Market Roundup
CFTC IMM CTA data - Specs slash net USD longs to lowest since late-October, some MXN shorts covered, JPY net shorts lowest since early December.
Wall St stands with two Fed-hike outlook for ’17 – Reuters Poll.
Bond market eyes ways to cope with US tax reform – IFR.
BoJ offers to buy total JPY750 bln 5-25+ year JGBs, lend Y1.3676 trillion.
Japan Dec real wages -0.4% y/y, total cash earnings +0.1%, overtime pay -1.9%, special payments -0.1%; ’16 real wages +0.7%, first rise in 5 years.
Japan Ono Pharmaceutical readies Y400-500 billion for US acquisitions – Nikkei.
Traders rush to ship US oil as export window to Asia opens – Reuters.
Imported vehicle sales in Japan +3.9% in January – JAIA.
Reuters BreakingViews – Tokyo is no economic enemy for Trump.
Foreign holdings of China government bonds fall for the first time since Oct ’15, Jan holdings off CNY1.9 bln to CNY421.8 bln.
China Jan Caixin services PMI 53.1, composite 52.2, Dec 53.4, 53.5, off but both indices still in expansion mode, hiring up, solid increase in orders.
Australia Dec retail sales -0.1% m/m, +0.3% forecast, Q4 chain volume retail sales +0.9% q/q, as forecast, Q4 sales at two-year high but momentum lacking.
Australia’s home market boom crumbling as buyers hold back - Reuters.
Australia Jan job adverts +4.0% m/m, December rev -2.2%.
Germany FinMin Schaeuble – EUR rate too weak for Germany – Tagesspiegel.
ForMin Gabriel – Give Italy, France, Portugal time to cut deficits – ARD.
Economic Data Ahead
(0200 ET/0700 GMT) Germany Dec industrial orders, +0.5% m/m forecast; last -2.5%.
(0200 ET/0700 GMT) Norway Dec manufacturing output; last -0.1% m/m.
(0430 ET/0930 GMT) Eurozone Feb Sentix index, 17.4 forecast; last 18.2.
(1000 ET/1500 GMT) United States Jan employment trends index; last 129.6.
Key Events Ahead
New Zealand Waitangi Day holiday.
N/A Norway NOK3 bln NST35 3-month treasury bill auction.
(0530 ET/1030 GMT) ECB/Belgian CB Smets speaks in Brussels.
(0900 ET/1400 GMT) ECB Pres Draghi speaks at Brussels parliamentary ECON hearings open.
(1630 ET/2130 GMT) Philly Fed Harker speaks in San Diego, CA.
FX Beat
DXY: The dollar steadied after declining versus its major peers following downbeat U.S. labor market and wage growth figures. The greenback against a basket of currencies traded flat at 99.74, drifting away from a low of 99.23 hit last week, its lowest since Nov. 14. FxWirePro's Hourly Dollar Strength Index stood at -68.14 (Bearish) by 0500 GMT.
EUR/USD: The euro edged down, as the dollar recovered after declining on dismal U.S. wage growth numbers released last week. On Friday, the major rose to 1.0797 from 1.0709 after data showed a smaller-than-expected rise in the U.S. wages in January that reinforced expectations the Federal Reserve will refrain from hiking interest rates next month. The European currency traded down at 1.0784, after rising as high as 1.0828 on Thursday, it’s highest since Dec. 8. FxWirePro's Hourly Euro Strength Index stood at 52.27 (Bullish) by 0400 GMT. Investors’ focus now shifts on the Eurozone Sentix Investor Confidence, ahead of the U.S. Labour Market Conditions Index and Fed official speeches. Immediate resistance is located at 1.0800, a break above targets 1.0840 (Nov 14-High). On the downside, support is seen at 1.0777 (5 DMA), a break below could drag it near 1.0700.
USD/JPY: The dollar edged down, extending losses for the third consecutive session, following Friday’s report which showed a slack in the U.S. labor market and a slowdown in the wage growth in January. The nonfarm payrolls report showed a greater-than-expected rise in job growth, while the unemployment rate edged up, indicating that inflation would not attain a pace that would prompt the Federal Reserve to hike interest rates. The major trades lower at 112.54, after falling as low as 112.05 on Thursday, it’s lowest since Nov 30. FxWirePro's Hourly Yen Strength Index stood at 42.83 (Neutral) by 0400 GMT. Investors will continue to track the price action in the U.S. treasury yields, ahead of the U.S. LMCI and Fed Harker's speech. Immediate resistance is located at 113.00 (5-DMA), a break above targets 113.42 (10-DMA). On the downside, support is seen at 112.05 (Feb 2 Low), a break below could take it lower 112.00.
