Market Roundup
- Work urgently with me on Brexit - Britain's May appeals to EU
- UK PM May prepares to delay second vote on Brexit deal until end Feb -The Telegraph
- Brexit, global slowdown to weigh on Bank of England
- U.S. and China to resume trade talks next week in Beijing
- Fed's Powell repeats that U.S. economy is in 'a good place'
- Fed's Quarles says Chinese 'downdraft' weighs on global economic outlook
- New Zealand Q4 HLFS Unemployment Rate, 4.3%, 4.1% f'cast, 3.9% prev, 4.0% rvsd
- New Zealand Q4 HLFS Job Growth QQ, 0.1%, 0.3% f'cast, 1.1% prev
Economic Data Ahead
- (0245 ET/0745 GMT) France Dec Trade Balance (EUR) SA, -4.0 bln f'cast, -5.10 bln prev
- (0330 ET/0830 GMT) Great Britain Jan Halifax House Prices MM, -0.5% f'cast, 2.2% prev
Key Events Ahead
- (0335 ET/0835 GMT) Bank of England's Martin Taylor speaks at Queen's University - Belfast
- (0700 ET/1200 GMT) Bank of England announces rate decision and publishes minutes of meeting - London
- (0715 ET/1215 GMT) ECB's Yves Mersch delivers speech at American European Community Association - Brussels
- (0915 ET/1415 GMT) FRB Dallas's Robert Kaplan participates in moderated Q&A session at Austin McCombs School of Business Outlook Series - Austin, Texas
- (0930 ET/1430 GMT) Fed’s Richard Clarida speaks at Czech National Bank - Prague
FX Beat
DXY: The dollar index rallied, extending gains for the fifth straight session, as investors expect major breakthrough in the U.S.-China tariff talks when the two sides meet in Beijing next week. The greenback against a basket of currencies trades 0.05 percent up at 96.43, having touched a high of 96.46, its highest since January 25. FxWirePro's Hourly Dollar Strength Index stood at 113.52 (Highly Bullish) by 0500 GMT.
EUR/USD: The euro plunged to a near 2-week low, as Euro zone growth slowed sharply and is likely to restrain the European Central Bank from increasing interest rates any time soon. The European currency traded 0.05 percent down at 1.1360, having touched a low of 1.1356 earlier, its lowest since Jan. 25. FxWirePro's Hourly Euro Strength Index stood at 16.44 (Neutral) by 0500 GMT. Investors’ attention will remain on a series of data from the Eurozone economies, EZ economic bulletin and growth forecasts, ahead of the U.S. unemployment benefit claims, consumer credit change and Fed Clarida's speech. Immediate resistance is located at 1.1406 (January 17 High), a break above targets 1.1474 (December 21 High). On the downside, support is seen at 1.1336 (Jan. 22 Low), a break below could drag it till 1.1300.
USD/JPY: The dollar eased, halting a 4-day rally, after Fed Chairman Jerome Powell stated that the case for rate increases had weakened in recent weeks, amid slowing growth overseas and the longest federal government shutdown in history that just ended. The major was trading 0.05 percent down at 109.93, having hit a high of 110.16 on Monday, its highest since December 31. FxWirePro's Hourly Yen Strength Index stood at 34.43 (Neutral) by 0500 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. unemployment benefit claims, consumer credit change and Fed Clarida's speech. Immediate resistance is located at 110.47 (Dec. 31 High), a break above targets 111.19 (Dec. 24 High). On the downside, support is seen at 109.16 (Jan. 28 Low), a break below could take it lower at 108.80 (Jan. 30 Low).
