Market Roundup
- China Jan Imports YY, 36.9% vs 4.5%, f'cast 9.8%
- China Jan Exports YY, 11.1% vs 10.9%, f'cast 9.6%
- China Jan Trade balance (USD), 20.34 bln vs 54.69 bln, f'cast 54.10
- Bank of England to send new rates message in last year before Brexit
- Merkel's conservatives make big concessions to SPD in coalition deal
- Japan Dec current account surplus T797.2 bln, Y1.0175 trln eyed
- MoF Jan flow data – Japanese buy net Y1.2637 trln foreign stocks
- Japanese Net Y1.3887 trln bonds bought too, Y160.0 bln bills sold
- New Zealand's central bank holds rates, says volatility a warning
- Fed won't overreact to good economic news, Williams says
- U.S. congressional leaders forge budget deal that adds to deficit
- N. Korea says no plans to meet U.S. officials at Olympics; Washington seeks more sanctions
Economic Data Ahead
- (0200 ET/0700 GMT) Germany Dec Trade balance SA (EUR), 21.7 bln f'cast, 22.3 bln prev
- (0200 ET/0700 GMT) Germany Dec Exports MM SA, -1.00% f'cast, 4.10% prev
- (0200 ET/0700 GMT) Germany Dec Imports MM SA, -0.5% f'cast, 2.3% prev
- (0300 ET/0800 GMT) Spain Dec Industrial output Cal Adj YY, 3.9% f'cast, 4.2% prev
Key Events Ahead
- (0530 ET/1030 GMT) ECB executive board member Yves Mersch speaks in London
- (0545 ET/1045 GMT) ECB's Praet speaks in Frankfurt
- (0700 ET/1200 GMT) Bank of England announces its rate decision
- (1100 ET/1600 GMT) Senate banking committee votes on the nomination of Marvin Goodfriend to the Fed Board
FX Beat
DXY: The dollar index edged down after rising to a 2-week high in the previous session on the back of higher U.S. Treasury yields. The greenback against a basket of currencies traded 0.1 percent down at 90.24, having touched a high of 90.40 the day before, its highest since Jan. 23. FxWirePro's Hourly Dollar Strength Index stood at 112.61 (Highly Bullish) by 0500 GMT.
EUR/USD: The euro steadied after falling to an over 2-week low in the previous session, as investors awaited Germany's Trade Balance and Current Account, ahead of German Bundesbank President Jans Weidmann speech titled "Monetary Policy in the European Context" at the Monetary and Economic Policies conference in Frankfurt. The European currency traded 0.05 percent up at 1.2265, having touched a low of 1.2245 the day before, its lowest since Jan. 23. FxWirePro's Hourly Euro Strength Index stood at -126.62 (Highly Bearish) by 0500 GMT. Immediate resistance is located at 1.2305 (78.6% retracement of 1.2523 and 1.2245), a break above targets 1.2394. On the downside, support is seen at 1.2223, a break below could drag it lower 1.2200.
USD/JPY; The dollar rose, reversing most of the previous session losses, as the U.S. Treasury benchmark yield climbed after stronger inflation data led investors to speculate that the Federal Reserve may raise rates more often than previously expected. The major was trading 0.3 percent up at 109.66, having hit a high of 110.48 on Friday, its highest since Jan. 23. FxWirePro's Hourly Yen Strength Index stood at 34.26 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. unemployment claim benefits and the FOMC member speeches for further momentum. Immediate resistance is located at 110.02 (21-DMA), a break above targets 110.74. On the downside, support is seen at 108.59, a break below could take it lower 108.10.
GBP/USD: Sterling steadied after falling for four straight sessions as investors awaited Bank of England's monetary policy decision, where it is expected to say that another interest rate increase could be nearing as Britain's economy grows faster than expected. The major traded 0.2 percent up at 1.3901, having hit a low of 1.3836 on Tuesday, it’s lowest since Jan 18. FxWirePro's Hourly Sterling Strength Index stood at 9.23 (Neutral) by 0500 GMT. Investors’ focus will remain on the BoE interest rate decision and quarterly inflation report, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.4032 (5-DMA), a break above could take it near 1.4087. On the downside, support is seen at 1.3836, a break below targets 1.3756. Against the euro, the pound was trading 0.1 percent up at 88.26 pence, having hit a low of 89.10 pence on Tuesday, it’s lowest since Jan. 17.
