Market Roundup
- BoJ up 5-10 year JGB buys to Y450 bln from Y410 bln last, caps 10s pre-0.1%.
- Japan Dec core CPI -0.2% y/y, Tokyo Jan core -0.3%, -0.3% and -0.4% forecast, nationwide decline smallest since flat reading Feb ’16, Dec core-core unch, government to release new CPI index excluding food/energy March 3.
- Japan preparing for all possible US trade contingencies – Reuters.
- Japan to monitor impact on its firms from US-Mexico relationship – Reuters.
- Trump seeks quick progress with Japan’s Abe on replacement trade deal.
- White House PressSec - Border wall will be funded by 20 percent import tax on Mexican goods, Mexican president cancels visit to DC - Washington Post.
- Foreign CB US debt holdings +$787 mln to $3.170 trillion Jan 25 week, Treasury holdings +$4.493 bln to $2.854 trillion, agencies -$4.655 bln to $255.501 bln.
- NY Fed – Swaps with foreign CBs $465 mln Jan 25 week, BoJ $200 mln, rest ECB.
- Lipper – Investors pull $5.7 bln from US stocks funds in the latest week.
- German FinMin – Economy on solid ground, Brexit-Trump-commodity prices pose largest risks for global economy – Reuters.
- Australia Q4 final demand PPI +0.5% q/q, +0.7% y/y.
- Australia Q4 export prices +12.4% q/q, import prices +0.2%, -0.5% and +11.0% forecast, big misses in both, export prices jump biggest since ‘10.
Economic Data Ahead
- (0200 ET/0700 GMT) Germany Dec import prices, +1.3% m/m, +2.7% y/y forecast; last +0.7%, +0.3%.
- (0245 ET/0745 GMT) France Jan consumer confidence index, 100.0 forecast; last 99.0.
- (0300 ET/0800 GMT) Spain Dec retail sales, +3.3% y/y forecast; last +3.3%.
- (0300 ET/0800 GMT) Sweden Jan manufacturing confidence index, 115.0 forecast; last 121.1.
- (0300 ET/0800 GMT) Sweden Jan consumer confidence index, 103.6 forecast; last 103.2.
- (0330 ET/0830 GMT) Sweden Dec retail sales, -0.3% m/m forecast; last +0.9% m/m, +3.6% y/y.
- (0330 ET/0830 GMT) Sweden Dec household lending; last +7.2% y/y.
- (0400 ET/0900 GMT) Eurozone Dec money supply M3, +4.9% y/y forecast; last +4.8%.
- (0400 ET/0900 GMT) Eurozone Dec loans to non-fin’ls, +2.3% forecast; last +2.2%, households +1.9%.
- (0400 ET/0900 GMT) Italy Jan mfg business confidence index, 103.5 forecast; last 103.5.
- (0400 ET/0900 GMT) Italy Jan consumer confidence index, 110.6 forecast; last 111.1.
- (0500 ET/1000 GMT) Italy Dec wage inflation; last unch m/m, +0.4% y/y.
- (0830 ET/1330 GMT) United States Q4 GDP – advance, +2.2% AR forecast; last +3.5%.
- (0830 ET/1330 GMT) United States Q4 deflator – advance, +2.1% AR forecast; last +1.4%.
- (0830 ET/1330 GMT) United States Q4 PCE prices – advance, +2.1% AR forecast; last +1.5%.
- (0830 ET/1330 GMT) United States Q4 - core - advance, +1.4% AR forecast; last +1.7%.
- (0830 ET/1330 GMT) United States Dec durable goods orders, +2.6% m/m forecast; last -4.5%.
- (0830 ET/1330 GMT) United States Dec - ex-transport, +0.5% m/m forecast; last +0.6%, ex-defense -6.5%.
- (0830 ET/1330 GMT) United States Dec – non-def cap goods ex-air, +0.5% m/m forecast; last +0.9%.
