Market Roundup
- Asia Central banks in spotlight as cheap money fuels debate over race to bottom.
- Japan February trade surplus Y242.8 bln, exports -4% y/y, imports -14.2%, Y388.6 bln, -3.1% and -15.2% eyed, exports to China +5.1%, Asia -6.1%, US +0.2%.
- Japan February crude import volume +9.6%, LNG -3.8%, thermal coal +0.7%.
- MoF flow data week-ended March 12 – Japanese buy net Y121.3 bln foreign stocks, Y897.3 bln bonds, sell Y114.1 bln bills; foreign investors sell net Y1.5832 trln Japanese stocks, buy Y994.1 bln bonds, Y143.2 bln bills.
- Japan FY ‘16/17 domestic car sales +6.5% to 5.26 mln units ahead of April ’17 sales tax hike.
- China February FDI +7.8% y/y to $8.44 bln, Common Ministry – will ease restrictions on foreign investment this year, ’16 trade situation more severe than ’15 but drop in trade to ease post-March, ODI growth to surpass FDI.
- RBA AsstGov Debelle – Would prefer a lower AUD.
- Australia February employment +0.3k, unemployment 5.8%, participation 64.9%, +10k, 6% and 65.2% eyed.
- NZ Q4 GDP +0.9% q/q, +2.3% y/y, +0.6% and +2.0% eyed, Q4 average growth 2.5%, expenditure-based GDP +1.1% q/q, +0.6% eyed, no change in RBNZ expectations.
Economic Data Ahead
<>······················(18300 ET/2230 GMT) RBA Ellis speech at Sydney conference.
FX Recap
USD: The dollar posted losses on Thursday after dropping sharply following the U.S. Fed's decision to halve its outlook for interest rate increases to two from four by the end of this year. It gained 0.2 percent to 112.73 after falling to a 1-week low of 112.335 following the Fed's announcement. It was hovering between the Feb. 11 low of 110.985 yen and the March 2 high of 114.875. Against a basket of currencies, the greenback was down about 0.2 percent at 95.738, after plunging to a one-month low of 95.539.
EUR/USD: The euro inched down 0.1 percent against the dollar to $1.1214 after the Fed drove it to a one-month high of $1.1244. Pair fails to break key resistance at $1.1249 and currently hovers around $1.1221 levels. Short term bias remains bullish till the time pair holds key support level at $1.1153. A daily close above key resistance will drag the parity towards $1.1376 marks. On the down side, key support level is seen at $1.1050/$1.1012 marks.
USD/JPY: The Yen strengthens against US dollar on Thursday and breaks 112.00 marks. Japan’s adjusted trade balance for February came in at a surplus of $170 billion, narrower than the Y240 billion expected. Exports fell 4.0% year-on-year, more than the 3.1% drop expected and imports slumped 14.2%, a bit less than the 15.2% expected. Country’s imports have fallen for thirteen months in a row now, while exports were down from the fifth consecutive month in February. Pair is likely to consolidate below 114.87 levels. A daily close above 114.87 is required to confirm the bullish trend. Today pair breaks key support level at 112.32 marks. 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 inched up about 0.1 percent to $1.4262, holding above the previous session's nearly two-week low of $1.4053. Short term bias remains bearish till the time pair holds key resistance at $1.4436 level. Alternatively, a daily close above $1.4378 will take the parity towards key resistance at $1.4508. BOE rate decision will be focus next. BOE is likely to keep the policy on hold. Indeed, market does not see high chance of any move ahead of the June 23 referendum on whether Britain should remain in the European Union.
AUD/USD: The Australian dollar rose to 8-month peak as unemployment rate dropped, supporting the lesser chance of near-term rate cut. The Australian Bureau of Statistics showed unemployment fell to 5.8 percent in February, while analysts had expected it to stay at 6.0 percent. Intraday bias remains bullish for the moment. A sustained close above $0.7593 levels will drag the parity towards 0.7653 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 NZD/USD was up 1.87% at $0.6772 on Thursday from around $0.6719 at the close of trade on Wednesday, hitting an intraday high of $0.6781 after the FOMC statement was released. Pair remains well supported above $0.67 marks and short term bias remains bullish for the moment. Key support was found at $0.6585, with resistance at $0.6797 levels. New Zealand’s GDP was expanded by 0.9% in the three months to December from the previous quarter, unchanged from the growth rate of the third quarter.
Equities Recap
Japan's benchmark Nikkei 225 index rallied 1.39% to 17,209.84 points Thursday, while the broader Topix index jumped 1.31% to 1,378.38 points.
Hong Kong Hang Seng index was trading 1.19% higher at 20,519.16 points, while the Shanghai Composite index traded little higher at 2,872.72 points early on.
South Korea’s Kospi was trading 1.04% higher at 1995 points.
Australia's benchmark S&P/ASX 200 index rallied 1.27% to 5,184.00 points on Thursday afternoon in Sydney.
New Zealand's S&P/NZX 50 index traded little down at 6,557.05 points on Thursday afternoon in Wellington.
Commodities Recap
Oil futures rose 2 percent in Asian trade on Thursday, adding to strong gains in the previous session after the world's biggest suppliers firmed up plans to meet to discuss an output freeze. Oil producers including Gulf OPEC members support holding talks next month on a deal to keep production at current levels even if Iran declines to participate, OPEC sources said on Wednesday, increasing the likelihood of the first global supply deal in 15 years. U.S. crude was up 77 cents at $39.23 a barrel at 0221 GMT, having earlier risen as high as $39.38. Brent crude rose 51 cents to $40.84. On Wednesday, it finished up $1.59, or 4 percent, at $40.33 a barrel.
Gold ticked lower on Thursday as the market took a breather after rallying 2.5 percent in the previous session following the Federal Reserve's decision to cut the number of planned interest rate hikes, adding to pressure on the dollar. Gains in Asian stock markets and U.S. crude oil futures took their toll on the precious metal's safe-haven appeal. Spot gold had slid 0.6 percent to $1,255.07 an ounce by 0236 GMT, after notching up its biggest one-day rally in five weeks on Wednesday to a high of $1,264 an ounce. U.S. gold jumped 2.1 percent to $1,256.1 an ounce, having settled down 0.1 percent in the last session prior to the Fed statement.
Treasuries Recap
Japan 03-month treasury discount bill auction lowest price 100.0240, average price 100.0253, bids accepted at lowest price 79.0420 pct. BOJ offers to lend Y645.6 bln of JGBs on spot basis through 3/18 as a secondary source of JGBs.
10-year U.S. treasury yield was at 1.911 percent vs U.S close of 1.938 percent on Wednesday.
Thailand 40 bln baht, 3-year Central bank bond average accepted yield 1.3958 pct.
