Market Roundup
- USD/JPY +0.5%, GBP/USD -0.5%, EUR/USD -0.1%
- DXY +0.3%, DAX -0.3%, Brent -1.0%, Gold -0.4%
- Gold wading through thick cloud to a new 1180.73 reversal low
- Commodity markets taking a hit: Copper the exception
- 10yr Bund- Yield holding near one-year highs
- European stocks fall: UBS pulling bank shares lower
- French Jan Consumer confidence highest since Oct 2007
- Turkish Pres. declares opposition to CBT's rate corridor
- EU Commission will not comment on press talk of European safe bonds
- EZ Lending picks up, driven by cheap ECB cash
- Swedish Dec Retail Sales +0.6% y/y. -2.9% m/m vs -0.3% expected
- Swedish household lending +7.2% y/y in Dec
- French presidential candidate Fillon's popularity tumbles - poll
- Japan preparing for all possible US trade contingencies
- Japan to monitor impact on its firms from US-Mexico relationship
- Trump seeks quick progress with Japan’s Abe on replacement trade deal
Economic Data Ahead
- (0830 ET/1330 GMT) The U.S. Commerce Department is expected to report that preliminary gross domestic product increased at a 2.2 percent annual rate in the fourth quarter after surging at a 3.5 percent pace in the third quarter.
- (0830 ET/1330 GMT) The U.S. Commerce Department releases the preliminary personal consumption expenditures (PCE) price index for the fourth quarter. The index is expected to rise 2.1 percent from 1.5 percent in the previous quarter, while core PCE is likely to increase 1.4 percent after gaining 1.7 percent in the third quarter.
- (0830 ET/1330 GMT) The U.S. durable goods orders are expected to have increased 2.6 percent in December after declining 4.5 percent in November, while non-defense capital goods orders excluding aircraft are likely to have risen 0.5 percent after gaining 0.6 percent the prior month.
- (1000 ET/1500 GMT) The University of Michigan is likely to report that U.S. consumer sentiment index rose to 98.1 in January, after posting a similar reading in December.
- (1300 ET/1800 GMT) Baker Hughes reports U.S. Oil Rig Count.
Key Events Ahead
- N/A U.S. President Donald Trump and UK PM Theresa May's meeting
- (1145 ET/1645 GMT) FedTrade operation 30-year Fannie Mae / Freddie Mac (max $2.125 bn)
FX Beat
DXY: The dollar retreated from recent lows versus its major peers, supported by rising U.S. Treasury yields, while investors await the U.S. gross domestic product due later in the day. The greenback against a basket of currencies traded 0.05 percent up at 100.57, having hit a low of 99.79 in the previous session, its lowest since Dec. 8. FxWirePro's Hourly Dollar Strength Index stood at 97.80 (Slightly Bullish) by 1100 GMT.
EUR/USD: The euro extended losses below the 1.0700 handle, as the greenback rebounded ahead of U.S. gross domestic product report. Markets seem to have ignored better-than-expected M3 money supply figures, which rose at an annualized rate of 5.0 percent in December, beating a forecast of 4.9 percent and previous 4.8 percent. The European currency traded flat at 1.0683, after falling as low as 1.0657 in the previous session, it’s lowest since Jan 2. FxWirePro's Hourly Euro Strength Index stood at -41.87 (Neutral) by 1000 GMT. On the higher side, the immediate resistance is around 1.0700 level and any break above will take the pair till 1.07750/1.0815 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 rose to a 1-week high above the 115.00 handle, as a rise in the U.S. treasury yields renewed bid tone around the greenback. The major trades 0.5 percent up at 115.04, after rising as high as 115.30 earlier, it’s strongest since Jan. 20. FxWirePro's Hourly Yen Strength Index stood at -40.54 (Neutral) by 1000 GMT. The major resistance is around 115.56 (daily Kijun-Sen) and any break above will take the pair till 116.87 (Nov 11th high)/117.50. On the lower side, minor support is around 111.55 (127.2% retracement of 112.59 and 115.62) and any break below targets 111.10 (100- day EMA)/110.
GBP/USD: Sterling tumbled towards the 1.2500 handle after rising to a 5-week high in the previous session as markets remained cautious ahead of the U.S. President Trump and UK PM May's meeting. However, the major remained on track for its strongest week since mid-November, as robust GDP figures released on Thursday indicated signs that the British economy is growing strongly. Sterling trades 0.5 percent lower at 1.2528, after rising to a high of 1.2672 on Thursday, it’s strongest since Dec. 14. FxWirePro's Hourly Sterling Strength Index stood at 11.26 (Neutral) by 1000 GMT. The major resistance is around 1.2680 high formed yesterday and any further jump can be seen only above that level. On the lower side, near term support is at 1.2503 (100-day MA) and any break below will drag it to next level till 1.2435 (60- day EMA)/1.24180 (Jan 24th low). Against the euro, the pound trades 0.6 percent down at 85.27 pence, having hit a peak of 84.70 the day before, it’s strongest since Jan. 3.