- (1000 ET/1500 GMT) United States Jan U.Mich sentiment index – final, 98.1 forecast; prelim 98.1.
Key Events Ahead
- Lunar New Year – China, Taiwan and SoKorea holidays, China till February 2.
- N/A EU EcoFin meeting in Brussels, ECB VP Constancio to attend.
- (0600 ET/1100 GMT) UK DMO GBP0.5/1.5/2.0 bln 1/3/6-month treasury bill auctions.
- (0700 ET/1200 GMT) Riksbank executive board meeting.
(1130 ET/1630 GMT) Riksbank DepGov Skingsley at Stockholm awards ceremony.
FX Beat
DXY: The dollar rose versus its major peers on optimism over the U.S. economic outlook, ahead of U.S. gross domestic product due later in the day. The greenback against a basket of currencies traded 0.1 percent up at 100.68, having hit a low of 99.79 in the previous session, its lowest since Dec. 8. FxWirePro's Hourly Dollar Strength Index stood at 30.18 (Neutral) by 0500 GMT.
EUR/USD: The euro edged down, extending previous session losses, as the dollar regained ground on optimism over the U.S. economic outlook and corporate earnings. However, the downside remained limited as U.S. President Donald Trump's protectionist policies raised uncertainties for global trade. The European currency traded 0.1 percent down at 1.0675, after falling as low as 1.0657 on Thursday, it’s lowest since Jan 2. FxWirePro's Hourly Euro Strength Index stood at -50.41 (Bearish) by 0400 GMT. Investors’ focus remains on Eurozone's M3 Money Supply figures and EcoFin meeting, ahead of the U.S. preliminary gross domestic product and durable goods data for further momentum on the major. Immediate resistance is located at 1.0719 (5-DMA)), a break above targets 1.0750. On the downside, support is seen at 1.0650, a break below could drag it near 1.0625 (Jan 20 Low).
USD/JPY: The dollar rallied to a 1-week high above the 115.00 handle, as investors await U.S. gross domestic product report due later in the day. The economy is expected to grow at an annualized rate of 2.2 percent in the fourth quarter, while on a quarterly basis it is likely to rise 2.1 percent versus previous 1.4 percent. Moreover, optimism over the U.S. economic outlook kept the bid tone around the major intact. The major trades 0.3 percent up at 114.89, after rising as high as 115.03 earlier, it’s strongest since Jan. 20. FxWirePro's Hourly Yen Strength Index stood at -106.62 (Highly Bearish) by 0400 GMT. Investors will continue to track board based market sentiment, ahead of the U.S. macroeconomic fundamental drivers. Immediate resistance is located at 115.38 (Jan 20 High), a break above targets 116.00. On the downside, support is seen at 114.00 (10-DMA), a break below could take it near 113.50
GBP/USD: Sterling extended losses below the 1.2600 handle, after rising to a 6-week high in the previous session on the back of robust gross domestic product report. The fall in the major comes in as investors booked profits after the pound gained almost 5 percent in just 10 days. Sterling trades 0.2 percent lower at 1.2564, after rising to a high of 1.2672 on Thursday, it’s strongest since Dec. 14. FxWirePro's Hourly Sterling Strength Index stood at 20.37 (Neutral) by 0400 GMT. Investors’ now await U.S. President Trump and UK PM May's meeting for further clues on the major. Immediate resistance is located at 1.2672 (Previous Session High), a break above could take it over 1.2700. On the downside, support is seen at 1.2505 (7-EMA), a break below targets 1.2400. Against the euro, the pound trades 0.2 percent down at 84.96 pence, having hit a peak of 84.70 the day before, it’s strongest since Jan. 3.
