Market Roundup
- Philly Fed Harker – March should be considered for next rate hike, economy- dependent, eyes three hikes this year, for no change in Dodd-Frank – Reuters.
- Japan FinMin Aso – Reiterates pledge against competitive FX devaluation, no comment on recent JPY gains - Reuters.
- Japan Dec leading indicator index 105.2, coincident 115.2, Nov 102.6, 115.1.
- Japan Ajinomoto targets Europe with $1.3 bln acquisitions pot, eyes on UK, Germany and France – Financial Times.
- RBA leaves OCR as is and as forecast at 1.5%, policy consistent with growth, inflation targets, AUD rise could complicated economic transition, global economic conditions better, RBA seen on hold indefinitely.
- Australia Jan AIG/HIA PCI 47.7, +0.7 point on month, still sub-50.
- RBNZ Gov Wheeler to step down when term expires on Sept 26, DepGov Spencer to stand in for six months – Reuters.
- RBNZ survey - Q1 average 1-year inflation expectations 1.56%, 2-year 1.92%.
- UK Jan BRC like-for-like retail sales -0.6% y/y, total sales +0.1%, both weakest readings since Aug, Dec +1.0%/+1.7%, Nov-Jan total weakest since ’09.
Economic Data Ahead
- (0145 ET/0645 GMT) Switzerland Q1 consumer confidence index, -11 forecast; last -13.0.
- (0200 ET/0700 GMT) Germany Dec industrial output, +0.3% m/m forecast; last +0.4%.
- (0245 ET/0745 GMT) France Dec current account balance; last E2.3 bln deficit.
- (0245 ET/0745 GMT) France Dec trade balance, E3.5 bln deficit forecast; last E4.38 bln deficit.
- (0245 ET/0745 GMT) France Dec budget balance; last E93.3 bln deficit.
- (0245 ET/0745 GMT) France Q1 industrial investment; last +5.0% AR.
- (0430 ET/0830 GMT) Great Britain Jan Halifax HPI, +1.2% m/m forecast; last +1.7%.
- (0600 ET/1100 GMT) United States Jan NFIB small business optimism index; last 105.8.
- (0830 ET/1330 GMT) The United States Dec int’l trade balance, $45 bln deficit forecast; last $45.2 billion deficit.
- (0830 ET/1330 GMT) Canada Dec trade balance, C$350 mln surplus forecast; last C$530 million surplus.
- (1000 ET/1500 GMT) United States Dec JOLTS job openings, 5.57 mln forecast; last 5.52 million.
- (1500 ET/2000 GMT) United States Dec consumer credit, $20.0 bln forecast; last $24.53 billion.
Key Events Ahead
- N/A Belgium 2024 and 2057 syndications via BNP/Paribas, HSBC, JPM et al.
- (0400 ET/0900 GMT) Netherlands E4-6 bln 0.75% 2027 DSL auction.
- (0430 ET/0930 GMT) ECB 7-day zero% refi, E31 billion allotment forecast, E33.3 bln maturing.
- (0500 ET/1000 GMT) Austria E1.43 billion total 1.75% and 0.75% 2023 and 2026 RAGB auctions.
- (0530 ET/1030 GMT) Germany E500 million 0.1% 2046 index-linked Bund auction.
- (0530 ET/1030 GMT) UK DMO GBP3 billion 1.75% 2019 Gilt auction.
- (0540 ET/1040 GMT) Belgium E1.7-2.1 billion 3 and 12-month treasury certificate auctions.
- (0630 ET/1130 GMT) ESM E1.5 bln 3-month bill auction.
- (0700 ET/1200 GMT) NZ Fonterra dairy auction, GDT price index.
- (0900 ET/1400 GMT) BoE MPC Forbes releases text of speech.
- (1130 ET/1630 GMT) ECB/Buba Weidmann speaks in Mainz, Germany.
