Market Roundup
- US President Trump – Chinese “grand champions” of currency manipulation – Reuters.
- US retreats from Trump pledge on China currency manipulation, Mnuchin yet to make ‘judgments’ on renminbi’s strength – Financial Times.
- US TsySec Mnuchin schedules FSOC meeting March 2, to discuss systematically important firms – Reuters.
- Foreign CB US debt holdings +$12.322 bln to $3.181 trln Feb 22 week, Treasury holdings +$2.683 bln to $2.850 trln, agencies +$9.087 trln to $268.297 bln.
- NY Fed – Swaps with foreign CBs $143 mln Feb 22 week, ECB $136 mln, rest BoJ.
- Lipper – US-based taxable
bond funds add cash for eighth straight week, stocks bought too, investors charmed by US tax plans.
- Swaps industry gets last-minute relief from new US margin rule – Reuters.
- US Jan business borrowing for equipment +3% y/y to $6.2 bln - ELFA.
- RBA Gov Lowe – Global picture much more positive, Australia growth likely @3% this year and next, closely watching household debt-labor market, would like AUD to be lower but commodity-price dependent, more effective ways of stimulating demand than cutting rates right now – Reuters.
- Reuters BreakingViews - China swaps bad debt for faint hope.
- China to spend more than $145 bln on rural road building 2016-20 – Reuters.
- South Korea FinMin Yoo – Recent FX volatility not a big issue – Reuters.
Economic Data Ahead
- (0245 ET/0745 GMT) France Feb consumer confidence index, 100.0 forecast; last 100.0.
- (0300 ET/0800 GMT) Sweden Feb consumer confidence index, 104.1 forecast; last 104.6.
- (0300 ET/0800 GMT) Sweden Feb manufacturing confidence index; last 119.1.
- (0400 ET/0900 GMT) Italy Dec industrial orders; last +1.5% m/m, +0.1% y/y.
- (0400 ET/0900 GMT) Italy Dec industrial sales; last +2.4% m/m, +3.9% y/y.
- (0430 ET/0930 GMT) Great Britain Jan BBA mortgage approvals; last 43.23k.
- (0500 ET/1000 GMT) Italy Feb consumer confidence index, 109.0 forecast; last 108.8.
- (0500 ET/1000 GMT) Italy Feb mfg business confidence index, 104.6 forecast; last 104.8.
- (1000 ET/1500 GMT) United States Feb U.Mich sentiment index – final, 96.0 forecast; prelim 95.7.
- (1000 ET/1500 GMT) United States Jan new home sales, 570k AR forecast; last 540k.
Key Events Ahead
- India markets closed for holiday.
- N/A Slovakia hires Deutsche, HSBC, SocGen, RIG for long, EUR benchmark bond.
- (0500 ET/1000 GMT) Greek CB Gov Stournaras speaks on economic outlook in Athens.
- (0500 ET/1000 GMT) Sweden 0.125% each 2019 and 2027 index-linked government bond auctions.
- (0500 ET/1000 GMT) Italy E6 bln 6-month BOT auction.
- (0600 ET/1100 GMT) UK DMO GBP0.5/0.5/1.0 bln 1/3/6-month treasury bill auctions.
FX Beat
DXY: The dollar recovered across the board from the Federal Reserve meeting minutes led-disappointed. The greenback against a basket of currencies traded 0.05 percent up at 101.03, having hit a low of 100.87 the day before, it’s weakest since Feb. 20. FxWirePro's Hourly Dollar Strength Index stood at -101.70 (Highly Bearish) by 0500 GMT.
EUR/USD: The euro edged up, extending gains for the third consecutive session on the back of easing bets of a March Fed rate hike and growing uncertainty over the Trump administration’s progress towards the U.S. tax reforms. However, the upside remained limited as the treasury yields recovered some ground, boosting the U.S. dollar higher across the board. The European currency traded up at 1.0585, having hit a low of 1.0493 on Wednesday, it’s lowest since Jan. 11. FxWirePro's Hourly Euro Strength Index stood at -28.10 (Neutral) by 0400 GMT. In absence of economic data from the Eurozone calendar, investors will closely watch the U.S. new home sales and revised consumer sentiment data for further momentum on the pair. Immediate resistance is located at 1.0596 (10-DMA), a break above targets 1.0621 (38.2 % retracement of 1.0828 and 1.0493). On the downside, support is seen at 1.0500, a break below could drag it near 1.0480.
USD/JPY: The dollar steadied after declining to a 2-week low in the previous session, as a recovery in the U.S. Treasury yields strengthened the greenback. However, the major was on track for weekly losses as dovish Federal Reserve meeting minutes disappointed dollar bulls. The pair trades 0.1 percent higher at 112.74, having hit low of 112.54 in the previous session, its lowest since Feb. 9. FxWirePro's Hourly Yen Strength Index stood at 91.88 (Slightly Bullish) by 0400 GMT. Investors’ will continue to track overall market sentiment, ahead of the U.S. new home sales and revised consumer sentiment data due later in the day. Immediate resistance is located at 113.00, a break above targets 113.40 (10-DMA). On the downside, support is seen at 112.50, a break below could take it near 112.30.
