Market Roundup
- USD/JPY again moving in step with Kuroda rhetoric: 113.03-113.75
- GBP/USD 1.4085-1.4158 and mid-range into NY
- EUR/USD 1.1074-1.1113 and quiet range ahead of FOMC
- DAX up 0.4%, Brent +1.75%, Iron Ore flat
- UK Jan ILO jobless rate 5.1% vs 5.1% previous, 5.1% exp
- UK Jan Avg Earnings 2.1% 3mths y/y vs 1.9% previous, 2.0% exp
- BoJ Kuroda – Can theoretically cut rates to -0.5% in answer to Diet question
- Kuroda NIRP not meant to affect FX but admits it does with other factors
- Kuroda won’t hesitate to ease again if needed
- Japan's megabanks go big with bonds as new rules loom – Nikkei
- Japan Inc: Architects of Abenomics revive spirit to compete with China – FT
- RBNZ – Banks can withstand severe dairy downturn
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Labor Department is likely to report that the consumer price index (CPI) declined 0.2 percent in February on lower gasoline prices after being unchanged in January. The core CPI, which excludes energy and food prices, likely rose 0.2 percent after increasing 0.3 percent in January.
- (0830 ET/1230 GMT) The U.S. Commerce Department is expected to report that housing starts rose to a 1.15 million-unit annualized rate in February from a 1.099 million-unit rate in January.
- (0830 ET/1230 GMT) The Canadian manufacturing sales likely rose in January, but at a slower pace than the prior month. Economists forecast factory sales likely rose 0.5 percent, compared to a rise of 1.2 percent in December.
- (0830 ET/1230 GMT) The Statistics Canada reports the value of securities acquired and sold by investors in January.
- (0915 ET/1315 GMT) The Fed is expected to report that industrial production fell 0.3 percent in February after spiking 0.9 percent in January.
- (0915 ET/1315 GMT) The Capacity Utilization released by the Fed is likely to decline slightly 76.9% in February from 77.1% prior .
- (1030 ET/1430 GMT) EIA reports its weekly Crude Oil Stocks
- (1400 ET/1800 GMT) The FOMC is due to conclude a two-day meeting and announce its decision on interest rates. The Fed is not expected to raise interest rates at its meeting, but its comments will be parsed for clues on the path of future hikes.
- (1745 ET/2145 GMT) The Statistics New Zealand will release fourth quarter Gross Domestic Product figures.
- (1950 ET/2350 GMT) Japan's Ministry of Finance will report imports and exports of good and services for the month of February. The merchandise trade balance is expected to rise in February, after posting a decline in the previous month.
Key Events Ahead
- (0830 ET/1230 GMT) The Treasury Chancellor of U.K presents the Budget report for the next year
- (1430 ET/1830 GMT) Federal Reserve Chair Janet Yellen will address news conference
- (1805 ET/2205 GMT) Reserve Bank of Australia Assist Governor Debelle's Speech
FX Beat
USD: The dollar index rose 0.3 percent to 96.916, pulling further away from 1-month low of 95.938 set last Friday. It was higher against the yen at 113.70 while the euro was 0.3 percent lower at 1.10775. The short term trend is slightly bullish as long as support 96.40 holds. On the lower side any break below 96.40 will drag the pair till 96/95.60 is possible. Any break above major resistance 97.15 will take the index till 97.60/98.05/98.60.
EUR/USD: The euro has recovered after making a low of 1.10714 and is currently trading around 1.109. Major resistance is around 1.11276 and any break above 1.11276 confirms minor bullishness, a jump till 1.11935/1.12180 is possible. The pair’s major support is around 1.10430 (200 Day MA) and break below targets 1.1000/1.0920, while minor support is around 1.10700. Overall bullish invalidation is only below 1.10820. The pair major resistance is around 1.12180 (161.8% retracement of 1.10682 and 1.0825) and any break above targets 1.12800.
USD/JPY: The dollar was up nearly 0.5 percent against the yen, as investors positioned for fresh guidance from the Federal Reserve on when interest rates are likely to rise. The pair has recovered after making a low of 112.63 and is currently trading around 113.60. The short term trend is slightly weak as long as resistance 115 holds. On the lower side major support is around 112.60 and break below targets 112.20/111. Major resistance is around 115 and break above targets 116/117.50, while minor resistance is around 113.80/114.20
GBP/USD: Sterling declined to a 2-week low of 1.4084, retreating from Friday's 1-month high of 1.4437, driven by worries that Britain could leave the European Union in a June referendum. However, it recovered briefly before falling back to 1.4100 after wages and jobs data beat forecasts marginally, leaving the focus back on the 2016 budget and the Brexit referendum. The pair is currently trading around 1.4132, drifting away from the low. Intraday trend is weak as long as resistance 1.4160 holds. Any break above 1.4160 will take the pair to next level 1.4210/1.4250. On the lower side major support is around 1.4100 and break below targets 1.4045/1.4000/1.3915. Sterling was also lower at 78.58 pence per euro.
