Market Roundup
- Japan Feb money supply M2 +3.1% y/y, M3 +2.5%, L +3.9%, Jan +3.2/+2.6/+3.9%.
- Australia March Westpac/MI consumer confidence index -2.2% to 99.1.
- Australia Jan owner-occupied housing finance -3.9% m/m, -2.3% forecast, value of investment housing finance -1.6%.
- New Zealand Feb electronic card retail sales +0.7% m/m, +9.3% y/y, Jan +0.4%, +5.2%.
- Asia corporate profits set for first drop since '08 - Nikkei.
- Britain finance lobby TheCityUK says Brexit could crimp investment in UK, send banking jobs elsewhere, alternatives to membership second best -Reuters.
- (0230 ET/0730 GMT) Franc Feb BdF business sentiment index, 101 forecast; last 101.
- (0330 ET/0830 GMT) Sweden Jan household consumption, +0.5% m/m forecast; last -1.0%.
- (0430 ET/0930 GMT) Great Britain Jan ind production, +0.5% m/m, +0.2% y/y forecast; last -1.1%, -0.4%.
- (0430 ET/0930 GMT) Great Britain Jan mfg production, +0.2% m/m, -0.7% y/y forecast; last -0.2%, -1.7%.
- (1000 ET/1500 GMT) United States Jan wholesale sales, -0.3% m/m forecast; last -0.3%.
- (1000 ET/1500 GMT) United States Jan wholesale inventories, -0.2% m/m forecast; last -0.1%.
- N/A Greece E1 bln 13-week t-bill, Norway NOK3 bln 1.5% 2026 NST478 auctions.
- (0200 ET/0700 GMT) Riksbank Floden speech.
- (0400 ET/0900 GMT) BoE DepGov Bailey speaks at London conference/10:20 BoE Gracie speaks.
- (0530 ET/1030 GMT) Germany E4 bln 2018 Schatz auction.
- (0530 ET/1030 GMT) Portugal E1.0-1.25 bln 3.85% and 2.875% 2021 and 2026 OT auctions.
- (1000 ET/1500 GMT) BoC policy announcement, no change in 0.5% overnight rate forecast.
- (1500 ET/2000 GMT) RBNZ policy announcement, no change in 2.5% OCR forecast, small ease chance.
FX Beat
USD: The dollar edged down to 112.41 yen against its Japanese counterpart early on Wednesday as demand for the safe-haven currency grew after downbeat Chinese trade data halted the global rally on the back of stronger risk appetites. The dollar index against a basket of six major currencies declined to a 2-week low of 96.887 on Tuesday, however, it has climbed up to 97.417 on Wednesday.
EUR/USD: The euro eased to around 1.0968, down about 0.37 percent for the week, ahead of the European central Bank's policy meeting on Thursday. On Tuesday, it rose to 1.1057, its highest in more than a week. The pair had declined to a 1-month low of 1.0825 last week but has pulled back since then. The European Central Bank is considered almost certain to ease, which in theory would be negative for the euro. Since the ECB has disappointed before, no one quite willing to position for bold action. Investors expect the ECB to cut its deposit rate by at least 10 basis points and expand its asset-buying programme at its meeting. The risk off sentiment will continue to drive the pair, since the EUR calendar remains absolutely data-empty today, while markets attention remains on ECB policy decision tomorrow. Traders are likely to remain bearish on the pair, as the pair continues to hover towards session's low of 1.0967. Immediate support is seen at 1.0950 (10-DMA), while resistance is located at 1.1039 (20-DMA).
USD/JPY: The yen was broadly firmer early on Wednesday as demand for the safe-haven currency rose after disappointing Chinese trade data halted the global rally which had boosted stronger risk appetites. The yen rose to 1-week high of 112.42 to the dollar on Tuesday, a gain of 1.2 percent so far this week. Following a tumble in China's exports, a drop over six years last month, the European and U.S. stocks declined overnight while many commodities came under pressure, sustaining demand for the yen. The weak China data highlighted risks facing the global economy, strengthening expectations for dovish outcomes at central bank policy reviews in Europe and New Zealand. The persisting risk-off sentiment will continue to drive the markets ahead of China CPI figures and U.S. jobless claims due on Thursday. Earlier in the session, the pair made a low of 112.41, nearing its 1-week low of 112.42 hit on Tuesday. However, it has retreated from the lows as it currently trades around 112.69. Immediate resistance is located at 113.21 (20-DMA), while support is seen at 112.30 (Feb 19 Low), break below could drag the pair to 112.15 (March 1 Low).
