Market Roundup
- Ccy exchange: Japan companies adjust expectations as JPY stiffens - Nikkei.
- Japan FinMin Aso - Recent FX moves volatile, eyeing market closely - Reuters.
- MoF ViceMin Asakawa - Recent FX moves "rough", checking for excessive volatility - Nikkei, Reuters.
- EconMin Ishihara - Recent JPY gains on external factors, safe haven flows, monitoring stock market too, not excessively worried over economy, looking to go ahead with sales tax hike next year - Reuters.
- Japan Jan money supply M2 +3.2% y/y, M3 +2.5%, broadest liquidity +3.6%, steady rises continuing, Dec +3.1% (rev), +2.5% and +3.6%.
- UK Jan BRC like-for-like retail sales +2.6% y/y, +0.45% forecast, Dec +0.1%; total sales +3.3%, biggest rise since September, Dec +1.0%.
- Australia Jan NAB business conditions index +5, confidence +2, Dec +6, +2.
- NZ Jan QV residential property index +12.6% y/y, Dec +14.2%.
- Goldman Sach lowers '16 copper, aluminium price forecasts, remains bearish on gold - Reuters.
- Inflows of gold-backed ETF make biggest jump since '11 - Reuters.
Economic Data Ahead
- (0200 ET/0700 GMT) Germany Dec industrial output, +0.4% m/m forecast; last -0.3%.
- (0200 ET/0700 GMT) Germany Dec trade balance, E20.2 bln surplus forecast; last E19.7 bln surplus.
- (0245 ET/0745 GMT) France Q1 industrial investment (current year); last +3.0%.
- (0245 ET/0745 GMT) France Dec budget balance; last E82.8 bln deficit.
- (0430 ET/0930 GMT) Great Britain Dec trade bal, GBP10.4 bln deficit forecast; last bln deficit.
- (0430 ET/0930 GMT) Great Britain Dec - non-EU, GBP 2.6 bln deficit forecast; last GBP 2.45 bln deficit.
- (0600 ET/1100 GMT) United States Jan NFIB business optimism index; last 95.2.
- (1000 ET/1500 GMT) United States Dec JOLTS job openings, 5.4 mln forecast; last 5.43 mln.
- (1000 ET/1500 GMT) United States Dec wholesale inv/sales, -0.2%, -0.4% m/m forecast; last -0.3%, -1.0%.
Key Events Ahead
- Lunar New Year, much of Asia/China markets closed.
- N/A Belgium 20-year syndication talk, E2.2-2.6 bln 3/12-mo tsy cert auctions.
- (0430 ET/0930 GMT) BoE DepGov Cunliffe speech in London.
- (0430 ET/0930 GMT) ECB 7-day refi at fixed 0.05%, E60 bln allotment forecast, last bln.
- (0500 ET/1000 GMT) BoS Gov Linde lecture at London OMFIF.
- (0500 ET/1000 GMT) Austria E1.1 total 1.2% and 3.15% 2025 and 2044 RAGB auctions.
- (0530 ET/1030 GMT) UK DMO GBP1.3 bln 0.125% 2026 index-linked Gilt auction.
- (0530 ET/1030 GMT) Germany E500 mln 0.1% 2046 index-linked Bund auction.
- (0745 ET/1245 GMT) France-Germany EcoFin, central bank governors meeting in Paris.
USD: The dollar crashed through the 115-yen level to its lowest since November 2014 on Tuesday, as a sell-off in European and U.S. stocks continued into the Asian session and strengthened the demand for the perceived safe-haven Japanese currency. Against a basket of currencies, the dollar index was 0.14 percent down at 96.53.
EUR/USD: The euro trades 0.10% up at 1.1203 levels after bouncing off Monday's low of 1.1087. The pair touched sessions high of 1.1237, before falling to its current levels. Traders find some relief in the safe-haven euro amid growing global uncertainties. The pair is pushed higher as U.S. dollar sell-off broadens on the back of rising risk-off trades. German industrial production and trade balance data will be closely watched by the markets for further cues on the pair's moves. Currently the pair trades at 1.1205 levels, having touched sessions low of 1.1184. Immediate resistance is located at 1.1244 (Feb 5 High), while support is seen at 1.1172 (5-DMA).
