Market Roundup
- EUR/CHF relatively steady after SNB decision
- EUR/NOK 9.50 after NB news then 9.3730 dip
- USD/JPY plays to base of 112.96-111.36 range into NY
- EUR/USD bid to 1.1315 from 1.1205 post Fed
- SNB leaves rates unchanged as expected
- Norgesbank cuts 25-bp as expected and lowers rate path
- Kuroda: Not makingl declaration Japan has escaped defl.
- Sakakibara- 105 would likely prompt verbal intervention
- Sakakibara-Fall sub-100 could spur yen sales (by BoJ/MoF)
- India RBI suspected to have bought USDs around 66.65-Dealers
- EZ Final Feb Infl.-0.2% y/y vs -0.2% previous, -0.2% exp -0.2%
- CH Feb Prod Prices -4.6% y/y vs -5.3% previous
- China Feb FDI +7.8% y/y to $8.44 bln, CommMinistry
- RBA AsstGov Debelle – Would prefer a lower AUD
- New Zealand Q4 GDP +0.9% q/q, +2.3% y/y, +0.6% and +2.0% eyed
- Asia cbs in spotlight: Cheap money fuels debat
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Commerce Department will report current account data for the fourth quarter. The deficit likely narrowed to $-119.9 bln from $-124.1 bln.
- (0830 ET/1230 GMT) The number of Americans filing for jobless benefits likely 9,000 to a seasonally adjusted 268,000 for the week ended March 12, while the continuing claims for the week ended March 4 are expected to have risen slightly to 2.228 mln from previous 2.225 mln.
- (0830 ET/1230 GMT) The Philadelphia Federal Reserve releases its business conditions survey for March. The index is expected to show a improved reading of -1.7 from -2.8 in February.
- (0830 ET/1230 GMT) The Canadian wholesale trade as measured by Statistics Canada likely gained 0.2 percent in January, compared with a 2 percent rise in December.
- (1000 ET/1400 GMT) The U.S. Labor Department will release its jobs openings report for January. Analysts expect a slight decrease in openings to 5.57 mln from 5.60 mln.
- (1000 ET/1400 GMT) The Conference Board's Leading Indicator is expected to have gained 0.2 pct in February after dropping 0.2 pct in January.
- (1030 ET/1430 GMT) The Energy Information Administration reports its Natural Gas Storage for the week ending March 11.
- (1800 ET/2200 GMT) Chile's central bank meets to decide the March interest rate, which is likely to hold the rate at 3.50 percent. It had raised the interest rate in December and held it steady at the same pace last month.
- (1950 ET/2350 GMT) The Bank of Japan is set to release minutes of its crucial rate review on January 28-29, when it decided to deploy negative interest rates. Investors will be watching for anything substantial and new on the tension within the board that was highlighted by the January.
Key Events Ahead
- (1145 ET/1545 GMT) New York FedTrade 30-yr F.Mae/Fr.Mac max $2.125bln
FX Beat
USD: The dollar declined against major currencies, slumping almost 2 percent to a 3-week low against the yen. The dollar index dropped to its lowest since Oct 22 to trade at 94.74. The short term trend is slightly weak as long as resistance 96.07 holds. On the lower side any break below 94.65 will drag the pair till 94.30/93.16.
EUR/USD: The euro extended gains and trades 0.88% higher at 1.1322, having touched sessions high of 1.1342. The pair was boosted after the Eurozone consumer price index came in better than expected. Eurozone February core CPI increased to 0.8% y/y, against market consensus and previous print of 0.7% y/y. It has broken major resistance 1.1320 and jumped till 1.3424. The major resistance is around 1.135 (trend line joining 1.1495 and 1.1376) and any break above 1.1350 targets 1.1380/1.14375. It’s major support is around 1.12750 and break below targets 1.1200/1.1155. The minor support is around 1.1300. Overall bullish invalidation is only below 1.10820.
USD/JPY: The yen gained against its U.S. counterpart as the Fed announcement's after effects have not yet faded away from the market. The pair trades 1.09 percent lower at 111.30 yen. It has broken major support at 112 and declined till 111.11. The short term trend is slightly weak as long as resistance 112.70 holds. On the lower side major support is around 111.00 and break below targets 110/108.85. The major resistance is around 112.70 and break above targets 113.60/114.25. The minor resistance is around 112.
