Market Roundup
- UK consumer morale stuck at lowest since 2013 as Brexit nears
- U.S., China launch high-level trade talks amid deep differences
- In a shift, U.S. Fed says will be 'patient' on future rate hikes
- Purported hackers stole U.S. evidence to discredit Mueller probe -filing
- Bloomberg confirms China bonds inclusion in Global Aggregate Index
- Beyond Trump's wall: U.S. Congress tackles border security
- Kuroda's deputy warns BOJ must limit side effects of easy policy
- S&P upgrades New Zealand's outlook to positive
- China Jan NBS Mfg PMI, 49.5, 49.3 f'cast, 49.4 prev
- China Jan NBS Non-Mfg PMI, 54.7, 53.8 prev
- Japan Dec Industrial Output Prelim, -0.1%, -0.4% f'cast, -1.0% prev
- Australia Dec Private Sector Credit, 0.2%, 0.3% prev
- Australia Q4 Export Prices, 4.4%, 3.7% prev
- Australia Q4 Import Prices, 0.5%, 1.9% prev
Economic Data Ahead
- (0200 ET/0700 GMT) Germany Dec Retail Sales MM Real, -0.6% f'cast, 1.4% prev
- (0200 ET/0700 GMT) Great Britain Jan Nationwide House Price YY, 0.0% f'cast, 0.5% prev
- (0245 ET/0745 GMT) France Jan CPI (EU Norm) Prelim YY, 1.3% f'cast, 1.9% prev
- (0500 ET/1000 GMT) EZ Q4 GDP Flash Prelim YY, 1.2% f'cast, 1.6% prev
- (0500 ET/1000 GMT) EZ Q4 GDP Flash Prelim QQ, 0.2% f'cast, 0.2% prev
- (0500 ET/1000 GMT) EZ Dec Unemployment Rate, 7.9% f'cast, 7.9% prev
- (0355 ET/0855 GMT) Germany Jan Unemployment Chng SA, -10k f'cast, -14k prev
- (0355 ET/0855 GMT) Germany Jan Unemployment Rate SA, 5.0% f'cast, 5.0% prev
Key Events Ahead
- (0515 ET/1015 GMT) ECB's Yves Mersch speaks at International Capital Market Association European Repo and Collateral Council - Luxembourg City
- (1100 ET/1600 GMT) Bundesbank's Jens Weidmann speaks about future of European Monetary Union - Frankfurt
- (1230 ET/1730 GMT) BoE's Carolyn A. Wilkins speaks on "How the labour market is changing and how this influences monetary policy" - Toronto
FX Beat
DXY: The dollar index plunged to a 3-week low after Federal Reserve Chairman Jerome Powell stated that the case for rate increases had weakened in recent weeks, as slowing growth overseas and the federal government shutdown made the U.S. outlook uncertain. The greenback against a basket of currencies trades 0.2 percent down at 95.22, having touched a low of 95.22, its lowest since December 10. FxWirePro's Hourly Dollar Strength Index stood at -66.61 (Bearish) by 0500 GMT.
EUR/USD: The euro rallied to a near 3-week peak as Federal Reserve’s dovish stance at its latest policy meeting overshadowed concerns about weakening growth in the eurozone. The European currency traded 0.2 percent up at 1.1503, having touched a high of 1.1508 earlier, its highest since Jan. 11. FxWirePro's Hourly Euro Strength Index stood at 50.52 (Bullish) by 0500 GMT. Investors’ attention will remain on a series of data from the Eurozone economies and EZ gross domestic product, ahead of the U.S. Challenger Job Cuts and unemployment benefit claims. Immediate resistance is located at 1.1540(January 11 High), a break above targets 1.1596 (January 10 High). On the downside, support is seen at 1.1458 (Jan. 11 Low), a break below could drag it till 1.1370 (Jan. 17 Low).
USD/JPY: The dollar slumped to a 2-week low after the Federal Reserve held interest rates steady and signaled its 3-year-drive to tighten monetary policy may be at an end amid a suddenly cloudy outlook for the U.S. economy due to impasses over trade and government budget negotiations. The major was trading 0.2 percent down at 108.79, having hit a low of 108.77, its lowest since January 17. FxWirePro's Hourly Yen Strength Index stood at 61.96 (Bullish) by 0500 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. Challenger Job Cuts and unemployment benefit claims. Immediate resistance is located at 109.88 (Jan. 18 High), a break above targets 110.47 (Dec. 31 High). On the downside, support is seen at 108.37 (Jan. 16 Low), a break below could take it lower at 107.98 (Jan. 14 Low).
