Market Roundup
- USD/JPY +0.3%, GBP/USD -0.4%, EUR/USD -0.2%
- DXY +0.3%, DAX +0.1%, Brent +0.5%, Gold -0.2%
- Dollar heads for fourth weekly fall ahead of payrolls
- Sterling sinks for the second day after services dip
- Gold retreats from 11-week peak ahead of U.S. payrolls data
- Germany FinMin-Responds to U.S criticism: Not responsible for EZ money policy
- Russia-CBR maintains 10% rate: CPI expectations going down gradually
- EZ Dec Retail sales vs previous -0.4%/2.3%. 0.3%/1.8% forecast
- EZ Jan Markit Comp final PMI 54.4 vs previous 54.3. 54.3 forecast
- EZ Jan Markit Service final PMI 53.7 vs previous 53.6, 53.6 forecast
- Great Britain Jan Markit/CIPS Service PMI 54.5 vs previous 56.2. 55.8 forecast
- BOJ offers to buy benchmark 10-year JGBs in special operation
- Japan readies package for Trump to help create 700,000 U.S. jobs
Economic Data Ahead
- (0830 ET/1330 GMT) The U.S. Labor Department releases nonfarm payrolls report for the month of January. The report is likely to show 175,000 jobs were added compared with an increase of 156,000 in December.
- (0830 ET/1330 GMT) The U.S. Bureau of Labor Statistics will release labor force participation rate for the month of January. The rate stood at 62.7 percent in the previous month.
- (0830 ET/1330 GMT) The U.S. Labor Department is expected to report that unemployment rate remained steady at a near nine-year low of 4.7 percent in January.
- (0830 ET/1330 GMT) The United States' average hourly earnings are likely to rise 0.2 percent in January after climbing 0.4 percent in the month before.
- (0900 ET/1400 GMT) Mexico releases its consumer confidence data for the month of January.
- (0900 ET/1400 GMT) Mexico releases gross fixed investment for the month of November.
- (0945 ET/1445 GMT) Financial firm Markit releases final U.S. composite PMI for the month of January. The index posted a final reading of 55.4 in the previous month.
- (0945 ET/1445 GMT) Markit Economics reports final U.S. services PMI for the month of January. The index posted a final reading of 55.1 in December.
- (1000 ET/1500 GMT) The Institute for Supply Management (ISM) is expected to report that U.S. non-manufacturing Purchasing Managers' index rose to a final reading of 57.0 in January from 56.6 in December.
- (1000 ET/1500 GMT) The United States is likely to report that factory orders increased 1.0 percent in December, after posting a fall of 2.4 percent in the prior month.
- (1000 ET/1500 GMT) The Richard Ivey School of Business releases Canada's seasonally adjusted Ivey Purchasing Managers Index for the month of January. The index posted a reading of 60.8 in the prior month.
- (1300 ET/1800 GMT) Baker Hughes reports U.S. Oil Rig Count.
Key Events Ahead
- (0915 ET/1415 GMT) Federal Reserve Bank of Chicago President Charles Evans speaks on current economic conditions and monetary policy before the Prairie State College Economic Breakfast in Olympia Fields, Illinois.
- (1145 ET/1645 GMT) FedTrade operation 30-yr Ginnie Mae (max $1.225 bn)
FX Beat
DXY: The dollar recovered versus the Japanese yen, following the Bank of Japan's special JGB buying operation, while investors’ await the U.S. employment report for clues to the timing of the Federal Reserve's next interest rate hike. The greenback against a basket of currencies traded 0.25 percent up at 100.97, drifting away from a low of 99.23 hit on Thursday, it’s lowest since Nov. 14 but was on track to shed 0.7 percent for a week. FxWirePro's Hourly Dollar Strength Index stood at 43.12 (Neutral) by 1100 GMT.
EUR/USD: The euro tumbled, extending losses for the third straight day, as the dollar retreated from a near- 2 month low on the back of rising U.S. treasury yields. Markets seem to have ignored better-than-expected Eurozone's January Markit Service and Composite PMI report, as weak retail sales data dampened investor sentiment. The European currency traded 0.1 percent lower at 1.0745, after rising as high as 1.0828 the previous day, it’s highest since Dec. 8, however, was up 0.6 percent for the week. FxWirePro's Hourly Euro Strength Index stood at -6.93 (Neutral) by 1000 GMT. On the lower side, the pair has broken the 21- 4H MA at 1.0765 and this confirms minor weakness, a decline till 1.0725 (4H Kijun-Sen) is possible. Any break below 1.0700 (100- 4H MA) will take it till 1.06250 level. The top formed on Dec 8 will be acting as major resistance and any break above targets 1.09335 (61.8% retracement of 1.12994 and 1.03402).
