Market Roundup
- USD/JPY +0.9%, GBP/USD -0.3%, EUR/USD -0.3%
- GBP/USD hits 6-week high at 1.2674 before GDP beat
- DXY +0.3%, DAX +0.5%, Brent +0.5%, Gold -0.6%
- Great Britain CBI Retail Sales balance -8 in Jan vs +35 in Dec. +22 expected. Lowest since Sept
- Great Britain Q4 GDP prelim +0.6% q/q, +2.2% y/y vs previous 0.6%/2.2%. 0.5%/2.1% expected
- Great Britain Dec BBA Mortgage Approvals 43.228k vs previous 41.003k revised
- Switzerland Dec Trade 2716mln vs previous 3500mln revised
- China FX regulator issues guidelines on improving checks for FX management
- U.S J&J to acquire Swiss biotech company Actelion in $30 bln all-cash deal
- Japanese inflation gives BoJ buyer’s remorse
Economic Data Ahead
- (0830 ET/1330 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 13,000 to a seasonally adjusted 247,000 for the week ended Jan. 20 while continuing claims for the week ended Jan. 13 is expected to decline to 2.040 m from 2.046 m.
- (0830 ET/1330 GMT) The U.S. Census Bureau is likely to report that preliminary wholesale inventories rose 0.9 percent in December after posting a gain of 1.0 percent in November.
- (0830 ET/1330 GMT) The United States releases goods trade balance data for the month of December. The economy recorded a trade deficit of $65.0 billion in the previous month.
- (0830 ET/1330 GMT) The Federal Reserve Bank of Chicago will release its Chicago Fed National Activity Index (CFNAI) for the month of December. The index stood at -0.27 in the prior month.
- (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 54.1 in the previous month.
- (0945 ET/1445 GMT) Financial firm Markit Economics is likely to report that preliminary U.S. service PMI business activity index rose to 54.4 in January after printing a final reading of 53.9 in December.
- (1000 ET/1500 GMT) The Conference Board is likely to report that U.S. leading indicator edged up 0.2 percent in the month of December after remaining unchanged in November.
- (1000 ET/1500 GMT) National Association of Realtors is likely to report that U.S. existing home sales declined 1.0 percent to an annual rate of 588,000 million units in December.
- (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending January 20.
- (1100 ET/1600 GMT) Federal Reserve Bank of Kansas City issues manufacturing activity index for the month of January. The indicator stood at 24 in the previous month.
- (1830 ET/2330 GMT) Japan's Statistics Bureau will release its National Consumer Price Index for the month of December. The index rose at an annualized rate of 0.4 percent in November.
Key Events Ahead
- (0900 ET/1400 GMT) Eurozone FinMin meeting in Brussels, ECB Coeure to attend
- (1145 ET/1645 GMT) FedTrade operation 30-year Ginnie Mae (max $1.425 bn)
FX Beat
DXY: The dollar rebounded versus its major peers on the back of rising U.S. Treasury yields amid risk-on market sentiment. The greenback against a basket of currencies traded 0.3 percent up at 100.20, having hit a low of 99.79 earlier in the day, its lowest since Dec. 8. FxWirePro's Hourly Dollar Strength Index stood at 9.23 (Neutral) by 1100 GMT.
EUR/USD: The euro tumbled towards the 1.0700 handle, as the dollar recovered amid positive treasury yields. Moreover, developments surrounding the Eurogroup meetings and cautious tone ahead of the German central bank Chief Weidmann and ECB officials Mersch and Villeroy speeches affected the major's price-action. The European currency traded 0.2 percent down at 1.0724, after rising as high as 1.0751 on Tuesday, it’s highest since Dec 8. FxWirePro's Hourly Euro Strength Index stood at -53.46 (Bearish) by 1000 GMT. On the lower side, any break below 1.0690 (200- HMA) will drag the pair down till 1.06579 (61.8% retracement of 1.05891 and 1.07730)/1.05891. Potential reversal zone is around 1.08015 and any break above will take it till 1.08735.
USD/JPY: The dollar rallied nearly 1 percent, extending its recovery mode above the 114.00 handle amid positive sentiment surrounding equity markets. The major trades 0.9 percent higher at 114.29, drifting away from a low of 112.52 hit on Tuesday, it’s weakest since Nov 30. FxWirePro's Hourly Yen Strength Index stood at -174.88 (Highly Bearish) by 1000 GMT. The major resistance is around 114.44 (61.8% retracement 115.62 and 112.52) and any break above will take it till 114.85 (38.2% retracement of 118.61 and 112.57)/115.62 (daily Kijun-Sen). On the lower side, minor support is around 111.55 (127.2% retracement of 112.59 and 115.62) and any break below targets 111.10 (100- day EMA)/110.
GBP/USD: Sterling weakened after rising to a 6-week high near the 1.2700 handle, despite data showing Britain's economy remained strong in the final three months of 2016. The UK's gross domestic product rose 0.6 percent in the fourth quarter, surpassing consensus of 0.5 percent, while on a yearly basis the economy grew by 2.2 percent, slightly faster than expected. Sterling trades 0.2 percent lower at 1.2602, attempting to sustain gains above the 1.2600 handle. FxWirePro's Hourly Sterling Strength Index stood at 80.62 (Bullish) by 1000 GMT. The downside might be capped at 1.2514 (23.6% retracement of 1.19860 and 1.26725) and any break below will drag it down till 1.24180. The short-term support is around 1.2580/1.2545 level. On the higher side, any break above 1.2700 will take it to next level till 1.2725/1.2770. Against the euro, the pound trades 0.1 percent up at 85.00 pence, having hit a peak of 84.70 earlier in the day, it’s strongest since Jan. 3.
