
- Italy Dec retail sales sa mm decrease to -0.3 % vs previous 0.9 % (revised from 1.1 %)
- Italy Dec retail sales sa mm decrease to -0.1 % vs previous 1.1 %
- Italy Dec retail sales nsa yy decrease to -0.3 % vs previous 1.4 %
- Germany's conservatives and social democrats have agreed coalition government deal - Spiegel Online
- German conservatives and SPD agree to stop endless renewal of fixed-term employment contracts- negotiating source
- Merkel's conservatives and Germany's SPD agree that fixed-term contracts without justification should legally be limited to 18 months from 24 months currently- negotiating source
Economic Data Ahead
- (0830 ET/1330 GMT) The Statistics Canada is likely to report that building permits rose 2.0 percent in December, compared with a 7.7 percent drop in November.
- (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending February 2.
- (1500 ET/2000 GMT) The U.S. Federal Reserve is likely to report that consumer credit declined to $20.0 billion in December from $27.95 billion the month before.
- (1500 ET/2000 GMT) The Reserve Bank of New Zealand will announce its interest rate decision and release monetary policy statement.
- (1850 ET/2350 GMT) Japan's Ministry of Finance will report foreign bond investment for the week ending February 2.
- (1850 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic stocks for the week ending February 2.
- (1850 ET/2350 GMT) Japan's Ministry of Finance is likely to report that Current Account (N.S.A) surplus narrowed to 1,017.5 billion yen in December from 1,347.5 billion yen in November.
- (1850 ET/2350 GMT) Japan's Customs Office will release Trade Balance (BOP Basis) figures for the month of December. The economy posted a trade surplus of 181.0 billion yen in the earlier month.
Key Events Ahead
- (0830 ET/1330 GMT) Federal Reserve Bank of New York President William Dudley participates in panel before event, "Banking Culture: Still Room for Improvement?" organized by the European American Chamber of Commerce and Thomson Reuters in New York.
- (1115 ET/1615 GMT) Federal Reserve Bank of Chicago President Charles Evans speaks on current economic conditions and monetary policy before the Iowa Bankers Association Bank Management Conference in Des Moines, Iowa.
- (1600 ET/2100 GMT) The Reserve Bank of New Zealand Governor gives a press conference.
- (1730 ET/2230 GMT) Federal Reserve Bank of San Francisco President John Williams speaks on the economy before a community leaders luncheon in Honolulu, Hawaii.
FX Beat
DXY: The dollar index rose for the fourth straight session, as investors awaited a host of FOMC members’ speeches for fresh clues on the strength of the economy. The greenback against a basket of currencies traded 0.2 percent up at 89.87, having touched a high of 90.03 the day before, its highest since Jan. 24. FxWirePro's Hourly Dollar Strength Index stood at 141.46 (Slightly Bullish) by 1000 GMT.
EUR/USD: The euro eased, hovering towards a 2-week low hit in the previous session despite Germany's Conservatives and Social Democrats agreeing on a coalition government deal. The European currency traded 0.3 percent down at 1.2347, having touched a low of 1.2314 the day before, its lowest since Jan. 30. FxWirePro's Hourly Euro Strength Index stood at -80.56 (Slightly Bearish) by 1000 GMT. Immediate resistance is located at 1.2424 (5-DMA), a break above targets 1.2500. On the downside, support is seen at 1.2307 (38.2% retracement of 1.2264 and 1.2537), a break below could drag it lower 1.2252 (23.6% retracement).
USD/JPY: The dollar declined, reversing almost all of its previous session gains as the recovery in share markets lost steam and dampened investor risk appetite. The major was trading 0.5 percent down at 109.03, having hit a high of 110.48 on Friday, its highest since Jan. 23. FxWirePro's Hourly Yen Strength Index stood at 113.18 (Highly Bullish) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the Fed William and Evan's speeches for further momentum. Immediate resistance is located at 110.18 (21-DMA), a break above targets 110.74. On the downside, support is seen at 108.59, a break below could take it lower 108.09.
GBP/USD: Sterling extended losses for the fourth straight session, on worries that the UK banks will lose their automatic access to the single market after Britain leaves the EU in March 2019. Moreover, downbeat Halifax house prices weighed heavily on the British pound. The major traded 0.4 percent down at 1.3892, having hit a low of 1.3836 on Tuesday, it’s lowest since Jan 18. FxWirePro's Hourly Sterling Strength Index stood at -131.61 (Highly Bearish) by 1000 GMT. Immediate resistance is located at 1.4027, a break above could take it near 1.4122 (10-DMA). On the downside, support is seen at 1.3836, a break below targets 1.3800. Against the euro, the pound was trading 0.3 percent down at 88.89 pence, having hit a low of 89.10 pence on Tuesday, it’s lowest since Jan. 17.