GBP/USD: Sterling steadied above the 1.3100 handle, as investors expect the government would avoid exiting the European Union without a Brexit deal. The major traded 0.1 percent up at 1.3127, having hit a high of 1.3217 on Friday; it’s highest since October 16. FxWirePro's Hourly Sterling Strength Index stood at -132.68 (Highly Bearish) 0500 GMT. Investors’ attention will remain on developments surrounding Brexit deal, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3170, a break above could take it near 1.3257 (October 12 High). On the downside, support is seen at 1.3021 (November 6 Low), a break below targets 1.3000. Against the euro, the pound was trading 0.1 percent down at 87.63 pence, having hit a high of 86.16 on Friday, it’s highest since May 2017.
AUD/USD: The Australian dollar rose to a fresh 8-week peak, as the greenback tumbled following a surprisingly dovish turn from the Federal Reserve. Investors now await the Reserve Bank of Australia's first policy meeting of the year on Feb. 5 that would provide further insights on the central bank's 2019 outlook. The Aussie trades 0.3 percent up at 0.7267, having hit a high of 0.7272; it’s highest since December 6. FxWirePro's Hourly Aussie Strength Index stood at 99.18 (Slightly Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7197 (Dec. 12 Low), a break below targets 0.7115 (Jan. 22 Low). On the upside, resistance is located at 0.7300 (November 20 High), a break above could take it near 0.7327 (November 28 High).
NZD/USD: The New Zealand dollar rallied to multi-week peaks after S&P Global Ratings affirmed New Zealand's credit ratings and lifted its outlook to positive, supporting the likelihood of an upgrade. The Kiwi trades 0.3 percent up at 0.6915, having touched a high of 0.6923, its highest level December 5. FxWirePro's Hourly Kiwi Strength Index was at 69.61 (Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6944 (Dec. 5 High), a break above could take it near 0.6998 (May 30 High). On the downside, support is seen at 0.6856 (Dec. 6 Low), a break below could drag it below 0.6799 (Jan. 15 Low).
Equities Recap
Asian shares rallied to a 4-month high after the Federal Reserve signalled a potential end to its tightening cycle amid signs of slowing global growth.
MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.7 percent.
Tokyo's Nikkei rallied 1.05 percent to 20,764.41 points, Australia's S&P/ASX 200 index declined 0.4 percent to 5,864.70 points and South Korea's KOSPI surged 0.3 percent to 2,212.49 points.
Shanghai composite index rose 0.3 percent to 2,582.85 points, CSI300 index traded 0.9 percent up at 3,194.60 points, and Hong Kong’s Hang Seng traded 1.1 percent higher at 27,930.95 points.
Commodities Recap
Crude oil prices rallied, extending gains for the third straight day, boosted by signs of lower imports into the United States as part of efforts by OPEC to tighten the market. International benchmark Brent crude was trading 0.7 percent up at $62.08 per barrel by 0450 GMT, having hit a low of $59.47 on Monday, its lowest since January 15. U.S. West Texas Intermediate was trading 0.8 percent higher at $54.60 a barrel, after falling as low as $51.31 on Monday, its lowest since the January 17.
Gold prices steadied near 8-1/2 month highs touched in the previous session, and was on course for its fourth straight monthly gain, as the dollar weakened after the U.S. Federal Reserve paused its monetary tightening cycle. Spot gold traded flat at $1,319.78 per ounce by 0453 GMT, having touched a high of $1,323.25 on Wednesday, its highest level since May 11. U.S. gold futures were up 0.6 percent at $1,317.70 per ounce.
Treasuries Recap
The Australian government bonds gained across the curve during Asian trading session after the Federal Reserve signalled patience and flexible monetary policy going ahead. Markets now believe that the Fed has effectively abandoned its hiking bias but stopped short of inciting bearish expectations.The yield on Australia’s benchmark 10-year note, which moves inversely to its price, fell over 1 basis point to 2.24 percent, the yield on the long-term 30-year bond remained steady around 2.77 percent and the yield on short-term 2-year slumped 2 basis points to 1.852 percent.
The Canadian government bond prices were higher across much of a steeper yield curve. The two-year rose 5.5 Canadian cents to yield 1.823 percent and the 10-year gained 15 Canadian cents to yield 1.923 percent. The gap between Canada's two-year yield and its U.S. equivalent narrowed by 2 basis points to a spread of 69.5 basis points in favor of the U.S. bond.
