Market Roundup
- BoJ mulls additional easing amid economic uncertainty, higher yen and falling stocks to figure in BoJ thinking Jan 28-29 - Nikkei Asian Review.
- Japan FinMin Aso - Closely watching FX moves, economic fundamentals strong, should not fret over slumping oil prices, need efforts to achieve 2% inflation target - Reuters.
- EconMin Amari - Market volatility caused by external factors - Reuters.
- To ease or not to ease; weak oil, wild markets put BoJ in tight spot - RTRS.
- Japan Jan mfg PMI - flash 52.4, Dec final 52.6, new export orders 52.6 vs 52.2 but new orders 52.7 vs 54.2, input prices down for 1st time in 3-years.
- Japanese supermarkets' same-store sales up for first time in 19 year -Nikkei.
- Foreign CB US debt holdings -$11.055 bln to $3.266 trln week-ended Jan 20, Treasuries -$10.242 bln to $2.951 trln, agencies -$1.557 bln to $267.004 bln.
- NY Fed - Swaps with foreign CBs $125 mln Jan 20 week, all with ECB.
- Lipper - Investors pull $5.2 bln from US stock funds in week-ended Jan 20, third straight week of withdrawals.
Economic Data Ahead
- (0300 ET/0800 GMT) France Jan Markit PMI mfg - flash, 51.3 forecast; last 51.4.
- (0300 ET/0800 GMT) France Jan Markit PMI services - flash, 50.2 forecast; last 49.8.
- (0300 ET/0800 GMT) France Jan Markit PMI composite - flash; last 50.1.
- (0330 ET/0830 GMT) Germany Jan Markit PMI mfg - flash, 53.0 forecast; last 53.2.
- (0330 ET/0830 GMT) Germany Jan Markit PMI services - flash, 55.6 forecast; last 56.0.
- (0330 ET/0830 GMT) Germany Jan Markit PMI composite - flash; last 55.50
- (0400 ET/0900 GMT) Eurozone Jan Markit PMI mfg - flash, 53.0 forecast; last 53.2.
- (0400 ET/0900 GMT) Eurozone Jan Markit PMI services - flash, 54.2 forecast; last 54.2.
- (0400 ET/0900 GMT) Eurozone Jan Markit PMI composite - flash, 54.2 forecast; last 54.3.
- (0430 ET/0930 GMT) Great Britain Dec retail sales, -0.3% m/m, +4.3% y/y forecast; last +1.7%, +5.0%.
- (0430 ET/0930 GMT) Great Britain Dec - ex-fuel, -0.3% m/m, +3.5% y/y forecast; last +1.7%, +3.9%.
- (0430 ET/0930 GMT) Great Britain Dec PSNB, bln forecast; last bln, PSNCR bln.
- (0430 ET/0930 GMT) Great Britain Dec - ex-banks, GBP10.5 bln forecast; last bln.
- (0830 ET/1330 GMT) United States Dec Chicago Fed national activity index; last -0.30.
- (0945 ET/1445 GMT) United States Jan Markit PMI mfg - flash, 51.1 forecast; last 51.2.
- (1000 ET/1500 GMT) United States Dec leading indicators index, -0.1% m/m forecast; last +0.4%.
- (1000 ET/1500 GMT) United States Dec exist home sales, 5.2 mln AR/+8.9% m/m forecast; last 4.76 mln/-10.5%.
- N/A Davos World Economic Forum (till January 23).
- N/A UK DMO GBP1.5 bln each 1/3/6-month treasury bill auctions.
- (0330 ET/0830 GMT) ECB/Buba Weidmann speech in Munich.
- (0400 ET/0900 GMT) ECB survey of professional forecasters.
- (0400 ET/0900 GMT) ECB/Austria CB Nowotny speech in Vienna.
- (0730 ET/1230 GMT) Irish CB Gov Lane speech in Dublin.
USD: The dollar gained against the euro following dovish remarks from Draghi. The dollar index rose about 0.26 percent to 99.36, as rising expectations of monetary easing by other major central banks offset fading chances of more rate hikes from the Federal Reserve.
EUR/USD: The euro trades at 1.0831 levels after falling to 1.0777 on Thursday following strong remarks from Draghi suggesting the bank could launch additional stimulus measures in the euro zone in the forthcoming months. ECB will review its policy stance in March, against the backdrop of fading growth and inflation prospects. Draghi's comments strengthened the dollar against the euro and helped battered stocks to recover some lost ground. However, weak U.S. data on Thursday reinforced doubts that the Fed would reveal more tightening in near future. Traders are seen bearish as the pair continues to hover near sessions low of 1.0827. Immediate support is seen at 1.0804 (Jan 13 Low), while on the upside, resistance is located at 1.0877 (5-DMA).