USD/JPY: The dollar rose, regaining most of its previous session losses and was well away from a 2-month low after the Bank of Japan offered to buy Japanese government bonds in an unexpected operation aimed to lower JGB yields. Markets now await U.S. nonfarm payrolls report, which is likely to show employers added 175,000 jobs in January. The major trades 0.3 percent higher at 113.15, after falling as low as 112.05 on Thursday, it’s lowest since Nov 30 and was on track to drop 1.8 percent for the week. FxWirePro's Hourly Yen Strength Index stood at 100.04 (Highly Bullish) by 1000 GMT. The major resistance is around 113.65 (10 – day MA) and any break above will take the pair till 115/115.33 (daily Kijun-Sen). On the lower side, minor support is around 112 and any break below 112 will drag it till 111.28 (100- day EMA).
GBP/USD: Sterling slumped below the 1.2500 handle after data released earlier indicated growth in Britain's services sector slowed for the first time in four months in January. The Markit/CIPS services purchasing managers' index declined to 54.5 last month from December's 15-month high of 56.2, recording a 3-month low. Sterling trades 0.3 percent down at 1.2490, after rising as high as 1.2705 in the previous session, it’s strongest since Dec. 14. FxWirePro's Hourly Sterling Strength Index stood at -157.40 (Highly Bearish) by 1000 GMT. On the lower side, major support is around 1.2430 (30- day EMA) and any break below targets 1.2385/1.2340 (daily Kijun-Sen). It should break above 1.27080 for further jump till 1.27750 level, while the minor resistance is around 1.2587 (100- day EMA). Against the euro, the pound trades 0.2 percent down at 85.98 pence, having hit a low of 86.33 earlier in the week, it’s weakest since Jan. 24.
USD/CHF: The Swiss franc declined against the dollar, as the greenback recovered from a 2-1/2 month low following a surge in the U.S. Treasuries yields. The major trades 0.3 percent up at 0.9962, having touched a low of 9.861 on Tuesday, it’s lowest since Nov. 11. FxWirePro's Hourly Swiss Franc Strength Index stood at -104.70 (Highly Bearish) by 1000 GMT. On the higher side, upside might be capped by 23.6% fibo level at 0.99750 (23.6% retracement of 1.03435 and 0.98611) and any break above will take the pair till 1.000/1.0446 (30th Jan 2017 high).The low formed yesterday will be acting as major support and any break below targets 0.9799 (61.8% retracement of 0.95493 and 1.03435)/0.9750.
AUD/USD: The Australian dollar consolidated between a narrow range after rising to a near 12-week high in the previous session, as a modest recovery in the U.S. Treasury bond yields supported the US dollar. Moreover, downbeat Chinese manufacturing PMI print triggered mild risk-off sentiment, which dampened the bid tone around the major. The Aussie trades 0.15 percent down at 0.7643, hovering away from a high of 0.7696 hit on Thursday, it’s strongest since Nov. 10 and was set to gain around 1.5 percent for the week. FxWirePro's Hourly Aussie Strength Index stood at 108.82 (Highly Bullish) by 1100 GMT. On the lower side, the minor support stands at 0.76000 and any break below will drag the pair down till 0.7564 (10- day MA)/0.7500. The minor resistance is around 0.7700 and a break above will take it till 0.7748/0.77783 (Nov 8 High).
NZD/USD: The New Zealand dollar declined, pulling away from a near 10-week high of 0.7350 touched earlier in the week, however, was up 0.3 percent for the week and on track for its sixth straight weekly gain. The Kiwi trades 0.25 percent down at 0.7266, hovering towards the 0.7250 handle. FxWirePro's Hourly Kiwi Strength Index was at -2.18 (Neutral) by 1100 GMT. Immediate resistance is located at 0.7300, a break above could take it near 0.7350. On the downside, support is seen at 0.7250, a break below could drag it near 0.7200.
Equities Recap
European shares rose in early deals, strengthened by consumer staples and healthcare sectors, while investors await key U.S. nonfarm payroll data for further insight on the strength of the economy.
