Market Roundup
- EUR/USD +0.2%, USD/JPY +0.3%, GBP/USD -0.1%, DXY +0.1%
- DAX-0.2%, CAC-0.2%, Brent -1.6%, Gold -0.2%, Copper -1.8%
- Higher yields drive dollar to 3-week high vs yen at 114.94
- Commodity ccys on the back foot as oil and metals head lower
- Gold hits 5-week low, copper sinks to seven-week low
- U.S. light crude down 90 cents at $49.38 per barrel
- German FinMin says wants "timely start to exit" from ECB stimulus
- Merkel says Brexit vote should be a wake-up call for EU
- Great Britain Feb RICS housing survey 24 vs previous 24 revised 23 forecast
- Switzerland Feb unadjusted jobless rate down at 3.6% vs previous 3.7%
- Swiss government sees unemployment edging lower in 2017
Economic Data Ahead
- (0745 ET/1245 GMT) The European Central Bank will announce its interest rate decision.
- (0830 ET/1330 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 12,000 to a seasonally adjusted 235,000 for the week ended March. 4 while continuing claims for the week ended Feb. 24 is expected to rise to 2.060 m from 2.066 m.
- (0830 ET/1330 GMT) The U.S. Labor Department publishes import and export prices index for the month of February. The import prices are likely to have gained 0.1 percent after rising 0.4 percent in January, while exports are expected to have edged up 0.2 percent after increasing 0.1 percent in the prior month.
- (0830 ET/1330 GMT) Canada's releases industrial capacity utilization data for the fourth quarter. The indicator stood at 81.9 percent in the previous quarter.
- (0830 ET/1330 GMT) The Statistics Canada reports New Housing Price Index (NHPI) for the month of January. The index rose 0.1 percent in December from the previous month.
- (0900 ET/1400 GMT) Mexico's statistics institute releases inflation data for the month of February. Consumer prices are likely to have risen 0.54 percent, after rising 1.70 percent in January. The core price index is expected to have increased 0.70 percent after it rose 0.58 percent in the prior month.
- (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending March 3.
- (1400 ET/1900 GMT) Argentina releases inflation data for the month of February. Consumer prices are expected to rise 2 percent after it rose 1.3 percent in the previous month.
- (1645 ET/2145 GMT) The Statistics New Zealand will release Electronic Card Retail Sales figures for the month of February. The index posted a rise of 8.4 percent in the previous month.
Key Events Ahead
- (0830 ET/1330 GMT) European Central Bank President Mario Draghi releases the monetary policy statement and gives a press conference.
- N/A Canada's Environment and Climate Change Minister Catherine McKenna will outline her environment strategy in her first ever address to Calgary's business community.
- (1145 ET/1645 GMT) FedTrade operation 15-yr Fannie Mae/Freddie Mac (max $450 mn)
FX Beat
DXY: The dollar rallied across the board as a strong ADP job number in the previous session cemented the chance of a Federal Reserve rate hike next week. The greenback against a basket of currencies traded flat at 102.07, having hit an early high of 102.25, its highest since Feb. 2. FxWirePro's Hourly Dollar Strength Index stood at 99.22 (Slightly Bullish) by 1100 GMT.
EUR/USD: The euro rose, retreating from a 4-day low hit earlier in the session, as investors turned their focus on the ECB policy decision for next direction on the major. Markets expect the ECB to keep the bond buying program and rates unchanged, however, traders will scrutinize President Mario Draghi comments for further clues on the central bank policy stance. The European currency traded 0.1 percent higher at 1.0558, having hit a low of 1.0525 earlier. FxWirePro's Hourly Euro Strength Index stood at 59.48 (Bullish) by 1000 GMT. Intraday bias is still bearish as long as resistance 1.0580 holds and any break above will take the pair till 1.06400/1.0660 level. On the lower side, major support is around 1.0490 short term low formed at Feb 22 and any break below targets 1.04500/1.03400.
USD/JPY: The dollar rallied to a fresh 3-week high as a continuous upsurge in the U.S. Treasury bond yields underpinned the bid tone around the greenback. Moreover, a strong ADP job number in the previous session bolstered expectations that the Fed would eventually raise interest rates at its meeting next week. The major traded 0.3 percent up at 114.73, after rising as high as 114.93, its highest since Feb. 15. FxWirePro's Hourly Yen Strength Index stood at -41.04 (Neutral) by 1000 GMT. The minor resistance is around 114.95 (Feb 15 high) and any break above will take the pair till 115.94. On the lower side, minor support is around 113.45 (21- day EMA) and any break below 112 will drag it till 111.65/111.
GBP/USD: Sterling declined, extending losses for the fourth consecutive session, amid persistent dollar demand on the back of growing expectations for an imminent March Fed rate-hike move. Moreover, renewed Brexit worries continued to weigh on the British pound, keeping it confined near 7-week lows against the dollar and the euro. Sterling trades 0.1 percent lower at 1.2151, having hit a low of 1.2138 earlier, its weakest since Jan. 17. FxWirePro's Hourly Sterling Strength Index stood at -36.98 (Neutral) by 1000 GMT. On the lower side, break below 1.2200 confirms minor weakness, a decline till 1.2080 is likely. The minor intraday bullishness can happen only above 1.2260 (5- day MA) and any break above will take it till 1.2300 (Mar 3 high)/ 1.2350 (Support turned into resistance). Against the euro, the pound trades 0.3 percent lower at 86.88 pence, having hit a 7-week low of 87.00 earlier.
