Market Roundup
• US Jan Core CPI MM, SA, 0.3%, 0.2% forecast, 0.3% previous, 0.2% revised.
• US Jan Core CPI YY, NSA, 1.8%, 1.7% forecast, 1.8% previous.
• US Jan CPI MM, SA, 0.5%, 0.3% forecast, 0.1% previous, 0.2% revised.
• US Jan CPI YY, NSA, 2.1%, 1.9% forecast, 2.1% previous.
• US Jan CPI Index, NSA, 247.867, 247.604 forecast, 246.524 previous.
• US Jan Core CPI Index, SA, 255.29, 254.43 previous, 254.40 revised.
• US Jan Cleveland Fed CPI, 0.3%, 0.3% previous, 0.2% revised.
• US Jan Real Weekly Earnings MM, -0.8%, -0.3% forecast, 0.2% previous.
• US Jan Retail Sales Ex-Autos MM, 0.0%, 0.4% forecast, 0.4% previous, 0.1% revised.
• US Jan Retail Sales MM, -0.3%, 0.2% forecast, 0.4% previous, 0.0% revised.
• US Dec Business Inventories MM, 0.4%, 0.3% forecast, 0.4% previous.
• US Jan TR IPSOS PCSI, 63.06, 61.58 previous.
• US w/e MBA Mortgage Applications, -4.1%, 0.7% previous.
• US w/e Mortgage Market Index, 399.4, 416.3 previous.
• US w/e MBA Purchase Index, 240.4, 255.4 previous.
• US w/e MBA 30-Yr Mortgage Rate, 4.57%, 4.50% previous.
• Trump holds line on immigration as bipartisan plan coalesces.
• Boom time for German economy as politicians bicker.
• German SPD leader invokes Europe to sell coalition deal with Merkel.
• UK's Johnson keeps hard Brexit stance in speech aimed at mending fences.
• Canada Feb TR IPSOS PCSI, 55.72, 55.12 previous.
Looking Ahead - Economic Data (GMT)
• 14 Feb 05:20 Japan Dec Machinery Orders MM, -2.3% forecast, 5.7% previous
• 14 Feb 05:20 Japan Dec Machinery Orders YY, 2.2% forecast, 4.1% previous
• 15 Feb 04:30 Japan Dec Industrial Output Rev, 2.7% previous
• 15 Feb 04:30 Japan Dec Capacity Utilization Index Change MM, 0.0% previous
• 15 Feb 00:30 Australia Jan New Motor Vehicle Sales m/m, 4.5% previous
• 15 Feb 00:30 Australia Jan Employment, 15.0k forecast, 34.7k previous
• 15 Feb 00:30 Australia Jan Full Time Employment, 15.1k previous
• 15 Feb 00:30 Australia Jan Participation Rate, 65.6% forecast, 65.7% previous
• 15 Feb 00:30 Australia Jan Unemployment Rate, 5.5% forecast, 5.5% previous
Looking Ahead - Events, Other Releases (GMT)
• 08:00 Riksbank executive board meeting – Stockholm
• 08:30 French finance minister Bruno Le Mairea and IMF chief Christine Lagarde speak about Eurozone reform – Paris
• 09:15 ECB's Yves Mersch gives keynote speech at the "Rencontres du Club SEPA" – Paris
• 10:45 Participation in panel discussion by ECB's Peter Praet at a conference jointly organised by the French Treasury and the IMF – Paris
• 12:00 ECB's Sabine Lautenschlager gives keynote speech at Dutch Banking Day 2018 organized by De Nederlandsche Bank - Amsterdam
• 17:00 Annual keynote speech by Norway central bank governor Oeystein Olsen – Oslo
• 18:45 Bank of Canada Deputy Governor Lawrence Schembri will give a speech - Winnipeg
Currency Summaries
EUR/USD is likely to find support at 1.2272 levels and currently trading at 1.2448 levels. The pair has made session high at 1.2440 and hit lows at 1.2272 levels. The euro rose higher against US dollar on Wednesday as equity markets rebounded quickly following a stronger-than-expected inflation data report. The dollar's decline was also due to surprise decline in U.S. retail sales in January. The single currency was last trading at $1.242, up nearly half a percent from its last close. U.S. consumer prices rose more than expected in January as Americans paid more for gasoline, rental accommodation and healthcare, raising pressure on new Federal Reserve chief Jerome Powell to prevent a possible overheating of the economy. The Labor Department said its Consumer Price Index increased 0.5 percent last month as households paid more for gasoline, rental accommodation and healthcare. The CPI rose 0.2 percent in December. The year-on-year increase in the CPI was unchanged at 2.1 percent in January as the large price gains from last year dropped out of the calculation. The possibility that the Fed would clamp down on inflation initially drove up the dollar index. But the dollar quickly fell to a session low of 89.231 against a basket of currencies, as the equity market recovered from earlier losses and Treasury bond yields remained range-bound.
