Market Roundup
- USD/JPY +0.5%, GBP/USD +0.4%, EUR/USD +0.1%
- DXY +0.1%, DAX +0.9%, Brent +0.25%, Gold -0.01%
- DXY +0.1% but holds below 100.00, close to Tuesday 99.430 low
- Oil edges further above $55 on Russia, OPEC cuts
- EZ Jan Markit Manufacturing final PMI 55.2 vs previous 55.1. 55.1 f/c
- Great Britain Jan Markit/CIPS Manufacturing PMI 55.9 vs previous 56.1. 55.9 f/c
- Switzerland Jan Manufacturing PMI 54.6 vs previous 56.2 revised55.8 f/c
- Great Britain Year-end inflation expectations rise to 2.6% in Jan vs 2.4% in Dec, highest since Dec 2013 - Citi/YouGov
- Great Britain Jan Nationwide house price +0.2% m/m, +4.3% y/y previous 0.8%/4.5%. 0.0%/4.4% f/c
- Japan Aso, Abe reject currency restrictions on trade pacts
- Japan Suga: no change to willingness to respond to FX moves
- Macron seen most likely to win French presidency, Fillon not making 2nd round-poll
Economic Data Ahead
- (0815 ET/1315 GMT) Payrolls processor ADP releases U.S. employment report for the month of January. The report is expected to show that 165,000 jobs were added as compared with 153,000 jobs in December.
- (0930 ET/1430 GMT) The RBC will release Canada's Manufacturing PMI for the Month of January. The indicator stood at 51.8 in the prior month.
- (0945 ET/1445 GMT) Financial firm Markit releases U.S. Manufacturing PMI for the month of January. The index is likely to show a final reading of 51.1 after posting similar gains in the previous month.
- (1000 ET/1500 GMT) The Institute for Supply Management (ISM) is expected to report that U.S. manufacturing Purchasing Managers' index rose to 55.0 in January from a revised 54.5 in December.
- (1000 ET/1500 GMT) The Commerce Department is likely to report that U.S. construction spending increased 0.2 percent in December after rising 0.9 percent in the previous month.
- (1100 ET/1600 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending January 27.
- N/A Autodata Corp is expected to report that U.S. auto sales figures dropped to an annualized rate of 17.55 million units in January from 18.43 million units in December.
- (1850 ET/2350 GMT) Japan's Ministry of Finance will report foreign bond investment for the week ending January 27.
- (1850 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic stocks for the week ending January 27.
Key Events Ahead
- (1400 ET/1900 GMT) The Federal Open Market Committee concludes its two-day meeting on interest rate policy and releases its statement.
FX Beat
DXY: The dollar traded near 7-week lows against a basket of currencies, weighed down by worries over U.S. President Donald Trump's protectionism. The greenback edged up 0.05 percent to 99.61, having hit a low of 99.43 on Tuesday, its lowest since Dec. 8. FxWirePro's Hourly Dollar Strength Index stood at -162.61 (Highly Bearish) by 1100 GMT.
EUR/USD: The euro edged down despite better-than-expected Eurozone's manufacturing PMI report, which indicated that the economy's factories started 2017 by boosting activity at the fastest rate for nearly six years. Markit's final manufacturing Purchasing Managers' Index rose to 55.2 in January from December's 54.9. The European currency traded 0.1 percent down at 1.0784, after rising as high as 1.0812 in the previous session, it’s lowest since Dec. 8. FxWirePro's Hourly Euro Strength Index stood at 3.91 (Neutral) by 1000 GMT. On the higher side, immediate resistance is around 1.08735 and any break above will take the pair till 1.09320/1.1000 level in the short term. The support is around 1.07650 (100- day EMA) and any violation below will drag it till 1.0680 (60- day EMA)/1.0637 (21- day MA)/1.05800.