USD/CHF: The Swiss franc slumped to an over 1-week low as the greenback steadied against a basket of currencies. The major trades 0.5 percent up at 0.9401, having touched a high of 0.9403 earlier, it’s highest since Jan. 26. FxWirePro's Hourly Swiss Franc Strength Index stood at -69.55 (Bearish) by 1000 GMT. On the higher side, near-term resistance is around 0.9415 (61.8% retracement of 0.9666 and 0.9255) and any break above will take the pair to next level till 0.9464 (50.0% retracement). The near-term support is around 0.9311 (5-DMA) and any close below that level will drag it till 0.9250.
Equities Recap
European shares rose, halting a seven-day losing streak following a rebound on Wall Street, while the greenback rose against a basket of currencies ahead of a host of FOMC members’ speeches.
The pan-European STOXX 600 index advanced 0.9 percent to 375.77 points, while the FTSEurofirst 300 index rallied 0.9 percent to 1,475.69 points.
Britain's FTSE 100 trades 0.8 percent higher at 7,195.77 points, while mid-cap FTSE 250 surged 1.1 percent to 19,465.55 points.
Germany's DAX rose 0.7 percent at 12,473.58 points; France's CAC 40 trades 0.7 percent up at 5,195.03 points.
Commodities Recap
Crude oil prices declined, as analysts warned that surging U.S. output and a seasonal demand drop could soon weigh on crude. International benchmark Brent crude was trading 0.5 percent down at $66.91 per barrel by 1009 GMT, having hit a low of $66.52 the day before, its lowest since Jan. 3. U.S. West Texas Intermediate was trading 0.8 percent down at $63.33 a barrel, after falling as low as $63.10 on Tuesday, its weakest since Jan. 22.
Gold prices rose after falling more than one percent to its lowest in over three weeks in the previous session. Spot gold was up 0.3 percent to $1,328.98 per ounce by 1012 GMT, having hit a low of 1,320.03 on Tuesday, lowest since Jan 11. U.S. gold futures for April delivery rose 0.3 percent to $1,333.50 per ounce.
Treasuries Recap
The U.S. Treasuries surged ahead of the 10-year auction and a host of FOMC members’ speeches scheduled for later in the day. The yield on the benchmark 10-year Treasuries remained tad lower at 2.76 percent, the super-long 30-year bond yields also slid marginally to 3.03 percent and the yield on the short-term 2-year traded 1-1/2 basis points lower at 2.07 percent.
The UK gilts traded mixed during European session as investors await the Bank of England’s (BoE) monetary policy decision, scheduled to be unveiled on February 8 by 12:00GMT and the central bank’s Inflation report, due on the same day for detailed insight into the bond market. The yield on the benchmark 10-year gilts slid nearly 1 basis point to 1.51 percent, the super-long 30-year bond yields rose nearly 1 basis point to 1.95 percent while the yield on the short-term 2-year traded close to 1 basis point lower at 0.60 percent.
The German bunds traded tad lower after the country’s industrial production improved during the month of December. The German 10-year bond yields, which move inversely to its price, rose nearly 1/2 basis point to 0.69 percent, the yield on 30-year note also remained tad higher at 1.34 percent and the yield on short-term 2-year traded flat at -0.57 percent.
The New Zealand government bonds ended Wednesday’s session on a higher note as investors have largely shrugged-off the better-than-expected Q4 employment market data, released overnight. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, slipped 1/2 basis point to 2.97 percent, the yield on 20-year also slid 1/2 basis point to 3.49 percent while the yield on short-term 2-year slumped 5 basis points to 1.90 percent.
The Japanese government bonds slumped as stocks prices rebounded after witnessing three straight days of heavy sell-off. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1/2 basis point to 0.078 percent, the yield on the long-term 30-year note traded ½ basis point higher at 0.815 percent and the yield on short-term 3-year also climbed 1/2 basis point to -0.097 percent.
The Australian bonds snapped gains during early Asian session as investors cashed-in profits amid a recovery in risk sentiments. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 5-1/2 basis points to 2.85 percent, the yield on the long-term 30-year note surged 3-1/2 basis points to 3.47 percent and the yield on short-term 2-year hovered around 2.02 percent.
