Market Roundup
- US President Trump scraps TPP, may move quickly to renegotiate NAFTA, boosts China RCEP plan, Australia favors TPP minus US – New York Times, et al.
- Australia and New Zealand pledge to salvage TPP after US exit – Reuters.
- US TsySec-nominee Mnuchin – Will address issue of currency manipulation, will recommend changes to evaluation procedures if needed, IMF has not prevented nations from manipulation, eyeing China actions – Reuters.
- Japan FinMin Aso – Seeking understanding with the US on trade - Reuters.
- EconMin Ishihara – No change to view free trade source of global economic growth, to take time to determine if the US to pursue bilateral trade deal.
- Japan Jan flash Mfg PMI 52.8, best in almost three years, Dec 52.4, new export orders rise at best pace in over a year.
- PBOC fixes CNY at 6.8331 vs USD, strongest since mid-November.
- China SAFE Pan – Normal profits of foreign firms can be repatriated but will fend off cross-border capital flow risks – Reuters.
- MSCI – Further China capital controls could delay China A-share inclusion in MSCi indices – Reuters.
- China outbound property investment to drop as capital curbs bite – Reuters.
- UK PM Theresa May plans China visit to bolster trade – Financial Times.
- New Zealand Dec BNZ PSI +0.3 pt to 58.4, best in ’16, output and new orders up.
Economic Data Ahead
- (0300 ET/0800 GMT) France Jan PMI Mfg – flash, 53.4 forecast; last 53.5.
- (0300 ET/0800 GMT) France Jan PMI services – flash, 53.2 forecast; last 52.9.
- (0300 ET/0800 GMT) France Jan PMI composite – flash, 53.3 forecast; last 53.4.
- (0330 ET/0830 GMT) Germany Jan PMI Mfg - flash, 55.4 forecast; last 55.6.
- (0330 ET/0830 GMT) Germany Jan PMI services - flash, 54.5 forecast; last 54.3.
- (0330 ET/0830 GMT) Germany Jan PMI composite – flash, 55.2 forecast; last 55.2.
- (0400 ET/0900 GMT) Eurozone Jan PMI Mfg - flash, 54.8 forecast; last 54.9.
- (0400 ET/0900 GMT) Eurozone Jan PMI services - flash, 53.9 forecast; last 53.7.
- (0400 ET/0900 GMT) Eurozone Jan PMI composite – flash, 54.5 forecast; last 54.4.
- (0430 ET/0930 GMT) Great Britain Dec PSNB, GBP7.0 bln forecast; last GBP12.21 bln, PSNCR GBP13.53 bln.
- (0430 ET/0930 GMT) Great Britain Dec – ex-banks, GBP6.7 bln forecast; last GBP12.65 bln.
- (0945 ET/1445 GMT) United States Jan PMI Markit Mfg – flash, 54.5 forecast; last 54.3.
- (1000 ET/1500 GMT) United States Dec exist home sales, 5.52 million AR, -1.1% m/m forecast; last 5.61, +0.7%.
- (1000 ET/1500 GMT) United States Jan Rich Fed Mfg shipments, services, comp indices; last 12, 4, 8.
Key Events Ahead
- N/A Ireland CB Lane, others speak at Dublin European Financial Forum.
- N/A France 2039 Euro Green OAT syndication via Barclays, BNP, CA, MS et al.
- N/A Spain Euro 2027 syndication via Barclays, BBVA, BNP, Caixa, Citi et al.
- (0400 ET/0900 GMT) Netherlands E2-3 bln zero% 2022 DSL auction.
- (0430 ET/0930 GMT) UK Supreme Court ruling on Brexit.
- (0430 ET/0930 GMT) ECN zero% 7-day refi, E32 billion allotment forecast, E32.3 bln maturing.
- (0430 ET/0930 GMT) Spain 3 and 9-month treasury bill auctions.
- (0630 ET/1130 GMT) ESM E1.5 bln 6-month bill auction.
- (0845 ET/1345 GMT) ECB ChiefEcon Praet in Rome panel discussion.
- (1230 ET/1730 GMT) EuroGroup Dijsselbloem speaks at EU Brexit conference.
- (1300 ET/1800 GMT) ECB Lautenschlaeger speaks in Hamburg.
FX Beat
DXY: The dollar hit multi-week lows against its major peers after President Donald Trump highlighted a protectionist stance on trade. The greenback against a basket of currencies traded 0.1 percent up at 100.06, recovering from a low of 99.899 hit overnight, its lowest since Dec. 8. FxWirePro's Hourly Dollar Strength Index stood at -23.82 (Neutral) by 0500 GMT.
EUR/USD: The euro advanced to fresh 7-week high, extending gains for the fourth straight day, as Trump’s decision to withdraw from the Trans-Pacific Partnership trade deal weighed down the greenback. The European currency traded at 1.0755, after rising as high as 1.0772 earlier, it’s highest since Dec 8. FxWirePro's Hourly Euro Strength Index stood at 21.64 (Neutral) by 0400 GMT. Investors’ focus remains on Eurozone's preliminary manufacturing and services PMI, ahead of the U.S. existing home sales and flash Markit manufacturing PMI for further momentum on the major. Immediate resistance is located at 1.0768 (Dec 7 High), a break above targets 1.0800. On the downside, support is seen at 1.0701 (5-DMA), a break below could drag it lower 1.0665 (10-DMA).