USD/JPY: The dollar retreated from a 2-month low, as the U.S Treasury yields resumed rally, while investors seem to reposition themselves ahead of series of U.S. macro releases due later in the day. The Federal Reserve is scheduled to announce its monetary policy decision and is likely to keep interest rates unchanged, however, markets will scrutinize the accompanying statement for insights on the U.S. dollar strength. The major trades 0.5 percent higher at 113.35, after falling as low as 112.08 in the previous session, it’s lowest since Nov 30. FxWirePro's Hourly Yen Strength Index stood at 88.71 (Slightly Bullish) by 1000 GMT. The major resistance is around 115.56 (daily Kijun-Sen) and any break above will take it till 116.87 (Nov 11 High)/117.50. 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 rallied above the 1.2600 handle, extending previous session gains, after data showed UK’s Manufacturing PMI rose to 55.9 in January, in line with consensus. Moreover, comments indicating that the Trump White House would prefer a weaker dollar boosted the bid tone around the British pound. Sterling rose 0.3 percent to 1.2613, after slumping to a low of 1.2412 on Tuesday, it’s weakest since Dec. 23. FxWirePro's Hourly Sterling Strength Index stood at 52.85 (Bullish) by 1000 GMT. On the lower side, major support is around 1.2400 and any break below will drag the pair down till 1.2355 (21- day MA)/1.2250 (61.8% retracement of 1.19860 and 1.26736). It should break above 1.2680 for further jump till 1.27750 level. Overall bearish invalidation is only above 1.2780. Against the euro, the pound trades 0.4 percent up at 85.50 pence, having hit a low of 86.33 the day before, it’s weakest since Jan. 24
USD/CHF: The Swiss franc edged down after rising to a near 3-month against the dollar the prior day, as worries over U.S. President Donald Trump's protectionism triggered risk-off market sentiment. The major trades up at 0.9897, having touched a low of 9.861 in the previous session, it’s lowest since Nov. 11. FxWirePro's Hourly Swiss Franc Strength Index stood at 30.81 (Neutral) by 1000 GMT. On the higher side, upside remains capped by 23.6% fibo level at 0.99750 (23.6% retracement of 1.03435 and 0.98611) and any break above will take it till 1.000/1.0446 (30Jan 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 edged up after declining earlier in the session, however, it failed to take out the 0.7600 handle as the U.S. dollar rebounded on the back of rising Treasury yields. The Aussie trades 0.1 percent up at 0.7589, hovering towards a high of 0.7605 hit the previous day, it’s strongest since Jan. 24. FxWirePro's Hourly Aussie Strength Index stood at 20.01 (Neutral) by 1100 GMT. On the lower side, the pair should close below 0.7493 (200- day MA) for further weakness. Any break below will take it down till 0.7461 (100- day EMA)/0.7435. The minor resistance is around 0.7609 (Jan 24 high) and a break above will take it till 0.7649/0.7680.
NZD/USD: The New Zealand dollar eased from a 2-1/2-month high, as investors continued to digest the economy's downbeat jobless rate and wage growth report. Moreover, broad-based U.S. dollar recovery after the recent Trump-led sell-off also weighed on the major. The Kiwi trades 0.4 percent down at 0.7283, drifting away from a peak of 0.7350 touched on Tuesday, its strongest since Nov. 9. FxWirePro's Hourly Kiwi Strength Index was at -22.74 (Neutral) by 1100 GMT. Immediate resistance is located at 0.7350, a break above could take it near 0.7400. On the downside, support is seen at 0.7251 (10-DMA), a break below could drag it near 0.7200.
Equities Recap
European shares rallied following three days of losses, as upbeat corporate results and positive manufacturing data out of France, Germany and Italy strengthened market sentiment.
The pan-European STOXX 600 index increased 0.98 percent to 363.65 points, while the FTSEurofirst 300 index climbed 0.97 percent to 1,435.07 points.
Britain's FTSE 100 trades 0.95 percent up at 7,166.90 points, while mid-cap FTSE 250 advanced 0.45 percent to 18,230.30 points.
