Market Roundup
- Singapore December Core CPI +0.3 Pct Y/Y (Reuters Poll +0.2 Pct)
- Singapore December All Items CPI -0.6 Pct Y/Y (Reuters Poll -0.7 Pct)
- Singapore December Private Road Transport Cost -1.1 Pct Y/Y Vs -1.7 Pct in Nov
- Australia Dec NAB business conditions index +7, confidence +3, Nov +10, +5.
- Japan Dec trade surplus Y140.2 bln, Y100 bln surplus forecast, exports -8% y/y, imports -18%. -6.8% and -16.4% forecast, exports to US -3.4%, China -8.6%, Asia b-10.3%,Dec export fall largest since Sept '12, Dec exports to Asia largest y/y drop since Jan '12, Japan posts trade deficit for 5th straight yr in '15.
- Japan Dec crude oil imports -6.7% m/m, LNG -2.2%, thermal coal +7.0%; '15 LNG imports -3.9% y/y, fall first since '15/Fukushima, thermal coal +4.8%, crude oil -2.3%m, lowest since '88.
- Japan Dec commodity imports mostly down, only meat up.
- Specs trim US dollar net longs to lowest since late October, JPY net longs most since Feb '12, EUR net shorts lowest since early November - CFTC/RTRS.
- BoJ Gov Kuroda - Fully committed to 2% inflation target, will do whatever it takes, won't hesitate, underlying inflation trend solid, eyeing market turbulence closely, crude oil weakness risk to global outlook - Reuters.
- BAML - Bond flows recessionary, more downside yet for stocks - Reuters.
- Scarred investors may stay out of Asia markets, despite low valuations -RTRS.
- IMF Lagarde - Markets need clarity on China currency, no hard landing - RTRS.
- China tries to reassure on yuan stability, investors see depreciation - RTRS.
- ECB Nouy - Mortgage lending potential source of stress -Slovenian Press Agy.
Economic Data Ahead
- (0400 ET/0900 GMT) Germany Jan Ifo business climate index,108.4 forecast; last 108.7.
- (0400 ET/0900 GMT) Germany Jan Ifo current conditions index, 112.8 forecast; last 112.8.
- (0400 ET/0900 GMT) Germany Jan Ifo expectations index, 104.1 forecast; last 104.7.
- (0400 ET/0900 GMT) Italy Nov industrial orders; last +4.6% m/m, +2.2% y/y.
- (0400 ET/0900 GMT) Italy Nov industrial sales; last +2.0% m/m, +1.6% y/y.
- (0500 ET/1000 GMT) Italy Nov retail sales; last -0.3% m/m, +1.8% y/y.
- (0600 ET/1100 GMT) Italy Dec trade balalance - non-EU - flash; last bln surplus.
- (0900 ET/1400 GMT) Belgium Jan leading indicator, -1.7 forecast; last -1.4.
- (1030 ET/1530 GMT) United States Jan Dallas Fed mfg business index; last -20.1.
Key Events Ahead
- N/A Germany E1.5 bln 12-month Bubill auction.
- N/A France E3-3.4/1.2-1.6/1.4-1.8 bln 3/6/12-month BTF note auctions.
- (0900 ET/1400 GMT) ECB/Austria CB Nowotny speech at Vienna OMFIF meeting.
- (1200 ET/1700 GMT) Buba Dombret speech at Berlin European Finance Forum.
- (1230 ET/1730 GMT) ECB Lautenschlaeger Brussels European Parliament ECON testimony.
- (1300 ET/1800 GMT) ECB Pres Draghi speech at Eschborn, Germany reception.
FX Beat
USD: The dollar dropped on Monday but remained well off recent lows as investors turned their attention towards the upcoming central bank meetings. Against a basket of currencies, the dollar index was about 0.12 percent lower at 99.405, but not far away from a 1-month high of 99.790 touched on Thursday.
EUR/USD: The euro edged up about 0.20 percent to 1.0813 levels, after going as low as 1.0782 earlier in the session, closer to a 2-week low of 1.0777 hit on Thursday. The pair is seen making a recovery after Draghi's comments suggested that the ECB could provide additional stimulus in March. Markets will be focused on the the Fed meeting due on Wednesday as they expect the Fed to leave its federal funds rate unchanged at 0.25-0.50 percent. Meanwhile, traders await for the German IFO surveys to provide fresh cues on the EUR moves. Currently the pair trades at 1.0810 levels, having touched sessions high of 1.0819. Immediate resistance is located at 1.0838 (Jan 5 High), while support is seen at 1.0777 (Jan 21 Low).