USD/CHF: The pair has retreated after making a high of 0.99014 and is currently trading around 0.98858. 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.Minor support is around 0.9840 and break below targets 0.9780/0.9720.
AUDUSD: The Australian dollar was nursing losses after renewed weakness in iron ore and dairy prices weighed on risk appetite. It declined to a low of 0.7437, edging away from an 8-month high just below 76 cents touched on Monday. However, the Aussie has slightly recovered from the low and is currently trading around 0.7460. Markets now await Fed guidance on the outlook for rate hikes and especially on the tone of Chair Janet Yellen's news conference. The short term trend is slightly weak as long as resistance 0.7510 holds. On the higher side major resistance is around 0.7510 and break above targets 0.7553/0.7600. The pair’s major support is around 0.7430 and break below will drag the pair till 0.7400/0.7380.
NZD/USD: The New Zealand dollar declined after international dairy prices fell 2.9 percent at a fortnightly auction, confounding expectations for a rise and disappointing kiwi bulls.It slipped to a 2-week trough of 0.6577, having dropped 1.1 percent on Tuesday. Even an improvement in the nation's current account deficit to NZ$2.6 billion did little to revive sentiment. The safe-haven yen was the major beneficiary with the kiwi skidding more than one yen to 74.81 since Tuesday's peak. Support is seen at 0.6571 (Mar 1 Low, while resistance is located at 0.6657 (5-DMA).
Equities Recap
European shares resisted the Asian trend and rose in early trade on the back of recovering oil prices, which had decline in the previous two sessions that had culminated losses of around 5 percent.
The FTSEuroFirst 300 index of leading shares was up 0.4 percent at 1,346 points. Germany's DAX was 0.7 percent higher, France's CAC 40 gained 0.5 percent and Britain's FTSE 100 rose 0.4 percent in early trade.
Tokyo's Nikkei declined 0.83 pct at 16,974.45. MSCI's broadest index of Asia-Pacific shares outside Japan and MSCI's global share index edged down 0.1 percent.
Shanghai Composite Index nudged up 0.2 pct at 2,870.43 points, while CSI300 Index climbed 0.5 pct at 3,090.03 points. HK’s Hang Seng Index edged down 0.2 pct at 20,257.70 points.
Commodities Recap
Oil prices firmed following an announcement that producers will meet next month in Qatar to discuss a proposal to freeze output and on growing signs of a decline in U.S. crude production. Brent crude futures were up 48 cents at $39.41 a barrel at 1019 GMT, while U.S. crude futures were trading 60 cents a barrel higher at $36.94.
Gold declined for a fourth consecutive session, hovering near its lowest in two weeks. Spot gold was flat at $1,232.98 an ounce by 1023 GMT, while U.S. gold was largely unchanged at $1,231.6 an ounce. Spot gold fell to $1,225.52 in the previous session, its lowest since March 2.
Treasuries Recap
The U.S. 10-year Treasuries yield stood at 1.961 percent versus previous close of 1.959 percent on Tuesday.
Bunds were trading modestly; the curve of 10s/30s was 0.5bp flatter, although a broader flattening overall. The 10-year futures were up over a dozen ticks from their open. The 10-year Bunds has modestly outperforming shorter dated issues. June Gilts are a mere two ticks lower on the data at 119.96.
Japanese government bonds firmed on Wednesday, as investors cover their short positions ahead of the outcome of the U.S. Federal Reserve's policy meeting later in the session. The 10-year JGB yield fell 2.5 basis points to minus 0.050 percent. In the superlong zone, the 20-year JGB yield fell 2.5 basis points to 0.430 percent . The benchmark 10-year JGB futures rose 0.38 point to 151.27.
Australian government bond futures edged up from multi-week lows, with the 3-year bond contract 5 ticks firmer at 97.980. The 10-year contract rose 2 ticks to 97.3500, while the 20-year contract added 2.25 ticks to 96.7950. New Zealand government bonds eased, sending yields 2 basis points higher at the long end of the curve.