GBP/USD: Sterling edged down after rising to a 2-week high in the previous session, as the greenback attempted a minor recovery, correcting the previous heavy losses. However, concerns over politics in the United States and Europe gave the British pound a breather from Brexit worries. Sterling trades lower at 1.2551, having hit a high of 1.2560 on Thursday, its strongest since Feb. 9. FxWirePro's Hourly Sterling Strength Index stood at 96.59 (Slightly Bullish) by 0400 GMT. Investors focus will remain on the British Bankers' Association's Mortgage Approvals, ahead of the U.S economic data. Immediate resistance is located at 1.2580, a break above could take it near 1.2628 (78.6 % retracement of 1.2706 and 1.2346). On the downside, support is seen at 1.2411, a break below targets 1.2346 (Feb 2 Low). Against the euro, the pound trades 0.05 percent lower at 84.31 pence, having hit a 2-month high of 84.02 on Wednesday.
AUD/USD: The Australian dollar rose, hovering near a three-month peak after Reserve Bank of Australia Governor Lowe stated that the Aussie dollar may not be overvalued, however, the central bank would prefer it lower. The major trades 0.02 percent up at 0.7715, hovering towards a high of 0.7740 hit in the previous session, its highest since Nov. 10 and was poised to gain a 0.4 percent for the week. FxWirePro's Hourly Aussie Strength Index stood at 63.94 (Bullish) by 0500 GMT. Markets will continue to digest RBA Governor's speech, ahead of series of U.S. economic data. Immediate support is seen at 0.7688 (5-DMA), a break below could drag it near 0.7650. On the upside, resistance is located at 0.7750, a break above targets 0.7778 (Nov. 8 High).
NZD/USD: The New Zealand dollar eased after rising to a 2-week peak in the previous session, as the greenback retreated from recent lows following a rise in the U.S. Treasury yields. The Kiwi trades 0.13 percent lower at 0.7220, having hit a high of 0.7246 on Thursday, it’s highest since Feb. 9 and was on track for a weekly gain of 0.65 percent after two weeks of losses. FxWirePro's Hourly Kiwi Strength Index was at 124.10 (Highly Bullish) by 0500 GMT. Investors’ will continue to track board based market sentiment, ahead of the U.S. macroeconomic fundamental drivers. Immediate resistance is located at 0.7252 (50.0 % retracement of 0.7375 and 0.7129), a break above could take it near 0.7281 (61.8 % retracement). On the downside, support is seen at 0.7205 (Feb 16 Low), a break below could drag it till 0.7180.
Equities Recap
Asian shares eased from a 1-1/2-year high as investors concerns over Trump administration's stance on tax and currency policies weighed on market sentiment.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.5 percent, while
Tokyo's Nikkei fell 0.49 percent to 19,277.50 points, Australia's S&P/ASX 200 index dropped 0.81 percent to 5,738.00 points and South Korea's KOSPI was trading 0.71 percent down at 2,093.18 points.
Shanghai composite index eased 0.31 percent to 3,241.22 points, while CSI300 index was trading 0.37 percent down at 3,460.61 points.
Hong Kong’s Hang Seng was trading 0.37 percent lower at 24,025.08 points. Taiwan shares added 0.08 percent at 9,777.24 points.
Commodities Recap
Crude oil prices gained after rising more than 1 percent in the previous session as inventory growth was well below expectations. International benchmark Brent crude was trading 0.18 percent up at $56.54 per barrel by 0407 GMT, having hit a peak of $57.23 on Wednesday. U.S. West Texas Intermediate crude gained 0.1 percent at $54.40 a barrel, after gaining 1.6 percent in the previous session and was on track for a weekly gain of about 1.8 percent.
Gold prices held firm near 3-1/2-month peak touched in the prior session amid fading expectations of a U.S. rate hike in March and concerns over President Donald Trump's economic policies. Spot gold rose to $1,250.07 per ounce at 0415 GMT after hitting its highest since Nov. 11, 2016, at $1,250.99 on Thursday. U.S. gold futures were also firm at $1,250.80.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.3774 percent lower by 0.011 bps, while 5-year yield was down by 0.012 bps at 1.8651 percent.
The Australian government bond futures rallied, with the 3-year bond contract up 4 ticks at 98.010. The 10-year contract gained 5.5 ticks to 97.2400 while the 20-year contract added 5.5 ticks to 96.3600.
The New Zealand government bonds gained, sending yields 4.5 basis points lower at the long end of the curve.
The Canadian government bonds prices moved higher in sympathy with U.S. Treasuries, with the 2-year price up 3 Canadian cents to yield 0.767 percent and the 10-year rising 40 Canadian cents to yield 1.668 percent.
