Market Roundup
- EU chooses Spain's de Guindos for ECB vice-chair, paving way for German head
- Germany's Merkel proposes ally for crucial party job
- Britain will not have "Mad Max" economy to undercut rivals, Brexit minister says
- UK manufacturers say they urgently need clarity on Brexit
- Australia c.bank maps steady rate path, wary on mortgage debt
- Reuters survey – Over half of Japan Inc not planning pay rises this year
- FinMin Aso – Economy escaped from asset price deflation doldrums
- Ex-BoJ Kiuchi – BoJ to keep retreating from stimulus under Kuroda
Economic Data Ahead
- (0200 ET/0700 GMT) Germany Jan Producer prices, 0.3% m/m, 1.9% y/y eyed; 0.2%, 2.3% prev
- (0500 ET/1000 GMT) Germany Feb ZEW Economic sentiment, 16.0 eyed, 20.4% prev
- (0500 ET/1000 GMT) Germany Feb ZEW Current conditions, 93.9 eyed, 95.2% prev
- (1000 ET/1500 GMT) EU Feb Consumer Confidence flash, 1.00 eyed, 1.30 prev
Key Events Ahead
- (0535 ET/1035 GMT) Germany E5.0 bln for 2-year auction
- (0630 ET/1130 GMT) ESM E2.0 bln for 6-month auction
- (1230 ET/1730 GMT) Riksbank Governor Stefan Ingves talks about economy and monetary policy in New York
- (1230 ET/1730 GMT) Bundesbank board member Andreas Dombret speaks in Geneva
- N/A ECB Vice President Vitor Constancio participates in ECOFIN meeting in Brussels
- N/A Spain 30-year EUR benchmark via Barclays, BBVA, CITI, HSBC, Santander, Soc Gen.
FX Beat
DXY: The dollar index rallied to a 6-day high on expectations that the Federal Reserve will raise interest rates at its next policy meeting in March. The greenback against a basket of currencies traded 0.3 percent up at 89.43, having touched a high of 89.44, its highest since Feb. 14. FxWirePro's Hourly Dollar Strength Index stood at 45.79 (Neutral) by 0500 GMT.
EUR/USD: The euro eased as German Social Democrats (SPD) start voting in a postal ballot on whether the centre-left party should go ahead with the agreement its leaders settled last week to renew their power-sharing alliance with the chancellor' Angela Merkel's conservatives. The European currency traded 0.2 percent down at 1.2389, having touched a high of 1.2555 on Friday, its highest since Dec 2014. FxWirePro's Hourly Euro Strength Index stood at -108.16 (Highly Bearish) by 0500 GMT. Investors’ attention will remain on series of economic data from the Eurozone economies, amid lack of significant data from the US docket. Immediate resistance is located at 1.2450, a break above targets 1.2500. On the downside, support is seen at 1.2355 (10-DMA), a break below could drag it lower 1.2245 (Feb 7 Low).
USD/JPY: The dollar rose, extending gains for the third straight session, as investors ignored rising worries about the U.S. budget deficit, which is projected to rise to more than $1 trillion in 2019 amid a government spending splurge and large corporate tax cuts. The major was trading 0.2 percent up at 106.78, having hit a low of 105.55 on Friday, its lowest since Nov. 2016. FxWirePro's Hourly Yen Strength Index stood at 10.98 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, amid lack of significant data from the US docket. Immediate resistance is located at 107.45 (61.8% retracement of 110.48 and 105.74), a break above targets 108.02 (50.0% retracement). On the downside, support is seen at 106.09 (Previous Session Low), a break below could take it lower 105.40.
GBP/USD: Sterling slumped for the third straight session, as traders awaited Britain's wages data due later this week for clues to the pace of monetary tightening from the Bank of England. The major traded 0.1 percent down at 1.3980, having hit a high of 1.4144 on Friday, it’s highest since Feb 5. FxWirePro's Hourly Sterling Strength Index stood at -7.01 (Neutral) by 0500 GMT. Immediate resistance is located at 1.4050, a break above could take it near 1.42144 (Feb 16 High). On the downside, support is seen at 1.3941 (10-DMA), a break below targets 1.3900. Against the euro, the pound was trading 0.05 percent down at 88.60 pence, having hit a low of 89.19 pence on Wednesday, it’s lowest since Jan. 12.
