Market Roundup
•Japan Fin Min Aso – Closely watching FX market moves.
•BOJ Policy Board January minutes – Risks up on global market volatility, could hurt sentiment, delay shift out of deflationary mindset, domestic economy faring well so far, three options proffered – more QQE, NIRP or combo, combo option for most, government agreed, inflation target later than eyed.
•Japan PM Abe considering delaying planned sales tax hike.
•Chief Cab Sec Suga– Not true government considering sales tax hike delay.
•PBOC fixes CNY at 6.4628 vs USD, CNY biggest daily rise since November.
•China February new home prices +3.6% y/y, Jan +2.5%, Beijing +12.9%, Shanghai +20.6%.
•Foreign CB US debt holdings -$2.585 bln to $3.251 trln March 16 wk, Treasury holdings -$2.971 bln to $2.936 trln, agencies +$141 mln to $266.278 bln.
•Lipper – US-based stock funds post $2.1 bln outflows week-ended Wednesday.
•NY Fed – Swaps with foreign CBs $76 mln march 16 week, BoJ $2 mln, rest ECB.
•NZ February job adverts +0.9% m/m, +0.4% y/y, follows sharp January fall, caution.
•NZ Fonterra update – ‘15/16 collection forecast -4%, NZ -1%, Australia -3%.
Economic Data Ahead
•(0500 ET/0900 GMT) Norway March unemployment, 3.3% nsa, 101.9k sa eyed; last 3.3%, 101.01k.
•(0600 ET/1000 GMT) EZ Q4 labour costs, wages; last +1.1% y/y, +1.4% y/y.
•(1000 ET/1400 GMT) US Mar UoM sentiment index – prelim, 92.2 eyed; last 91.7.
•(1000 ET/1400 GMT) Belgium March consumer confidence index; last -5.0.
Key Events Ahead
•N/A European Council Brussels summit (final day), Marshall Fund Forum.
•N/A Riksbank executive board meeting.
•N/A UK DMO GBP1.0/1.5/2.0 bln 1/3/6-month treasury bill auctions.
•(0300 ET/0700 GMT) Riksbank DepGov Ohlsson speaks at Stockholm seminar.
•(0630 ET/1030 GMT) BoE Fisher in London panel discussion.
•N/A NY Fed Dudley, Boston Fed Rosengren, BoE Bailey at NY Fed conference.
•(0915 ET/1315 GMT) US Tsy DepSec Raskin speaks at Boston College conference.
•(1500 ET/1900 GMT) St Louis Fed Bullard speaks at Frankfurt conference.
FX Recap
USD: The dollar held near a 17-month low struck overnight against the yen on Friday as the Federal Reserve's less hawkish outlook for U.S. interest rates weighed on the U.S. currency. The dollar has slid sharply since the U.S. central bank lowered its expectations for interest rate increases this year at the midweek Federal Open Market Committee meeting. The dollar index fell to a five-month trough of 94.847, and was set to end the week 1.5 percent lower.
EUR/USD: The euro hovered near a five-week high of $1.1342 and was on track to gain 1.6 percent on the week. Pair breaks key resistance at $1.1249 and currently hovers around $1.1310 levels. Short term bias remains bullish till the time pair holds key resistance level at $1.1342. A daily close above key resistance will drag the parity towards $1.1376 marks. On the down side, key support level is seen at $1.1175 marks.
USD/JPY: The yen stood within reach of a 17-month high against the dollar early on Friday, with the Federal Reserve's cautious stance towards hiking interest rates continuing to take a toll on the greenback. Pair is likely to consolidate below 114.87 levels. A daily close above 114.87 is required to confirm the bullish trend. Pair sustained below key support level at 112.32 marks and currently trading around 111.27 levels. A daily close below key support level will drag the parity towards at 110.98/ 108.75/107.51 marks thereafter. On the top side, key resistance levels are seen at 114.87/115.96 levels.
