Market Roundup
- Australia Feb Westpac/MI consumer sentiment index +4.2% to 101.3, +0.6% y/y.
- Australia Dec qtr HIA new home sales jump 6%, '15 closes strong, Nov -2.7%.
- NZ Jan electronic card retail sales +0.3% m/m, +5.2% y/y, Dec +0.1%, +6.6%.
- FOMC Chair Yellen faces tough sell on Fed rate hikes in Congress - Reuters.
- Negative US rates possible but no panacea for economic woes - Reuters.
- Japan PM Abe - Up to BoJ to decide monetary policy, believes central bank will take appropriate steps, closely watching markets, no comment on stocks.
- Mrs Watanabe loses faith in Abenomics, turns bullish on yen - Reuters.
- EconMin Ishihara - Economic fundamentals recovering - Reuters.
- Japan Jan domestic corp goods prices -0.9% m/m, -3.1% y/y, -0.7%, -2.% forecast.
- Japan Asahi offers Y400 bln+ for Peroni, Grolsch from SABMiller - Nikkei.
- IIF - China likely saw $113 bln in capital outflows in January.
- Hillary Clinton concedes defeat in New Hampshire Democratic primary, Sanders projected winner, Trump wins on Republican side - Washington Post.
- Europe to call on G20 finance chiefs for urgent action on growth - Reuters.
- ECB/BdF de Galhau - Deflation battle not over - Le Figaro.
- Oil traders rush for options to protect against crude gyrations - Reuters.
- Iran OilMin - Foreign oil companies to settle Iran's debt in EUR - Reuters.
- (0245 ET/0745 GMT) France Dec industrial output, +0.2% m/m forecast; last -0.9%.
- (0330 ET/0830 GMT) Sweden Dec household consumption, -0.4% m/m forecast; last +0.1%.
- (0400 ET/0900 GMT) Norway Jan CPI, +0.1% m/m, +2.5% y/y forecast; last -0.4%, +2.3%.
- (0400 ET/0900 GMT) Norway Jan - core, -0.1% m/m, +3.0% y/y forecast; last -0.2%, +3.0%.
- (0400 ET/0900 GMT) Norway Jan PPI; last -10.8% y/y.
- (0400 ET/0900 GMT) Italy Dec industrial output, +0.3% m/m, +1.4% y/y forecast; last -0.5%, +0.9%.
- (0430 ET/0930 GMT) Great Britain Dec industrial output, -0.1% m/m, +1.0% y/y forecast; last -0.7%, +0.9%.
- (0430 ET/0930 GMT) Great Britain Dec mfg output, +0.1% m/m, -1.4% y/y forecast; last -0.4%, -1.2%.
Key Events Ahead
- Lunar New Year, China-Hong Kong markets closed, Singapore back.
- N/A Riksbank monetary policy meeting (till tomorrow).
- N/A Italy E6.5 bln 12-mo BOT, Greece E875 mln 13-week bill auctions.
- (0300 ET/0800 GMT) Iceland central bank monetary policy announcement.
- (0530 ET/1030 GMT) Germany E5 bln 2018 Schatz auction.
- (0900 ET/1400 GMT) ECB Praet speech at Washington, DC conference.
- (1000 ET/1500 GMT) FOMC Chair Yellen semi-annual House testimony.
- (1030 ET/1530 GMT) United States TsySec Lew Senate testimony on budget.
- (1330 ET/1830 GMT) SF Fed Williams to speak at Fed/FDIC/OCC conference in Los Angeles.
FX Beat
USD: The dollar nursed losses around 3-1/2-month lows against a basket of major currencies on Wednesday, pressured by the spectre of a global economic slowdown as European banks struggled to fend off growing doubts over their health and as oil prices resumed slump.
EUR/USD: The euro trades flat at 1.1295 levels, having touched a 3-1/2 month high of 1.1337 on Tuesday. The upside remains capped as upbeat U.S. jobs opening data released on Tuesday strengthened the greenback. The number of job openings increased to 5.61 million in December, better than markets expectations of 5.35 million. Traders suspect that the global growth turbulence will prevent the Federal Reserve from raising interest rates in the near future. Markets now await for Fed Chair Janet Yellen's congressional testimony later in the day for fresh insights on the Fed's interest rates outlook. The pair has touched sessions high of 1.1311 and low of 1.1282. Immediate resistance is seen at 1.1337 (Previous Session High), while support is located at 1.1227 (5-DMA).
