Market Roundup
- FOMC Chair Yellen – US economy doing well, no short-term obstacles - Reuters.
- Fed officials see a quick economic boost from Trump, risks to follow – Reuters.
- US banks ready bond issuance flood after earnings – IFR.
- Foreign CB US debt holdings -$213 mln to $3.181 trln Jan 11 week, Treasury holdings +$520 mln to $2.861 trln, agencies -$681 mln to $260.720 bln.
- NY Fed – Swaps with foreign CBs $2.626 bln Jan 11 wk, BoJ $491 mln, rest ECB.
- Lipper – US investment-grade bond fund inflows biggest in nearly two years.
- Japan FinMin Aso – Can’t comment on Trump border tax idea, difficult to comment on Trump talk due to market sensitivity, half of US trade deficit with China, Japan’s surplus smaller – Nikkei.
- EconMin Ishihara – Watching closely for rapid JPY rises – Reuters.
- Just the facts: Japan seeks a way out of Trump’s bad books on trade – Reuters.
- BoJ Insight: Worry over Trump disappointment hit to stocks, USD – MNI.
- MoF flow data week-ended Jan 7 – Japanese buy net Y234.2 bln foreign stocks, Y206.5 bln bonds, Y10.6 bln bills; foreign investors buy net Y346.8 bln Japanese stocks, Y626.1 bln bonds, Y3.8794 trln bills.
- Japan Dec money supply M2 +4.0% y/y, M3 +3.4%, broadest liquidity +2.1%.
- As global headwinds blow, Japan’s conglomerates think local – Nikkei.
- PBOC said to boost CNY curbs as banks told to balance flow – Bloomberg.
- China Dec trade surplus $40.82 bln, $46.5 bln forecast, Nov $44.61 bln, exports -6.1% y/y, imports +3.1%, -3.5% and +2.7% forecast; ’16 surplus $509.96 bln, exports -7.7%, imports -5.5%.
- China ’16 trade surplus CNY3.35 trln, exports -2.0% y/y, imports +0.6%; Q4 imports +8.7% y/y, exports +0.3%; trade situation still facing difficulties, supportive policies-improved overseas demand helped, China biggest loser in anti-globalization trend, new US president may aggravate the situation.
- China ’16 coal imports jump 25.2%, iron ore +7.5%, at record 1.024 bln tonnes, Dec -3.3%, Dec crude imports +12.5% m/m, oil product exports highest on record, Dec soybean imports highest since Dec ’15.
- New Zealand Dec electronic card retail sales -0.1% m/m, +5.8% y/y.
- Auckland makes euro debut with E500 mln 10-year via USB, Westpac et al – IFR.
Economic Data Ahead
- (0300 ET/0800 GMT) Spain Dec CPI; last +0.4% m/m, +0.7% y/y.
- (0300 ET/0800 GMT) Spain Dec HICP; last +0.2% m/m, flash +1.4% y/y.
- (0830 ET/1330 GMT) United States Dec PPI final demand, +0.3% m/m, +1.6% y/y forecast; last +0.4%, +1.3%.
- (0830 ET/1330 GMT) United States Dec – ex-food/energy, +0.1% m/m, +1.5% y/y forecast; last +0.4%, +1.6%.
- (0830 ET/1330 GMT) United States Dec retail sales, +0.7% m/m forecast; last +0.1%.
- (0830 ET/1330 GMT) United States Dec - ex-autos, +0.5% m/m forecast; last +0.2%.
- (1000 ET/1500 GMT) United States Jan U. Mich sentiment index – prelim, 98.5 forecast; last 98.2.
- (1000 ET/1500 GMT) United States Nov business inventories, +0.6% m/m forecast; last -0.2% m/m.
Key Events Ahead
- (0300 ET/0800 GMT) ADB Nakao speaks in Tokyo.
- N/A Moscow Gaidar Economics Forum (till January 14).
- (0430 ET/0930 GMT) BoE MPC Saunders speaks in London.
