Market Roundup
- Division! Brexit stretches arcane British parliament to breaking point
- British PM May's top lawyer struggles for Brexit deal in Brussels
- Reflationary BOJ board member calls for more stimulus if economy sinks
- China to take steps to boost domestic consumption this year - state planner
- Italy plans to join China's Belt and Road Initiative - FT
- U.S. Federal Reserve mulls tighter rules on foreign bank branches -sources
- North Korea rebuilds part of missile site as Bolton warns of more sanctions
- Australia central bank: Housing market will stabilise as buyers return
- Australia Q4 Real GDP QQ SA, 0.2%, 0.3% f’cast, 0.3% prev
- Australia Q4 Real GDP YY SA, 2.3%, 2.5% f’cast, 2.8% prev
Economic Data Ahead
- No major economic data releases
Key Events Ahead
- (0715 ET/1215 GMT) Bank of England Deputy Governor Jon Cunliffe speaks at an event in London
- (1000 ET/1500 GMT) Bank of Canada key policy interest rate announcement in Ottawa
- (1200 ET/1700 GMT) Cleveland Fed President Loretta Mester participates in moderated question-and-answer session in Columbus, Ohio
- (1200 ET/1700 GMT) New York Fed President John Williams speaks at the Economic Club of New York
- (1230 ET/1730 GMT) Michael Saunders, Bank of England member of the monetary policy committee, speaks at an event in London
- (1300 ET/1800 GMT) Bank of England chief economist Andy Haldane to host first 'Citizens Panel' in Hull, northeast England
- (1400 ET/1900 GMT) U.S. Federal Reserve issues the Beige Book of economic condition in Washington
FX Beat
DXY: The dollar index rallied, drifting closer to a 3-week peak hit in the prior session, as better than expected U.S. services data and new home sales helped to ease some fears about the state of the economy. The greenback against a basket of currencies traded 0.1 percent up at 96.96, having touched a high of 97.01 on Tuesday, its highest since February 19. FxWirePro's Hourly Dollar Strength Index stood at 119.85 (Highly Bullish) by 0400 GMT.
EUR/USD: The euro slumped to a 2-week low amid increasing speculation that the European Central Bank meeting on Thursday would indicate a delay in raising rates until next year and the ECB will soon re-launch long-term bank loans to combat an economic slowdown. The European currency traded 0.1 percent down at 1.1297, having touched a low of 1.1289 earlier, its lowest since Feb. 19. FxWirePro's Hourly Euro Strength Index stood at 13.68 (Neutral) by 0400 GMT. Investors’ attention will remain on the U.S. ADP employment change, trade balance and Fed William's speech, amid a lack of economic data from the Eurozone docket. Immediate resistance is located at 1.1341 (Feb. 13 High), a break above targets 1.1371 (Feb. 20 High). On the downside, support is seen at 1.1275 (Feb. 19 Low), a break below could drag it till 1.1234 (Feb. 15 Low).
USD/JPY: The Japanese yen retreated from multi-week lows after Bank of Japan board member Yutaka Harada stated that the central bank must ramp up stimulus without delay if risks to the economy threaten the achievement of its inflation target. The dollar rose to a 2-1/2 month peak in the previous session on the back of unexpectedly strong data on U.S. services industries and new home sales. The major was trading 0.1 percent down at 111.76, having hit a high of 112.07 on Friday, its highest since December 20. FxWirePro's Hourly Yen Strength Index stood at 106.96 (Highly Bullish) by 0400 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of U.S. ADP employment change, trade balance and Fed William's speech. Immediate resistance is located at 112.20, a break above targets 112.60 (Dec. 20 High). On the downside, support is seen at 111.32 (Mar. 1 Low), a break below could take it lower at 110.66 (Feb.28 Low).
