Market Roundup
- S&P 500 futures skid in Asia, down more than 10 pct from peak
- BOJ Kuroda: Inappropriate to shift monetary policy prematurely just to create future policy tools
- Japan EconMin Motegi – Closely eyeing financial markets, impact on economy
- Japan ChiefCabSec Suga – Stable FX market very important
- Australia's c.bank upbeat on economy, keeps policy unchanged
- Australia Dec Trade balance (A$), -1,385 mln vs -628 mln, f'cast 200 mln
- Australia Dec Retail sales m/m, -0.5% vs 1.2%, f'cast -0.2%
- Australia Q4 Retail trade, 0.9% vs 0.1% vs f'cast 0.8%
- German parties add another day in last-ditch push for coalition
- EU's chief negotiator tells Britain: Time has come to make a Brexit choice
- U.S. Congress grapples with immigration, averting funding fight
- U.S. House committee votes to release Democrats' Russia memo
Economic Data Ahead
- (0200 ET/0700 GMT) Germany Dec Industrial orders, 0.7% f'cast, -0.4% last
Key Events Ahead
- (0400 ET/0900 GMT) Agustin Carstens, Bundesbank's Weidmann speak in Frankfurt
- (0500 ET/1000 GMT) BoE's Elisabeth Stheeman speaks in London
- (0515 ET/1015 GMT) Austria E1.38/E1.38 bln for 5/10 year auctions
- (0850 ET/1350 GMT) St. Louis Fed's President Bullard speaks in Lexington, Kentucky
- More major issues in pipeline - includes EIB USD 3-year, CEDB USD 5-year
- Belgium 15-20 year Green OLO, Finland EUR 15-year, Greece EUR 7-year
FX Beat
DXY: The dollar index rose to a near 2-week high on the data and liquidation of investments in its counterparts across the board, except the yen. The greenback against a basket of currencies traded flat at 89.64, having touched a high of 89.72 earlier, its highest since Jan. 24. FxWirePro's Hourly Dollar Strength Index stood at 114.97 (Neutral) by 0500 GMT.
EUR/USD: The euro slumped to a 1-week low as the greenback rose against a basket of currencies after U.S. 10-year Treasury bond yields surged to a four-year top on Monday. The European currency traded 0.1 percent down at 1.2356, having touched a low of 1.2351 earlier, its lowest since Jan. 30. FxWirePro's Hourly Euro Strength Index stood at -12.60 (Neutral) by 0500 GMT. Investors’ attention will remain on German factory orders, ahead of U.S. trade balance and Fed Bullard's speech. Immediate resistance is located at 1.2429 (5-DMA), a break above targets 1.2500. On the downside, support is seen at 1.2351 (50.0% retracement of 1.2264 and 1.2537), a break below could drag it lower 1.2307 (38.2% retracement).
USD/JPY: The dollar declined to a 1-week trough as a fresh bout of sell-off in global equities prompted anxious investors to cut exposure to riskier assets. The major was trading 0.3 percent down at 108.69, having hit a high of 110.48 on Friday, its highest since Jan. 23. FxWirePro's Hourly Yen Strength Index stood at 113.24 (Highly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. trade balance and Fed Bullard's speech for further momentum. Immediate resistance is located at 109.31 (5-DMA), a break above targets 109.75. On the downside, support is seen at 108.41, a break below could take it lower 108.00.
GBP/USD: Sterling slumped to a 2-week low below the 1.4000 handle, weighed down by negative news around Brexit negotiations and surveys showing a slowing British economy. The major traded flat at 1.3954, having hit a low of 1.3937 earlier, it’s lowest since Jan 23. FxWirePro's Hourly Sterling Strength Index stood at -161.09 (Highly Bearish) by 0500 GMT. Investors’ focus will remain on the U.S. fundamental drivers, amid a lack of economic data from the UK docket. Immediate resistance is located at 1.4134 (5-DMA), a break above could take it near 1.4200. On the downside, support is seen at 1.3918 (21-DMA), a break below targets 1.3900. Against the euro, the pound was trading 0.1 percent down at 88.65 pence, having hit a low of 88.73 pence on Monday, it’s lowest since Jan. 17.