USD/CHF: The Swiss franc nudged down, after rising to an intra-day high of 0.9969, as the greenback rebounded from recent lows on the back of rising U.S. Treasury yields. The major trades up at 0.9994, hovering away from a low of 0.9959 hit on Tuesday, it’s lowest since Nov. 15. FxWirePro's Hourly Swiss Franc Strength Index stood at 15.03 (Neutral) by 1000 GMT. The pair upside is capped by 10- day MA and any break above targets 1.0080/1.01220. On the lower side, any break below 0.99575 will drag it till 0.9925 (200- day EMA)/0.9860 (200- day MA).
AUD/USD: The Australian dollar declined, extending losses for the third consecutive session, amid board based U.S. dollar bounce back. The Aussie trades 0.2 percent lower at 0.7551, having touched a high of 0.7609 on Tuesday, it’s strongest since Nov. 11. FxWirePro's Hourly Aussie Strength Index stood at 47.72 (Neutral) by 1100 GMT. On the higher side, the pair should close above 0.7600 for further bullishness and any break above will take it till 0.7645/0.7700. The minor support is around 0.7519 (60- 4H EMA) and break below will drag it till 0.7475 (89- 4H EMA)/0.74350
NZD/USD: The New Zealand dollar slumped after rising to an 11-week high above the 0.7300 handle on the back of better-than-expected inflation data, which boosted RBNZ rate speculations. The Kiwi trades 0.6 percent lower at 0.7255, having hit a peak of 0.7312 earlier in the day, it’s strongest since Nov. 9. FxWirePro's Hourly Kiwi Strength Index was at 47.72 (Neutral) by 1100 GMT. Immediate resistance is located at 0.7340 (Nov 3.), a break above could take it near 0.7400. On the downside, support is seen at 0.7222 (7-EMA), a break below could drag it till 0.7203 (9-EMA).
Equities Recap
European shares escalated to 1-year highs, while world stocks rallied strongly after Dow Jones index break past 20,000 points.
MSCI's 46-country All World index was within the distance of its record high, while MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.7 percent to its highest since Oct.
The pan-European STOXX 600 index increased 0.5 percent to 368.41 points, while the FTSEurofirst 300 index rose 0.5 percent to 1,455.75 points.
Britain's FTSE 100 trades 0.2 percent up at 7,178.69 points, while mid-cap FTSE 250 advanced 0.13 percent to 18,156.40 points.
Germany's DAX jumped 0.49 percent at 11,865.36 points; France's CAC 40 trades 0.22 percent higher at 4,888.17 points.
Tokyo's Nikkei rallied 1.81 percent to 19,402.39 points, South Korea's KOSPI gained 0.81 percent to 2,083.59 points.
Shanghai composite index advanced 0.3 percent to 3,159.17 points, while CSI300 index climbed 0.4 percent to 3,387.96 points. Hong Kong’s Hang Seng rose 1.4 percent at 23,374.17 points.
Commodities Recap
Crude oil prices rose, extending gains from the previous session, as efforts of OPEC and other producers to cut output boosted market sentiment. International benchmark Brent crude was trading 0.4 percent higher at $55.54 per barrel by 0937 GMT, having hit a high of $55.83 on Tuesday, its highest since Jan. 18. U.S. West Texas Intermediate crude rose 0.2 percent at $53.05 a barrel, after rising to $53.64 on Friday, its highest since Jan. 9.
Gold prices fell for the third consecutive session, as a rally in the global equities counterbalanced support from uncertainty over the U.S. President Trump's policies. Spot gold prices tumbled 0.45 percent at $1,194.94 per ounce at 0944 GMT, having hit their lowest since Jan. 13 at $1,193.14 in the previous session. U.S. gold futures fell 0.1 percent to $1,195.80.
Treasuries Recap
Treasuries saw further downward pressure across the curve, alongside continued equity gains as the Dow finally managed to break above the 20k-mark. The yield on the benchmark 10-year Treasury jumped 2 basis points to 2.54 percent, the super-long 30-year bond yield also rose nearly 1-1/2 basis points to 3.12 percent and the yield on short-term 2-year note moved higher by nearly 1/2 basis points to 1.24 percent.
The UK gilts plunged, following higher-than-expected fourth quarter gross domestic product (GDP). Also, investors are now curiously eyeing the Bank of England’s monetary policy meeting next week. The yield on the benchmark 10-year gilts, jumped over 5 basis points to 1.52 percent, the super-long 30-year bond yields also surged by 5-1/2 basis points to 2.16 percent and the yield on short-term 2-year rose 2 basis points to 0.19 percent.
The German government bunds slumped as investors moved away from safe-haven instruments on higher risk appetite in crude oil and equities. The yield on the benchmark 10-year bond, rose 1-1/2 basis points to 0.48 percent, the long-term 30-year bond yields also edged higher by 1/2 basis point to 1.23 percent and the yield on the short-term 2-year bond traded 1 basis point higher at -0.62 percent.
The Japanese 10-year government bond yields climbed highest since January 16, as investors moved away from safe-haven instruments on higher risk appetite in crude oil and equities. The benchmark 10-year bond yield, edged up nearly 2 basis points to 0.08 percent, while the long-term 30-year bond yields rose nearly 3 basis points to 0.84 percent and the yield on the short-term 2-year note also surged nearly 3 basis points to -0.19 percent.
The New Zealand government bonds plunged, tracking higher-than-expected consumer price inflation during the fourth quarter of 2016. The yield on the benchmark 10-year bond jumped near 1-month high by 9-1/2 basis points to 3.39 percent at the time of closing, the yield on 7-year note also surged nearly 8 basis points to 3.03 percent and the yield on short-term 2-year note rose 4 basis points to 2.34 percent.