- (0600 ET/1100 GMT) UK DMO GBP0.5/2.0/2.5 bln 1/3/6-month treasury bill auctions.
- (0600 ET/1100 GMT) Riksbank DepGov Ohlsson speaks at Stockholm event.
- (0930 ET/1430 GMT) Philly Fed Harker speaks at Philadelphia event.
- (1000 ET/1500 GMT) Canada FinMin Morneau meets with leading economists in Toronto.
FX Beat
DXY: The dollar rebounded after declining to multi-week lows against its major peers, as remarks from Philadelphia Fed President Patrick Harker reinforced prospects of three Fed rate hikes in 2017. The greenback against a basket of currencies traded 0.04 percent up at 101.50, retreating from a low of 100.72 hit in the previous session, its lowest since Dec. 8. FxWirePro's Hourly Dollar Strength Index stood at -82.32 (Slightly Bearish) by 0400 GMT.
EUR/USD: The euro eased after rising to a 4-week high in the previous session, as the greenback bounced back following hawkish comments from Philadelphia Fed President Patrick Harker. Markets seem to have digested Wednesday's disappointment from Trump's press conference, as focus shifts towards the U.S. retail sales figures for the month of December, which are likely to rise 0.7 percent from 0.1 percent in November. The European currency trades 0.04 percent lower at 1.0608, having hit a peak of 1.0684 on Thursday, its highest since Dec 8. FxWirePro's Hourly Euro Strength Index stood at -8.31 (Neutral) by 0400 GMT. Investors’ attention remains on series of U.S. macro fundamental drivers, amid a lack of relevant data from the Eurozone docket. Immediate resistance is located at 1.0650, a break above targets 1.0700. On the downside, support is seen at 1.0572 (7-EMA), a break below could drag it lower 1.0550.
USD/JPY: The dollar rose against the yen, halting its four-day losing streak, after comments from Philadelphia Fed President Patrick Harker, strengthened prospects of three Fed rate hikes in 2017. The recovery in the major was also supported by better-than-expected weekly jobless claims data, which came in at 247K for the week ended Jan. 6, beating expectations of a 255K rise. The major trades 0.3 percent higher at 115.07, after hitting a low of 113.75 the prior day, its lowest since Dec. 8. FxWirePro's Hourly Yen Strength Index stood at 57.61 (Bullish) by 0400 GMT. Investors will continue to track board based market sentiment, ahead of the U.S. retail sales, producer price index and Fed speeches for further momentum on the pair. Immediate resistance is located at 115.61 (7-EMA), a break above targets 116.00. On the downside, support is seen at 114.53 (Session Low), a break below could take it lower 114.00.
GBP/USD: Sterling edged down, extending previous session losses, as concerns of a Hard-Brexit continued to weigh on market sentiment. On Thursday, the major rose to a 6-day high of 1.2316 on the back of a weaker greenback, however, it ended lower at 1.2152 as the U.S dollar regained following hawkish remarks by Fed’s Harker and upbeat jobless claims data. Sterling trades flat at 1.2155, within the sight of a low of 1.2107 hit on Wednesday, its lowest since Oct. 25. FxWirePro's Hourly Sterling Strength Index stood at -101.12 (Highly Bearish) by 0400 GMT. Investors now eye the BoE Credit conditions survey and MPC member Saunders speech, ahead of the U.S. retail sales, PPI, and consumer sentiment data for further clues on the major. Immediate resistance is located at 1.2200, a break above could take it near 1.2239 (10-DMA). On the downside, support is seen at 1.2123 (Jan 9 Low), a break below targets 1.2100. Against the euro, the pound trades 0.04 percent down at 87.26 pence, having hit a low of 87.63 earlier in the week, its lowest since Nov. 10.
