Market Roundup
- CFTC IMM CTA data - Specs cut net long USD positions to smallest since early October ’16, GBP shorts up however, CHF too, CAD and AUD longs up.
- Trump accuses Obama of plot to wiretap Trump Tower before the election, requests Congress determine Obama abuse of powers, senior ex-intel official says highly unlikely – Washington Post.
- Japan CabSec Suga – Three North Korean ballistic missiles fell into Japan’s EEZ, total four fired, grave threat to Japan’s security - Reuters.
- China cuts growth target, puts focus on reform and “firewall” against risks, pledges more support for military, CNY may be disturbed in short run but to follow fundamentals over long run, ’17 fixed asset investment @9% – Reuters.
- China SAFE Pan – To release better FX data in few days – MNI.
- PBOC DepGov Yi Gang – Won’t start currency war, must watch economic trend before any rate hike – Caixin, YiCai, MNI.
- Australia Jan retail sales +0.4% m/m, as eyed, Dec -0.1%.
- Australia Feb overall job ads -0.7% m/m, still +6.9% y/y, Jan +3.9% m/m.
- New Zealand Jan new dwelling consents +0.8% m/m, +3.4% y/y, Dec -7.9% m/m.
Economic Data Ahead
- (0430 ET/0930 GMT) Eurozone Mar Sentix index, 18.5 eyed; last 17.4.
- (1000 ET/1500 GMT) United States Jan factory orders, +1.0% m/m eyed; last +1.3%, ex-transport +2.1%.
Key Events Ahead
- N/A China National People’s Congress.
- (0530 ET/1030 GMT) Netherlands E1-2 bln 6-month DTC auction.
- (0850 ET/1350 GMT) France E3.1-3.5/1.2-1.6/1.3-1.7 bln 3/6/12-month BTF note auctions.
- (1500 ET/2000 GMT) Minny Fed Kashkari speaks at Washington, DC NABE “17 policy conference.
FX Beat
DXY: The dollar was on the defensive as reports of North Korea's launch of four ballistic missiles triggered a fresh bout of risk aversion across the financial market. The greenback against a basket of currencies traded 0.1 percent down at 101.45, having hit a high of 102.26 on Thursday, it’s strongest since Jan. 11. FxWirePro's Hourly Dollar Strength Index stood at 65.18 (Bullish) by 0500 GMT.
EUR/USD: The euro edged down after rising to a 3-day high in the previous session, as the greenback gained on growing expectations of a U.S. interest rate hike this month. The European currency traded 0.2 percent down at 1.0602, having hit a low of 1.0494 on Thursday, it’s lowest since Feb. 22. Investors’ attention will remain on Eurozone's sentix Investor Confidence, ahead of U.S. factory orders and Fed officials speeches. Immediate resistance is located at 1.0630, a break above targets 1.0661 (50.0 % retracement of 1.0828 and 1.0494). On the downside, support is seen at 1.0597 (Session Low), a break below could drag it near 1.0573 (23.6 % retrace).
USD/JPY: The dollar eased from a 2-week peak as rising geopolitical tensions over North Korea triggered a fresh bout of risk aversion in the market. North Korea fired four ballistic missiles earlier, three of which landed in Japan's exclusive economic zone, Japan PM Shinzo Abe stated. However, increasing expectations of an imminent U.S. interest rate hike kept the bid tone around the major intact. The pair trades 0.1 percent lower at 113.86, having hit high of 114.74 in the previous session, its highest since Feb. 15. Investors’ will continue to track overall market sentiment, ahead of the U.S. economic data and speeches from Fed officials. Immediate resistance is located at 114.30, a break above targets 114.75. On the downside, support is seen at 113.51 (5-DMA), a break below could take it near 113.23 (10-DMA)).
GBP/USD: Sterling steadied after declining to a seven-week low in the previous session on the back of boosted expectations of an imminent U.S. interest rate hike and weaker-than-expected services PMI, which indicated the economy could be running out of steam. Moreover, concerns about a fresh Scottish independence referendum continued to weigh on the major. Sterling trades flat at 1.2287, having hit a low of 1.2214 the prior session, its weakest since Jan. 17. Investors’ attention will remain on BoE MPC member Hogg's speech, ahead of Fed officials' speeches. Immediate resistance is located at 1.2298 (23.6 % retracement of 1.2569 and 1.2214), a break above could take it near 1.2350 (50% retrace). On the downside, support is seen at 1.2242 (Mar 2 Low), a break below targets 1.2214 (Previous Session Low). Against the euro, the pound trades 0.1 percent higher at 86.26 pence, having hit a 2-week low of 86.40 the prior session.