GBP/USD: The pound traded just below a one-month high of $1.4504 scaled overnight. It has clawed back from a seven-year low of $1.3836 hit late in February on concerns over the potential exit of Britain from the European Union. Short term bias remains bearish till the time pair holds key resistance at $1.4504 level. A daily close above $1.4504 will take the parity towards key resistance at $1.4602. Alternatively, a sustained break below $1.4357 will turn the bias slightly bearish and drag the parity down towards $1.4150 marks.
AUD/USD: The Australian dollar rose to an eight-month peak of $0.7681 on Friday. Intraday bias remains bullish for the moment. Australia's top export earner jumped 5 percent. It was last at $0.7662. It has gained an impressive 7.2 percent so far this month and looked set to test the June 2015 peak of $0.7849. It also stood tall against the pound, which slumped for the sixth consecutive week. A sustained close above $0.7593 levels will drag the parity towards 0.7725 area. On the downside, a break below $0.7365 support levels will turn bias back to the downside for retesting 0.6826 low.
NZD/USD: The New Zealand dollar pushed to its highest this year at $0.6866, having gained 1.9 percent on Thursday. The U.S. dollar continued to wilt in the wake of cautious comments by the Federal Reserve. Pair remains well supported above $0.68 marks and short term bias remains bullish for the moment. Key support was found at $0.6585, with resistance at $0.6885 levels.
Equities Recap
The Nikkei 225 index traded 1.18% lower at 16,719.77 points, while the broader Topix index tumbled 1.23% to 1,342.27 points.
Chinese markets started Friday's session on an upbeat note, taking cues from overnight gains on Wall Street. Hong Kong's Hang Seng index traded 0.48% higher at 20,602.43 points and the Shanghai Composite 0.38% in the black at 2,915.90 points.
South Korea’s Kospi was trading 0.14% higher at 1990 points.
Australia’s S&P/ASX 200 index was trading 0.16% higher to 5,176.55 points on Friday afternoon in Sydney.
New Zealand's S&P/NZX 50 index was trading 0.35% higher at 6,596.53 points on Friday afternoon in Wellington.
Commodities Recap
U.S. oil futures touched new highs for 2016 on Friday, adding to strong gains the previous session as optimism grew that major producers would strike a deal to freeze output, while a more benign interest rate environment also supported prices. U.S. crude was up 5 cents at $40.25 barrel at 0211 GMT, after rising as far as $40.55 - it’s highest so far this year. But the contract also fell to as low as $39.96 earlier on Friday. On Thursday, U.S. crude rose 4.5 percent to close at $40.20, after climbing as high as $40.26. Brent crude's front-month contract was up 1 cent at $41.55. It finished up $1.21 at $41.54 a barrel on Thursday, after earlier reaching the year's peak of $41.60, a level that was matched earlier on Friday.
Gold edged up on Friday with the market on track to end the week on a firmer note as the dollar hovered near its lowest in five months, pressured by the Federal Reserve's plan to make fewer-than-expected interest rate hikes. Spot gold gained around half a percent to $1,262.84 an ounce by 0249 GMT, while U.S. gold was little changed at $1,264.20 an ounce. Spot gold has risen 1.2 percent this week after closing down 0.9 percent in the previous week.
Treasuries Recap
Australian government bond futures eased, with the three-year bond contract off 4 ticks at 98.040. The 10-year contract fell 2.5 ticks to 97.4200, while the 20-year contract shed 4.5 ticks to 96.8450. The spread between 10-year and 3-year government bonds widened to 59 basis points, having earlier shrunk to the smallest in nearly a year at 57 basis points.
New Zealand government bonds gained a tad, pushing yields half a basis point lower at the short end and 1.5 basis points lower at the long end.
JGB 20-year yield drops to new record low of 0.290 pct. 10-year JGB yield falls below minus 0.10 pct, first time below BOJ’s policy rate since 1980.