USD/JPY: The dollar retreated after declining to a near 2-month low earlier in the session on the back of concerns over the U.S President Donald Trump's protectionist trade stance. Moreover, lower U.S. Treasury yields and risk-off market sentiment undermined the bid tone around the pair. The major trades 0.2 percent up at 112.90, after declining as low as 112.52 in early trade, it’s weakest since Nov 30. FxWirePro's Hourly Yen Strength Index stood at 111.85 (Highly Bullish) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of the U.S. existing home sales data, preliminary Markit manufacturing PMI and Richmond Fed manufacturing index. Immediate resistance is located at 113.53 (Nov 24 High), a break above targets 114.00. On the downside, support is seen at 112.35, a break below could take it near 112.00.
GBP/USD: Sterling eased after rising to a 6-week high above the 1.2500 handle, as investors remain cautious ahead of the Supreme Court's decision on getting parliamentary approval before triggering Article 50 of the Lisbon Treaty. Sterling trades 0.2 percent lower at 1.2506, after rising as high as 1.2544 earlier, it’s strongest since Dec. 15. FxWirePro's Hourly Sterling Strength Index stood at 64.65 (Bullish) by 0400 GMT. Investors’ will continue to track overall market sentiment, ahead of British Supreme Court’s decision on Brexit. Immediate resistance is located at 1.2584 (Nov 10 High), a break above could take it near 1.2620. On the downside, support is seen at 1.2403 (5-DMA), a break below targets 1.2368 (9-EMA). Against the euro, the pound edged down 0.1 percent at 85.98 pence, having hit a peak of 85.81 earlier in the day, it’s strongest since Jan. 6.
AUD/USD: The Australian dollar rallied to a fresh 2-1/2 month high above the 0.7600, as the greenback weakened after Trump formally withdrew the United States from the Trans-Pacific Partnership trade deal. The Aussie trades flat at 0.7577, having touched a high of 0.7608 hit earlier in the session, it’s strongest since Nov. 11. FxWirePro's Hourly Aussie Strength Index stood at 4.37 (Neutral) by 0500 GMT. Investors await series of U.S. economic data, ahead of Australia fourth quarter inflation data due on Wednesday. Immediate support is seen at 0.7554 (D-DMA), a break below could drag it near 0.7519 (9-EMA). On the upside, resistance is located at 0.7630 (Nov 11 High), a break above targets 0.7650/ 0.7690.
NZD/USD: The New Zealand dollar rose above the 0.7250 handle to hit a 10-week high, as uncertainties over Trump's presidency and falling U.S. Treasury yields weakened the bid tone around the U.S. dollar. The Kiwi trades flat at 0.7231, having hit an early peak of 0.7264, it’s strongest since Nov. 10. FxWirePro's Hourly Kiwi Strength Index was at 49.08 (Neutral) by 0500 GMT. Investors now eye the U.S. macroeconomic fundamental drivers, ahead of New Zealand's fourth-quarter inflation data due later in the week. Immediate resistance is located at 0.7264 (Session High), a break above could take it near 0.7300. On the downside, support is seen at 0.7188 (5-DMA), a break below could drag it till 0.7153 (10-DMA).
Equities Recap
Asian shares gained, while the dollar eased across the board as U.S. President Donald Trump focused on protectionism.
MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.4 percent.
Tokyo's Nikkei fell 0.56 percent to 18,785.89 points, Australia's S&P/ASX 200 index rose 0.72 percent to 5,651.40 points and South Korea's KOSPI was trading 0.18 percent down at 2,062.32 points.
Shanghai composite index climbed 0.18 percent to 3,142.03 points, while CSI300 index was trading 0.05 percent higher at 3,365.69 points.
Hong Kong’s Hang Seng was trading 0.32 percent lower at 22,971.96 points. Taiwan shares added 0.3 percent at 9,447.95 points.
Commodities Recap
Crude oil prices rose, reversing most of its previous session gains, as production cuts announced by OPEC and other producers strengthened the market sentiment, however, a rise in drilling activity in the U.S. is expected to limit upside. International benchmark Brent crude was trading 0.3 percent higher at $55.48 per barrel by 0355 GMT, having hit a high of $56.92 last week, its highest since Jan. 9. U.S. West Texas Intermediate crude also rose 0.3 percent at $52.98 a barrel, after declining to $50.89 on Wednesday.
Gold prices advanced to its highest level in two-month, as uncertainty over the U.S. President Donald Trump's economic policies sent investors towards safe-haven assets. Spot gold was flat at $1,217.25 an ounce by 0359 GMT, after hitting a peak of $1,219.99, its highest since Nov. 22. U.S. gold futures settled up 0.9 percent at $1,215.6 per ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.3917 percent lower by 0.009 bps, while 5-year yield was down by 0.002 bps at 1.8650 percent.
The Australian 10-year bond yields hit a 1-week low after the United States President Donald Trump ended the long-standing 12-nation Trans-Pacific Partnership (TPP) trade deal with its Asian allies on Monday despite rising influence from China in the region. The yield on the benchmark 10-year Treasury note slumped nearly 6 basis points to 2.71 percent, the yield on 15-year note also plunged 6 basis points to 3.15 percent and the yield on short-term 2-year fell 4 basis points to 1.84 percent.
The New Zealand government bonds closed on a stronger note following a rise in global safe-haven demand after the United States President Donald Trump lifted the 12-nation Trans-Pacific Partnership (TPP) trade deal on Monday, distancing the Asian economies from its U.S. counterpart. The yield on the benchmark 10-year bond fell 1-1/2 basis points to 3.24 percent at the time of closing, the yield on 7-year note also ended 1-1/2 basis points lower at 2.91 percent and the yield on short-term 2-year note slipped 1 basis point to 2.28 percent.
Canadian government bond prices rose across the yield curve, with the 2-year up 4 Canadian cents to yield 0.752 percent and the 10-year rising 59 Canadian cents to yield 1.681 percent.