FX Beat
DXY: The dollar edged up against the Japanese yen after declining to a 10-week low earlier amid risk-off market profile. The greenback against a basket of currencies traded 0.2 percent up at 100.14, putting further distance between a low of 99.23 hit last week, its lowest since Nov. 14. FxWirePro's Hourly Dollar Strength Index stood at 42.36 (Neutral) by 0500 GMT.
EUR/USD: The euro tumbled, hitting a fresh 1-week low near the 1.0700 handle, as heightened political uncertainty in France pushed the France-German yield spread to a four-year high. On Monday, France's far-right National Front leader Marine Le Pen launched her presidential bid, promising to fight globalization and take France out of the eurozone. The European currency traded 0.3 percent down at 1.0712, having touched a low of 1.0704 earlier, it’s lowest since Jan. 31. FxWirePro's Hourly Euro Strength Index stood at -151.93 (Highly Bearish) by 0400 GMT. Investors’ attention now remains on developments surrounding France elections, ahead of series of U.S. macro fundamental drivers. Immediate resistance is located at 1.0771 (5-DMA), a break above targets 1.0800. On the downside, support is seen at 1.0686 (21-DMA), a break below could drag it near 1.0650.
USD/JPY: The dollar edged up, attempting a minor recovery after declining for consecutive three sessions, as data released on Monday showed U.S. Labour market conditions index rose to 1.3 in January from previous revised 0.6, indicating that the labor market strengthened during the same period. The major initially fell to a 10-week low, as political uncertainty in Europe triggered risk-off market sentiment. The pair trades 0.2 percent up at 111.91, after falling as low as 111.59 earlier, it’s lowest since Nov 29. FxWirePro's Hourly Yen Strength Index stood at 104.55 (Highly Bullish) by 0400 GMT. Investors will continue to track board based market sentiment, ahead of the U.S. Trade balance, JOLTS Survey, and consumer credit figures. Immediate resistance is located at 112.00, a break above targets 112.61 (5-DMA). On the downside, support is seen at 111.59 (Session Low), a break below could take it near 111.00.
GBP/USD: Sterling slumped, extending losses for the fourth straight session, as a three-day debate on a law giving May the right to trigger Brexit began on Monday. Investors’ attention now remains on Wednesday’s House of Commons vote on the Article 50 bill. Sterling trades down at 1.2460, after slumping to a low of 1.2427 in the previous session, it’s weakest since Jan. 31. FxWirePro's Hourly Sterling Strength Index stood at -54.95 (Bearish) by 0400 GMT. Investors’ now await the UK Halifax House Price figures, ahead of series of U.S. economic data. Immediate resistance is located at 1.2500, a break above could take it near 1.2547 (10-DMA). On the downside, support is seen at 1.2397 (21-DMA), a break below targets 1.2300. Against the euro, the pound trades 0.3 percent up at 85.92 pence, having hit a low of 86.44 on Monday, it’s weakest since Jan. 24.
AUD/USD: The Australian dollar rose, reversing most of its previous session losses, after the Reserve Bank of Australia held rates steady at its first policy meeting of the year. The central bank left rates unchanged at a record low of 1.5 percent for a seventh straight month, despite recent weak economic growth figures. The Aussie trades 0.15 percent up at 0.7670, hovering towards a high of 0.7696 hit last week, it’s strongest since Nov. 10. FxWirePro's Hourly Aussie Strength Index stood at 48.76 (Neutral) by 0500 GMT. Investors will continue to digest RBA monetary policy decision, ahead of the U.S. economic data. Immediate support is seen at 0.7629 (5-DMA), a break below could drag it near 0.7600. On the upside, resistance is located at 0.7700, a break above targets 0.7750.
