Market Roundup
• US trade deficit falls, -44.3b v 45b forecast -45.7b previous, as exports hit more than 1.5-yr high at USD190.7b.
• US job openings (JOLTS) fall to 5.501mn in Dec v 5.568m roti, 5.505m previous.
• Atlanta Fed’s GDPNow model for Q1 back down to 2.7% from 3.4% on Feb 1
• ECB’s Weidmann: Absurd to say Germany exploits trading partners, easy-money must end when ECB hits inflation target
• Jr. Brexit Minister Jones: UK govt will not renegotiate Brexit deal if rejected by parliament -minister"
• Bank of England's Forbes breaks ranks, says rates could rise soon
• Election nerves push French yields to highest over Germany since ‘12, gap b/w French, German yields hits 78bps
• German IP posts steepest monthly fall since Jan 2009, -3% v 0.3% forecast, 0.5% previous.
• Oil prices fall as reviving shale balances OPEC cuts
• Gold drifts lower as USD climbs on European uncertainty
Looking Ahead - Economic Data (GMT)
• 21:45 New Zealand Building Consents Dec -9.20%-previous
• 23:50 Japan Bank Lending YY Jan 2.60%-previous
• 23:50 Japan Current Acct NSA JPY* Dec f/c 1294.5b, 1415.5b-previous
• 23:50 Japan Foreign Reserves Jan 1216.90b-previous
• 05:00 JP Econ Watchers Poll SA* Jan 51.4-previous
Looking Ahead - Events, Other Releases (GMT)
• 20:00 NZ RBNZ Interest Rate* N/A forecast 1.75%, 1.75%-previous
Currency Summaries
EUR/USD is likely to find support at 1.0655 levels and currently trading at 1.0694 levels. The pair has made session high at 1.0706 and hit lows at 1.0662 levels. The euro slipped sharply against the U.S. dollar on Tuesday as increasingly unpredictable French presidential election race weighted on euro. Trading, was dominated by the latest twists in the French presidential election race, while doubts over a rescue package for Greece also stoked concerns over the future stability of the eurozone. France's tightly contested presidential race sank deeper into smear and sleaze on Tuesday after centrist Emmanuel Macron was forced to deny an extramarital affair and as scandal continued to dog conservative Francois Fillon and his party. The dollar index rose 0.6 percent to 100.53, recovering from its worst January performance since 1987. It also gained 0.6 percent against the yen to 112.39 .The dollar's gains accelerated after China reported its foreign exchange reserves unexpectedly fell below the $3 trillion level in January for the first time in nearly six years. The euro, meanwhile, fell 0.7 percent to $1.0684 on pace for its worst daily performance in about three weeks.
GBP/USD is supported in the range of 1.2400 levels and currently trading at 1.2517 levels. It reached session high at 1.2544 and dropped to session low at 1.2349 levels. Britain's pound recovered its earlier losses against the dollar on Tuesday as investors jumped on signs of growing pressure on the government to give parliament a greater say in the final deal to leave the European Union. Bank of England policymaker Kristin Forbes added to support for the pound by saying the bank should raise interest rates soon if growth remains solid and inflation continues to accelerate. The gains came after a rough few days for sterling, due largely to a run of surveys suggesting that the economy and consumer demand is finally softening in the face of Brexit-related risks. On the data front, The British Retail Consortium numbers showed consumers reined in their spending last month in comparison to a year earlier. Data from mortgage lender Halifax Bank of Scotland showed British house prices fell 0.9 percent in January alone after a 1.6 percent surge in December, compared to expectations prices would hold flat on the month. By 21:30 GMT, sterling traded up 0.1 percent on the day at $1.2511 and 0.7 percent stronger against a broadly weaker euro at 85.65 pence.
