Market Roundup
- Japan PM Abe advisor Hamada - Not in favor of FX intervention to weaken ccy per se but sporadic action may be needed to punish specs - Japan Times.
- Japan PM Abe - To convene new advisory panel to debate need for supplementary budget to stimulate growth - Reuters.
- Japan Feb mfg PMI- final 50.1, slowest growth in 8 mos, flash 50.2, Jan 52.3.
- Japan Jan household spending -0.6% m/m, -3.1% y/y, +0.3% and -2.7% forecast.
- Japan Jan unemployment 3.2%, jobs-applicants ratio 1.28, 3.3% and 1.27 forecast, Dec jobs-applicants 1.27, 1.28 highest since December '91.
- Japan Q4 CAPEX +8.5% y/y, unch excl software, profits -1.7%, sales -2.7%.
- PBOC Chen - Concerned over rising spillover effect from divergence in global monetary policies, CNY 10% overvalued according to BIS REER - Reuters.
- China Feb Caixin mfg PMI 48.0, 48.3 forecast, Jan 48.4, mfg sheds jobs at fastest pace in 7 years.
- China Feb off'l mfg PMI 49.0, 49.3 forecast, services PMI 52.7, Jan 49.4, 53.5.
- Foreign investors shun Gilts, Brexit-c/a deficit cited - Financial Times.
- RBA leaves OCR as is at 2%, low inflation leaves scope for easier policy, reasonable prospects for growth, AUD continuing to adjust.
- Australia AIG PMI +2 pts to 53.5, manufacturing strongest since '10.
- Australia Feb RPData home price index +0.5% m/m, Jan +0.9%.
- Australia Jan bldg approvals -7.5% m/m, -2% forecast, priv-sector houses -6.0%.
- Australia Q4 c/a def A$21.1 bln, A$20 bln forecast, net exports zero GDP impact.
- Australia Q4 government consumption +0.7% q/q to A$73.65 bln.
- Australia sees agriculture output boost as El Nino fades - Reuters.
- New Zealands Q4 terms of trade -2% q/q, unch forecast, export volumes -2.4% pirces -5.7%.
- S&P - Global government dept to keep rising in '16.
Economic Data Ahead
- (0230 ET/0730 GMT) Sweden Feb PMI mfg, 55.0 forecast; last 55.5.
- (0300 ET/0800 GMT) Norway Feb PMI mfg, 48.2 forecast; last 49.2.
- (0315 ET/0815 GMT) Switzerland Jan retail sales; last -1.6% y/y.
- (0315 ET/0815 GMT) Spain Feb PMI mfg, 54.4 forecast; last 55.4.
- (0330 ET/0830 GMT) Switzerland Feb PMI mfg, 49.6 forecast; last 50.0.
- (0345 ET/0845 GMT) Italy Feb PMI mfg, 52.5 forecast; last 53.2.
- (0350 ET/0850 GMT) France Feb PMI mfg, 50.3 forecast; flash 50.3.
- (0355 ET/0855 GMT) Germany Feb PMI mfg, 50.2 forecast; flash 50.2.
- (0355 ET/0855 GMT) Germany Feb unemployment, 2.92 mln nsa forecast; last 2.92 mln nsa, 2.73 mln sa.
- (0355 ET/0855 GMT) Germany Feb unemployment, 6.2%, -10k sa forecast; last 6.2%, -20k.
- (0400 ET/0900 GMT) Eurozone Feb PMI mfg, 51.0 forecast; flash 51.0.
- (0400 ET/0900 GMT) Italy Jan unemployment, 11.4% forecast; last 11.4%.
- (0430 ET/0930 GMT) Great Britain Feb PMI mfg, 52.2 forecast; last 53.5.
- (0500 ET/1000 GMT) Eurozone Jan unemployment, 10.4% forecast; last 10.4%.
- (0945 ET/1445 GMT) United States Feb Markit PMI mfg - final; flash 51.0.
- (1000 ET/1500 GMT) United States Feb ISM PMI mfg, 48.5 forecast; last 48.2.
- (1000 ET/1500 GMT) United States Jan construction spending, +0.4% m/m forecast; last +0.1%.
- (1030 ET/1530 GMT) United States Feb Dallas Fed services revenues, outlook indices; last 10.0, -10.4.
- (1330 ET/1830 GMT) United States Feb total vehicle sales, 17.68 mln AR forecast; last 17.58 mln.
- N/A Finland 10-year bond and Belgian 30-year OLO syndications.
- N/A Belgium E2.1-2.5 bln 3/6-month treasury certificate auctions.
- (0430 ET/0930 GMT) ECB 7-refit at fixed 0.05%, E61 bln allotment forecast, last E65.8 bln.
- (0905 ET/1405 GMT) ECB Lautenschlaeger speech at New York GARP convention.
- N/A US Super Tuesday - 11 state primaries in lead-up to US pres election.
