Market Roundup
- US President Trump is ordering the construction of a Mexican wall and may unveil plans to curtail immigration from "terror-prone" nations – New York Times.
- US Sen Schumer, top Senate Democrat, urges Trump to name China a currency manipulator – Reuters.
- US asset managers seek delay on new variation margin rule – Reuters.
- Japan Dec trade surplus Y641.4 bln, Y270.0 bln forecast, exports +5.4% y/y, imports -2.6%, +1.2% and -0.8% forecast, report much better than forecast, exports to US +1.3%, China +12.5%, Asia +12.0%, export to China biggest on record, export y/y rise first in 15-months.
- Japan Dec crude import volume +3.0% y/y, LNG -6.5%, thermal coal -5.5%.
- BoE Salmon – Expects further flash crashes in core global markets – Reuters.
- ECB Lautenschlaeger – Should soon start discussing the exit from stimulus.
- Australia Q4 CPI +0.5% q/q, +1.5% y/y, +0.7/+1.6% forecast; trimmed mean +0.4%, +1.6, +0.5/+1.7% forecast; weighted mean +0.4%, +1.5%, +0.5/+1.4% forecast; inflation subdued, rekindles rate cut hopes, JPM sees RBA cuts in May, August.
- Australia Dec Westpac/MI leading index 97.54, Nov 97.11.
Economic Data Ahead
- (0200 ET/0700 GMT) Switzerland Dec UBS consumption indicator; last 1.43.
- (0245 ET/0745 GMT) France Jan business climate index, 106.0 forecast; last 106.0.
- (0400 ET/0900 GMT) Germany Jan Ifo business climate index, 111.3 forecast; last 111.0.
- (0400 ET/0900 GMT) Germany Jan Ifo current conditions index, 116.9 forecast; last 116.6.
- (0400 ET/0900 GMT) Germany Jan Ifo expectations index, 105.8 forecast; last 105.6.
- (0400 ET/0900 GMT) Italy Nov industrial sales; last +0.8% m/m, -0.9% y/y.
- (0400 ET/0900 GMT) Italy Nov Industrial orders; last +0.9% m/m, -3.2% y/y.
- (0500 ET/1000 GMT) Italy Dec non-EU trade balance – flash; last E3.97 bln surplus.
- (0600 ET/1100 GMT) Great Britain Jan CBI Trends Survey – orders, +2.0 forecast; last 0.
- (0800 ET/1300 GMT) Belgium Jan leading indicator, 0.5 forecast; last -0.2.
- (0900 ET/1400 GMT) United States Nov FHFA monthly home price; last +0.4% m/m, +6.2% y/y, index 240.2.
Key Events Ahead
- N/A SNB Jordan, BoE Carney, others speak at Buba Wiesbaden G20 conference.
- (0250 ET/0750 GMT) ECB Nouy at Frankfurt EBF SSM forum.
- (0430 ET/0930 GMT) ECB 3-month LTRO operation, E5 bln allotment forecast, E5.4 bln maturing.
- (0530 ET/1030 GMT) Germany E1 bln 2.5% 2046 Bund auction.
- (0700 ET/1200 GMT) Riksbank Gov Ingves speaks at Stockholm development talks.
FX Beat
DXY: The dollar stood firm after declining to multi-week lows versus its peers, amid concerns about U.S. President Donald Trump's protectionist stance. The greenback against a basket of currencies traded 0.02 percent up at 100.29, recovering from a low of 99.90 hit on Monday, its lowest since Dec. 8. FxWirePro's Hourly Dollar Strength Index stood at -42.72 (Neutral) by 0500 GMT.
EUR/USD: The euro steadied after declining from a near 7-week high hit in the previous session, as the dollar held gains following a rebound in U.S. Treasury yields. Moreover, weakness in the EUR/GBP cross following the UK Supreme Court ruling on Brexit weighed on the major. The European currency traded at 1.0736, after rising as high as 1.0774 on Tuesday, it’s highest since Dec 8. FxWirePro's Hourly Euro Strength Index stood at 9.04 (Neutral) by 0400 GMT. Investors’ focus remains on the U.S. housing price index, amid a lack of relevant economic data from the Eurozone. Immediate resistance is located at 1.0768 (Dec 7 High), a break above targets 1.0800. On the downside, support is seen at 1.0701 (7-EMA), a break below could drag it near 1.0665 (10-DMA).
USD/JPY: The dollar eased against the Japanese yen after data released overnight showed Japan swung back into trade surplus for the first time in six years in 2016. The economy recorded a surplus of 4.074 trillion yen from a 2.792 trillion yen deficit. The major trades 0.2 percent down at 113.47, after declining as low as 112.52 on Tuesday, it’s weakest since Nov 30. FxWirePro's Hourly Yen Strength Index stood at 10.04 (Neutral) by 0400 GMT. Investors will continue to track board based market sentiment, ahead of the U.S. housing price index. Immediate resistance is located at 114.00, a break above targets 114.45 (Jan 16 High). On the downside, support is seen at 113.32 (Dec 2 Low), a break below could take it near 112.00
GBP/USD: Sterling edged down, after rising to a 6-week high in the prior session, following the Supreme Court decision that the government must take parliamentary approval to trigger Article 50 of the Lisbon Treaty. Sterling trades lower at 1.2514, after rising as high as 1.2545 on Tuesday, it’s strongest since Dec. 15. FxWirePro's Hourly Sterling Strength Index stood at 68.68 (Bullish) by 0400 GMT. Investors’ will continue to track overall market sentiment, ahead of Britain's CBI Industrial Trends Survey. Immediate resistance is located at 1.2584 (Nov 10 High), a break above could take it near 1.2620. On the downside, support is seen at 1.2456 (5-DMA), a break below targets 1.2399 (9-EMA). Against the euro, the pound trades at 85.73 pence, having hit a peak of 85.58 earlier in the day, it’s strongest since Jan. 6.