AUD/USD: The Australian dollar rose after minutes from the Reserve Bank of Australia's last policy meeting showed it was in no hurry to hike as wage growth and inflation remained weaker. The Aussie trades 0.1 percent up at 0.7918, having hit a high of 0.7988 on Friday; it’s highest since Feb 2. FxWirePro's Hourly Aussie Strength Index stood at 47.73 (Neutral) by 0500 GMT. Immediate support is seen at 0.7897 (10-DMA), a break below targets 0.7828. On the upside, resistance is located at 0.7988, a break above could take it near 0.8044.
NZD/USD: The New Zealand dollar declined on the indication that the central bank's first move on interest rate hike might come until mid-2019. The Kiwi trades 0.2 percent down at 0.7359, having touched a high of 0.7437 on Friday, its highest level since August 2017. FxWirePro's Hourly Kiwi Strength Index was at 86.76 (Slightly Bullish) by 0500 GMT. Immediate resistance is located at 0.7450, a break above could take it near 0.7520. On the downside, support is seen at 0.7340 a break below could drag it near 0.7324 (21-DMA).
Equities Recap
Asian shares slumped, after European equities broke a winning streak, while the greenback rallied, ahead of the release of minutes of FOMC policy meeting due later in the week for clues on the outlook for U.S. interest rate.
MSCI's broadest index of Asia-Pacific shares outside Japan tumbled 0.5 percent.
Tokyo's Nikkei slumped 1.01 percent to 21,925.10 points, Australia's S&P/ASX 200 index eased 0.01 percent to 5,940.90 points and South Korea's KOSPI declined 1.2 percent to 2,413.21 points.
Commodities Recap
Crude oil prices declined on the back of a dip in Asian stocks and a stronger dollar, which potentially curbs demand. International benchmark Brent crude was trading 0.1 percent down at $65.44 per barrel by 0517 GMT, having hit a high of $65.86 the day before, its highest since Feb. 8. U.S. West Texas Intermediate was trading 0.4 percent down at $62.23 a barrel, after rising as high as $62.62 earlier, its strongest since Feb. 8.
Gold prices declined for a third straight session as investors awaited the minutes of the latest Federal Reserve meeting for clues on the outlook for U.S. interest rates. Spot gold was 0.4 percent down at $1,341.12 an ounce at 0520 GMT, having declined to its lowest level since Feb. 14 at $1,340.19 earlier. U.S. gold futures were down 1 percent at $1,342.90 per ounce, posting its biggest one-day fall in nearly two weeks.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.904 percent higher by 0.027 bps, while 5-year yield was 0.041 bps up at 2.668 percent.
The Japanese government bonds traded sideways as investors await the Bank of Japan’s policymaker Funo’s speech, scheduled to be held on February 21 by 01:10GMT, besides, the country’s national consumer price inflation (CPI), due on the following data by 23:30GMT for added direction in the debt market. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, hovered around 0.06 percent, the yield on the long-term 30-year note remained flat at 0.79 percent and the yield on short-term 2-year also steadied at -0.15 percent.
The Australian bonds slumped after policymakers showed optimism over economic growth outlook in February minutes, mapping out a steady course for rates at its first meeting of 2018 this month. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1-1/2 basis points to 2.889 percent, the yield on the long-term 30-year note surged 1 basis point to 3.515 percent and the yield on short-term 2-year up 2 basis points to 2.052 percent.
The New Zealand government bonds closed mixed as investors wait to watch the country’s GlobalDairyTrade (GDT) price auction, scheduled to be held later today and the retail sales for the fourth quarter of 2017, due on February 22 by 21:45GMT. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, surged 1-1/2 basis points to 3.01 percent, the yield on 20-year also climbed 1-1/2 basis points to 3.52 percent while the yield on short-term 2-year closed 1 basis point lower at 1.89 percent.