AUD/USD: The Australian dollar eased to 0.7412, from an eight-month high of 0.7486 touched on Monday. However, it fared better among its commodity peers facilitated by further gains in iron ore, Australia's single biggest export earner. The pair came under renewed downward pressure following downbeat domestic data. Australia's January home loans declined to -3.9 percent as compared to previous 2.7 percent, while January investment lending for homes also decreased to -1.6 percent versus previous print of 0.6 percent. Markets view this decline in the domestic data as a result of recent financial market volatility. The pair currently trades around 0.7432, drifting away from session's low of 0.7412, hit earlier in the session. Immediate support is seen at 0.7392 (March 7 Low), while resistance is located at 0.7472 (March 8 High). The Aussie lost ground against a broadly stronger yen to 83.34 yen, having touched a 1-month high of 85.01 on Monday.
NZD/USD: The New Zealand dollar edged lower on Wednesday, after disappointing Chinese trade data sent investors to safe-haven assets like the yen. The kiwi trades 0.20 percent lower at 0.6727, retreating further from Friday's peak of 0.6818. Traders are likely to remain cautious ahead of the Chinese CPI figures and the RBNZ policy decision due later. Markets only imply a small chance of a rate cut by the Reserve Bank of New Zealand. If the central bank decides to hold steady, dealers assume it will sound dovish in order to put downward pressure on the kiwi. The pair made a low of 0.6716 before climbing back to its current levels. On the downside, support is located at 0.6703 (10-DMA), while on the upside, resistance is seen at 0.6760 (5-DMA). The New Zealand dollar declined to 75.65 yen to be down more than 2 percent so far this week.
USD/CNY: The yuan eased against the dollar on Wednesday after the central bank set the midpoint rate at 6.5106 per dollar prior to market open, easing 0.1 percent from the previous fix 6.5041. In the spot market, the yuan opened at 6.5062 per dollar and was trading at 6.5147 at midday, 0.16 percent weaker than the previous close. The offshore yuan was trading 0.04 percent weaker than the onshore spot at 6.517 per dollar. Last week, the International Monetary Fund said that it will separately identify China's yuan currency in its official foreign exchange reserves database starting Oct. 1, a move prompted by the yuan's new status in the Fund's Special Drawing Rights (SDR) basket.
Equities Recap
Sharp losses in Chinese stocks pulled Asian equities further away from 2-month highs on Wednesday, as weak trade figures from the Chinese economy and a retreat in oil prices revived concerns about global growth.
MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.6 percent, down 1.7 percent from its two-month high hit on Monday. Chinese shares lost ground, with the Shanghai Composite index and the CSI 300 both losing about 2 percent. Taiwan stocks edged down 0.4 pct at 8,634.11 points.
Australia's S&P/ASX 200 index closed up 0.75 pct at 5,146.50 points, while Nikkei declined 0.84 pct at 16,642.20, with Seoul shares edged up 0.24 pct.
Commodities Recap
Gold edged lower on Wednesday, declining with the euro as expectations that the European Central Bank is almost certain to ease policy this week weighed on the single currency. Spot gold was down 0.5 percent at $1,254.26 an ounce by 0313 GMT. Gold touched $1,279.60 last week, its strongest since Feb. 3, 2015. U.S. gold for April delivery eased 0.6 percent to $1,255.40 an ounce. Spot silver declined 0.5 percent to $15.235 an ounce, platinum lost 1 percent to $969.50 and palladium fell 1.2 percent to $549.45.
Oil prices dropped on Wednesday, weighed down by a strengthening U.S.-dollar and concerns over slowing demand, although falling U.S. production lent crude markets some support. U.S. crude futures were trading at $36.46 per barrel at 0219 GMT, down 4 cents from their last settlement, but still almost 40 percent above February's 2016 and multi-year low. International Brent crude futures were at $39.54 per barrel, down 11 cents from their last close, but still some 40 percent above their January lows for this year.
Treasuries Recap
The 10-year U.S. Treasuries yield declined back to 1.8392 percent, erasing its gains made after Friday's payrolls data.
Australian government bond futures were off multi-week lows, with the 3-year bond contract down half a tick at 98.045. The 10-year contract rose 0.75 ticks to 97.4475, while the 20-year contract was up 5.25 ticks to 96.9525.
New Zealand government bonds gained, sending yields around 3 basis points lower along the curve.
Canadian government bond prices rose across the maturity curve on Tuesday, with the benchmark 10-year rising 83 Canadian cents to yield 1.185 percent, while the 2-year price up 7.5 Canadian cents to yield 0.496 percent. The spread between the 2-year and 10-year yields narrowed by 5 basis points to 68.9 basis points.
