Market Roundup
- USD/JPY -0.5%, GBP/USD -0.1%, EUR/USD -0.1%
- DXY +0.1%, DAX -0.1%, Brent +0.1%, Gold -0.05%
- Oil slides as strong U.S drilling activity weakens deal to cut output
- Firm $ weighs on gold, political uncertainty supports
- Germany Saxony & Hesse inflation surprises at 2.3% and 2.4% yy respectively
- EZ Jan Economic Sentiment 108.2 vs previous 107.8. 107.7 f/c
- EZ Jan Industrial Sentiment 0.8 vs previous 0.0 revised 0.2 f/c
- EZ Jan Consumer Confidence final -4.7 vs previous -5.1. -4.9 f/c
- Switzerland Jan KOF indicator 101.7 vs previous 102.1 revised 103.3 f/c
- SNB domestic deposits rise to CHF 466.714bln from previous 464.281 w/e Jan 27
- France's Macron gets boost from left as scandal-hit Fillon falters
- Germany says expects IMF to participate in Greece's bailout
- South Africa's rand, bonds weaken on cabinet reshuffle reports
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Commerce Department releases personal income figures for December, which is expected to rise 0.4 percent, after staying unchanged in the previous month.
- (0830 ET/1230 GMT) The U.S. Commerce Department releases the personal consumption expenditures (PCE) price index for the month of December. The index rose at an annualized rate of 1.4 percent in the prior month while core PCE is likely to have increased 0.2 percent after staying unchanged in the previous month.
- (0830 ET/1230 GMT) The U.S. Personal spending is likely to rise 0.4 percent in the month of December, after surging 0.2 percent in November.
- N/A The Federal Reserve releases its Loan Officer Survey.
- (1000 ET/1500 GMT) The National Association of Realtors is likely to report that U.S. pending home sales increased 1.2 percent in December after declining 2.5 percent in November.
- (1030 ET/1530 GMT) The Dallas Fed releases its Manufacturing Business Index for the month of January. The index posted a rise of 15.5 percent in the previous month.
- (1645 ET/2145 GMT)The Statistics New Zealand will release visitor arrivals report for the month of December. The indicator posted an annualized gain of 11 percent in the prior month.
- (1830 ET/2330 GMT) Japan's Statistics Bureau is expected to report that unemployment rate remained unchanged at 3.1 percent for the month of December.
- (1830 ET/2330 GMT) Japan's overall household spending probably declined at an annualized rate of 0.6 percent in December after tumbling 1.5 percent in November.
- (1850 ET/2350 GMT) Japan's Ministry of Economy, Trade, and Industry will release preliminary Industrial Production for the month of December. The indicator posted a final reading of 4.6 percent in the prior month.
Key Events Ahead
- (1165 ET/1645 GMT) FedTrade operation 30-yr Ginnie Mae (max $1.225 bn)
- (1430 ET/1930 GMT) FedTrade operation 15-yr Fannie Mae/Freddie Mac (max $675 mn)
FX Beat
DXY: The dollar slumped versus the yen after President Trump suspended travel to the United States from Syria, Iraq, Iran and four other countries on national security grounds. The greenback against a basket of currencies traded 0.16 percent up at 100.72, hovering towards a high of 100.82 hit in the previous session, its highest since Jan. 20. FxWirePro's Hourly Dollar Strength Index stood at 9.18 (Neutral) by 1000 GMT.
EUR/USD: The euro declined below the 1.0700 handle, as a rebound in treasury yields strengthened the bid tone around the dollar across the board. Markets seem to have ignored better-than -expected Eurozne's economic sentiment indicator, which came in at 108.2, beating estimates of 107.9 and previous 107.8. The European currency traded flat at 1.0697, after falling as low as 1.0657 on Thursday, it’s lowest since Jan 2. FxWirePro's Hourly Euro Strength Index stood at -46.10 (Neutral) by 1000 GMT. On the higher side, immediate resistance is around 1.07750 level and any break above will take it till 1.08015/1.08480 level. The support is around 1.06580 (61.8% fibo) and any violation below will drag it till 1.0625/1.0578.