USD/JPY: The dollar trades flat at 118.79 yen against its Japanese counterpart, after having touched sessions low of 118.43. However, the pair is seen hovering towards a 2-week high of 118.87 hit on Friday. Japanese trade data released early on Monday disappointed the markets as exports dropped 8 percent from a year earlier. Markets expect the BoJ to cut its core consumer inflation forecast for the coming fiscal year to possibly below 1 percent at the policy meet on Friday. The central bank is likely to hold its policy steady this week, after the downbeat economic data increased market speculation of more easing by April. The pair faces resistance at 119.16 (Jan 06 High), while on the downside, support is seen at 117.95 (5- DMA).
AUD/ USD: The Australian dollar climbed about 0.41 percent to 0.7026 levels, hovering towards sessions high of 0.7013, underpinned by the recovery in crude oil prices. However, the gains remain capped as the NAB Business Confidence dropped to 3 in December after rising to 5 in November, with the Business Conditions Index also dropping to 7 in December after it rose to 10 in November. Traders will remain focused upon the FOMC statement and Australian CPI report scheduled later this week for more cues on the AUD moves. Currently the pair trades at 0.7023, having touched sessions low of 0.6981. Immediate resistance is located at 0.7046 (Jan 22 HIgh), while support is seen at 0.6966 (5- DMA) on the downside. Against the yen, the Aussie held at 83.43, after it touched its lowest since mid-2012 on Wednesday.
NZD/USD: The New Zealand dollars advanced about 0.52 percent to 0.6515 on Monday as worries about global growth kept a lid on further gains after a bounce from multi-weeks lows hit last week. The kiwi is seen steady at the start of this week as markets looked ahead to the Reserve Bank of New Zealand's rate decision on Thursday. The central bank is widely expected to keep rates on hold, however, the markets expect the banks announcements to point for more rate cuts ahead. Immediate resistance is seen at 0.6551 (Jan 22 High) while support is located at 0.6461 (Sessions Low). Against its Japanese counterpart yen, it trades at 77.43 levels, having touched sessions high of 77.57.
USD/CNY: China's yuan weakened slightly against the dollar in thin trading after the PBoC set the midpoint rate at 6.5557 per dollar prior to market open on Monday, 0.02 percent firmer than the previous fix of 6.5572. The spot market opened at 6.5791 per dollar and was trading at 6.5796 at midday, while the offshore yuan was trading 0.40 percent weaker than the onshore spot at 6.6059 per dollar. The onshore yuan strengthened 0.2 percent against the euro to 7.1149.
Equities Recap
Asian stocks drifted further away from 4-year lows struck last week, as the blizzard on the U.S. East coast pushed oil prices higher, relieving some of the bearish pressure on Wall Street and world markets.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.2 percent, putting further distance between a 4-year low hit last week, while Shanghai stocks edged up 0.9 percent, with Taiwan stocks gained 1.8 pct at 7,894.15 points.
Australia's S&P/ASX 200 Index climbed up 1.78 Pct at 5,003.70 points, while Nikkei closed up 0.90 pct at 17,110.91, with Seoul Shares edged up at 0.80 Pct.
Commodities Recap
Gold edged higher on Monday, buoyed by expectations the U.S. Federal Reserve may have fewer possibilities to raise interest rates amid wobbly global economy.Spot gold edged up 0.2 percent at $1,100.06 an ounce by 0237 GMT, after gaining nearly 1 percent last week, while U.S. gold for February delivery gained 0.4 percent to $1,100.60 an ounce. Spot silver climbed 0.6 percent to $14.09 an ounce, with palladium edging up 0.3 percent at $495.50, while Platinum also gained 0.5 percent to $833.76 per ounce.
Crude oil futures extended gains on Monday following a surge at the end of last week on short-covering and fuel demand generated by freezing weather in parts of the northern hemisphere. Oil prices rose 10 percent on Friday, as bearish traders who had taken out record short positions scrambled to close them. Brent had gained 8 cents to $32.26 a barrel by 0221 GMT after touching $32.69 a barrel earlier in the day. U.S. crude gained 5 cents to $32.24 a barrel, compared with its session-high of $32.64 and previous settlement at $32.19.
Treasuries Recap
U.S. 10-Year Treasuries yield stood at 2.058 percent versus its previous close of 2.048 percent.
Australian government bond futures were trading low, with the 3-year bond contract off 1 tick at 98.060. The 10-year contract eased half a tick to 97.2650, while the 20-year contract edged down 1 tick to 96.7600.
New Zealand government bonds gained slightly, with yields 1 basis point lower across most of the curve.
Canadian government bond prices were lower across the maturity curve, with the benchmark 10-year dropping 45 Canadian cents to yield 1.318 percent, however, the 2-year price was up half a Canadian cent to yield 0.454 percent. The Canada-U.S. 2-year bond spread was 4.4 basis points more negative at -41.9 basis points as Treasuries underperformed at the front of the curve.