The pan-European STOXX 600 index increased 0.5 percent to 363.73 points, while the FTSEurofirst 300 index rallied 0.5 percent to 1,435.74 points.
Britain's FTSE 100 trades advanced 0.4 percent to 7,169.38 points, while mid-cap FTSE 250 climbed 0.56 percent to 18,361.33 points.
Germany's DAX edged up 0.20 percent at 11,651.70 points; France's CAC 40 trades 0.8 percent higher at 4,832.37 points.
Tokyo's Nikkei rose 0.02 percent to 18,918.20 points, Australia's S&P/ASX 200 index lost 0.44 percent to 5,620.40 points and South Korea's KOSPI edged up 0.10 percent to 2,073.16 points.
Shanghai composite index fell 0.6 percent to 3,140.17 points, while CSI300 index declined 0.7 percent at 3,364.49 points. Hong Kong’s Hang Seng shed 0.2 percent at 23,129.21 points.
Commodities Recap
Crude oil prices rose, extending gains for the fourth straight day, as news that U.S. President Donald Trump could impose new sanctions on multiple Iranian entities heightened geopolitical tensions between both the economies. International benchmark Brent crude was trading 0.16 percent higher at $56.76 per barrel by 0945 GMT, after rising as high as $57.41 in the previous session, it’s strongest since Jan. 3. U.S. West Texas Intermediate crude rose 0.2 percent at $53.72 a barrel, having hit a high of $54.31 on Thursday, its highest since Jan. 3.
Gold prices edged down after rising to an 11-week high on Thursday, as the dollar gained against the yen after Japan offered to buy government bonds. Spot gold edged down 0.16 percent to $1,213.54 an ounce by 0951 GMT, having touched a peak of $1,225.12 in the previous session, its highest since Nov. 17. U.S. gold futures fell 0.4 percent to $1,214.90.
Treasuries Recap
The U.S. Treasuries were pulled downwards following lower-than-expected initial jobless claims and ahead of the release of detailed labor market report scheduled to be released later in the day. The yield on the benchmark 10-year Treasury jumped 1-1/2 basis points to 2.48 percent, the super-long 30-year bond yield also surged 1-1/2 basis points to 3.09 percent while the yield on short-term 2-year note traded 1 basis point higher at 1.22 percent.
The UK gilts plunged as investors shifted from safe-haven assets towards riskier assets including equities and crude oil. The yield on the benchmark 10-year gilts, rose 1-1/2 basis points to 1.40 percent, the super-long 30-year bond yields also jumped 1-1/2 basis points to 2.06 percent and the yield on short-term 2-year moved 1/2 basis point higher to 0.12 percent.
The German government bunds tumbled Friday as investors and small traders cashed in profits on the last trading day of the week amid a timid trading session that lacked release of significant economic data. The yield on the benchmark 10-year bond, jumped over 2 basis points to 0.44 percent, the long-term 30-year bond yields also bounced 3 basis points to 1.20 percent and the yield on short-term 2-year bond rose nearly 1 basis point to -0.72 percent.
The 10-year Japanese government bond yields hit highest since January 2016 after the Bank of Japan (JPY) disappointed in its daily bond-buying operations. Also, members of the board remained optimistic over the country’s inflation and growth targets in its December meeting minutes released early today. The benchmark 10-year bond yields rose nearly 1 basis point to 0.11 percent, while the long-term 30-year bond yields jumped 4 basis points to 0.90 percent and the yield on the short-term 2-year note moved nearly 1-1/2 basis points higher at -0.20 percent.
The New Zealand government bonds closed flat as investors remain reluctant to trade amid a soft session that witnessed data of least economic significance. Also, investors remain focused on the Reserve Bank of New Zealand’s (RBNZ) first monetary policy decision of 2017 on February 9. The yield on the benchmark 10-year bond, hovered around 3.40 percent at the time of closing, the yield on 7-year note also traded flat at 3.03 percent and the yield on short-term 2-year note ended 1/2 basis point lower at 2.31 percent.
The Australian bonds continued to slump as investors cashed in profits on the last day of the week ahead of the Reserve Bank of Australia’s (RBA) first monetary policy of 2017, scheduled to be held on February 7 for further direction in the debt market. The yield on the benchmark 10-year Treasury note, rose nearly 1 basis point to 2.77 percent, the yield on 15-year note jumped 1-1/2 basis points to 3.25 percent and the yield on short-term 2-year also surged 1-1/2 basis points to 1.84 percent.
