Market Roundup
- Oil gains 1 percent as short-sellers take profit
- Gold steady as investors still wary over coronavirus
- Dollar at 4-month highs against euro
- Australia business conditions stay flat in January
- Australia business confidence added 1 point to -1 in January
Economic Data Ahead
- (0400 ET/0900 GMT) UK Total Trade Balance (Dec)
- (0400 ET/0900 GMT) UK Trade Balance; non-EU (Dec)
- (0400 ET/0900 GMT) UK Industrial Production (MoM) (Dec)
- (0400 ET/0900 GMT) UK Industrial Production (YoY) (Dec)
- (0400 ET/0900 GMT) UK Manufacturing Production (YoY) (Dec)
- (0400 ET/0900 GMT) UK Manufacturing Production (MoM) (Dec)
- (0400 ET/0900 GMT) UK Gross Domestic Product (YoY) (Q4) PREL
Key Events Ahead
- (0500 ET/1000 GMT) European Commission releases Economic Growth Forecasts
FX Beat
DXY: The dollar index rallied to a 4-month peak as Fed Chair Jerome Powell appears before Congress today to begin two days of testimony and is expected to reiterate that the U.S. economy is doing well. The greenback against a basket of currencies traded 0.05 percent up at 98.88, having touched a high of 98.89 earlier, its highest since Oct. 10.
EUR/USD: The euro plunged to a fresh 4-month low after data released yesterday showed investor morale in the euro zone fell for the first time in four months in February over fears that China will not be able to contain the coronavirus outbreak. The European currency traded 0.05 percent down at 1.0910, having touched a low of 1.0907 earlier, its lowest since October 2. Investors’ attention will remain on a series of data from the Eurozone economies and EZ economic growth forecasts, ahead of the U.S. JOLTS job opening data and Fed Chair Powell's testimony. Immediate resistance is located at 1.0942, a break above targets 1.0976. On the downside, support is seen at 1.0884, a break below could drag it below 1.0839.
USD/JPY: The dollar rose, extending previous session gains, supported by relatively strong economic data in the United States. On Monday, Philadelphia Federal Reserve Bank President Patrick Harker stated that the U.S. economy is in good shape and the central bank should hold rates steady for the time being. The major was trading 0.1 percent up at 109.89, having hit a high of 110.02 on Friday, its highest since Jan. 22. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. JOLTS job opening data and Fed Chair Powell's testimony. Immediate resistance is located at 110.10, a break above targets 110.29. On the downside, support is seen at 109.55 (21-DMA), a break below could take it near at 109.29 (10-DMA).
GBP/USD: Sterling consolidated near a 2-1/2 month trough amid increasing concerns over Britain’s trade talks with the European Union. Investors now await Bank of England Governor Mark Carney's speech at the British Parliament, explaining how monetary policy could improve the economy of the country. The major traded flat at 1.2905, having hit a low of 1.2872 on Monday, it’s lowest since Nov. 27. Investors’ attention will remain on the trade negotiations, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2951 (5-DMA), a break above could take it near 1.3013. On the downside, support is seen at 1.2876, a break below targets 1.2834. Against the euro, the pound was trading flat at 84.48 pence, having hit a low of 85.04 on Monday, it’s lowest since Feb. 4.
AUD/USD: The Australian dollar rose, extending gains from the prior session after a closely-watched measure of Australian business conditions showed activity stayed flat in January though confidence lifted slightly from its lowest since mid-2013. The Aussie trades 0.5 percent up at 0.6716, having hit a low of 0.6662 on Friday, it’s lowest since March 2009. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6650, a break below targets 0.6615. On the upside, resistance is located at 0.6736, a break above could take it near 0.6774.
NZD/USD: The New Zealand dollar rebounded from a near 4-month low as investors eye Reserve Bank of New Zealand’s monetary policy decision on Wednesday, where it is expected to hold rates at record lows of 1.0 percent. The Kiwi trades 0.2 percent up at 0.6396, having touched a low of 0.6378 earlier, its lowest level since November 15. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6440 (5-DMA), a break above could take it near 0.6468. On the downside, support is seen at 0.6358, a break below could drag it below 0.6327.
Equities Recap
Asian shares surged as investors assessed how quickly China’s factories could return to work as the coronavirus continues to spread and deaths mount.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.6 percent.
Australia's S&P/ASX 200 index rallied 0.6 percent to 7,055.30 points and South Korea's KOSPI surged 1.05 percent to 2,224.35 points.
Shanghai composite index rose 0.5 percent to 2,905.48 points, while CSI 300 index traded 1.1 percent up at 3,958.70 points.
Hong Kong’s Hang Seng traded 1.4 percent higher at 27,606.29 points. Taiwan shares added 0.8 percent to 11,664.04 points
Commodities Recap
Crude oil prices rallied more than 1 percent as recent sharp falls encouraged investors holding short positions to book profits. International benchmark Brent crude was trading 1.01 percent higher at $53.93 per barrel by 0505 GMT, having hit a low of $53.09 on Monday, its lowest since Jan 2019. U.S. West Texas Intermediate was trading 1.1 percent up at $50.14 a barrel, after falling as low as $49.46 on Monday, its lowest since Feb. 4.
Gold prices declined after rising to a 1-week peak in the previous session, as investor risk appetite recovered with an apparent slowdown in the rate of coronavirus infection. Spot gold was trading 0.2 percent down at $1,569.20 per ounce by 0510 GMT, having touched a high of $1577.05 on Monday, its highest since Feb. 4. U.S. gold futures fell 0.3 percent to $1,574.60.
Treasuries Recap
The spread between yields of 3-month and 10-year Treasuries was at minus 1.21 basis points on Monday. The spread was below zero for several days last week. The 10-year Treasury yield has fallen 18.7 percent since Dec. 31. It was last 2.5 basis points lower to 1.553 percent. Across maturities Treasury yields were lower, with the two-year note yield down 2 basis points to 1.379 percent and the 30-year bond yield down 1.9 basis point to 2.024 percent.
