Market Roundup
- Bank of Japan faces a new opponent on negative rates: Main Street - WSJ.
- FinMin Aso - G20 to discuss China excess capacity, oil price declines, US Fed policy - Reuters.
- Japanese corp earnings: Profit growth seen slowing on stronger yen - Nikkei.
- Japan Feb Reuters Tankan mfg index +7, non-mfg +21, Jan +6, +27, mood hurt by fears of global slowdown, +4 and +21 forecast for May.
- SF Fed Williams - Chances of negative rates very remote, not that concerned over China, Fed rate projections still useful - Reuters.
- Foreign CB US debt holdings -$11.982 bln to $3.255 trln week-ended Feb 17, Treasuries -$12.29 bln to $2.943 trln, agencies -$48 mln to $263.651 bln.
- NY Fed - FX swaps with foreign CBs total $98 mln Feb 17 week, all with ECB.
- Lipper - US-based stock funds post $5.7 bln outflows in February 17 week.
- BoE MPC Weale - Would be surprised if BoE took as long to hike rates as market expected, markets may well turn out to be right though - Irish News.
- RBA board Edwards revives fears over AUD strength - DowJones.
- Suspected intervention steadies KRW.
- (0200 ET/0700 GMT) Germany Jan PPI, -0.3% m/m, -2.0% y/y forecast; last -0.5%, -2.3%.
- (0330 ET/0830 GMT) Sweden Jan unemployment, 7.6% nsa forecast; last 6.7% nsa, 7.2% sa.
- (0430 ET/0930 GMT) Great Britain Jan retail sales, +0.8% m/m, +3.6% y/y forecast; last -1.0%, +2.6%.
- (0430 ET/0930 GMT) Great Britain Jan - ex-fuel, +0.7% m/m, +3.5% y/y forecast; last -0.9%, +2.1%.
- (0430 ET/0930 GMT) Great Britain Jan PSNB, - bln forecast; last bl, PSNCR bln.
- (0430 ET/0930 GMT) Great Britain Jan -ex-banks, - bln forecast; last bln.
- (0830 ET/1330 GMT) United States Jan CPI, -0.1% m/m, +1.3% y/y forecast; last -0.1%, +0.7%, index 236.53.
- (0830 ET/1330 GMT) United States Jan -core, +0.2% m/m, +2.1% y/y forecast; last +0.2%, +2.1%, index 244.52.
- (0830 ET/1330 GMT) United States Jan real weekly earnings; last +0.1% m/m.
- (0900 ET/1400 GMT) Belgium Feb consumer confidence index; last -4.0.
- (1000 ET/1500 GMT) Eurozone Feb consumer confidence index - flash, -6.7 forecast; last -6.3.
- (1130 ET/1630 GMT) United States Jan Cleveland Fed CPI; last +0.1%.
- N/A European Council meeting in Brussels (final day).
- N/A UK DMO GBP0.5/2.0/2.0 bln 1/3/6-month treasury bill auctions.
- (0830 ET/1330 GMT) ECB VP Constancio at New York event.
- (0840 ET/1340 GMT) Cleveland Fed Mester speech in Sarasota, Florida.
FX Beat
EUR/USD: The euro trades 0.18 percent higher at 1.1125 levels, after declining to a 2-week low of 1.1071 in the previous session, and is on track to lose 1.2 percent on the week. The minutes from the ECB's January meeting showed some policymakers supporting the need to act pre-emptively against new threats on the economy. Markets await German Producer Price data, following U.S. inflation report for further cues on the pair. Earlier in the session, the pair touched sessions low of 1.10971, before climbing up to its current level. Immediate resistance is located at 1.1149 (Previous Session High), while support is seen at 1.1082 (20-DMA).
