Market Roundup
- Italy faces political gridlock as 5-Star surges in election
- Social Democrats sign up to new Merkel-led German government
- Trump trade adviser sees business exemptions for new tariffs
- China says it does not want a trade war with U.S.
- China keeps growth target at 6.5 pct, stays focused on financial risks
- China Feb Caixin Services PMI, 54.2 vs 54.7 last
- Japan Feb services PMI 51.7, Jan 51.9, new order growth slows, Feb comp PMI 52.2
- Australia Q4 Business inventories, 0.2% vs 0.2% last (0.1% rvsd), 0.5% f'cast
- Australia Jobs ads stay strong in Feb, point to healthy labour demand
- Australia Approvals to build new homes jump 17 percent in Jan
- Poll shows Australian leader's popularity slides over sex scandal
- Britain's May defends stance on post-Brexit financial services rules
- S.Korea delegation to depart for Pyongyang to bring U.S., North to talks
Economic Data Ahead
- (0355 ET/0855 GMT) Germany Feb Markit Services PMI, 55.3 eyed, 55.3 prev
- (0355 ET/0855 GMT) Germany Feb Markit Comp Final PMI, 57.4 eyed, 57.4 prev
- (0400 ET/0900 GMT) EU Markit Serv Final PMI, 56.7 eyed, 56.7 prev
- (0400 ET/0900 GMT) EU Markit Comp Final PMI, 57.5 eyed, 57.5 prev
- (0430 ET/0930 GMT) EU Mar Sentix Index, 31.0 eyed, 31.9 prev
- (0430 ET/0930 GMT) Great Britain Feb Markit/CIPS Services PMI, 53.3 eyed, 53.0 prev
- (0500 ET/1000 GMT) EU Jan Retail Sales, 0.3% m/m, 2.1% y/y eyed; -1.1%, 1.9% prev
Key Events Ahead
- (0400 ET/0800 GMT) Riksbank Governor Stefan Ingves speaks in Stockholm
- (0430 ET/0830 GMT) Bank of Spain Governor Luis M. Linde to speak in Madrid
- (0535 ET/1035 GMT) Germany E0.5/E0.5 bln for 8/12 year auction
- (0540 ET/1040 GMT) Netherlands E1.0-2.0 bln for 6 month auction
- (0855 ET/1355 GMT) France E3.3-3.7/E1.3-1.7/E1.1-1.5 bln for 3/6/12 month auction
- (1030 ET/1530 GMT) Deutsche Bundesbank's Andreas Dombret speaks in Washington
- N/A UK's Hammond appears before Brexit select committee to discuss govt's plans for leaving EU
FX Beat
DXY: The dollar index edged down to a 6-day low after President Donald Trump last week proposed tariffs on imported steel and aluminium, raising fears of retaliation from its trade partners. The greenback against a basket of currencies traded flat at 89.98, having touched a low of 89.93 earlier, its lowest since Feb. 27. FxWirePro's Hourly Dollar Strength Index stood at 4.50 (Neutral) by 0500 GMT.
EUR/USD: The euro rallied to a near 2-week high as Germany's Social Democrats (SPD) decisively backed another coalition with Chancellor Angela Merkel's conservatives. The European currency traded 0.1 percent up at 1.2323, having touched a low of 1.2155 on Thursday, its lowest since Jan. 12. FxWirePro's Hourly Euro Strength Index stood at 36.35 (Neutral) by 0500 GMT. Investors’ attention will remain on Eurozone Markit service PMI, composite PMI, sentix investor confidence and retail sales, ahead of U.S. Markit service and composite PMI, and Fed Quarles' speech. Immediate resistance is located at 1.2412 (Feb 20. High), a break above targets 1.2465 (Feb 14 High). On the downside, support is seen at 1.2265 (Mar 1 Low), a break below could drag it lower 1.2221 (Feb 27 Low).
USD/JPY: The dollar declined towards a near 16-month low touched in the previous session, as the uncertainty over Trump's decision to impose tariffs on imports of aluminum and steel continued to weigh on risk sentiment. The major was trading 0.2 percent down at 105.52, having hit a low of 105.25 on Friday, its lowest since Nov. 2016. FxWirePro's Hourly Yen Strength Index stood at 159.18 (Highly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. Markit service and composite PMI, and Fed Quarles' speech. Immediate resistance is located at 106.56 (5-DMA), a break above targets 107.00. On the downside, support is seen at 105.25 (Previous Session Low), a break below could take it lower 104.90.