NZD/USD: The New Zealand dollar rallied to a 3-month peak above the 0.7350 level after Reserve Bank of New Zealand released higher inflation expectations numbers. The RBNZ inflation expectations for the fourth quarter rose to 1.9 percent y/y, surpassing previous reading of 1.7 percent. However, the upside looked limited as the U.S. dollar remains broadly strong, amid moderate risk-averse sentiment. The Kiwi trades 0.5 percent up at 0.7359, having hit a peak of 0.7375 earlier in the session, its strongest since Nov. 9. FxWirePro's Hourly Kiwi Strength Index was at 51.62 (Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of Global Dairy Trade price index and the U.S. JOLTS job openings data. Immediate resistance is located at 0.7400, a break above could take it near 0.7430. On the downside, support is seen at 0.7301 (5-DMA), a break below could drag it near 0.7270 (Jan 31 Low).
Equities Recap
Asian shares tumbled as global economic and political concerns sent investors seeking shelter in the safe haven assets such as Japanese yen and gold.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.15 percent.
Tokyo's Nikkei rose 0.17 percent to 18,944.54 points, Australia's S&P/ASX 200 index edged up 0.03 percent to 5,617.50 points and South Korea's KOSPI was trading 0.14 percent down at 2,074.52 points.
Shanghai composite index climbed 0.27 percent to 3,148.80 points, while CSI300 index was trading 0.10 percent higher at 3,368.03 points.
Hong Kong’s Hang Seng was trading 0.11 percent lower at 23,318.63 points. Taiwan shares added 0.2 percent at 9,554.56 points.
Commodities Recap
Crude oil prices steadied after declining more than 1 percent in the previous session, as investors refrained from taking big positions, keeping crude range-bound for much of the year. International benchmark Brent crude was trading 0.1 percent higher at $56.88 per barrel by 0429 GMT, having hit a low of $55.63 in the previous session, it’s weakest since Feb. 1. U.S. West Texas Intermediate crude rose 0.1 percent at $53.11 a barrel, after falling to $52.89 on Monday, its lowest since early Feb.
Gold prices edged down after rising to a three-month high earlier in the session, although increasing political uncertainty across the global supported the bid tone around the safe-haven metal. Spot gold eased 0.1 percent to $1,233.19 per ounce at 0433 GMT, having touched its highest since Nov. 11 at $1,235.50 earlier. U.S. gold futures rose 0.32 percent to $1,236.20 an ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.3912 percent lower by 0.022 bps, while 5-year yield was down by 0.022 bps at 1.8321 percent.
The Japanese government bonds remained flat in a subdued trading session that witnessed data of least economic significance, while slightly lower equities limited the fall in yields. The benchmark 10-year bond yield hovered around 0.09 percent, while the long-term 30-year bond yields also remained flat at 0.90 percent and the yield on the short-term 2-year note slid nearly 1 basis point to -0.21 percent.
The Australian 10-year government bond yields tumbled to 2-week low despite the Reserve Bank of Australia (RBA) maintaining its official cash rate at its record-low of 1.50 percent, citing improved global macroeconomic conditions at the first monetary policy meeting of 2017 held today. The yield on the benchmark 10-year Treasury note tumbled 7-1/2 basis points to 2.70 percent, the yield on 15-year note also slumped nearly 8 basis points to 3.16 percent and the yield on short-term 2-year fell nearly 3 basis points to 1.81 percent.
The New Zealand government bonds bounced at the time of closing as investors digested the United States President Donald Trump’s aggressive policy actions. However, markets have largely shrugged off the upbeat inflation expectations revealed today. The yield on the benchmark 10-year bond plunged 8 basis points to 3.33 percent at the time of closing, the yield on 7-year note also slumped 7 basis points to 2.96 percent and the yield on short-term 2-year note traded 3-1/2 basis points lower at 2.28 percent.
Canadian government bond prices were higher across the maturity curve, with the 2-year price up 7.5 Canadian cents to yield 0.737 percent and the benchmark 10-year rising 52 Canadian cents to yield 1.701 percent, its lowest settlement since Jan. 23. The Canada-U.S. two-year bond spread narrowed to -41.6 basis points, while the 10-year spread came in at -70.9 basis points.