AUD/USD: The Australian dollar stumbled, extending losses for the fourth consecutive session, despite data showing export prices recorded the biggest rise in over six years last quarter. The major edged up initially after data released earlier showed export prices surged 12.4 percent in the fourth quarter, while import prices edged up 0.2 percent, however, it turned lower amid fresh U.S. dollar buying interest. The Aussie trades flat at 0.7529, having touched a high of 0.7609 earlier in the week, it’s strongest since Nov. 11. FxWirePro's Hourly Aussie Strength Index stood at -79.33 (Slightly Bearish) by 0500 GMT. Investors will continue to digest upbeat export/import price report, ahead of the U.S. economic data. Immediate support is seen at 0.7559 (5-DMA), 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 edged up, regaining some of its previous session losses, amid holiday-thinned trade as markets in China, South Korea, and Taiwan were shut for the Lunar New Year holiday. On Thursday, the major rose to a 2-1/2-month peak after data showed inflation was in the central bank's target range for the first time in two years, indicating further interest rate cuts were unlikely. The Kiwi trades 0.1 percent up at 0.7250, having hit a peak of 0.7312 in the previous session, it’s strongest since Nov. 9 and was set for its fifth consecutive week of rises with a gain of 1 percent. FxWirePro's Hourly Kiwi Strength Index was at 49.55 (Neutral) by 0500 GMT. Immediate resistance is located at 0.7300, a break above could take it near 0.7340. On the downside, support is seen at 0.7211 (9-EMA), a break below could drag it lower 0.7200.
Equities Recap
Asian shares steadied, amid holiday-thinned trade and were on course for strong gains in this week, while the dollar retained gains following strong U.S. corporate earnings.
Markets in China, South Korea, and Taiwan were shut for the Lunar New Year holiday.
MSCI's broadest index of Asia-Pacific shares outside Japan was little changed.
Tokyo's Nikkei gained 0.34 percent to 19,467.40 points, Australia's S&P/ASX 200 index rose 0.67 percent to 5,709.60 points.
Hong Kong’s Hang Seng fell 0.06 percent lower at 23,360.78 points.
Commodities Recap
Crude oil prices stood firm, while a rise in the United States crude output offset efforts by OPEC and other producers to cut supplies to balance the market. International benchmark Brent crude was trading 0.3 percent higher at $56.22 per barrel by 0419 GMT, having hit a high of $56.53 in the previous session, its highest since Jan. 17. U.S. West Texas Intermediate crude rose 0.2 percent at $53.81 a barrel, after rising to $54.03 on Thursday, its highest since Jan. 6.
Gold prices declined to near two-week lows earlier in the session and were on track to record its first weekly loss since late December as the dollar rebounded, ahead of the U.S. GDP report. Spot gold prices were down 0.3 percent at $1,184.25 per ounce at 0424 GMT, having hit their lowest since Jan. 11 at $1,183.36. U.S. gold futures fell 0.4 percent to $1,185.50 an ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.5158 percent higher by 0.008 bps, while 5-year yield was up by 0.011 bps at 1.9723 percent.
The Australian bonds continued to plunge as investors moved away into safe-haven instruments amid gains in riskier assets including equities and crude oil. Also, traders cashed in profits after on the last trading day of the week. The yield on the benchmark 10-year Treasury note jumped 5 basis points to 2.78 percent, the yield on 15-year note also climbed 5 basis points to 3.24 percent and the yield on short-term 2-year ticked 1 basis point higher to 1.86 percent.
The New Zealand government bonds traded narrowly mixed in a subdued trading session amid a lack of any major domestic or global economic events. The yield on the benchmark 10-year bond jumped 5 basis points to 3.44 percent at the time of closing, the yield on 7-year note fell 1 basis point to 3.05 percent and the yield on short-term 2-year note also dipped 1 basis point to 2.38 percent.
Canadian government bond prices were mixed across the yield curve, with the 2-year up half a Canadian cent to yield 0.815 percent and the 10-year rising 3 Canadian cents to yield 1.819 percent while the 20-year price fell C$1.31 to yield 2.438 percent. The 10-year yield touched its highest since Dec. 16 at 1.851 percent as record highs on Wall Street reduced demand for safe-haven assets.
