Market Roundup
- Japan PM Abe – Wants Trump to recognize Japan firms’ contribution to US economy, new US president trustworthy – Reuters.
- ChiefCabSec Suga – Will monitor the impact of US policies on Japan firms.
- Reuters poll – Japan Inc plans no wage hike, wary about excess JPY weakening under Trump, protectionist backlash, red line is USD/JPY 125+.
- China PBOC temporary liquidity support a new tool, sends neutral policy signal – Financial News.
- Chinese banks told to issue USD-denominated debt – IFR.
- China bond issuance hits CNY36 trillion in ’16 – Xinhua.
- China end-’16 registered urban unemployment 4.02% - Xinhua.
- British banks’ optimism hits crisis-era low on Brexit uncertainty – Reuters.
- The UK seeks interventionist approach to drive post-Brexit industrial revival.
Economic Data Ahead
- No Major Economic Data Releases
Key Events Ahead
- N/A Norway NOK3 bln NST37 11-month treasury bill auction.
- (0630 ET/1130 GMT) ECB President Draghi speaks at Turin, Italy event.
- (0815 ET/1315 GMT) ECB ChiefEcon Praet speaks at EC Commission conference in Brussels.
- (0850 ET/1350 GMT) France E3.1-3.5/1.4-1.8/1.2-1.6 bln 3/6/12-month BTF auctions.
- (0910 ET/1410 GMT) Norges Bank DepGov Matsen speaks at Copenhagen economic seminar.
FX Beat
DXY: The dollar declined across the board as the U.S. President Donald Trump offered no detail on his plans to stimulate economic growth. The greenback against a basket of currencies traded 0.4 percent down at 100.38, pulling further away from a high of 101.73 hit last week. FxWirePro's Hourly Dollar Strength Index stood at -23.82 (Neutral) by 0500 GMT.
EUR/USD: The euro advanced, hitting a 7-week high above the 1.0700 handle, as the dollar weakened on President Trump’s protectionism speech. The European currency traded 0.4 percent higher at 1.0742, after rising as high as 1.0749 earlier, it’s highest since Dec 8. FxWirePro's Hourly Euro Strength Index stood at 89.16 (Neutral) by 0400 GMT. Investors’ focus remains on Eurozone's preliminary consumer confidence and European Central Bank President Draghi's Speech, amid a lack of relevant data from the U.S. docket. Immediate resistance is located at 1.0750, a break above targets 1.0796 (Dec 6 High). On the downside, support is seen at 1.0672 (7-EMA), a break below could drag it lower 1.0650.
USD/JPY: The dollar declined nearly 1 percent below the 114.00 handle, as the U.S. President Donald Trump’s signal of protectionism raised the risk of trade wars and retaliatory tariffs. Moreover, the selling pressure around the major intensified as the 10-year treasury yield fell down by more than three basis points. The pair trades 0.8 percent down at 113.63, after rising to a high of 115.61 last week, it’s strongest since Jan. 11. FxWirePro's Hourly Yen Strength Index stood at -125.93 (Highly Bearish) by 0400 GMT. Investors will continue to digest Donald Trump’s speech, with the U.S. economic data calendar absolutely data empty. Immediate resistance is located at 114.54 (9-EMA), a break above targets 115.00. On the downside, support is seen at 113.44 (Session Low), a break below could take it lower 113.00.
GBP/USD: Sterling rose to a 1-month high against the dollar as the greenback was sold off broadly after Trump’s inauguration speech failed to impress global markets. Sterling trades 0.3 percent higher at 1.2411, after rising as high as 1.2444 earlier, it’s strongest since Dec. 19. FxWirePro's Hourly Sterling Strength Index stood at 118.77 (Highly Bullish) by 0400 GMT. Investors’ will continue to track overall market sentiment, amid a lack of macroeconomic fundamentals from the UK docket. Immediate resistance is located at 1.2450, a break above could take it near 1.2501 (Dec 19 High). On the downside, support is seen at 1.2361 (5-DMA), a break below targets 1.2309 (7-EMA). Against the euro, the pound trades 0.06 percent down at 86.48 pence, having hit a peak of 86.27 last week, it’s strongest since Jan. 9.