GBP/USD: Sterling eased after rising for two straight sessions after Prime Minister Theresa May on Friday urged the European Union to show more flexibility in talks on a future relationship but failed to convince investors a smooth Brexit transition deal is assured. The major traded 0.05 percent down at 1.3794, having hit a low of 1.3712 on Thursday, it’s lowest since Jan 12. FxWirePro's Hourly Sterling Strength Index stood at -11.76 (Neutral) by 0500 GMT. Investors’ focus will remain on the UK Markit Service PMI, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3841 (5-DMA), a break above could take it near 1.3903 (10-DMA). On the downside, support is seen at 1.3700, a break below targets 1.3665. Against the euro, the pound was trading 0.1 percent down at 89.30 pence, having hit a low of 89.51 pence on Friday, it’s lowest since Nov. 28, 2017.
AUD/USD: The Australian dollar declined, weighed down by a broad risk-off move after U.S. President Donald Trump imposed a tariff on imported steel and aluminium. The Aussie trades 0.2 percent down at 0.7748, having hit a low of 0.7712 on Thursday; it’s lowest since Dec 26. FxWirePro's Hourly Aussie Strength Index stood at -72.51 (Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7699 (Dec 22 Low), a break below targets 0.7653 (Dec 21 Low). On the upside, resistance is located at 0.7783 (5-DMA), a break above could take it near 0.7819 (10-DMA).
NZD/USD: The New Zealand dollar tumbled as U.S. President Donald Trump's threat of tariffs triggered fears of a global trade war. The Kiwi trades 0.3 percent down at 0.7221, having touched a low of 0.7186 on Thursday, its lowest level since Feb. 8. FxWirePro's Hourly Kiwi Strength Index was at -6.85 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7263 (Mar 1 High), a break above could take it near 0.7304. On the downside, support is seen at 0.7144 (Jan. 5 Low), a break below could drag it below 0.7100.
Equities Recap
Asian shares declined to near three-week lows, while the greenback eased to a 6-day low amid fears of a global trade war.
MSCI's broadest index of Asia-Pacific shares outside Japan tumbled 0.8 percent.
Tokyo's Nikkei fell 0.7 percent to 21,042.09 points, Australia's S&P/ASX 200 index plunged 0.6 percent to 5,895.00 points and South Korea's KOSPI lost 0.9 percent to 2,379.74 points.
Shanghai composite index declined 0.3 percent to 3,246.27 points, while CSI300 index was trading 0.3 percent down at 4,005.32 points.
Hong Kong’s Hang Seng was trading 1.5 percent lower at 30,130.78 points. Taiwan shares shed 0.5 percent to 10,642.90 points.
Commodities Recap
Crude oil prices rose, extending previous session gains ahead of a meeting between OPEC and U.S. shale firms in Houston, raising expectations that oil producers would discuss further how to reduce a global oil glut. International benchmark Brent crude was trading 0.05 percent up at $64.57 per barrel by 0449 GMT, having hit a low of $63.21 on Thursday, its lowest since Feb. 15. U.S. West Texas Intermediate was trading 0.1 percent down at $61.44 a barrel, after rising as low as $60.17 on Friday, its weakest since Feb. 15.
Gold prices rose to a 6-day high as the dollar remained pressured amid concerns of a global trade war following U.S. President Donald Trump's decision to impose tariffs on imports of aluminum and steel. Spot gold was up 0.4 percent at $1,326.46 an ounce at 0452 GMT, having fallen to its lowest level since Jan. 2 at $1,302.68 on Thursday. U.S. gold futures were up 0.2 percent at $1,325.4 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.837 percent lower by 0.02 bps, while 5-year yield was 0.027 bps down at 2.596 percent.
The Japanese government bonds rally sharply during early Asian session, following dull sentiments among investors as equities took a slide ahead of the country’s 30-year auction, scheduled to be held on March 6 by 03:45GMT. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 2-1/2 basis points to 0.04 percent, the yield on the long-term 30-year note declined nearly 1-1/2 basis points to 0.75 percent and the yield on short-term 2-year plunged 2 basis points to -0.17 percent.
The Australian bonds traded narrowly mixed as investors await the Reserve Bank of Australia (RBA) monetary policy decision scheduled for March 6. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1 basis point to 2.723 percent, the yield on the long-term 30-year note rose 1/2 basis point to 3.350 percent and the yield on short-term 2-year down 1 basis point to 1.965 percent.
The New Zealand government bonds slumped at the time of closing as investors wooed away from safe-haven buying ahead of the country’s GlobalDairyTrade (GDT) price auction, scheduled to be held on Mach 6 for further direction in the debt market. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 4 basis points to 2.98 percent, the yield on 20-year surged 4-1/2 basis points to 3.50 percent while the yield on short-term 2-year closed 1 basis point higher at 1.93 percent.