USD/CAD is supported at 1.3097 levels and is trading at 1.3164 levels. It has made session high at 1.3181 and lows at 1.3149 levels. The Canadian dollar declined against its U.S. counterpart on Tuesday as Canadian dollar was pressured by gains for the greenback, lower oil prices. The dollar benefitted from mounting political uncertainty ahead of a number of crucial elections in the euro zone.Prices for oil, a major Canadian export, were down more than 1 percent in morning trade as growing evidence of a revival in U.S. shale production offset lower output by OPEC and other exporters. Canada posted a C$923 million trade surplus in December, thanks largely to booming crude oil exports, Statistics Canada said. November's surplus was also revised sharply higher. But overall exports rose by 0.8 percent in December, export volumes actually fell by 1.4 percent. The Canadian dollar was trading at C$1.3174 to the greenback, or 75.93 U.S. cents, weaker than the Bank of Canada's close on Monday of C$1.3087, or 76.41 U.S. cents.
AUD/USD is supported around 0.7583 levels and currently trading at 0.7633 levels. It hit session high at 0.7647 and made session lows at 0.7605 levels. The Australian dollar declined against US dollar on Tuesday as the Australian dollar was weighted down by lower oil prices and as the dollar was bolstered by technical buying after recent losses, as well as political uncertainty in Europe with a slew of elections this year. The Australian dollar shed 0.5 percent to $0.7621, after the Reserve Bank of Australia left interest rates unchanged. The Reserve Bank of Australia (RBA) held interest rates at 1.5 percent on Tuesday, as expected, but said it sees consumer price inflation in 2017 to be above 2 percent and within the central bank's 2-3 percent inflation target band for the first time since the third quarter of 2014. Governor Philip Lowe also played down recent soft economic data, expecting growth around 3 percent over the next couple of years. The commentary cemented views that further cuts in interest rates were unlikely in the near-term. Data on Australia's gross domestic product for the December quarter is due March 1 and economists generally expect the pace of growth to have rebounded after a shock contraction in the July-September period.
Equities Recap
European shares rose on Tuesday, helped by some encouraging company results, but French stocks slipped after earnings at BNP Paribas disappointed and election jitters weighed on the country's sovereign bonds.
UK's benchmark FTSE 100 closed up by 0.1 percent, the pan-European FTSEurofirst 300 ended the day up by 0.27 percent, Germany's Dax ended up by 0.3 percent, France’s CAC finished the day up by 0.6 percent.
The S&P 500 ended barely higher on Tuesday while the Nasdaq managed to scratch out a new record as gains in big tech names countered energy declines.
Dow Jones closed up by 0.18 percent, S&P 500 ended up 0.01 percent, Nasdaq finished the day up by 0.18 percent.
Treasuries Recap
U.S. Treasury yields fell to their lowest in nearly three weeks on Tuesday, drifting past significant technical levels, as fixed-income investors worried that President Donald Trump's pro-growth policies could be hamstrung by his focus on other issues.
Benchmark 10-year note yields fell to 2.37 percent, their lowest since Jan. 18, with other Treasury yields falling broadly to their weakest levels since mid-January.
Prices on the 10-year were last up 7/32 to yield 2.38 percent.
The yield on 2-year notes US2YT=RR hit the lowest since Jan. 17. They were last little changed in price to yield 1.16 percent.
Commodities Recap
Oil prices fell on Tuesday, pressured by sluggish demand and evidence of a burgeoning revival in U.S. shale production that could complicate efforts by OPEC and other producers to reduce a supply glut.
Brent crude settled down 67 cents, or 1.2 percent, at $55.05 a barrel, while U.S. crude ended 84 cents, or 1.6 percent, lower at $52.17.
Gold slipped from a three-month peak on Tuesday, pressured by earlier strength in the dollar as the euro fell on weak German industry data and nervousness ahead of the French elections.
Spot gold was down 0.2 percent at $1,233.40 an ounce by 3:18 p.m. EST (2018 GMT), after rising to $1,235.78, its highest since Nov. 11. U.S. gold futures settled up 0.3 percent at $1,236.10.