AUD/USD: The Australian dollar stood firm near a 2-1/2-month peak, as the U.S. dollar weakened across the board after U.S. President Donald Trump failed to provide detail on his plans to stimulate economic growth. The Aussie trades 0.2 percent higher at 0.7564, hovering towards a high of 0.7588 hit in the previous session, it’s strongest since Nov. 11. The major posted its fourth straight weekly gain last week and is up more than 5 percent in January. FxWirePro's Hourly Aussie Strength Index stood at 48.13 (Neutral) by 0500 GMT. Investors will continue to digest President Trump’s inauguration speech, ahead of Australia fourth quarter inflation data due on Wednesday. Immediate support is seen at 0.7522 (7-EMA), a break below could drag it lower 0.7503 (9-EMA). On the upside, resistance is located at 0.7600, a break above targets 0.7630 (Nov 11 High).
NZD/USD: The New Zealand dollar rose, hovering towards a more than one-month high, as the U.S. dollar tumbled amid uncertainty surrounding the U.S. President's economic policies. The Kiwi trades 0.4 percent up at 0.7194, having hit a peak of 0.7225 on Friday, it’s strongest since Dec. 14. The major is up 3.7 percent so far in January and on course for its best monthly performance since last June. FxWirePro's Hourly Kiwi Strength Index was at -35.56 (Neutral) by 0500 GMT. Investors will continue to track board based market sentiment, ahead of New Zealand's fourth-quarter inflation data due later in the week. Immediate resistance is located at 0.7238 (Dec 14 High), a break above could take it near 0.7300. On the downside, support is seen at 0.7150, a break below could drag it till 0.7125 (10-DMA).
Equities Recap
Asian shares gained, while the dollar declined broadly as the U.S. President Donald Trump struck a protectionist tone in his speech and offered no negative surprises.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4 percent.
Tokyo's Nikkei fell 1.29 percent to 18,891.03 points, Australia's S&P/ASX 200 index declined 0.82 percent to 5,608.40 points and South Korea's KOSPI was trading 0.07 percent up at 2,066.52 points.
Shanghai composite index rose 0.16 percent to 3,128.27 points, while CSI300 index was trading 0.06 percent higher at 3,356.53 points.
Hong Kong’s Hang Seng was trading 0.02 percent lower at 22,881.88 points. Taiwan shares added 1.0 percent at 9,424.05 points.
Commodities Recap
Crude oil prices edged up, extending previous session gains after OPEC and other producers stated over the weekend that they have been successfully implementing output cuts, however, a rise in U.S. drilling activity limited gains. International benchmark Brent crude was trading 0.1 percent higher at $55.53 per barrel by 0408 GMT, having hit a high of $56.92 on last week, its highest since Jan. 9. U.S. West Texas Intermediate crude added 0.04 percent at $53.22 a barrel, after falling as low as $50.89 on Thursday.
Gold prices rose, hitting their highest in two months as investors rushed towards safe-haven assets amid uncertainty around the U.S. President Donald Trump's economic policies. Spot gold rose 0.6 percent, to $1,215.75 per ounce by 0413 GMT, having touched a high of $1,219.34 earlier, its highest since Nov. 22. U.S. gold futures were up 1.1 percent, to $1,218.20 per ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.4375 percent lower by 0.03 bps, while 5-year yield was down by 0.028 bps at 1.9099 percent.
The Japanese government bonds gained as the country’s benchmark stock indices remained lower, following the United States President Donald Trump’s protectionist speech in on Friday. The benchmark 10-year bond yield edged down 1 basis point to 0.05 percent, while the long-term 30-year bond yields fell 1-1/2 basis points to 0.78 percent and the yield on the short-term 2-year note remained nearly flat at -0.24 percent.
The Australian government bonds rebounded, post the protectionist speech delivered by the United States President Donald Trump on Friday in his Inaugural ceremony. The yield on the benchmark 10-year Treasury note slumped 2 basis points to 2.76 percent, the yield on 15-year note also plunged 2 basis points to 3.21 percent and the yield on short-term 2-year slid 1-1/2 basis points to 1.88 percent.
The New Zealand government bonds started the week on a stronger note, following firmness in U.S. Treasuries. In intraday trading, the yield on the benchmark 10-year bond plunged 2-1/2 basis points to 3.25 percent, the yield on 7-year note ended nearly 3-basis points lower at 2.92 percent and the yield on short-term 2-year note also slipped 2-1/2 basis points to 2.30 percent.
Canadian government bond prices were mostly higher across the maturity curve, with the 2-year price up 3.5 Canadian cents to yield 0.772 percent and the benchmark 10-year rising 9 Canadian cents to yield 1.75 percent. The Canada-U.S. 2-year bond spread was -42.1 basis points, while the 10-year spread was -71.9 basis points.