AUD/USD: The Australian dollar slumped after hitting a 2-1/2 month high on Tuesday following the release of worse-than-expected Australian inflation figures. The economy’s consumer prices rose 0.5 percent in the fourth-quarter, but below expectations of a 0.7 percent rise, heightening expectations of a RBA rate cut going forward. The Aussie trades 0.5 percent lower at 0.7539, having touched a high of 0.7609 hit in the previous session, it’s strongest since Nov. 11. FxWirePro's Hourly Aussie Strength Index stood at -103.56 (Highly Bullish) by 0500 GMT. Investors will continue to digest downbeat Australian inflation report, ahead of the U.S. economic data. Immediate support is seen at 0.7524 (9-EMA), a break below could drag it near 0.7500. On the upside, resistance is located at 0.7600, a break above targets 0.7650/ 0.7690.
NZD/USD: The New Zealand dollar nudged down, however, traded within the sight of a 10-week high hit in the previous session, as the U.S. dollar rebounded across the board. The Kiwi trades 0.1 percent lower at 0.7238, having hit a peak of 0.7277 on Tuesday, it’s strongest since Nov. 10. FxWirePro's Hourly Kiwi Strength Index was at 19.13 (Neutral) by 0500 GMT. Investors now await the U.S. macroeconomic fundamental drivers, ahead of New Zealand's fourth-quarter consumer price for further momentum on the pair. Immediate resistance is located at 0.7277 (Previous Session High), a break above could take it near 0.7300. On the downside, support is seen at 0.7214 (5-DMA), a break below could drag it till 0.7135 (10-DMA).
Equities Recap
Asian shares rose to a 3-month high, boosted by overnight gains on the Wall Street, while the dollar rebounded on easing concerns over the U.S. President Trump's protectionist stance.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.1 percent to its highest levels since late October.
Tokyo's Nikkei gained 1.17 percent to 19,007.38 points, Australia's S&P/ASX 200 index rose 0.42 percent to 5,673.80 points and South Korea's KOSPI was trading flat at 2,065.91 points.
Shanghai composite index climbed 0.06 percent to 3,144.57 points, while CSI300 index was trading 0.16 percent higher at 3,369.95 points. Hong Kong’s Hang Seng was trading 0.19 percent higher at 22,991.31 points.
Commodities Recap
Crude oil edged higher, after falling for two consecutive sessions, as output cuts announced by OPEC and other producers boosted the market, however, expectations of an increase in U.S. inventories limited gains. International benchmark Brent crude was trading 0.2 percent higher at $55.31 per barrel by 0405 GMT, having hit a high of $55.83 the previous day, its highest since Jan. 18. U.S. West Texas Intermediate crude rose 0.2 percent at $53.02 a barrel, after rising to $53.64 on Friday, its highest since Jan. 9.
Gold prices extended losses, after declining from a 2-month high hit in the previous session, as the dollar strengthened following a rebound in the U.S. Treasury yields. Spot gold prices fell 0.3 percent to $1,204.90 per ounce at 0412 GMT, having hit their strongest since Nov. 22 at $1,220.01. U.S. gold futures slipped 0.1 percent to $1,209 per ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.4617 percent lower by 0.009 bps, while 5-year yield was down by 0.006 bps at 1.9298 percent.
The Australian bonds plunged in early trading session as underlying inflation appeared to have stabilized in the December quarter, suggesting that the sharp disinflationary forces that have been weighing on prices are abating. The yield on the benchmark 10-year Treasury note jumped nearly 3 basis points to 2.74 percent, the yield on 15-year note also rose 3-1/2 basis points to 3.18 percent and the yield on medium-term 5-year edged 1/2 basis point higher to 2.28 percent.
The New Zealand government bonds witnessed mild selling along the curve as investors remain keen to watch the fourth quarter consumer price inflation (CPI) data, due to be released Thursday. The yield on the benchmark 10-year bond jumped 5-1/2 basis points to 3.30 percent at the time of closing, the yield on 7-year note also ended 4 basis points higher at 2.95 percent and the yield on short-term 2-year note rose 1-1/2 basis point to 2.30 percent.
Canadian government bond prices were lower across the yield curve, with the 2-year price down 8 Canadian cents to yield 0.788 percent and the benchmark 10-year declining 66 Canadian cents to yield 1.759 percent. Yields had dipped on Monday as Trump's stance on trade boosted safe-haven demand for bonds.