GBP/USD: Sterling consolidated below the 1.2500 handle, after rising to a 1-1/2 month high above the 1.2700 handle on Thursday as the British parliament voted to give PM May the power to trigger Article 50 last week. Sterling trades flat at 1.2483, after slumping to a low of 1.2412 on Tuesday, it’s weakest since Dec. 23. FxWirePro's Hourly Sterling Strength Index stood at -105.56 (Highly Bearish) by 0400 GMT. Investors’ now await the U.S. economic data, amid a lack of relevant data from the UK docket. Immediate resistance is located at 1.2655 (10-DMA), a break above could take it near 1.2600. On the downside, support is seen at 1.2412 (Jan-31 Low), a break below targets 1.2400. Against the euro, the pound trades 0.1 percent down at 86.31 pence, having hit a low of 86.44 earlier in the day, it’s weakest since Jan. 24.
AUD/USD: The Australian dollar declined from a three-month peak hit last week after data showed retail sales eased in December, raising concerns over the economy's lack of momentum. The continent's retail sales fell 0.1 percent in the month of December, below expectations for a 0.3 percent increase and were the first monthly decline since December 2015. The Aussie trades 0.2 percent down at 0.7662, hovering away from a high of 0.7696 hit on Thursday, it’s strongest since Nov. 10. FxWirePro's Hourly Aussie Strength Index stood at 159.78 (Highly Bullish) by 0500 GMT. Investors will continue to digest Australia's downbeat retail sales data, ahead of the U.S. Labour Market Conditions Index and Fed Harker’s speech. Immediate support is seen at 0.7650, a break below could drag it near 0.7619. On the upside, resistance is located at 0.7700, a break above targets 0.7750.
NZD/USD: The New Zealand rose for a third straight day to stay near a 3-month high, as the U.S. dollar weakened following downbeat labor and wage growth data. The Kiwi trades 0.1 percent up at 0.7317, hovering towards a peak of 0.7350 touched on Tuesday, its strongest since Nov. 9. FxWirePro's Hourly Kiwi Strength Index was at 131.61 (Highly Bullish) by 0500 GMT. Investors will continue to track board based market sentiment, ahead of the U.S. economic data. Immediate resistance is located at 0.7350, a break above could take it near 0.7400. On the downside, support is seen at 0.7275 (10-DMA), a break below could drag it near 0.7200.
Equities Recap
Asian shares rose following overnight gains on the Wall Street, while the dollar eased weighed down by a lack of progress on U.S. fiscal stimulus.
MSCI's broadest index of Asia-Pacific shares outside Japan inched up 0.3 percent.
Tokyo's Nikkei rose 0.27 percent to 18,968.64 points, Australia's S&P/ASX 200 index declined 0.08 percent to 5,617.10 points and South Korea's KOSPI was trading 0.19 percent up at 2,077.16 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 0.54 percent higher at 23,251.61 points. Taiwan shares added 0.9 percent at 9,538.01 points.
Commodities Recap
Crude oil prices rallied, extending gains for the fifth consecutive session on worries that new U.S. sanctions against Iran could impact crude supplies, however, signs of growing U.S. production capped further gains. International benchmark Brent crude was trading 0.3 percent higher at $56.96 per barrel by 0414 GMT, having hit a high of $57.41 last week, it’s strongest since Jan. 3. U.S. West Texas Intermediate crude rose 0.26 percent at $53.98 a barrel, after rising to $54.31 on Thursday, its highest since Jan. 3.
Gold prices nudged higher, as the dollar weakened after mixed U.S. jobs data late last week lowered expectations for near-term interest rate hikes. Spot gold gained 0.3 percent to $1,223.27 per ounce by 0418 GMT, having hit a high of $1,225.12 on Thursday, its highest since Nov. 17. U.S. gold futures rose 0.2 percent to $1,223.20 per ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.4754 percent higher by 0.024 bps, while 5-year yield was up by 0.027 bps at 1.9327 percent.
The Japanese government bonds traded modestly lower as investors shifted away from safe-haven assets amid a silent trading session that witnessed data of least economic significance and rise in riskier assets including equities and crude oil. The benchmark 10-year bond yield hovered around 0.09 percent, while the long-term 30-year bond yields jumped nearly 4 basis points to 0.90 percent and the yield on the short-term 2-year note rose nearly 1 basis point to -0.21 percent.
The Australian bonds snapped decline at the start of the week on following surprise tumble in the country’s retail sales during the month of December. The yield on the benchmark 10-year Treasury note plunged nearly 2-1/2 basis points to 2.78 percent, the yield on 15-year note also slumped 2-1/2 basis points to 3.24 percent and the yield on short-term 2-year fell 2 basis points to 1.83 percent.
