Market Roundup
- Trump offers 'Dreamers' a path to citizenship, wants other immigration curbs.
- U.S. President Trump talks up dollar in Davos.
- Trump ordered Mueller's firing, then backed off -New York Times.
- BOJ Gov Kuroda – G7 says FX rates should reflect fundamentals - Kyodo.
- FinMin Aso – G7 agreement to avoid targeting FX for sake of competitiveness.
- BoJ Dec Policy Board minutes – Appropriate for BoJ to continue easing.
- Too early to contemplate policy change, fin’l intermediation not impaired.
- One member suggested need to adjusting policies if econ-prices improve.
- Dec core CPI +0.9% y/y, as eyed, Tokyo area Jan core +0.7%, +0.8% eyed.
- China Dec industrial profits up 10.8% y/y (vs Nov 14.9%).
- Britain's Hammond calls for very modest divorce from EU.
- U.S. tech stock funds attract most cash since 2000 -Lipper.
- U.S. muni bond funds post $781.2 mln in inflows-Lipper.
- Foreign CB US debt holdings -$3.660 bln to $3.352 trln Jan 24 week.
- Treasuries -$3.503 bln to $3.01 trln, agencies -$482 mln to $261.337 bln.
Economic Data Ahead
- (0245 ET/0745 GMT) France Jan Business Climate f'cast 112, last 112
- (0245 ET/0745 GMT) France Jan Consumer Confidence f'cast 106, last 105
- (0430 ET/0930 GMT) Great Britain Q4 GDP Prelim QQ f'cast 0.4%, last 0.4%
- (0430 ET/0930 GMT) Great Britain Q4 GDP Prelim YY f'cast 1.4%, last 1.7%
Key Events Ahead
- (0400 ET/0800 GMT) Riksbank executive board meeting in Stockholm.
- (0500 ET/1000 GMT) ECB's Benoit Coeure participates in a televised session on "The end of easy money" at the World Economic Forum in Davos.
- (1030 ET/1530 GMT) Bundesbank's Claudia Buch speaks at the Imperial College in London.
- (1100 ET/1600 GMT) BoE's Mark Carney, IMF's Christine Lagarde, BOJ's Haruhiko Kuroda participate in a panel discussion at the World Economic Forum in Davos.
- N/A Riksbank Deputy Governor Cecilia Skingsley attends the World Economic Forum (Final Day) in Davos.
FX Beat
DXY: The dollar index slumped to a 3-year low following a decline in the U.S. Treasury yields. The greenback against a basket of currencies traded 0.3 percent down at 89.18, having touched a low of 88.44 earlier, its lowest since December 2014. FxWirePro's Hourly Dollar Strength Index stood at -39.63 (Neutral) by 0500 GMT.
EUR/USD: The euro steadied after easing from a 3-year high hit above the 1.2500 handle in the previous session, as the European Central Bank President Mario Draghi said economic data pointed to robust growth with inflation likely to rise in the medium term. The European currency traded 0.2 percent up at 1.2421, having touched a high of 1.2537 the day before, its highest since Dec. 2014. FxWirePro's Hourly Euro Strength Index stood at 57.32 (Bullish) by 0400 GMT. Investors’ attention will remain on series of economic data from Eurozone M3 money supply data and ECB Coeure's speech, ahead of U.S. preliminary gross domestic product, goods trade balance and durable goods orders. Immediate resistance is located at 1.2500, a break above targets 1.2590. On the downside, support is seen at 1.2351 (50.0% retracement of 1.2264 and 1.2537), a break below could drag it lower 1.2307 (38.2% retracement).
USD/JPY: The dollar rose, extending previous day's rebound from 4-1/2 month lows after U.S. President Donald Trump said he wanted a strong dollar, contradicting earlier comments made by Treasury Secretary Steven Mnuchin. The major was trading 0.1 percent up at 109.47, having hit a low of 108.50 the day before, its lowest since Sept 11. FxWirePro's Hourly Yen Strength Index stood at - 55.22 (Bearish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. preliminary gross domestic product, goods trade balance and durable goods orders for further momentum. Immediate resistance is located at 110.00 (50.0% retracement of 111.49 and 108.50), a break above targets 110.35 (38.2% retracement). On the downside, support is seen at 108.30, a break below could take it near 108.00.