USD/JPY: The dollar fell as investors sought for safe-haven assets, such as Japanese yen, as worries over the implications of immigration restrictions under President Donald Trump's administration triggered a fresh bout of risk-averse sentiment. However, a surge in the U.S. Treasury bond yields helped the major to recover from an intra-day low of 114.26. The major trades 0.4 percent down at 114.63, after rising as high as 115.03 in the previous session, it’s strongest since Jan. 20. FxWirePro's Hourly Yen Strength Index stood at -67.93 (Bearish) by 1000 GMT. The major resistance is around 115.56 (daily Kijun-Sen) and any break above will take it till 116.87 (Nov 11th high)/117.50. On the lower side, minor support is around 114.07 (daily Kijun-Sen) and any break below 114.07 will drag it till 113.05 (60- day EMA)/112.52.
GBP/USD: Sterling declined, extending losses below the 1.2600 handle, ahead of this week's first Bank of England meeting of 2017. The BoE is widely expected to keep interest rate unchanged, however, it is likely to revise up its short-term growth and inflation forecasts following recent upbeat UK data. Sterling trades 0.1 percent lower at 1.2537, after rising to a high of 1.2672 on Thursday, it’s strongest since Dec. 14. FxWirePro's Hourly Sterling Strength Index stood at -28.96 (Neutral) by 1000 GMT. On the lower side, its downside is capped by 23.6% fibo and any violation below that level confirms further weakness, a decline till 1.2435/1.24180 (Jan 24 Low) is possible. It should close above 1.2600 for further jump till 1.26750 (Jan 26 High). Any break above the high of 26 Jan will take the pair till 1.27750 level. Against the euro, the pound trades 0.1 percent down at 85.27 pence, having hit a peak of 84.70 last week, it’s strongest since Jan. 3.
USD/CHF: The dollar recovered and closed the bearish opening gap against the Swiss franc, as a rebound in the U.S. Treasury yields boosted the greenback. The major trades up at 0.9991, having touched a high of 1.0027 in the previous session, it’s highest since Jan. 20. FxWirePro's Hourly Swiss Franc Strength Index stood at 62.73 (Bullish) by 1000 GMT. The upside is capped by 23.6% fibo at 1.00520 and any break above targets 1.00960 (21- day6 MA)/1.01225. On the lower side, any break below 0.99575 will drag it till 0.9925 (200- day EMA)/0.9860 (200- day MA).
AUD/USD: The Australian dollar retreated after rising to an intra-day high of 0.7560, as the greenback recovered amid risk-averse market sentiment. Moreover, the travel ban executed by the US President on Friday continued to curb the demand for risky assets. The Aussie trades flat at 0.7545, having touched a low of 0.7511 in the previous session, it’s weakest since Jan. 19. FxWirePro's Hourly Aussie Strength Index stood at 5.02 (Neutral) by 1000 GMT. On the lower side, the pair should close below 0.7493 (200- day MA) for further weakness and any break below will take the pair down till 0.7461 (100- day EMA)/0.7435. The minor resistance is around 0.7609 (Jan 24 High) and a break above will take it till 0.7649/0.7680.
NZD/USD: The New Zealand dollar eased, reversing most of its session gains, as the U.S. dollar slightly recovered across the board. Moreover, optimistic comments from NZ finance minister Joyce on the economic outlook failed to impress the Kiwi bulls, keeping the bearish tone around the major intact. The Kiwi trades 0.1 percent down at 0.7251, having hit a peak of 0.7312 last week, it’s strongest since Nov. 9. FxWirePro's Hourly Kiwi Strength Index was at 42.01 (Neutral) by 1000 GMT. Immediate resistance is located at 0.7300, a break above could take it near 0.7340. On the downside, support is seen at 0.7221 (9-EMA), a break below could drag it lower 0.7200.
Equities Recap
European shares declined in early trade, weighed down by weaker commodities-related stocks, while the dollar dropped against the yen after immigration restrictions introduced by President Trump fuelled global political uncertainties.
