Market Roundup
- EUR/USD steady within 1.1163-1.1237 range.
- USD/JPY hits 114.21 low from 115.85 then recovers.
- DAX choppy after Monday's 9.5% slump: hovering around flat into NY.
- Switzerland January Jobless rate 3.4% vs 3.4% previous, 3.4% expected.
- Germany December Industrial Output -1.2% m/m vs -0.3% previous, +0.4% expected.
- Germany December Trade Balance E18.8bln vs 19.7bln previous, 20.2bln expected.
- UK December Trade Balance -bln vs -10.64bln previous, -10.4bln expected.
- Japan Fin Min Aso - Recent FX moves volatile, eyeing market closely.
- Japan Econ Min Ishihara - Recent JPY gains on external factors, safe haven flows.
- MoF's Asakawa - Recent FX moves "rough", checking for excessive volatility.
- UK January BRC like-for-like retail sales +2.6% y/y, +0.45% eyed, Dec +0.1%.
- UK BRC total sales +3.3%, biggest rise since September, Dec +1.0%.
Economic Data Ahead
- (1000 ET/1500 GMT) U.S. Commerce Department is scheduled to release its wholesale inventories report which is likely to show a drop of 0.2 percent in December, after dropping 0.3 percent in the previous month.
- (1000 ET/1500 GMT) The U.S. Bureau of Labor Statistics releases JOLTS Job Openings for December, which probably fell by approximately 100K to 5.33 million in December, yet remained above the healthy 453K level.
- (1630 ET/2130 GMT) API Weekly Crude Oil Stock, previous 3.8M.
Key Events Ahead
- (1145 ET/1645 GMT) Fed Trade Operation 30-Year F.Mae/Fr.Mac max $1.625bln.
FX Recap
USD: The dollar was trading at 115.15 yen, down 0.6 percent, after dropping as low as 114.205 in Asian trade. Against a basket of currencies, it was flat at 96.593.
EUR/USD: The euro was trading lower against the dollar at $1.1185 and was hurt in part by weak German industrial output. It has formed a triple top around 1.1250 and slightly retreating from that level. It was trading around 1.11990. The intraday trend is slightly weak as long as resistance 1.1250 holds. Any break above 1.1250 will take the pair to next level around 1.1280/1.1350 level. On the lower side major support is around 1.1178 and break below targets 1.1130/1.1100/1.1055. The overall bullish invalidation is only if it closes below 1.1050. The euro fell as much as one percent to 128.31 yen, and hit a 2-week low against the franc.
USD/JPY: The yen climbed to its highest against the dollar since November 2014 on a sell-off in global stocks and worries about Europe's banks. The pair has broken major support 115 and declined till 114.20 at the time of writing. The short term trend is slightly weak as long as resistance 116.60 holds. On the lower side major support is around 114.20 and break below targets 113/111.80. The minor resistance is around 116.60 and break above targets 117.25/117.60.
GBP/USD: The Sterling moved higher against the dollar and euro, a day after plunging to a 13-month low against the single currency on concerns about Europe's financial sector. It was marginally higher against the dollar at $1.4448, more than two cents down on the one-month high of $1.4672 it hit last Thursday. The pair has broken a major resistance at 1.4450 and jumped till 1.44850. The short term trend is slightly bullish as long as support 1.4320 holds. Any break below 1.4320 will drag it down till 1.4240 levels. The minor support is around 1.4400/1.4350. On the higher side break above 1.4450 confirms minor trend reversal, a jump till 1.4500/1.4570 is possible. The overall bearish invalidation is only above 1.4600. The pound gained just over 0.1 percent to 77.49 pence against the euro, still within sight of lows of 77.85 pence hit in Asian time.
USD/CHF: The Swiss franc rose to 0.9874 against the greenback, its highest since December. It has broken major support around 0.9870 and declined till 0.9800 at the time of writing. The short term trend is slightly weak as long as resistance 1.000 holds. On the lower side major support is around 0.9780. Any break below 0.9780 will drag the pair down till 0.9700/0.9630. On the higher side resistance is around 0.9850 and break above 0.9850 will take it till 0.9900/0.9950. The franc was also 0.3 percent higher against the euro, trading at 1.10235 francs per euro.