GBP/USD: Sterling consolidated below recent highs as optimism around Brexit and growing expectations of an interest rate increase later this year encouraged investors to add to long positions. The major traded 0.2 percent up at 1.4169, having hit a high of 1.4344 the day before, it’s highest since June 2016. FxWirePro's Hourly Sterling Strength Index stood at 101.73 (Highly Bullish) by 0400 GMT. Investors’ focus will remain on the UK gross domestic product, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.4370, a break above could take it near 1.4400. On the downside, support is seen at 1.3412 (78.6% retracement), a break below targets 1.3985 (61.8% retracement of 1.3458 and 1.4305). Against the euro, the pound was trading 0.05 percent up at 87.60 pence, having hit a high of 86.87 pence earlier, it’s highest since Dec. 15.
AUD/USD: The Australian dollar held firm below four-month highs amid a quiet holiday trading period. The Aussie trades 0.3 percent up at 0.8023, having hit a high of 0.8118 on Thursday; it’s highest since Sept. 8. FxWirePro's Hourly Aussie Strength Index stood at -28.21 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.8000 (61.8% retracement of 0.7807 and 0.8118), a break below targets 0.7964 (50.0% retracement). On the upside, resistance is located at 0.8150, a break above could take it near 0.8200.
NZD/USD: The New Zealand dollar edged up after falling for a 4-day low weak inflation and views the central bank was in no rush to tighten policy. The Kiwi trades 0.1 percent up at 0.7333, having touched a high of 0.7435 on Wednesday, its highest level since Aug. 3. FxWirePro's Hourly Kiwi Strength Index was at -42.45 (Neutal) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7450, a break above could take it near 0.7490. On the downside, support is seen at 0.7288, a break below could drag it lower 0.7245 (Jan 18 Low).
Equities Recap
Asian shares eased from record highs but were still on track to end the week with strong gains, while the greenback slumped despite President Donald Trump citing that he wanted a strong U.S. currency.
MSCI's broadest index of Asia-Pacific shares outside Japan traded flat.
Tokyo's Nikkei eased 0.2 percent to 23,626.99 points and South Korea's KOSPI advanced 0.3 percent to 2,568.78 points.
Shanghai composite index rose 0.4 percent to 3,562.79 points, while CSI300 index was trading 0.6 percent up at 4,392.44 points.
Hong Kong’s Hang Seng was trading 1.4 percent higher at 33,096.83 points. Taiwan shares shed 0.2 percent to 11,147.10 points.
Commodities Recap
Crude oil prices rose as the U.S. dollar continued to decline and on supply restrictions led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia, which started last year and are set to last throughout 2018. International benchmark Brent crude was trading 0.2 percent up at $70.25 per barrel by 0438 GMT, having hit a high of $71.26the day before, its highest since Dec. 2014. U.S. West Texas Intermediate was trading 0.3 percent up at $65.40 a barrel, after rising as high as $66.63 on Thursday, its highest since Dec. 2014.
Gold prices rose after falling from 1-1/2-year highs in the previous session, as the dollar remained weak despite U.S. President Donald Trump backing a stronger currency. Spot gold rose 0.3 percent to $1,352.30 per ounce at 0440 GMT, having hit a high of 1,365.95 on Thursday, highest since Aug. 3, 2016. U.S. gold futures were down 0.9 percent at $1,351.10 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.423 percent higher by 0.005 bps, while 5-year yield was 0.008 bps up at 2.092 percent.
The Japanese government bonds gained on the last trading day of the week Friday as investors covered previous short positions and as the country’s national consumer price inflation index for the month of December disappointed market expectations, albeit higher than the previous reading in November. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slipped nearly 1 basis point to 0.07 percent, the yield on the long-term 30-year note traded tad lower at 0.82 percent and the yield on short-term 2-year remained flat at -0.12 percent.
The New Zealand government bonds surged at the time of closing on cues from the country’s consumer price-led inflation index (CPI) for the fourth quarter of this year disappointed market expectations, flocking investors into safe-haven assets. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 1-1/2 basis points to 2.92 percent, the yield on 20-year also slipped 1-1/2 basis points to 3.41 percent while the yield on short-term 2-year ended 1 basis point lower at 1.97 percent.
The Canadian government bond prices were higher across a flatter yield curve, with the 10-year rising 16 Canadian cents to yield 2.244 percent. The 10-year yield touched its highest intraday since September 2014 at 2.281 percent.
