Market Roundup
- EUR/USD +0.2%, USD/JPY -0.3%, GBP/USD -0.5%, DXY -0.1%,
- DAX +0.1%, Brent +0.9%, Gold +0.3%, Copper +0.6%
- Copper firmer after hefty overnight gains on supply woes
- China iron ore extends gains to 3-year high, upbeat steel outlook
- Britain unlikely to trigger Article 50 at March EU summit-Brexit minister
- Pressure mounts on France's Fillon as party lawmakers rebel
- BoJ Gov Kuroda – Global yield rises alone won’t trigger rate hikes
- EZ Q4 GDP flash estimate 0.4% m/m, 1.7% y/y vs previous 0.5%/1.8%. 0.5%/1.8% forecast
- EZ Dec Ind production -1.6% m/m, 2.0% y/y vs previous 1.5%/3.2%. -1.5%/1.7% forecast
- Great Britain Jan CPI -0.5% m/m, 1.8% y/y vs previous 0.5%/1.6%. -0.5%/1.9% forecast
- Great Britain Jan PPI core output +0.5% m/m, +2.4% y/y vs previous 0.0%/2.1%. 0.3%/2.2% forecast
- Germany Jan CPI final -0.6% m/m, 1.9% y/y previous -0.6%/1.9%. -0.6%/1.9% forecast
- Germany Q4 GDP flash SA 0.4% q/q vs previous 0.1% revised 0.5% forecast
- Switzerland Jan CPI 0.0% m/m, 0.3% y/y vs previous -0.1%/0.0% revised 0.3% forecast
- Switzerland Jan Producer/Import price 0.4% m/m, 0.8% y/y vs previous 0.2%/0.0%
Economic Data Ahead
- (0830 ET/1330 GMT) The U.S. producer price index is likely to have increased 0.3 percent in January, while in the 12 months through the same period, it is expected to have advanced 1.5 percent. PPI excluding food and energy probably edged up 0.2 percent after posting similar gains in December
- (1600 ET/2100 GMT) Chile's central bank will meet to set its benchmark interest rate, where is widely expected to lower its rate to 3 percent.
- (1630 ET/2130 GMT) API reports its weekly crude oil stock.
- (1830 ET/2330 GMT) The Faculty of Economics and Commerce Melbourne Institute will release Australia's Westpac consumer confidence for the month of February. The index edged up 0.1 percent to 97.4 in January.
Key Events Ahead
- (0850 ET/1350 GMT) Richmond Fed President Jeffrey Lacker participates in a panel before the 2017 Economic Forecast forum, hosted by the Lyons Companies and the Lerner College Center for Economic Education and Entrepreneurship, in Newark.
- (1000 ET/1500 GMT) U.S. Federal Reserve Chair Janet Yellen gives the semiannual Humphrey-Hawkins testimony before the Senate Banking Committee in Washington.
- (1300 ET/1800 GMT) Dallas Fed chief Robert Kaplan will participate in a moderated Q&A session before the Greater Houston Port Bureau Luncheon Series in Houston.
- (1315 ET/1815 GMT) Atlanta Fed President Dennis Lockhart will speak on "Crisis, Recession, and Recovery" before the Huntsville Rotary Club of Atlanta, in Huntsville.
FX Beat
DXY: The dollar declined versus the Japanese yen, as investors refrained from taking big positions ahead of Federal Reserve chief Janet Yellen's testimony before the Senate Banking Committee in Washington. The greenback against a basket of currencies traded 0.2 percent down at 100.81, having hit a high of 101.11 on Monday, it’s strongest since Jan. 20. FxWirePro's Hourly Dollar Strength Index stood at 48.28 (Neutral) by 1100 GMT.
EUR/USD: The euro rose, retreating from a 1-month low hit earlier in the day, as the greenback eased following the resignation of the U.S. National Security Adviser Michael Flynn. Markets seem to have ignored worse-than-expected Eurozone's gross domestic figures, which indicated that the economy weakened in the fourth quarter. The European currency gained 0.26 percent to 1.0618, having hit a low of 1.0588, it’s lowest since Jan. 16. FxWirePro's Hourly Euro Strength Index stood at -72.42 (Bearish) by 1000 GMT. The pair is facing strong support at 1.05790 low formed on Jan 16, 2017. Any violation below 1.05800 will drag it till 1.05200/1.0500/ 1.04500 (Jan 11 low). On the higher side, any break above minor trend line resistance 1.06350 will take it till 1.0680 (55- day EMA)/1.06990 (200- H MA)/1.07386 (61.8% retracement of 1.08288 and 1.05880).
USD/JPY: The dollar fell towards the 113.00 handle, as the resignation of the US National Security Adviser Flynn over his alleged links with Russia triggered risk-off sentiment. The selling pressure around the major intensified as the market turned cautious ahead of the testimony from Federal Reserve chief Janet Yellen that may offer clues to the timing of the next U.S. interest rate rise. The pair trades 0.3 percent lower at 113.33, pulling away from a high of 114.16 touched on Monday, its highest since Jan 30. FxWirePro's Hourly Yen Strength Index stood at 68.58 (Bullish) by 1000 GMT. The major resistance is around 114.56 (daily Kijun-Sen) and any break above will take it till 115.35/116. On the lower side, minor support is around 112.88 (daily Tenken-Sen) and any break below 112.88 will drag it till 112.05/111.48.