AUD/USD: The Australian dollar declined, despite better-than-expected Australian retail sales figures as reports of 4 ballistic missiles launched by North Korea into the East Sea triggered a wide-spread of risk-aversion. Moreover, increased cautiousness ahead of the RBA’s cash rate decision weakened the bid tone around the major. The pair trades 0.2 percent down at 0.7577, having touched a low of 0.7542 in the previous session, it’s lowest since Jan. 31. Markets will continue to track board based market sentiment, ahead of U.S. factory orders report and Fed officials' speeches. Immediate support is seen at 0.7556 (Mar 2 Low), a break below could drag it near 0.7510. On the upside, resistance is located at 0.7618 (23.6 % retracement of 0.7740 and 0.7542), a break above targets 0.7650.
NZD/USD: The New Zealand dollar tumbled, extending losses for the seventh consecutive session, as the U.S dollar strengthened on expectations of a March Fed hike, ahead of the NFP data later in the week. Moreover, reports of North Korea's launch of four ballistic missiles weakened investors risk appetite. The Kiwi trades 0.4 percent lower at 0.7011, having hit a low of 0.6997 earlier in the day, it’s lowest since Jan. 11. Investors’ will continue to track board based market sentiment, ahead of the U.S. macroeconomic fundamental drivers and Fed speeches for further momentum in the major. Immediate resistance is located at 0.7055 (23.6 % retracement of 0.7246 and 0.6997), a break above could take it near 0.7100. On the downside, support is seen at 0.7000, a break below could drag it till 0.6961 (Jan 11 Low).
Equities Recap
Asian shares were on the defensive as news of slower growth in China this year and four ballistic missiles fired by North Korea triggered a fresh bout of risk-off market sentiment across the globe.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.2 percent.
Tokyo's Nikkei declined 0.46 percent to 19,379.14 points, Australia's S&P/ASX 200 index fell 0.26 percent to 5,746.40 points and South Korea's KOSPI was trading 0.19 percent up at 2,082.85 points.
Shanghai composite index rose 0.23 percent to 3,226.36 points, while CSI300 index was trading 0.30 percent up at 3,438.00 points.
Hong Kong’s Hang Seng was trading 0.29 percent higher at 23,618.96 points. Taiwan shares added 0.4 percent at 9,682.63 points.
Commodities Recap
Crude oil prices declined, reversing some of its previous gains amid ongoing concern over Russia's compliance with a global deal to cut oil output. International benchmark Brent crude was trading 0.2 percent down at $55.65 per barrel by 0425 GMT, having hit a low of $55.01 on Thursday, its lowest since Feb. 8. U.S. West Texas Intermediate crude fell 0.3 percent at $53.04 a barrel, after tumbling to a trough of $52.52 last week, its weakest since Feb. 9.
Gold prices steadied after declining to a 2-week low in the previous session supported by safe haven buying amid rising geopolitical tensions over North Korea. Spot gold was trading 0.4 percent down at $1,233.80 per ounce at 0430 GMT, having hit a low of $1,222.72, the lowest since Feb. 15 on Friday on signals of a hike in U.S. interest rates this month. U.S. gold futures were up 0.7 percent to $1,234.6.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.4763 percent lower by 0.016 bps, while 5-year yield was down by 0.013 bps at 2.0041 percent.
The Japanese government bonds traded narrowly mixed as investors wait to watch the super-long 30-year auction, scheduled to be held on Tuesday. The benchmark 10-year bond yield rose 1/2 basis point to 0.08 percent, while the long-term 30-year bond yields fell nearly 1 basis point to 0.84 percent while the yield on the short-term 2-year note traded 1/2 basis point lower at -0.28 percent.
The Australian bonds gained modestly at the start of the trading week ahead of the Reserve Bank of Australia’s (RBA) monetary policy decision, scheduled to be held on March 7. The yield on the benchmark 10-year Treasury note slipped nearly 1 basis point to 2.81 percent, the yield on 15-year note also fell nearly 1-1/2 basis points to 3.23 percent while the yield on short-term 2-year traded nearly 1/2 basis point lower at 1.84 percent.
The New Zealand government bonds traded a tad higher as investors covered previous short positions. Also, market participants are awaiting the GlobalDairyTrade (GDT) price auction, scheduled to be held on March 7 for further direction in the bond market. The yield on the benchmark 10-year bond fell 1 basis point to 3.32 percent at the time of closing, the yield on 7-year note pushed lower by nearly 1 basis point to 2.88 percent and the yield on short-term 2-year note also traded 1 basis point lower at 2.19 percent.