AUD/USD: The Australian dollar plunged to a near 1-month low after data showed a 0.5 percent drop in retail sales in December, suggesting consumption remained weak in the all-important festive season. Separately, the trade balance recorded a deficit of AUD 1.36 billion in December compared to the AUD 0.2 billion surplus. The Aussie trades 0.2 percent up at 0.7860, having hit a high of 0.7835 earlier; it’s lowest since Jan. 10. FxWirePro's Hourly Aussie Strength Index stood at -117.30 (Highly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7835 (Session Low), a break below targets 0.7805. On the upside, resistance is located at 0.7974 (21-DMA), a break above could take it near 0.8025 (10-DMA).
NZD/USD: The New Zealand dollar rebounded after falling to a near 1-month low earlier in the day on speculation that the Reserve Bank of New Zealand will hold interest rates at record lows for a long time to come. The Kiwi trades 0.4 percent up at 0.7295, having touched a low of 0.7256 earlier, its lowest level since Jan. 17. FxWirePro's Hourly Kiwi Strength Index was at -39.21 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7331 (5-DMA), a break above could take it near 0.7403. On the downside, support is seen at 0.7245 (Jan 18 Low), a break below could drag it lower 0.7200.
Equities Recap
Asian shares slumped after Wall Street suffered its biggest decline since 2011, while the greenback steadied near 2-week peak despite 10-year U.S. bond yield falling back off a 4-year high.
MSCI's broadest index of Asia-Pacific shares outside Japan declined 3.5 percent to a one-month low.
Tokyo's Nikkei slumped 5.8 percent to 21,374.58 points, Australia's S&P/ASX 200 index eased 3.2 percent to 5,833.30 points and South Korea's KOSPI tumbled 1.8 percent to 2,447.97 points.
Shanghai composite index fell 2.8 percent to 3,392.30 points, while CSI300 index was trading 2.7 percent down at 4,159.93 points.
Hong Kong’s Hang Seng was trading 4.0 percent lower at 30,956.89 points. Taiwan shares shed 4.5 percent to 10,404.00 points.
Commodities Recap
Crude oil prices declined, extending losses for the third straight session as global financial markets slumped in the wake of one of the biggest intra-day falls ever registered on Wall Street. International benchmark Brent crude was trading 0.2 percent down at $66.86 per barrel by 0445 GMT, having hit a low of $66.81 earlier, its lowest since Jan. 3. U.S. West Texas Intermediate was trading 0.1 percent down at $63.36 a barrel, after falling as low as $63.27, its weakest since Jan. 22.
Gold prices rallied, boosted by a tumble in global equity markets, however, expectations for more U.S. interest rate hikes this year limited upside. Spot gold was trading 0.3 percent up at $1,343.18 an ounce at 0451 GMT, having hit a low of 1,327.36 on Friday, lowest since Jan 19. U.S. gold futures were up 0.4 percent at $1,342 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.696 percent lower by 0.098 bps, while 5-year yield was 0.105 bps down at 2.416 percent.
The Japanese government bonds gained in a muted trading session that witnessed least data of major economic significance and as investors await the country’s 30-year auction scheduled to be held later this week. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slipped 1 basis point to 0.07 percent, the yield on the long-term 30-year note also fell nearly 1 basis point to 0.81 percent and the yield on short-term 2-year too traded 1 basis point lower at -0.14 percent.
The Australian 10-year government bond yields sank to a 3-week low after the country’s retail sales for the month of December worsened below market expectations. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 14-1/2 basis points to 2.76 percent, the yield on the long-term 30-year note plunged 12-1/2 basis points to 3.40 percent and the yield on short-term 2-year traded nearly 6-1/2 basis points lower at 1.99 percent.
The Canadian government bond prices were higher across the yield curve, with the two-year up 12.5 Canadian cents to yield 1.789 percent and the 10-year rising 53 Canadian cents to yield 2.294 percent. The 10-year yield touched its highest intraday level since May 2014 at 2.393 percent.