GBP/USD is supported in the range of 1.3774 levels and currently trading at 1.3995 levels. It reached session high at 1.4008 and dropped to session low at 1.3794 levels. Sterling rose against the dollar on Wednesday as dollar reversed its earlier gains as the equity market recovered from earlier losses. The dollar initially rose after the U.S. Labor Department report showed U.S. consumer prices increased more than expected in January, and traders bet the U.S. Federal Reserve would boost interest rates faster than previously forecast. However, softer-than-forecast retail sales data and an immediate pullback in equities markets sparked concern that the Fed would struggle to raise rates quickly enough to offset inflation pressures. The British pound was last trading at $1.4002, up 0.65 percent from Tuesday's close. Sterling had strengthened on Tuesday after data showed British inflation unexpectedly stayed close to its highest levels in six years in January, firming up investors' bets that the Bank of England will raise interest rates again in May. The BoE surprised financial markets last week by indicating that rates could move up faster than previously expected, as the Bank wanted to bring inflation back to its target of two percent within two years rather than three. In a taken after the BoE's policy meeting last week, 32 of 57 economists said the Bank would raise its key rate to 0.75 percent in May, when it publishes its next quarterly Inflation Report.
USD/CAD is supported at 1.2481 levels and is trading at 1.2501 levels. It has made session high at 1.2649 and lows at 1.2500 levels. The Canadian dollar strengthened against its U.S. counterpart on Wednesday as oil prices climbed and concern that the Fed would struggle to raise rates weighed on the greenback. The U.S. dollar surrendered gains against a basket of major world currencies after the Labor Department said its Consumer Price Index increased 0.5 percent. Oil prices rebounded from earlier losses after U.S. crude stocks rose less than expected and Saudi Energy Minister Khalid al-Falih said major producers would prefer tighter markets than to end supply cuts too early. U.S. crude inventories rose 1.8 million barrels last week, Energy Information Administration (EIA) data showed compared with expectations for an increase of 2.8 million barrels. On the data front, the Teranet-National Bank Composite House Price Index, which measures changes for repeat sales of single-family homes, showed prices rose 0.3 percent in January from a month earlier. But the pace of gains continued to decelerate on a year-over-year basis. The Canadian Real Estate Association will release its monthly home sales report on Thursday. Canada's manufacturing sales report for December is due on Friday.
NZD/USD is supported around 0.7229 levels and currently trading at 0.7365 levels. It hit session high at 0.7371 and made session lows at 0.7237 levels. The New Zealand dollar rose to hit one-week high against the dollar on Wednesday after a central bank survey showed the country's inflation expectations had rebounded. New Zealand's inflation expectations were sitting just above the central bank's target for inflation at the start of 2018, reinforcing the bank's view that interest rates would remain on hold for some time before rising in 2019. The Reserve Bank of New Zealand's (RBNZ) quarterly survey of expectations showed business managers forecast annual inflation to average 2.11 percent over the coming two years, up from 2.02 percent in the previous survey. The results snapped two previous quarters of falls and should be a relief to the RBNZ as consumer prices have remained sluggish, forcing it to keep rates at a record low 1.75 percent since late 2016.Some in the market had called for a rate cut, but the bank had stressed that inflation expectations holding up around its target midpoint of 2 percent were central to its monetary policy outlook. The kiwi dollar was up 0.9 percent at $0.7378, the highest since Feb. 7 and well above a recent one-month trough of $0.7176.
Equities Recap
European shares rose on Wednesday, quickly recovering from losses sparked by stronger-than-expected U.S. inflation data, as solid company and economic updates kept investors confident.
The UK's benchmark FTSE 100 closed up by 0.73 percent, FTSEurofirst 300 ended the day up by 1.13 percent, Germany's Dax ended down by 1.49 percent, and France’s CAC finished the up by 1.35 percent.
Wall Street surged on Wednesday as investors shrugged off stronger-than-expected inflation data and snapped up shares of Facebook, Amazon.com and Apple.
Dow Jones closed up by 1.03 percent, S&P 500 ended up 1.35 percent, Nasdaq finished the day up by 1.84 percent.
Treasuries Recap
U.S. Treasury yields on most maturities rose on Wednesday, with those on benchmark 10-year notes hitting a four-year high, boosted by data showing consumer prices in the world's largest economy gained more than expected last month, with underlying inflation posting its largest monthly increase in a year.
In late trading, U.S. benchmark 10-year Treasury note yields rose to 2.916 percent, from 2.84 percent late on Tuesday. Earlier in the session, 10-year yields hit a four-year peak of 2.919 percent.
U.S. 30-year yields increased to 3.179 percent from Tuesday's 3.128 percent.U.S. 2-year yields, the maturity most sensitive to rate-hike expectations, advanced to a two-week high of 2.176 percent, compared with 2.106 percent on Tuesday. Two-year yields were last at 2.175 percent.
Commodities Recap
Gold prices climbed nearly 2 percent on Wednesday, rebounding from early losses that followed stronger-than-expected U.S. inflation data, as the dollar surrendered gains and equities swung higher.
Spot gold was up 1.7 percent at $1,351.81 per ounce by 1:37 p.m. EST (1837 GMT), after reaching $1,355.08, its highest since Jan. 26. U.S. gold futures for April delivery settled up $27.60 per ounce, or 2.1 percent, at $1,358.
Oil prices rose on Wednesday, rebounding from earlier losses after U.S. crude stocks rose less than expected and Saudi Energy Minister Khalid al-Falih said major oil producers would prefer tighter markets than to end supply cuts too early.
Brent crude futures rose 53 cents, or 0.8 percent, to $63.25 a barrel as of 1:01 p.m. EST (1801 GMT). U.S. West Texas Intermediate crude futures gained 36 cents, or 0.6 percent, to $59.55 a barrel.