Germany's DAX rose 0.88 percent at 11,636.76 points; France's CAC 40 trades 1.0 percent higher at 4,796.24 points.
Tokyo's Nikkei advanced 0.56 percent to 19,148.08 points, Australia's S&P/ASX 200 index rose 0.53 percent to 5,650.80 points.
South Korea's KOSPI rallied 0.62 percent to 2,080.48 points, Hong Kong’s Hang Seng fell 0.18 percent to 23,318.39 points.
Commodities Recap
Crude oil rose, extending previous session gains, as Russia joined OPEC in cutting production to balance the market, however, increasing supply from the United States weighed on prices. International benchmark Brent crude was trading 0.2 percent higher at $55.67 per barrel by 0948 GMT, having hit a low of $54.85 on Friday, it’s weakest since Jan. 25. U.S. West Texas Intermediate crude rose 0.2 percent at $52.93 a barrel, after falling to $52.22 in the previous session, its lowest since Jan. 18.
Gold edged up, extending gains for the fourth consecutive session, as the dollar traded near 7-week lows, while investors cautiously waited to see if the U.S. Federal Reserve will keep its interest rates unchanged amid uncertainty over the President Donald Trump's economic policies. Spot gold nudged up 0.1 percent to $1,211.39 an ounce by 0955 GMT, having hit a high of $1,215.20 on Tuesday, its highest since Jan. 24. U.S. gold futures slipped 0.1 percent to $1,207.80.
Treasuries Recap
The U.S. Treasuries were pushed lower alongside continued gains in equities ahead of the Federal Reserve’s first monetary policy meeting scheduled for later in the day, as investors await to note further clarity on the central bank’s interest rate hikes this year. The yield on the benchmark 10-year Treasury rose 2 basis points to 2.47 percent, the super-long 30-year bond yield also rose 2-1/2 basis points to 3.07 percent while the yield on short-term 2-year note moved higher by 1-1/2 basis points to 1.22 percent.
The UK gilts slumped for the second straight day in a row on ahead of the Bank of England’s (BoE) monetary policy decision, scheduled to be held on February 2. Markets will then, focus on the comments delivered by BoE Governor Mark Carney post the meeting minutes. The yield on the benchmark 10-year gilts, jumped 3 basis points to 1.44 percent, the super-long 30-year bond yields also spurt 3 basis points to 2.07 percent and the yield on short-term 2-year also rose by the same margin to 0.16 percent.
The German government bunds plunged ahead of the 5-year auction scheduled to be held later in the day. The yield on the benchmark 10-year bond, jumped 3 basis points to 0.46 percent, the long-term 30-year bond yields also surged 3 basis points to 1.18 percent and the yield on short-term 2-year bond rose nearly 1/2 basis point at -0.68 percent.
The Japanese government bonds traded narrowly mixed ahead of the 10-year auction, scheduled to be held on February 2. The benchmark 10-year bond yield, inched nearly 1 basis point higher to 0.09 percent, while the long-term 30-year bond yields hovered around 0.83 percent and the yield on the short-term 2-year note slumped 2 basis points to -0.22 percent.
The New Zealand government bonds gained at the time of closing as the country’s rate of unemployment unexpectedly rose during the fourth quarter of 2016. The yield on the benchmark 10-year bond, fell 1 basis point to 3.38 percent at the time of closing, the yield on 7-year note also dipped nearly 1 basis point to 3.00 percent and the yield on the short-term 2-year note too trickled 1 basis point to 2.32 percent.
The Australian bonds slumped ahead of the Federal Reserve’s first monetary policy meeting for 2017 scheduled to be held later in the day. The yield on the benchmark 10-year Treasury note, climbed 3 basis points to 2.75 percent, the yield on the 15-year note rose 2 basis points to 3.20 percent and the yield on short-term 2-year moved higher by 1 basis point to 1.80 percent.
