Market Roundup
- BoJ Gov Kuroda reappointed for another term, Amamiya/Wakatabe as DepGovs
- BoJ Gov Kuroda – Sticks to script, premature to talk exit yet
- Japan FinMin Aso – Watching FX market with sense of urgency, will act if needed
- MoF flow data week-ended 2/10 – Japanese sell net Y973.2 bln foreign bonds
- Net Y44.8 bln stocks sold too, Y142.0 bln bills bought
- Foreigners sell Y429.5 bln Japan stks, buy Y41.7 bln JGBs, Y807.3 bln bills
- Australian central bank says doesn't see case for near-term rate rise
- Cracks widen in Australian coalition as deputy PM calls Turnbull 'inept'
- New Zealand Jan Manufacturing PMI, 55.6 vs 51.2
- U.S. Senate rejects immigration bills, leaves Dreamers in limbo
- Ramaphosa elected president of South Africa, vows anti-corruption fight
- U.S. 'junk' bond funds hit by 2nd biggest cash withdrawals -Lipper
- Foreign CB US debt holdings +$11,122 bln to $3.398 trln Feb 14 week
- Treasuries +$11,010 bln to $3.056 trln, agencies $117 mln to $262.523 bln
Economic Data Ahead
- (0430 ET/0930 GMT) Great Britain Jan Retail sales, 0.5% m/m, 2.6% y/y eyed; -1.5%, 1.4% last
- (0430 ET/0930 GMT) Great Britain Jan Retail sales ex-fuel, 0.6% m/m, 2.5% y/y eyed; -1.6%, 1.3% last
Key Events Ahead
- (0320 ET/0820 GMT) ECB's Benoit Coeure speaks in Skopje, Macedonia
- (0630 ET/1130 GMT) Bank of Spain Governor Luis Maria Linde to participate in an event in Granada
FX Beat
DXY: The dollar index slipped to a 3-year low and was headed for its biggest weekly loss in two years, weighed down by concerns that Washington might pursue a weak dollar strategy. The greenback against a basket of currencies traded 0.4 percent down at 88.29, having touched a low of 88.25, its lowest since Dec. 2014. FxWirePro's Hourly Dollar Strength Index stood at -15.48 (Highly Bearish) by 0500 GMT.
EUR/USD: The euro rallied to a 3-year peak and was on track for a weekly gain as the greenback continued to defy hardening of the treasury yields as investors speculated the Fed could respond more aggressively to rising price pressures. The European currency traded 0.4 percent up at 1.2553, having touched a high of 1.2555 earlier, its highest since Dec 2014. FxWirePro's Hourly Euro Strength Index stood at 25.88 (Neutral) by 0500 GMT. Investors’ attention will remain on ECB Coeure's speech, ahead of U.S. building permits, housing starts and export and import index. Immediate resistance is located at 1.2570, a break above targets 1.2620. On the downside, support is seen at 1.2369 (5-DMA), a break below could drag it lower 1.2245 (Feb 7 Low).
USD/JPY: The dollar slumped to a fresh 15-month low below the 106.00 handle on mounting worries over the U.S. budget deficit which is projected to expand to near $1 trillion in 2019 amid a government spending splurge and large corporate tax cuts. The major was trading 0.4 percent down at 105.74, having hit a low of 105.55 earlier, its lowest since Nov. 2016. FxWirePro's Hourly Yen Strength Index stood at 159.07 (Highly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. building permits, housing starts and export and import index for further momentum. Immediate resistance is located at 106.63 (78.6% retracement of 110.48 and 105.74), a break above targets 107.45 (61.8% retracement). On the downside, support is seen at 105.60, a break below could take it lower 105.30.