GBP/USD: Sterling tumbled below the 1.2500 handle after Britain's inflation data for January missed forecasts. The economy's consumer prices rose at an annualized rate of 1.8 percent in January, recording its fastest pace since June 2014 however, below a consensus of 1.9 percent, which did little to convince the Bank of England to hike interest rates. Sterling trades 0.5 percent lower at 1.2464, having hit a high of 1.2547 earlier, it’s strongest since Feb. 9. FxWirePro's Hourly Sterling Strength Index stood at -178.56 (Highly Bearish) by 1000 GMT. The upside is capped by 100 –day EMA and any break above will take the pair till 1.26750/1.27060 (Feb 2 high). On the lower side, next immediate support is around 1.2430 (38.2% retracement of 1.19860 and 1.27060) and any break below will drag it down till 1.2345 (Feb 7 low)/1.2300. Against the euro, the pound trades 0.9 percent down at 85.25 pence, having hit a high of 84.49 on Monday, it’s strongest since Dec. 22.
USD/CHF: The Swiss franc edged up, halting its 3-day losing streak, as the greenback weakened amid risk-off market sentiment. The major trades lower at 1.0046, having touched a high of 1.0069 in the previous session, its highest since Jan. 20. FxWirePro's Hourly Swiss Franc Strength Index stood at -85.76 (Slightly Bearish) by 1000 GMT. The minor weakness can be seen below 1.0000 (100- day EMA) and any break below will drag it till 0.9950/0.9900. On the higher side, 1.0070 will be acting as immediate resistance and any break above this level will take it till 1.01225 (Jan 19 high)/1.01588 (61.8% retracement of 1.03435 and 0.98611).
AUD/USD: The Australian dollar rose following the release of better-than-expected Chinese CPI and PPI reports for the month of January. Moreover, the major was also supported by Australia's upbeat business confidence data, indicating that economic conditions improved in the previous month. The Aussie trades 0.5 percent higher at 0.7681, attempting to regain the 0.7700 handle. FxWirePro's Hourly Aussie Strength Index stood at 55.58 (Bullish) by 1100 GMT. On the lower side, the minor support stands at 0.7630 (10- day MA) and any break below will drag it down till 0.7578 (21- day EMA)/0.7500. The minor resistance is around 0.7700 and a break above will take it till 0.7748/0.77783 (Nov 8 high).
Equities Recap
European shares declined and were poised to snap a five-day winning streak as investors remained cautious ahead of Federal Reserve chief Janet Yellen's testimony.
The pan-European STOXX 600 index decreased 0.06 percent to 369.89 points, while the FTSEurofirst 300 index eased 0.07 percent to 1,458.70 points.
Britain's FTSE 100 trades 0.12 percent up at 7,287.86 points, while mid-cap FTSE 250 rose 0.14 percent to 18,785.57 points.
Germany's DAX edged down 0.3 percent at 11,771.01 points; France's CAC 40 trades 0.08 percent higher at 4,891.82 points.
Tokyo's Nikkei slumped 1.13 percent to 19,238.98 points, Australia's S&P/ASX 200 index fell 0.08 percent to 5,756.30 points and South Korea's KOSPI jumped 0.17 percent to 2,078.65 points.
Shanghai composite index climbed 0.03 percent to 3,217.93 points, while CSI300 index eased 0.01 percent at 3,435.80 points. Hong Kong’s Hang Seng shed 0.03 percent at 23,703.01 points.
Commodities Recap
Crude oil rallied by more than 1 percent, boosted by an OPEC-led effort to cut output, however, rising production capped the upside. International benchmark Brent crude was trading 0.9 percent higher at $56.05 per barrel by 0944 GMT, pulling away from a low of $54.43 hit last week, its weakest since Jan. 20. U.S. West Texas Intermediate crude rose 0.85 percent at $53.30 a barrel, hovering towards a high of $54.10 on Friday, its highest since Feb. 6.
Gold prices rose, retreating from a 1-week low as the dollar eased ahead of the U.S. Federal Reserve Chair Janet Yellen's testimony later in the day for insights on the central bank's interest rate policy. Spot gold was up 0.3 percent at $1,228.28 per ounce at 0956 GMT, having hit its lowest since Feb. 6 at $1,219.19 on Monday. U.S. gold futures rose 0.4 percent to$1,230.60.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.4448 percent higher by 0.011 bps, while 5-year yield was up by 0.012 bps at 1.9231 percent.
France and Ireland saw their 10-year borrowing costs converge briefly for the first time since October 2007, with upcoming presidential elections pushing France's bond yields up to 14-month highs in recent weeks. The yield on France's 10-year bond edged to a high of 1.035 percent while the Irish equivalent fell 2.4 basis points to the same level.
The shorter-dated Japanese government bond prices edged higher as firm results at a five-year debt auction lifted sentiment, although longer-dated maturities sagged and steepened the overall yield curve. The two-year yield fell 1 basis point to minus 0.225 percent and the five-year yield dipped half a basis point to minus 0.090 percent. The benchmark 10-year yield rose 0.5 basis point to 0.090 percent and the 30-year yield climbed 3.5 basis points to 0.895 percent.
The Australian government bond futures fell, with the 3-year bond contract down 7 ticks at 97.98 and the 10-year contract 5 ticks to 97.2150. The New Zealand government bonds eased, sending yields 2.5 basis points higher.
The Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries ahead of Yellen's testimony. The 2-year dipped 3 Canadian cents to yield 0.786 percent and the 10-year declined 28 Canadian cents to yield 1.729 percent.