AUD/USD: The Australian dollar rebounded from an early 1-month low after data showed China imported 100 million tonnes of iron ore in January, compared to 84.3 million tonnes in December. The Aussie trades 0.05 percent up at 0.7825, having hit a low of 0.7803 earlier; it’s lowest since Jan. 2. FxWirePro's Hourly Aussie Strength Index stood at -49.86 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7794, a break below targets 0.7750. On the upside, resistance is located at 0.7912 (5-DMA), a break above could take it near 0.7977 (21-DMA).
NZD/USD: The New Zealand dollar slumped to a 1-month low after the Reserve Bank of New Zealand kept interest rates steady at a record low and cut its inflation forecasts, suggesting easy monetary policy in near term. The Kiwi trades 0.6 percent down at 0.7196, having touched a low of 0.7181 earlier, its lowest level since Jan. 10. FxWirePro's Hourly Kiwi Strength Index was at -75.05 (Slightly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7277 (61.8% retracement of 0.7435 and 0.7181), a break above could take it near 0.7324 (10-DMA). On the downside, support is seen at 0.7139 (Jan 10 Low), a break below could drag it lower 0.7100.
Equities Recap
Asian shares steadied as U.S. bond yields hovered towards four-year highs, while sterling consolidated within narrow ranges, ahead of BoE policy decision outcome.
MSCI's broadest index of Asia-Pacific shares outside Japan held gains near its six-week low touched on Tuesday.
Tokyo's Nikkei rose 1.2 percent to 21,893.66 points, Australia's S&P/ASX 200 index gained 0.3 percent to 5,890.70 points and South Korea's KOSPI tumbled 0.8 percent to 2,416.68 points.
Shanghai composite index fell 2.01 percent to 3,242.87 points, while CSI300 index was trading 1.3 percent down at 3,997.85 points.
Hong Kong’s Hang Seng was trading 0.5 percent higher at 30,466.17 points. Taiwan shares shed 0.2 percent to 10,528.52 points.
Commodities Recap
Crude oil prices eased to multi-week lows, as soaring U.S. output undermined OPEC's efforts to tighten markets and balance prices. International benchmark Brent crude was trading 0.3 percent down at $65.22 per barrel by 0453 GMT, having hit a low of $65.10 earlier, its lowest since Jan. 3. U.S. West Texas Intermediate was trading 0.5 percent down at $61.41 a barrel, after falling as low as $61.23 on Wednesday, its weakest since Jan. 5.
Gold prices slumped to a near four-week low on a firmer greenback amid expectations of more U.S. interest rate hikes this year. Spot gold was down 0.5 percent to $1,311.32 per ounce, as of 0458 GMT, having hit a low of 1,309.57 earlier, lowest since Jan 10. U.S. gold futures for April delivery rose 0.1 percent to $1,315.70 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.836 percent higher by 0.005 bps, while 5-year yield was 0.002 bps up at 2.565 percent.
The Japanese government bonds traded tad lower as stock prices rebounded after witnessing heavy sell-off as the country’s domestic stock index, Nikkei 225 was seen hovering higher at around 1 percent early in the session. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1/2 basis point to 0.07 percent, the yield on the long-term 30-year note also traded tad higher at 0.82 percent and the yield on short-term 2-year remained flat at -0.14 percent.
The Australian bonds slid during early Asian session tracking similar movement in U.S. Treasuries as investors are awaiting the Reserve Bank of Australia’s (RBA) monetary policy statement, scheduled to be released today by 00:30GMT. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped nearly 2 basis points to 2.85 percent, the yield on the long-term 30-year note surged 3 basis points to 3.49 percent and the yield on short-term 2-year rose nearly 1 basis point to 2.01 percent.
The New Zealand government bonds ended Thursday’s session on a flat note after the Reserve Bank of New Zealand (RBNZ) remained pat in its monetary policy decision, unveiled late yesterday while maintaining forecasts for rate rises in Q2 2019. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, remained flat at 2.98 percent, the yield on 20-year also steadied at 3.49 percent while the yield on short-term 2-year slumped 2 basis points to 1.88 percent.
The Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries. The two-year fell 2 Canadian cents to yield 1.85 percent and the 10-year declined 10 Canadian cents to yield 2.377 percent.