GBP/USD: Sterling was up 0.6 percent at 1.4357, recovering from a 2-week low of 1.4053, after a Fed left investors convinced that U.S. interest rates would not rise anytime soon. It was also strengthened by the budget where the finance minister announced delayed fiscal tightening of the current five-year parliament term in anticipation that the economy will be in better shape to absorb more spending cuts. Investors are now awaiting a Bank of England rate decision and the minutes of the monetary policy meeting for further cues. The pound underperformed the euro, with the European single currency up 0.4 percent at 79 pence. The pair has broken minor resistance 1.4320 and jumped till 1.4380. Intraday trend is weak as long as resistance 1.4400 holds. Any break above 1.4400 will take the pair to next level 1.4500/1.4580. On the lower side major support is around 1.4260 and break below targets 1.4200/1.4150/1.4100.
USD/CHF: The Swiss franc is trading 0.70% lower at 0.9693 after Swiss economy's posted down beat producer and import prices data. The SNB left the key interest rate unchanged at -0.75% in line with markets expectation. The pair has broken major support 0.9780 and declined till 0.96781. The short term trend is slightly bullish as long as support 0.9660 holds. On the higher side minor resistance around 0.9755 and any break above 0.9755 will take the pair till 0.9780/0.9850/0.9900. Major support is around 0.9660 and break below targets 0.9600/0.9570.
AUD/USD: The Australian dollar trades 1.08% higher at 0.7630, hovering towards sessions high of 0.76510. The Aussie continues to rise on upbeat unemployment data, released earlier in the day. The pair has broken major resistance 0.7600 and jumped till 0.76500. The short term trend is slightly bullish as long as support 0.7570 holds. On the higher side major resistance is around 0.7650 and break above targets 0.7725/0.7750. The major support is around 0.7570 and break below will drag the pair till 0.7500/0.7430.
NZD/USD: The New Zealand dollar trades 1.49% higher at 0.6819 against its U.S. counterpart. Traders are likely to remain bullish on the pair as it hovers towards session high of 0.6839. Earlier in the day, it made sessions low of 0.6714, before climbing up to its current levels. Immediate resistance is located at 0.6839 (Sessions High), while support is located at 0.6690 (20-DMA).
Equities Recap
The slump in the dollar bolstered world shares to their highest level of the year, after the Fed narrowed down the number of U.S. rate hikes likely over the next nine months.
The surge in the risk appetite boosted the European shares, as Europe's FTSEurofirst 300, UK's FTSE, Germany's DAX and France's CAC opened 0.5 to 0.8 percent higher, while bond yields declined.
Tokyo's Nikkei edged down 0.22 pct at 16,936.38. MSCI's broadest index of Asia-Pacific shares outside Japan climbed to a 2-month high. MSCI's 46-country All World share index surged over 1 percent on the day to reach its highest since Jan 4.
Shanghai Composite Index advanced 1.2 pct at 2,904.83 points, while China's CSI300 Index ended up 1.1 pct at 3,124.20 points. HK’s Hang Seng index gained 1.2 pct at 20,503.81 points.
Commodities Recap
Oil advanced above $41 a barrel, trading close to a 2016 high, bolstered by a plan among some of the world's biggest producers to meet next month, increasing the likelihood of the first global supply deal in 15 years. Brent crude was up 81 cents at $41.14 a barrel by 1009 GMT. It has rallied over 50 percent from a 12-year low of $27.10 in January and is close to its 2016 peak of $41.48 reached on March 8. U.S. crude was up 92 cents at $39.38 a barrel.
Gold advanced on Thursday, extending a 2.5 percent rally made in the previous session after the Fed cut the number of interest rate rises it forecasts for this year, sending the dollar sharply lower. Spot gold was up 0.6 percent at $1,269.31 an ounce at 1030 GMT, while U.S. gold futures for April delivery were up 3.3 percent at $1,270.80.
Treasuries Recap
The 10-year U.S. Treasury yield stood at 1.911 percent versus previous close of 1.938 percent on Wednesday.
Euro zone bond yields declined after the Fed reduced the number of rate hikes due this year. German Bund yields, the benchmark for euro zone borrowing costs, dropped 5 basis points on the day to 0.24 percent, down about 10 bps from pre-Fed highs.
Long-dated Japanese government bond prices surged after the Fed scaled back its interest rate hike projections, boosting U.S. bond prices. The 20-year JGB yield slumped 2.5 basis points to 0.405, while the 30-year JGB yield declined 7.0 basis points to 0.595 percent. But maturities around seven to ten years were softer, with the 10-year yield rising 0.5 basis point to minus 0.050 percent. The 10-year JGB futures price was flat at 151.27 .
Gilts opened 90 ticks higher than the settlement of 120.16 as core markets reacted to the dovish Fed statement. Buyers have failed to extend much of the opening gap however and are respecting 50% of February lows and March highs on 10-year cash yields at 1.406%.