AUD/USD: The Australian dollar advanced, extending gains for the fifth consecutive session, as surprisingly positive news on world growth underpinned gains in key commodity prices. However, softer-than-expected Chinese trade figures and subdued commodities’ prices weakened the bid tone around the Aussie. The major trades 0.04 percent up at 0.7485, having hit a high of 0.7518 in the previous session, its highest since Dec. 14. FxWirePro's Hourly Aussie Strength Index stood at 87.96 (Slightly Bullish) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of the U.S. economic data including the retail sales, PPI, and consumer sentiment. Immediate support is seen at 0.7450, a break below could drag it till 0.7402 (7-EMA). On the upside, resistance is located at 0.7524, a break above targets 0.7600.
NZD/USD: The New Zealand dollar rose, extending gains above the 0.7100 handle after data showed the economy's electronic card retail sales rose at an annualized rate of 5.8 percent in December. However, the upside remains capped as weak China export growth figures weighed on market sentiment. China's trade balance came in at $40.81 billion, below estimates of $46.50 billion and previous $44.61 billion, while exports declined 6 percent y/y against a consensus of 3.5 percent drop, and imports rose 3.1 percent y/y versus a forecast of 2.7 percent. The Kiwi trades 0.4 percent up at 0.7122, having hit a high of 0.7144 the prior day, it’s strongest since Dec. 14. FxWirePro's Hourly Kiwi Strength Index was at 49.86 (Neutral) by 0400 GMT. Investors will continue to track U.S. dollar price action, ahead of series of U.S. economic data due later in the day. Immediate resistance is located at 0.7144 (Previous Session High), a break above could take it till 0.7200. On the downside, support is seen at 0.7069 (Dec- 5 Low), a break below could drag it lower 0.7050.
Equities Recap
Asian shares declined, however, remained on course for weekly gains while the dollar rebound from recent lows after Fed's Patrick Harker boosted prospects of three Fed rate hikes in 2017.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.2 percent but was up 1.8 percent for the week.
Tokyo's Nikkei rose 0.62 percent to 19,253.73 points, Australia's S&P/ASX 200 index declined 0.83 percent to 5,719.20 points and South Korea's KOSPI was trading 0.53 percent down at 2,076.47 points.
Shanghai composite index edged up 0.1 percent to 3,121.59 points, while CSI300 index was trading 0.3 percent higher at 3,328.88 points.
Hong Kong’s Hang Seng was trading 0.4 percent higher at 22,921.98 points. Taiwan shares shed 0.45 percent at 9,364.44 points.
Commodities Recap
Crude oil prices slightly edged up, helped by reports on details of OPEC output cuts, however, concerns over producer compliance with supply reduction targets limited upside. International benchmark Brent crude was trading up at $56.04 per barrel by 0344 GMT, having hit a low of $53.57 on Wednesday, its lowest since Dec. 15. U.S. West Texas Intermediate crude rose 0.1 percent at $53.06 a barrel, after declining as low as $50.69 earlier in the week.
Gold prices eased, after touching a 7-week high in the previous session as the dollar recovered across the board, however, the safe-haven metal was on course to end higher for a third straight week. Spot gold fell 0.2 percent to $1,192.48 per ounce by 0349 GMT, having hit a high of $1,206.83 on Thursday, its strongest since Nov. 23. U.S. gold futures fell 0.7 percent to $1,191.50 per ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.3726 percent higher by 0.012 bps, while 5-year yield was up by 0.006 bps at 1.1809 percent.
The Australian 10-year bonds sagged on the last trading day of the week as investors cashed in profits after relishing previous gains. Also, investors are curiously eyeing next week unemployment rate for further direction in the debt market. The 10-yield on the benchmark 10-year Treasury note rose nearly 3 basis points to 2.70 percent, the yield on 15-year note also surged almost 3 basis points to 3.14 percent and the yield on short-term 2-year moved up 3 basis points to 1.86 percent.
Canadian government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries. The 2-year rose 1.2 Canadian cents to yield 0.774 percent and the 10-year added 14 Canadian cents to yield 1.662 percent.