GBP/USD: Sterling eased, hovering towards a 1-week low touched in the previous session, on report that the EU's chief negotiator, Michel Barnier and Britain's attorney general and Brexit minister were unlikely to make significant progress in talks in Brussels over tweaks to the deal demanded by hard-line Brexiteers in May's Conservative Party. The major traded 0.3 percent down at 1.3136, having hit a low of 1.3097 on Tuesday; it’s lowest since Feb.26. FxWirePro's Hourly Sterling Strength Index stood at -46.71 (Neutral) 0400 GMT. Investors’ attention will remain on developments surrounding Brexit deal, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3226 (5-DMA), a break above could take it near 1.3288 (Feb.26 High). On the downside, support is seen at 1.3093 (Feb. 26 Low), a break below targets 1.3011 (Feb. 20 Low). Against the euro, the pound was trading 0.2 percent down at 86.00 pence, having hit a low of 86.245 on Tuesday, it’s lowest since Feb 26.
AUD/USD: The Australian dollar plunged to a 2-month trough after data showed the domestic economy expanded at its slowest pace in two years last quarter, stirring speculation interest rates would have to be cut to support growth. The Australian gross domestic product grew just 0.2 percent in the December quarter, below forecasts of 0.3 percent, while annual growth slowed to 2.3 percent. The Aussie trades 0.7 percent down at 0.7032, having hit a low of 0.7028 earlier; it’s lowest since Jan. 4. FxWirePro's Hourly Aussie Strength Index stood at -141.27 (Highly Bearish) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6993 (Jan.4 Low), a break below targets 0.6965. On the upside, resistance is located at 0.7150 (Feb. 22 High), a break above could take it near 0.7206 (Feb. 21 High).
NZD/USD: The New Zealand dollar slumped to a 3-week low, as the greenback rallied on the back of better-than-expected data U.S. service PMI. The Kiwi trades 0.5 percent down at 0.6761, having touched a low of 0.6752 earlier, its lowest level Feb. 13. FxWirePro's Hourly Kiwi Strength Index was at -49.28 (Neutral) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6853 (Feb. 22 High), a break above could take it near 0.6941 (Feb. 1 High). On the downside, support is seen at 0.6719 (Feb. 12 Low), a break below could drag it below 0.6706 (Feb. 22 Low).
Equities Recap
Asian shares consolidated within narrow ranges, as investors awaited fresh clues on the progress of U.S.-China trade negotiations.
MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.05 percent.
Tokyo's Nikkei fell 0.7 percent to 21,585.07 points, Australia's S&P/ASX 200 index rose 0.8 percent to 6,245.60 points and South Korea's KOSPI eased 0.1 percent to 2,176.29 points.
Shanghai composite index rose 0.9 percent to 3,082.07 points, while CSI300 index traded 0.1 percent up at 3,819.83 points.
Hong Kong’s Hang Seng traded 0.4 percent higher at 29,082.13 points. Taiwan shares added 0.5 percent to 10,357.15 points.
Commodities Recap
Crude oil prices declined, as bullish output forecasts by two U.S. producers and a build in U.S. crude stockpiles offset ongoing OPEC-led efforts to rein in crude production. International benchmark Brent crude was trading 0.4 percent down at $65.34 per barrel by 0421 GMT, having hit a high of $67.11 on Friday, its highest since February 25. U.S. West Texas Intermediate was trading 0.3 percent lower at $56.07 a barrel, after rising as high as $57.85 on Friday, its highest since the November 16.
Gold prices steadied near an over 5-week low touched in the previous session, supported by weakness in equity markets, while a stronger dollar capped gains. Spot gold trades flat at $1,287.22 per ounce by 0425 GMT, having touched a low of $1,281.08 in the previous session, its lowest since January 25. U.S. gold futures were up about 0.3 percent at $1,287.90 an ounce.
Treasuries Recap
The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged nearly 5-1/2 basis points to 2.104 percent, the yield on the long-term 30-year bond also slumped 51/2 basis points to trade at 2.616 percent and the yield on short-term 2-year traded 4-1/2 basis points lower at 1.692 percent.
The Canadian government bond prices were mixed across the yield curve, with the two-year down 0.5 Canadian cent to yield 1.749 percent and the 10-year rising 3 Canadian cents to yield 1.892 percent.
