Markets Roundup
- EUR/USD easy bias holding but loss consolidation in Europe
- USD/JPY plays 113.51-114.00 and EUR/JPY 126.25-127.14
- GBP/USD Marginally bearish but tight 1.4337-1.4388 range
- EZ Jan Ind. Prod. y/y vs -1.3% prev, +1.4% exp
- PM Abe distanced himself from NIRP in parliament - RTRS
- PM Abe Advisor: BoJ unlikely to ease now, yen not too strong vs dollar - RTRS
- Sources - BOJ to debate exempting $90bln s/t funds from neg. rates – RTRS
- PBOC Gov Zhou – Signs financial markets returning to normal- RTRS
- China SAFE – Cross-border capital outflows easing – RTRS
- IMF Lagarde – Growth-supportive money/fiscal policies urged in Asia –RTRS
- RBNZ Gov Wheeler: Rates cut no mystery - Liam Dann, NZ Herald
Economic Data Ahead
- N/A Brazil's central bank releases results of a weekly economic survey with more than 100 financial institutions. This will include forecasts for GDP, interest rates and inflation rates.
Key Events Ahead
- (0645 ET/1145 GMT) New York FedTrade 15-yr F.Mae/Fr.Mac max $625mln
- (1400 ET/1900 GMT) Reserve Bank of New Zealand Governor Wheeler's Speech
FX Beat
USD: The dollar was flat at 113.75 yen having gained 0.6 percent on Friday. An improvement in risk appetite lifted the greenback from a low of 112.225 to as high as 114.45 versus the safe-haven yen last week. Against a basket of currencies it was trading at 96.447, up 0.32 pct.
EUR/USD: The euro fell 0.2 percent on Monday to $1.1126, having set a 1-month high of $1.1218 on Thursday. It has recovered till 1.11934 and was trading around 1.1120. The short term trend is weak as long as resistance 1.12180 holds. On the higher side any break above 1.12180 will take the pair to next level till 1.1250/1.1345 in short term. The minor resistance is around 1.1150/1.1178. Major weakness can be seen below 1.1050 and break below targets 1.1000/1.0920.
USD/JPY: The yen strengthened 0.1 percent to 113.68 per dollar. It was trading around 113.66 and the short term trend is slightly weak as long as resistance 115 holds. On the lower side major support is around 113.20 and break below targets 112.60/112. The major resistance is around 115 and break above targets 116/117.50.
GBP/USD: The Sterling was hovering within half a cent of one-month highs against the dollar, supported by a brighter stock markets which drove number of currencies seen as riskier higher against the dollar. It was less than 0.1 percent lower on the day at $1.4380 while gaining 0.1 percent to 77.37 pence per euro. The pair has made a high of 1.44363 and slightly retreated from that level. The Cable is facing strong resistance around 1.4400 and any close above 1.4400 will take it to next level till 1.4500/1.4580 in short term. The minor support is around 1.4345 and break below targets 1.4300/1.4270 level. Overall bullish invalidation is only below 1.4100 level.
USD/CHF: The pair has recovered after making a low of 0.98028, it was trading around 0.98770. The short term trend is slightly bullish as long as support 0.9780 holds. On the higher side any break above 0.9900 will take the pair till 0.9950/1.000/1.00380. Major support is around 0.9780 and break below targets 0.9720/0.9660. The minor support is around 0.9850.
AUD/USD: The Australian dollar was trading near 8-month highs, supported by the relatively high yields offered by local debt. It stood at $0.7568, having hit its highest since July at $0.7583 on Friday. A break above would test $0.7655, the 61.8 percent retracement of the $0.8184-$0.6827 move. It bounced 4 cents so far this month, in part due to broad U.S. dollar weakness. The short term trend is slightly bullish as long as support 0.7500 holds. On the higher side major resistance is around 0.7600 and break above targets 0.7640/0.7750. The major support is around 0.7500 and break below will drag the pair till 0.7450/0.7400.
NZD/USD: The New Zealand dollar struggled for traction following a tough week. It was steady at $0.6740 and well above last week's $0.6618 low.
Equities Recap
Shares gained in Europe and Asia as investors shifted their attention to policy decisons from the Bank of Japan and Federal Reserve.
The pan-European FTSEurofirst 300 stocks index rose 0.8 percent, led higher by Italian banks. UK's FTSE rose 0.2 pct, Germany's DAX gained 1.2 pct and France's CAC was up 0.1 pct.
Tokyo's Nikkei advanced 1.74 pct at 17,233.75, while MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.7 percent.
Shanghai Composite Index gained1.8 pct at 2,859.50 points, China's CSI300 Index ended up 1.6 pct at 3,065.69 points, HK’s Hang Seng index climbed 1.2 pct at 20,435.34 points
Commodities Recap
Oil declined around 2 percent on Monday after Iran dashed hopes that there would be a coordinated production freeze any time soon, returning bearish sentiment to the market over a supply glut that has sent prices crashing. Global benchmark Brent crude futures dropped back below $40 a barrel, trading at $39.75 at 1055 GMT, down 70 cents on Friday's close. U.S. crude was down 79 cents at $37.71 a barrel.
Gold bounced back on Monday, inching closer to last week's 13-month high, ahead of crucial Fed and the BoJ policy meetings which are likely to provide direction to the metal. Spot gold had risen 0.43 percent to $1,255.66 an ounce by 1057 GMT, while U.S. gold eased 0.2 percent to $1,256.5 an ounce.
Treasuries Recap
10-year U.S. Treasury yield stood at 1.951 percent versus previous close of 1.929 percent.
Peripheral government bonds led euro zone yields lower on Monday, with German bonds underperforming. Germany's benchmark 10-year Bund yield was down 1.5 basis points at 0.26 percent, more than 15 basis points above 10-month lows hit last month and underperforming most other euro zone bond yields.
French 10-year bond yields fell 2 basis points. The yield gap between German and U.S. 10-year bond yields was at 171 basis points, holding close to its widest level in more than three months. Spanish, Portuguese and Italian 10-year bond yields were heading back towards lows hit in the wake of last Thursday's ECB meeting.
Japanese government bond prices gained on Monday, helped by buyback after a market correction over the last three sessions, and ahead of the Bank of Japan's policy meeting outcome on Tuesday. The 10-year JGB yield dropped 3.5 basis points to minus 0.050 percent, slipping from three-week high of plus 0.015 percent touched on Friday. The 20-year JGB yield declined 4.5 basis points to 0.480 percent. The benchmark 10-year JGB futures rose 0.39 point in price to 151.92.
Gilts opened 10 ticks higher than the settlement of 119.55 as core markets drew support from the slide in crude prices due to renewed oversupply concerns. A data free session however has left screens operating in a narrow risk averse channel and 10-year cash yields are sitting in the middle of Friday's high of 1.583% and Thursday's high of 1.544%.
Australian government bond futures hovered near multi-week lows, with the 3-year bond contract off 4.5 ticks at 97.905. The 10-year contract was unchanged at 97.3175, while the 20-year contract shed 1 tick to 96.7825. Yields on 2-year government bonds rose to a 3-month peak of 2.1 percent, the same as their New Zealand counterparts.
New Zealand government bonds eased, sending yields 2.5 basis points higher across much of the curve. The spread between 10-year New Zealand and Australian government bonds has contracted to 34 basis points, having fallen to 32 basis points on Friday, the smallest in 2 years. The New Zealand yield curve has steepened sharply after last week's interest rate cut and narrowed the premium paid over Australian debt.