USD/JPY: The dollar is 0.35 percent down at 112.82 yen, crawling back towards a 15-month low near 111.00 set last week. The greenback nearly touched 115 on Tuesday but was poised to lose 0.4 percent on the week. Asian shares slipped from 3-week high as oil rally reversed, further strengthening the yen. The effects of BoJ Kuroda's statements are seen fading away, as market now focus on U.S. CPI data for fresh cues. The pair continues to drift lower, hovering towards sessions low of 112.71. Immediate support is located at 112.71 (Session's Low), while on the upside, resistance is seen at 113.75 (5-DMA).
AUD/USD: The Australian dollar declined after RBA's John Edwards stated that the currency was too high, and that there were growing risks of it appreciating as other central banks adopt negative interest rates. Renewed appetite for the yen following a halt in an oil rally, further weighs on the Aussie. While oil and stocks will continue to drive market sentiment, attention now shifts towards the U.S. CPI figures and RBA Assist Gov Debelle Speech. Currently the pair trades at 0.7113 levels, having touched sessions low of 0.7093. Support is located at 0.7084 (Feb 17 Low), while resistance is seen at 0.7161 (Session's High).
NZD/USD: The New Zealand dollar fell on Friday as concerns about global growth sent investors towards safe-haven yen and government bonds. The Kiwi was strengthened on Thursday, however, failed to hold its gains overnight. The pair currently trades at 0.6625, having touched sessions high of 0.6645 and low of 0.6611. On the upside, the pair faces resistance at 0.6649 (Feb 17 High), while on the downside, support is located at 0.6589 (20-DMA).
USD/CNY: The yuan edged down against the dollar on Friday after the central bank set the midpoint rate at 6.5186 per dollar prior to market open, only 0.05 percent weaker than the previous fix of 6.5152. The spot market opened at 6.5190 per dollar and was trading at 6.5203 at midday, while the offshore yuan was trading 0.11 percent weaker than the onshore spot at 6.5275 per dollar. On Thursday, the PBoC stated that it would conduct open market operations every working day, providing flexibility in its efforts to aid the banking system without needing to resort to broad interest rate cuts and thus putting downward pressure on the yuan.
Equities Recap
Asian shares declined from near 3-week highs on Friday as a rally in oil prices reversed and investors remained cautious about the outlook for the global economy.
MSCI's broadest index of Asia-Pacific shares outside Japan edged down 0.7 percent, but gains in previous sessions left it up 4 percent for the week, while Taiwan stocks edged up 0.1 pct at 8,325.04 points.
Australia's S&P/ASX 200 Index closed down 0.91 pct at 4,946.50 points, while Nikkei declined 1.42 pct at 15,967.17, with Seoul Shares edged up 0.37 pct.
Commodities Recap
Gold gave up some of its sharp overnight gains on Friday, but held above $1,200 an ounce as a drop in equities stoked fresh safe-haven demand for the metal. Spot gold eased 0.4 percent to $1,226.61 an ounce by 0308 GMT, after gaining 2 percent on Thursday. For the week, it has lost nearly 1 percent, as traders took profits after the metal climbed to a one-year top last week.
U.S. oil futures declined in early Asian trade on Friday as record crude stocks renewed concerns about global oversupply, outweighing moves by oil producers including Saudi Arabia and Russia to cap oil output. Brent futures dropped 38 cents to $33.90 a barrel as of 0456 GMT, after ending the previous session down 22 cents. U.S. crude also lost 34 cents to $30.43 a barrel, after climbing up 11 cents in the previous session.
Treasuries Recap
U.S. 10-Year Treasuries yield stood at 1.7294 down by 0.031.
Australian government bond futures advanced, with the 3-year bond contract 6 ticks higher at 98.220. The 10-year contract climbed 10.5 ticks to 97.5650, while the 20-year contract also added 10.5 ticks to 97.0350. The spread between 10- and 3-year government bonds contracted to 65 basis points, near 64 basis points, the smallest in 10 months.
New Zealand government bonds gained slightly, sending yields 4 bps higher across most of the curve.