USD/CHF: The Swiss franc edged up after falling to a 2-month low earlier in the week as in-line with estimates Switzerland's unemployment rate provided some support to the ongoing recovery momentum in the Swiss currency. The major traded lower at 1.0140, having hit a high of 1.0170 on Tuesday, its strongest since Jan. 11. FxWirePro's Hourly Swiss Franc Strength Index stood at 64.00 (Bullish) by 1100 GMT. The pair should break above the weekly high of 1.0170 for further jump till 1.0200/1.02480. On the lower side, 1.01400 will be acting as immediate support and any break below will drag it down till 1.00970 (23.6% retracement of 0.9860 and 1.0170)/1.00690 (Mar 3 low).
AUD/USD: The Australian dollar tumbled to hit a 7-week low below the 0.7500 handle, as persistent U.S. dollar demand amid surging U.S. Treasury bond yields weakened the bid tone around the major. The Aussie trades 0.4 percent down at 0.7497, having touched a low of 0.7491 earlier, it’s lowest since Jan. 17. FxWirePro's Hourly Aussie Strength Index stood at -177.68 (Highly Bearish) by 1100 GMT. On the lower side, the next immediate support stands at 0.74450 and any break below will drag the pair down till 0.7380 (61.8% retracement of 0.71599 and 0.77406). The major resistance is around 0.7530 (200- day EMA) and a break above will take it till 0.75869/0.7617 (21 – day EMA).
Equities Recap
European shares declined in early deals, weighed down by oil stocks and some disappointing earning updates, while the dollar and benchmark bond yields gained on rising U.S. interest rate hike prospects.
The pan-European STOXX 600 index plunged 0.25 percent to 371.63 points, while the FTSEurofirst 300 index eased 0.27 percent to 1,464.24 points.
Britain's FTSE 100 trades 0.04 percent down at 7,293.44 points, while mid-cap FTSE 250 shed 0.43 percent to 18,847.44 points.
Germany's DAX edged down 0.22 percent at 11,941.88 points; France's CAC 40 trades 0.1 percent lower at 4,954.14 points.
Tokyo's Nikkei rose 0.34 percent to 19,318.58 points, Australia's S&P/ASX 200 index fell 0.39 percent to 5,737.20 points and South Korea's KOSPI gained 0.21 percent to 2,091.06 points.
Shanghai composite index dropped 0.7 percent to 3,216.75 points, while CSI300 index slumped 0.6 percent to 3,426.94 points. Hong Kong’s Hang Seng shed 1.2 percent to 23,501.56 points.
Commodities Recap
Crude oil prices steadied, recovering some ground after registering it’s the biggest fall this year, however, record U.S. crude inventories continued to weaken market sentiment. International benchmark Brent crude was trading 0.1 percent up at $53.19 per barrel by 1007 GMT, having hit a low of $52.91 on Wednesday, its lowest since Dec. 8. U.S. West Texas Intermediate crude trades 0.3 percent up at $50.32 a barrel, after falling to a low of $50.03 the day before, its weakest since Dec. 15.
Gold prices declined, hitting their lowest level in five weeks as the dollar strengthened across the board ahead of U.S. non-farm payrolls data due to release on Friday. Spot gold was down by 0.24 percent at $1,205.04 per ounce, as of 1011 GMT, after falling to a low of $1,203.13 earlier in the session, the lowest since Feb. 1. U.S. gold futures eased 0.3 percent to $1,206.4.
Treasuries Recap
The U.S. Treasuries retreated ahead of the initial jobless claims, scheduled to be released later in the day. The yield on the benchmark 10-year Treasury jumped 1-1/2 basis points to 2.56 percent, the super-long 30-year bond yield also rose 1/2 basis point to 3.15 percent and the yield on short-term 2-year note also traded 1/2 basis point higher at 1.36 percent.
The UK gilts traded higher Thursday after the country’s Finance Minister Philip Hammond said that there is less uncertainty over the happening of 'Brexit', in a way confirming that UK will disperse from the membership of the European Union. The yield on the benchmark 10-year gilts, slumped 1-1/2 basis points to 1.20 percent, the super-long 30-year bond yields plunged 1 basis point to 1.79 percent and the yield on the short-term 2-year trade 1/2 basis point lower at 0.08 percent.
The German government slumped after chancellor Angela Merkel said that Europe needs policies based on free trade and that Germany only does well if Europe doing well. The yield on the benchmark 10-year bond, rose 2-1/2 basis points to 0.39 percent, the long-term 30-year bond yields jumped 3 basis points to 1.18 percent and the yield on short-term 3-year bond traded 1-1/2 basis points higher at -0.83 percent.
The Japanese government bonds skid on the back of falling U.S. Treasuries, after comments by the Federal Reserve Chair Janet Yellen raised chances of an interest rate hike at the monetary policy meeting scheduled to be held on March 14-15. The benchmark 10-year bond yield, rose 1-1/2 basis points to 0.09 percent, while the long-term 30-year bond yields hovered around 0.86 percent while the yield on the short-term 2-year note jumped 2-1/2 basis points to -0.26 percent.
The New Zealand government bonds slumped, tracking weakness in the U.S. counterpart after reading upbeat data from a private employment report released late yesterday. The yield on the benchmark 10-year bond, fell 1 basis point to 3.34 percent at the time of closing, the yield on 7-year note also slipped nearly 1 basis point to 2.90 percent and the yield on short-term 5-year note also traded 1 basis point lower at 2.61 percent.
The Australian 10-year bond yields hit near 1-1/2 year high after strong private employment data from the United States, released late yesterday almost confirmed that the Federal Reserve will adopt an interest rate hike at the March 14-15 monetary policy meeting. The yield on the benchmark 10-year Treasury note, jumped nearly 7 basis points to 2.94 percent, the yield on the 15-year note climbed 6 basis points to 3.34 percent and the yield on short-term 2-year traded 3 basis point higher at 1.92 percent.