USD/JPY: The dollar edged up 0.35 percent against the yen to 118.08, pulling away from a one-year trough of 115.97 hit earlier in the week against the safe-haven Japanese currency. BOJ Governor stated on Thursday that he is not focusing to adopt a negative interest rate policy at the moment, signalling that any further monetary easing will likely take the form of an expansion of its current massive asset-buying programme. Further the central bank is expected to cut its core consumer inflation forecast for the coming fiscal year, probably below 1 percent at the policy review next week. Currently pair trades above the 118.00 mark ahead of BoJs policy review. The pair faces resistance at 118.27 (Jan 15 High). while support is seen at 117.54 (Sessions Low) on the downside.
AUD/USD: The Australian dollar heads for hefty weekly gains after a bounce in oil prices and expectations of further policy easing in economies sharpened appetites for risky assets. The Aussie hovers around 0.7000 level as Asian traders track the positive sentiment amid an improved risk environment, with commodities and equities rising. The pair trades flat at 0.7028 levels against its U.S counterpart, having touched sessions high of 0.7035 and moves within a thin range of 0.6986 - 0.7035. Immediate resistance is located at 0.7048 (Jan 13 High), while support is seen at 0.6947 (10- DMA). Against the yen, the Aussie trades at 82.93 after making session high of o 83.07.
NZD/USD: The New Zealand dollar was a major beneficiary of improving risk appetite as it rose to 0.6551, from a 4-month trough of 0.6347 hit on Wednesday. Trades are seen bullish in early trade as the pair continues to advance hovering towards sessions high of 0.6551. The kiwi's movements will be dominated by further oil price action and the markets sentiment on the stocks. Currently the pair trades at 0.6543 levels, having touched session's low of 0.6514. Immediate resistance is seen at 0.6559 (Previous Session High), while support is located at 0.6488 (10-DMA). The kiwi trades at 77.23 yen against its Japanese counterpart, drifting towards session's of 77.36.
USD/CNY: China's yuan remained steady against the dollar as the traders slightly reduced their bearish positions against the yuan, while the central bank kept daily guidance rates in a tight range. The PBoC set the midpoint rate at 6.5572 per dollar prior to market open, only 0.02 percent firmer than the previous fix at 6.5585. The spot market opened at 6.5797 per dollar and was trading at 6.5800 at midday, almost unchanged from the previous close. The central bank has helped the currency plateau by setting a succession of midpoints within a tight range, after guiding the yuan lower and pushing onshore spot rates to a 5-year low earlier this month.
Equities Recap
Asian stocks rose on Friday after a clue of more monetary easing by the European Central Bank and a bounce in crude oil from 12-year lows calmed market sentiments.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 2 percent, while Taiwan stocks gained 1.2 pct at 7,756.18 points.
Australia's S&P/ASX 200 Index climbed up 1.02 pct at 4,913.40 points, while Nikkei advanced 5.88 pct at 16,958.53, with Seoul Shares closed up 2.04 pct.
Commodities Recap
Gold dropped on Friday as the euro declined after the European Central Bank hinted a further policy easing amid turmoil in global markets and weaker growth across emerging economies. Spot gold was off 0.2 percent at $1,098.96 an ounce by 0206 GMT, while U.S. gold for February delivery edged up 0.1 percent to $1,099.50 an ounce. Spot platinum was steady at $816.74 an ounce after further selling dragged the metal to a 7-year low of $806.31 on Thursday. Palladium gained 0.4 percent to $499.10 an ounce while silver was flat at $14.06.
Oil prices advanced for a second session on Friday, drifting further away from 12-year lows plumbed earlier this week, as cold U.S. and European weather as well as firmer financial markets gave some traders reason to cash in on record short positions. U.S. West Texas Intermediate crude futures were up 17 cents at $29.70 per barrel at 0206 GMT, around $3.50 away from a 12-year low of $26.19 hit earlier this week. International benchmark Brent climbed 24 cents at $29.49 per barrel, off a 12-year low of $27.10 and set for a 2 percent gain for the week.
Treasuries Recap
U.S. 10-Year Treasuries yield stood at 2.0224 up by 0.003.
Australian government bond futures eased, with the 3-year bond contract off 4 ticks at 98.060. The 10-year contract dropped 3 ticks to 97.2800, while the 20-year contract lost 3.5 ticks to 96.7800.
New Zealand government bonds were slightly firmer with yields down between half and 1.5 ticks.
Canadian government bond prices were lower across the maturity curve, with the benchmark 10-year dropping 95 Canadian cents to yield 1.264 percent and the 2-year price down 13.5 Canadian cents to yield 0.455 percent. The Canada-U.S. 2-year bond spread was 4.8 basis points less negative at -38.5 basis points, while the 10-year spread was 5.1 basis points less negative at -77.2 basis points as Canadian government bonds underperformed.