FX Beat
EUR/USD: The euro edged up by 0.10 percent at 1.0885 levels, after falling to a 1-month low of 1.0859 in the previous session. The pair gained after a set of U.S. economic data failed to impress the markets. U.S Chicago Purchasing Manager's Index declined to 47.6 in February as compared to previous print of 55.6. U.S. January pending home sales also dropped to -2.5% m/m and 1.4% y/y. Looking ahead, markets now await Eurozone economies Markit manufacturing PMI data and German unemployment data for further cues on the pair, while they anticipate the ECB to deliver another round of policy easing at its March 10 policy review. The pair continues to rise, hovering towards sessions high of 1.0889. Immediate resistance is located at 1.0942 (5-DMA), while support is seen at 1.0859 (Previous Session Low). Against the yen, the euro fell as far as 122.06, reaching a low not seen since April 2013.
USD/JPY: The yen was firmer early in trade, as cautious investors sought the safe-haven Japanese currency as China took fresh steps to stimulate its economy. The dollar extended losses, skidding to a low of 112.15, erasing Friday's 0.9 percent gain. Heavy selling pressure weighs on the pair as risk-off market profile continues to strengthen the safe-haven yen amid falling Japanese stocks. The pair trades at 112.50 levels, away from session's low, however, the recovery looks fragile as the greenback remains broadly lower following Fed's Dudley's comments. Attention will be now on U.S. February ISM and Markit Manufacturing PMI data for further insights on the U.S. economic outlook ahead of the U.S. jobs report due later this week. Traders are likely to continue previous sessions's bearish trend. Immediate support is located at 111.89 (Feb 25 LOw), while resistance is seen at 112.86 (5-DMA).
AUD/USD: The Australian dollar declined on downbeat Australian Current Account Balance report and Chinese economic data. The Aussie hit a low of 0.7109 earlier in the session after Australia's Current Account Balance in Q4 declined to -21.1 billion, against markets expectation of -20.0 billion. Further downward pressure weighs on the pair as China's Caixin Manufacturing PMI for February declined to 48.0 versus previous print of 48.4, while the official China manufacturing PMI fell from 49.4 to 49.0 in February. However, the pair has pulled away from the low after the Reserve Bank of Australia kept the key rate unchanged at 2.0%, in line with market consensus. Traders will now closely watch Australia's GDP report for Q4 scheduled tomorrow, ahead of U.S. Unemployment Report. The pair trades around 0.7145 levels, hovering towards session's high of 0.7151. Immediate resistance is located at 0.7166 (5-DMA), while support is seen at 0.7109 (Session's Low).
NZD/USD: The New Zealand dollar trades 0.41 percent higher at 0.6616, drifting towards session's high of 0.6618 and away from a low of 0.6565 in the previous session. The pair continues to rise, despite downbeat Chinese economic data and volatile oil prices. Later in the day, U.S. economic data followed by NZD GDT Price Index will be closely eyed for further cues on the pair. Traders are likely to be bullish as the pair continues to rise. Immediate resistance is located at 0.6641 (5-DMA) on the upside, while support is seen at 0.6565 (Previous Session Low) on the downside.
USD/CNY: The yuan firmed at the open on Tuesday, after the PBoC cut banks' reserve requirement ratio by 50 basis points, injecting around 650 billion yuan ($99.20 billion) into the economy. The central bank set the midpoint rate at 6.5385 per dollar prior to market open, firmer than the previous fix of 6.5452, and higher than Monday's closing quote at 6.554. The spot market opened at 6.5432 per dollar and was trading at 6.5440 in early trade, -100 pips away from the previous close and 0.08 percent away from the midpoint. The offshore yuan was trading -0.08 percent away from the onshore spot at 6.5492 per dollar, firmer than the previous day's unofficial close of 6.5518.
Equities Recap
Asian shares rose on Tuesday, strengthened by China's monetary easing and downbeat manufacturing and service surveys that raised hopes of additional measures.
MSCI's broadest index of Asia-Pacific shares outside Japan edged up about 0.5 percent.The Shanghai Composite Index erased early losses and added 0.2 percent, while the CSI300 index edged up 0.4 percent.
Australia's S&P/ASX 200 Index advanced 0.82 pct at 4,920.80 points, while Nikkei rose 0.37 pct at 16,085.51, while Taiwan Stocks edged up 0.9 pct at 8,485.69 points.
Commodities Recap
Gold advanced for a second straight session on Tuesday, strengthened by safe-haven demand after weak Chinese data raised concerns over the global economy, with the volume of assets in the top bullion fund climbing to the highest since 2014. Spot gold had gained 0.7 percent to $1,246.35 an ounce by 0228 GMT, after rising 1.3 percent in the previous session. U.S. gold futures rose over 1 percent to $1,249.30.
Crude prices declined on Tuesday as another slump in China's manufacturing sector outweighed overnight reports of falling U.S. and OPEC production and strong oil demand. U.S. West Texas Intermediate crude futures were trading at $33.63 per barrel at 0122 GMT, down 12 cents cents from their last settlement, while International benchmark Brent crude futures were down 17 cents at $36.40 per barrel, though still up over 20 percent since Feb. 11.
Treasuries Recap
U.S. 10-Year Treasuries Yield stood at 1.721 percent down by 0.019 bps.
German 10-year Bund yields declined into negative territory on the data and were last flirting with zero percent.
Canadian government bond prices were mixed across the maturity curve, with the benchmark 10-year off 7 Canadian cents to yield 1.190 percent, while the 2-year price down half a Canadian cent to yield 0.521 percent. Prices for 3-7 year maturities rose.