USD/CHF: The Swiss franc declined to a 1-week low, extending losses for the second consecutive session, as the dollar rebounded across the board on the back of climbing U.S. Treasury yields. The major trades up at 1.0001, having touched a high of 1.0027 earlier in the day, it’s highest since Jan. 20. FxWirePro's Hourly Swiss Franc Strength Index stood at 49.31 (Neutral) by 1000 GMT. The upside remains capped by 10- day MA and any break above targets 1.0080/1.01220. 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 slumped to a fresh 1-week low, as a rise in the U.S. treasury bond yields and optimism over faster U.S. economic growth supported the greenback's recovery. Moreover, downbeat Australian CPI report, which triggered expectations of additional monetary easing by the RBA continued to weigh on the major. The Aussie trades flat at 0.7534, having touched a low of 0.7511 earlier in the session, it’s weakest since Jan. 19. FxWirePro's Hourly Aussie Strength Index stood at -14.93 (Neutral) by 1100 GMT. On the lower side, the pair should close 200- day MA for further weakness and any break below will take it down till 0.7461 (100- day EMA)/0.7435. The minor resistance is around 0.7545 (10- day MA) and a break above will take it till 0.7600/0.7680.
NZD/USD: The New Zealand dollar edged up, after hitting an 11-week high in the previous session, as speculations of RBNZ interest rate boosted market sentiment. The Kiwi trades 0.1 percent higher at 0.7253, having hit a peak of 0.7312 the day before, it’s strongest since Nov. 9. FxWirePro's Hourly Kiwi Strength Index was at 49.86 (Neutral) by 1100 GMT. Immediate resistance is located at 0.7340 (Nov 3), a break above could take it near 0.7400. On the downside, support is seen at 0.7211 (9-EMA), a break below could drag it lower 0.7200.
Equities Recap
European shares slumped in early deals, weighed down by banking stocks, while the dollar extended its recovery against a basket of other currencies, ahead of the U.S. preliminary gross domestic product readings.
The pan-European STOXX 600 index decreased 0.5 percent to 365.66 points, while the FTSEurofirst 300 index tumbled 0.47 percent to 1,444.37 points.
Britain's FTSE 100 trades flat at 7,161.67 points, while mid-cap FTSE 250 advanced 0.08 percent to 18,156.95 points.
Germany's DAX declined 0.27 percent at 11,816.90 points; France's CAC 40 trades 0.62 percent lower at 4,837.12 points.
Tokyo's Nikkei rallied 0.34 percent to 19,467.40 points, Australia's S&P/ASX 200 index rose 0.67 percent to 5,709.60 points and Hong Kong’s Hang Seng fell 0.1 percent at 23,360.78 points.
Commodities Recap
Crude oil prices eased as increasing crude output from the United States counterbalanced efforts by OPEC and other producers to reduce a supply glut. International benchmark Brent crude was trading 0.1 percent down at $56.00 per barrel by 0946 GMT, having hit a high of $56.53 on Thursday, its highest since Jan. 17. U.S. West Texas Intermediate crude eased 0.02 percent at $53.69 a barrel, after rising to $54.03 in the previous session, its highest since Jan. 6.
Gold prices tumbled to a fresh two-week low, as the dollar strengthened ahead of the U.S. gross domestic product report. Spot gold prices declined 0.3 percent at $1,184.34 per ounce at 1023 GMT, having hit their lowest since Jan. 11 at $1,181.15. U.S. gold futures fell 0.6 percent to $1,183.
Treasuries Recap
The U.S. Treasuries were little changed during a relatively choppy session highlighted by mixed economic data, ahead of the release of the Q4 GDP data, scheduled for later today. 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 recovered as investors sought safe-haven assets amid rising worries of a trade war, initiated by the United States, after President Donald Trump took office from January 20.The yield on the benchmark 10-year gilts slumped nearly 3 basis points to 1.48 percent, the super-long 30-year bond yields also plunged 2 basis points to 2.12 percent and the yield on short-term 2-year fell 1-1/2 basis points to 0.18 percent.
The German government bunds traded modestly higher as investors remain sidelined in any trading activity amid a calm and quiet session amid slight fall in equities. Also, markets are eyeing the release of the fourth quarter gross domestic product (GDP), scheduled to be released on January 30. The yield on the benchmark 10-year bond, which hovered around 0.48 percent, the long-term 30-year bond yields also fell 1-1/2 basis points to 1.22 percent and the yield on short-term 2-year bond traded flat at -0.64 percent
The Japanese government bonds climbed steadily after the Bank of Japan (BoJ) surprised markets, by unveiling its bond-buying plans, wherein it raised the purchase operation of long-term bonds. The benchmark 10-year bond yield, hovered around 0.08 percent, while the long-term 30-year bond yields fell 1/2 basis point to 0.85 percent and the yield on the short-term 3-year note also dipped 1/2 basis point to -0.14 percent
The New Zealand government bonds traded narrowly mixed in a subdued trading session amid a lack of any major domestic or global economic events. The yield on the benchmark 10-year bond, jumped 5 basis points to 3.44 percent at the time of closing, the yield on 7-year note fell 1 basis point to 3.05 percent and the yield on short-term 2-year note also dipped 1 basis point to 2.38 percent.
The Australian bonds continued to plunge as investors moved away into safe-haven instruments amid gains in riskier assets including equities and crude oil. Also, traders cashed in profits after on the last trading day of the week. The yield on the benchmark 10-year Treasury note, jumped 5 basis points to 2.78 percent, the yield on 15-year note also climbed 5 basis points to 3.24 percent and the yield on short-term 2-year ticked 1 basis point higher to 1.86 percent.