USD/JPY: The dollar trades 0.50 percent lower at 114.53 levels, hovering towards 15-month low of 114.21 yen hit on Tuesday. Weakness in Japanese equities could hurt investors' risk appetite and weigh on the dollar against the yen as Japan's benchmark Nikkei declined to its lowest levels since October 2014, further aiding the demand for the safe-haven yen to rise. The 15- month low represented a 4.8 percent decline from its 12-1/2-year peak touched in early December when the markets expected the Fed to keep raising rates this year, strengthening a global capital rush of funds to higher-yielding dollar assets. Looking ahead, markets will closely watch Fed Chair Janet Yellen's testimony due later today for clues on the policy outlook. Earlier in the session the pair touched sessions high of 115.25, before falling down to its current levels. Immediate support is located at 114.21 (Previous Session Low), while resistance is seen at 115.80(5-DMA) on the upside.
AUD/USD: The Australian dollar trades at 0.7068 levels, off previous session lows of 0.6973. The Aussie has been relatively subdued as concerns about the health of global banks and declining commodity prices sent investors to safe haven assets. The pair ignored upbeat domestic home sales data which rose 6.0% m/m in December as compared to 2.7% drop in November, recording its strongest monthly increase since November 2013. With Chinese financial markets shut this week for the Lunar New Year, the focus will be on Federal Reserve Chair Janet Yellen's testimony due later today and RBA Governor Stevens' speech scheduled on Thursday. The pair moves between the range of 0.7037 - 0.7079. Immediate support is seen at 0.7022 (20-DMA), while resistance is located at 0.7095 (10-DMA).
NZD/USD: The New Zealand dollar trades 0.13 percent down at 0.6623 against its U.S. counterpart as concerns about growing global turmoil and sliding commodity prices sent investors to safe haven assets. Kiwi continues to remain under pressure by broad USD selling on falling Fed rate hike bets this year. Markets now eye on the Fed Chair Yellen's testimony and U.S. crude supply data for fresh momentum on the pair. Yellen is expected to defend the Fed's first rate hike in a decade and insist that further rises remain on track. Traders are seen bearish in the session as the pair continues to hover towards session's low of 0.6604. Immediate support is located at 0.6589 (10-DMA) on the downside, while resistance is seen at 0.6659 (Feb 8 High) on the upside.
Equities Recap
Asian stocks dropped on Wednesday amid growing concerns about the health of the global banking sector, particularly in Europe, pushing investors into safer assets such as the yen, which stood near a 15-month high versus the dollar.
MSCI's broadest index of Asia-Pacific shares outside Japan dropped to 0.4 percent, while the Chinese markets are closed this week for the Lunar New Year holidays.
Australia's S&P/ASX 200 Index closed down 1.27 Pct At 4,770.90 Points, while Nikkei declined 2.31 pct at 15,713.39.
Commodities Recap
Gold advanced towards a 7-1/2-month high on Wednesday, as investors sought the safe-haven asset amid tumbling stock markets and concerns about the global economy. Spot gold was up 0.2 percent to $1,190.71 an ounce by 0310 GMT, after hitting an earlier intraday high of $1,194.06.
Crude oil prices rose on Wednesday after Iran said it was open to cooperation with Saudi Arabia, partly recovering from an 8 percent fall in the previous session led by concerns over demand and weak equities. The front-month Brent contract was 2.5 percent higher at $31.07 a barrel by 0219 GMT. The contract declined for a fourth straight session on Tuesday to end down $2.56, while U.S. crude for March delivery was 58 cents higher at $28.52 a barrel.
Treasuries Recap
U.S. 10-Year Treasuries yield stood at 1.7124 percent down by 0.017.
Australian government bond futures held near multi-month peaks, with the 3-year bond contract steady at 98.280. The 10-year contract was unchanged at 97.5950, while the 20-year contract was flat at 97.0650.
New Zealand government bonds eased, sending yields 2 basis points higher in the middle of the curve.
Canadian government bond prices were mixed across the maturity curve, with the benchmark 10-year flat to yield 1.051 percent after hitting a record low at 1.008 percent, while the 2-year priced up 2 Canadian cents to yield 0.354 percent.