GBP/USD: Sterling rose to an 11-day high on the back of a broadly weakened U.S. currency, with traders eyeing earnings data next week to give the British pound fresh momentum. The major traded 0.3 percent up at 1.4135, having hit a high of 1.4144 earlier, it’s highest since Feb 5. FxWirePro's Hourly Sterling Strength Index stood at 37.15 (Neutral) by 0500 GMT. Investors’ focus will remain on the UK retail sales, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.4150 (Feb 5 High), a break above could take it near 1.4278 (Feb 2 High). On the downside, support is seen at 1.4018 (21-DMA), a break below targets 1.3946 (10-DMA). Against the euro, the pound was trading 0.1 percent down at 88.76 pence, having hit a low of 89.19 pence on Wednesday, it’s lowest since Jan. 12.
AUD/USD: The Australian dollar rose to an over 2-week peak, bolstered by stronger commodity prices and a positive outlook for global growth, while the greenback continued its downward momentum. The Aussie trades 0.4 percent up at 0.7969, having hit a high of 0.7970 earlier; it’s highest since Feb 2. FxWirePro's Hourly Aussie Strength Index stood at 11.28 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7900, a break below targets 0.7879 (5-DMA). On the upside, resistance is located at 0.7994, a break above could take it near 0.8049.
NZD/USD: The New Zealand dollar advanced to a 3-week high, as the greenback eased amid increasing worries about the rising budget and current account deficits in the U.S. economy. The Kiwi trades 0.2 percent up at 0.7420, having touched a high of 0.7427, its highest level since Jan. 24. FxWirePro's Hourly Kiwi Strength Index was at 99.59 (Slightly Bullish) 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 0.7520. On the downside, support is seen at 0.7312 a break below could drag it near 0.7292 (10-DMA).
Equities Recap
Asian shares rose, extending gains for a fifth straight day, while the greenback hit a three-year low against a basket of major currencies on concerns that Washington might pursue a weak dollar strategy.
MSCI's broadest index of Asia-Pacific shares outside Japan surged 0.5 percent.
Tokyo's Nikkei rose 1.2 percent to 21,728.95 points, Australia's S&P/ASX 200 index fell 0.1 percent to 5,904.00 points.
Many Asian markets were closed for the Lunar New Year holiday.
Commodities Recap
Crude oil prices edged higher as the dollar stood near a three-year low in subdued Asian trade. International benchmark Brent crude was trading 0.3 percent up at $64.64 per barrel by 0447 GMT, having hit a high of $65.12 on Thursday, its highest since Jan. 8. U.S. West Texas Intermediate was trading 0.3 percent up at $64.66 a barrel, after rising as high as $61.80 earlier, its strongest since Jan. 8.
Gold prices rose to a 3-week peak and were on track for their biggest weekly percentage gain in nearly two years, boosted by a weaker U.S. dollar and as investors looked to hedge against inflation. Spot gold was trading 0.4 percent up at $1,358.64 an ounce at 0450 GMT, after touching its highest level since Jan. 25 at $1,359.34 earlier and was up 2.7 percent so far this week. U.S. gold futures climbed 0.1 percent to $1,356.2 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.909 percent higher by 0.017 bps, while 5-year yield was 0.021 bps up at 2.658 percent.
The Japanese government bonds rose during early Asian session amid a silent trading day that witnessed no data of any primary economic significance, following a shutdown in major Asian markets on the occasion of Chinese New Year holidays. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slipped 1/2 basis point to 0.06 percent, the yield on the long-term 30-year note hovered around 0.78 percent and the yield on short-term 2-year steadied tad lower at -0.15 percent.
The Australian bonds slumped on the last trading day of the week following weakness in the U.S. Treasuries, which hovers around 4-year high. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1 basis point to 2.904 percent, the yield on the long-term 20-year note also surged nearly 1 basis point to 3.313 percent and the yield on short-term 3-year up 1 basis point to 2.143 percent.
The Canadian government bond prices were little changed across the yield curve, with the five-year flat to yield 2.154 percent and the 10-year rising 1 Canadian cent to yield 2.373 percent. The five-year yield posted its highest intraday since September 2013 at 2.173 percent.