USD/JPY: The dollar trades 1.14 percent down at 114.54 yen, after going as low as 114.21. The greenback dropped below the 115-yen level, as a sell-off in European and U.S. stocks continued into the Asian session resulting the demand for the perceived safe-haven yen to rise. Investors will now pay attention to Fed Yellen's testimony to the House Financial Services Committee on Wednesday, for further clues on the strength of the U.S. economy. Meanwhile, markets will be dominated by the sentiment on the
global equities amid a lack of macro data in the day ahead. Traders are likely to follow bearish trend during the session, as the pair continues to hover towards sessions low. Immediate support is seen at 114.21 (Sessions Low), break below could further drag the pair to multi- months lows. On the upside, resistance is located at 116.36.
AUD/USD: The Australian dollar dropped to 0.7037, from 0.7085 early, drifting away from a 1-month high of 0.7242 touched last week. However, it managed to hold its ground against the greenback, staying above 70 U.S. cents. The Aussie came under renewed selling pressure following the NAB Business conditions data suggesting deteriorating business conditions amid financial markets turmoil. The National Australia Bank (NAB) Business Confidence index was unchanged at 2 in January, while the NAB Business Conditions index dropped from 7 to 5, recording its lowest reading since April 2015. The pair is seen making minor recovery drifting away from the session's low. Immediate support is seen at 0.7015 (20-DMA), while resistance is located at 0.7109 (5- DMA).
NZD/USD: The New Zealand dollar lost its ground against the greenback on Tuesday as a selloff in global stocks sent investors to safe-haven assets such as the yen and government bonds. The kiwi dropped to 0.6575, drifting away from the 1-month high of 0.6749 hit last week. However, the pair has climbed up to 0.6598 levels after falling to sessions low of 0.6575. Immediate support is located at 0.6567 (10- DMA) on the downside, while resistance is seen at 0.6645 (5-DMA) on the upside. In absence of significant data release this week, the Kiwi will mainly respond to global conditions. Markets will focus on Wednesday's Fed Chair Yellen's testimony and the U.S. retail sales data due on Friday for further momentum on the pair.
Equities Recap
Asian share markets tumbled on Tuesday as stability concerns put a torch to European bank stocks and sent investors towards the safe haven assets.
MSCI's broadest index of Asia-Pacific shares outside Japan dropped 1 percent, and would have been lower if not for holidays in many centres.
Australia's S&P/ASX 200 Index declined 2.85 pct at 4,833.80 points, while Nikkei closed down 5.40 pct at 16,085.44
Commodities Recap
Gold advanced to near its highest since June on Tuesday, as uncertainty over global growth that has hammered stocks puts the precious metal on course for its longest rally since 2011. Spot gold edged up 0.2 percent at $1,193 an ounce by 0250 GMT, while U.S. gold for April delivery was off 0.3 percent at $1,194 an ounce. Spot silver increased 0.6 percent to $15.39 an ounce, while Platinum gained 0.5 percent to $925.80 an ounce, with Palladium edged down 0.5 percent to $510.52 an ounce.
Crude oil prices escalated 2 percent on Tuesday, shrugging off big drops in Japan's stock market and eroding some of the previous session's losses that were driven by concerns about global oversupply. U.S. crude was up 49 cents at $30.18 a barrel at 0259 GMT, after rising as far as $30.30. Global crude benchmark Brent was up 35 cents at $33.23 a barrel. It settled the previous session down $1.18 at $33.88.
Treasuries Recap
U.S. 10-Year Treasuries yield stood at 1.690 percent versus previous close of 1.735 percent.
Demand for higher-rated sovereign debt sent Australian government bond futures to multi-month highs, with the 3-year bond contract up 12 ticks at 98.270. The 10-year contract rose 17 ticks to a 9-month peak of 97.5850, while the 20-year contract jumped 14.5 ticks to 97.0300.
New Zealand government bonds gained, sending yields 13.5 basis points lower at the long end of the curve.
Canadian government bond prices were higher across the maturity curve amid a flight to safety, while the curve flattened as the long end outperformed. The benchmark 10 -year was up 72 Canadian cents, pushing its yield to a record low at 1.054 percent, while the 2-year price increased 5 Canadian cents to yield 0.345 percent.