GBP/USD: Sterling steadied after falling for five consecutive sessions, as investors stayed on the sidelines ahead of the Bank of England monetary policy meeting scheduled later in the day, where it is widely expected to keep interest rates unchanged. The major traded flat at 1.2954, having hit a low of 1.2924 on Tuesday; it’s lowest since January 22. FxWirePro's Hourly Sterling Strength Index stood at 14.86 (Neutral) 0500 GMT. Investors’ attention will remain on BoE policy decision and Governor Carney's speech, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3001 (January 17 High), a break above could take it near 1.3047 (November 13 High). On the downside, support is seen at 1.2879 (November 14 Low), a break below targets 1.2827 (November 12 Low). Against the euro, the pound was trading flat at 87.83 pence, having hit a low of 88.21 on Tuesday, it’s lowest since Jan. 22.
AUD/USD: The Australian dollar tumbled to a near 2-week low, amid growing speculation that interest rates would most likely come down this year amid heightened growth risks. The Aussie trades 0.05 percent down at 0.7102, having hit a low of 0.7093 earlier; it’s lowest since January 26. FxWirePro's Hourly Aussie Strength Index stood at -143.63 (Highly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7075 (Jan. 25 Low), a break below targets 0.7016 (Dec. 27 Low). On the upside, resistance is located at 0.7166 (January 24 High), a break above could take it near 0.7234 (January 11 High).
NZD/USD: The New Zealand dollar slumped to a 2-week trough after data showed the domestic employment growth stalled, triggering speculation of a more cautious tone from the RBNZ at its first policy meeting of the year next week, The Kiwi trades 0.3 percent down at 0.6755, having touched a low of 0.6744, its lowest level Jan. 23. FxWirePro's Hourly Kiwi Strength Index was at -144.98 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6798 (Jan. 23 High), a break above could take it near 0.6832 (Jan. 14 High). On the downside, support is seen at 0.6728 (Jan. 17 Low), a break below could drag it below 0.6706 (Jan. 22 Low).
Equities Recap
Asian shares edged higher to 4-month highs as the U.S. Federal Reserve changed its stance on policy for further rate hikes.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.2 percent.
Tokyo's Nikkei eased 0.6 percent to 20,751.28 points, Australia's S&P/ASX 200 index rose 1.1 percent to 6,092.50 points and South Korea's KOSPI fell 0.05 percent to 2,203.42 points.
Commodities Recap
Crude oil prices declined after U.S. crude inventories rose and as production levels in the country held at record levels. International benchmark Brent crude was trading 0.2 percent down at $62.44 per barrel by 0511 GMT, having hit a high of $63.61 on Monday, its highest since December 7. U.S. West Texas Intermediate was trading 0.1 percent lower at $53.83 a barrel, after rising as high as $55.72 on Monday, its highest since the November 21.
Gold slumped to a more than 1-week low, weighed down by a stronger dollar, but worries over slowing global economic growth limited the downside. Spot gold fell 0.2 percent to $1,303.46 per ounce by 0514 GMT, having touched a low of $1,302.71, its lowest level since Jan. 29. U.S. gold futures were down 0.5 percent at $1,307.30.
Treasuries Recap
The Japanese government bonds remained narrowly mixed during late Asian session amid silent trading hours that witnessed data of little economic significance after the country’s super-long 30-year bond auction attracted a sufficient amount of demand ahead of the household spending data for the month of December, scheduled to be released today by 23:30GMT. The yield on the benchmark 10-year JGB note, which moves inversely to its price, remained tad lower at -0.009 percent, the yield on the long-term 30-year hovered around 0.592 percent while the yield on short-term 2-year plunged 15 basis points to -0.153 percent.
The Australian government bonds held gains across the curve during Asian trading session after the Reserve Bank of Australia’s Governor Philip Lowe turned dovish in his speech at the National Press Club of Australia yesterday and opened door to a possible rate cut. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, fell about 4 basis points to 2.14 percent (hovers near 1-month), the yield on the long-term 30-year bond also dipped 2 basis points to 2.71 percent and the yield on short-term 2-year slumped over 1 basis point to 1.77 percent.
The Canadian government bond prices were higher across the yield curve, with the 10-year rising 12 Canadian cents to yield 1.924 percent.