The pan-European STOXX 600 index decreased 0.8 percent to 363.29 points, while the FTSEurofirst 300 index tumbled 0.85 percent to 1,434.69 points.
Britain's FTSE 100 trades 0.8 percent up at 7,124.30 points, while mid-cap FTSE 250 advanced 0.66 percent to 18,070.37 points.
Germany's DAX declined 0.79 percent at 11,722.22 points; France's CAC 40 trades 0.98 percent lower at 4,792.95 points.
MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.5 percent.
Tokyo's Nikkei slumped 0.51 percent to 19,368.85 points, Australia's S&P/ASX 200 index fell 0.81 percent to 5,667.70 points
Commodities Recap
Crude oil prices declined, extending previous session losses as a report of another rise in U.S. drilling activity fuelled concern over increasing oil output. International benchmark Brent crude was trading 0.2 percent lower at $55.33 per barrel by 1025 GMT, having hit a low of $54.85 on Friday, its lowest since Jan. 25. U.S. West Texas Intermediate crude fell 0.1 percent at $53.10 a barrel, after rising to $54.05 in the previous session, its highest since Jan. 6.
Gold prices edged down, as the dollar recovered after declining on the back of rising uncertainty over U.S. policy under President Donald Trump. Spot gold had edged down 0.1 percent to $1,190.01 per ounce by 1030 GMT, having hit its lowest since Jan. 11 at $1,180.78 on Friday. U.S. gold futures were up 0.24 percent at $1,191.2.
Treasuries Recap
The U.S. Treasuries witnessed modest downward pressure post-President Donald Trump’s immigration order, to cancel the entry of Muslims into the country’s premises. The yield on the benchmark 10-year Treasury jumped 2 basis points to 2.54 percent, the super-long 30-year bond yield also rose nearly 1-1/2 basis points to 3.12 percent and the yield on short-term 2-year note moved higher by nearly 1/2 basis points to 1.24 percent.
The UK gilts traded nearly flat as investors remain sidelined in any major deal amid subdued trading session. Also, investors are now curiously eyeing the Bank of England’s monetary policy meeting scheduled to be held on Thursday. The yield on the benchmark 10-year gilts, rose nearly 1 basis point to 1.48 percent, the super-long 30-year bond yields also slipped 1/2 basis point to 2.10 percent and the yield on short-term 2-year fell 1-1/2 basis points to 0.14 percent.
The German government bunds slid, following expectations of upbeat consumer price inflation, scheduled to be released later in the day. The yield on the benchmark 10-year bond, jumped 3 basis points to 0.48 percent, the long-term 30-year bond yields also surged 3-1/2 basis points to 1.22 percent and the yield on the short-term 2-year bond traded higher by 1 basis point at -0.65 percent.
The Japanese government bonds traded narrowly mixed ahead of the Bank of Japan’s (BoJ) 2-day monetary policy meeting decision, scheduled to be revealed on Tuesday. Also, investors remain sidelined in any major trading activity, following the closure of major Asian markets on account of Lunar New Year holidays. The benchmark 10-year bond yield, hovered around 0.08 percent, while the long-term 30-year bond yields fell nearly 1/2 basis point to 0.85 percent and the yield on the short-term 2-year note also dipped 1-1/2 basis points to -0.21 percent.
The New Zealand government bonds closed mixed as investors remained sidelined in any major trading activity amid a subdued session that witnessed data of little economic significance. However, markets have largely shrugged off the improvement in the country’s trade balance data. The yield on the benchmark 10-year bond, plunged 6 basis points to 3.38 percent at the time of closing, while the yield on 7-year note rose 1/2 basis point to 3.01 percent and the yield on short-term 2-year note fell 5 basis points to 2.34 percent.
The Australian bonds rebounded at the start of the week, tracking firmness in the U.S. Treasuries and as investors moved away from riskier assets amid including equities and crude oil. The yield on the benchmark 10-year Treasury note, plunged nearly 5 basis points to 2.74 percent, the yield on 15-year note also fell 4-1/2 basis points to 3.19 percent and the yield on short-term 2-year ticked 3 basis points lower to 1.82 percent.