AUD/USD: The Australian dollar dropped to $0.7034, from $0.7085 early, pulling away from a 1-month high of $0.7242 touched last week. It has broken major support 0.7150 and declined till 0.7020. The short term trend is bearish as long as resistance 0.7150 holds. On the higher side minor resistance is around 0.7075 and break above targets 0.7135/0.7170. The minor support is around 0.7020 and break below will drag it till 0.6980/0.6920. The heavy buying of the yen dealt a blow to the Aussie which skidded a full yen under 81. A week ago it was up above 86 yen and was now near 79.17, a level last seen mid-2012.
NZD/USD: The New Zealand dollar slipped to $0.6590, continuing to edge away from the one-month high of $0.6752 hit last week.
Equities Recap
The drop in European banking stocks and losses in Asian markets drove European shares lower, the pan-European FTSEurofirst 300 dipped 0.1 percent, near its lowest close since 2013, banking stocks pared early gains with STOXX Europe 600 banks plunging 1.6 percent, and shares in several Italian banks were suspended from trading after dropping sharply. Britain's FTSE 100 was up 0.3 pct, Germany's DAX opened flat and France's CAC 40 rose 0.1 pct in early deals.
Tokyo's Nikkei ended down 5.40 pct at 16,085.44, MSCI's broadest index of Asia-Pacific shares outside Japan dropped 1.1 percent. While Australia's S&P/ASX 200 Index closed down 2.85 pct at 4,833.80 points.
Commodities Recap
Oil prices edged higher after posting some losses from a sell-off across markets, Brent crude futures were last up 35 cents at $33.23 a barrel by 0940 GMT, down from Monday's session high of $34.68. U.S. futures were up 66 cents at $30.35.
Gold steadied after hitting its highest level in more than seven months in the previous session as rising concerns about the global economy weighed on shares and drove investors to prefer safer assets. Spot gold was trading at $1,187.6 an ounce, down 0.3 percent, by 0925 GMT, after rising to $1,200.60 on Monday. U.S. gold for April delivery was down 0.7 percent at $1,189 an ounce.
Treasuries Recap
The U.S. 10-year Treasury yield stood at 1.7601, up 0.025 pct.
JGB prices extended their earlier gains after noon. The benchmark 10-year JGB yield dropped as low as -0.010%, hitting a fresh record low, as the BoJ decided on Jan 29 to buy T-Bills and JGBs at minus 0.10% or lower. Yields on the current 5-year JGBs are down 7.5bp from yesterday's afternoon close at -0.25% in negative territory, while the 10s are down 4.5bp at -0.005%, vs -0.01% earlier. In the super-long zone, the 20s are down 3.5bp at 0.725%, while the 40s are down 1bp at 1.06%. The lead 10-year March JGB futures are up 0.85 at 152.17, after hitting a fresh record high of 152.21 (+0.90).
The yields on safe haven German 10-year bonds fell to a 9-1/2 month low at 0.19 percent before pulling back to 0.22 percent, while 2-year bond yields moved off a new record low at -0.536 percent. Italian 10-year bond yields dropped 5 basis points to 1.66 percent, below a four-month high at about 1.77 percent hit in early trade. Portugal's 10-year bond yield was flat at 3.22 percent; it hit its highest level in almost nine months at 3.31 percent in early trade.
UK Gilts opened 7 ticks lower than the close of 121.85 as dealers tried to scale back some of yesterday's rally. Bears had little respite though as temptation proved too much for buyers and 10-year cash yields once again posted new lows for the year.
The 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 leapt 17 ticks to a 9-month peak of 97.5850. The 20-year contract jumped 14.5 ticks to 97.0300. New Zealand government bonds also gained, sending yields 13.5 basis points lower at the long end of the curve.
