Market Roundup
- Fed Gov Powell – March FOMC to be “live”, hike on table – Reuters.
- Top banks bond trading revenue +9% in ’16, first rise since ’12, equities -13%, biggest fall since ’08, commodities -7% – Coalition survey/Reuters.
- BoJ Policy Board Kiuchi (one of two dissenters) – For longer-term 2% CPI target, must normalize at appropriate time, yield curve control could help in eventual QQE slow-down, dichotomy in targets for both interest rates and quantity of money printed, exports largest uncertainty, economic structure not purview of BoJ but of government, companies – Reuters.
- MoF flow data week ended Feb 18 – Japanese buy net Y164.9 bln foreign stocks, Y48.2 bln bonds, sell Y23.0 bln bills; foreign investors sell net Y127.9 bln Japanese stocks, Y141.2 bln JGBs, buy Y856.6 bln bills.
- Japan Inc sees record profit in FY ‘16/17 despite stronger yen – Nikkei.
- Japan Jan corp service price index -0.5% m/m, +0.5% y/y.
- China HousingMin – Property prices to remain stable in Q1, undertaking preparatory work for property tax – Reuters.
- UK January car production +7.5% y/y, at nine-year high, export demand high.
- Australia Q4 new CAPEX -2.1% q/q, -1.0% forecast, first estimate ‘17/18 CAPEX A$81 bln, ‘16/17 latest estimate A$112 bln, Q4 plant/machinery CAPEX +0.4% q/q, building CAPEX -4.1%.
- New Zealand Fonterra confirms ‘16/17 forecast farmgate milk price - Reuters.
Economic Data Ahead
- (0200 ET/0700 GMT) Germany Mar GfK consumer sentiment index, 10.1 forecast; last 10.2.
- (0200 ET/0700 GMT) Norway Q1 oil investment forecasts – ‘17/’18; last NOK169.1 bln, 146.6 bln.
- (0245 ET/0745 GMT) France Feb business climate index, 106.0 forecast; last 106.0.
- (0400 ET/0900 GMT) Italy Dec retail sales; last -0.7% m/m, +0.8% y/y.
- (0600 ET/1100 GMT) Great Britain Feb CBI distributive trades – retail sales, zero forecast; last -8.0.
- (0830 ET/1330 GMT) United States Jan Chicago Fed national activity index; last 0.14.
- (0830 ET/1330 GMT) United States w/e initial jobless claims, 241k forecast; last 239k.
- (0900 ET/1400 GMT) United States Dec FHFA monthly home prices; last +0.5% m/m, +6.1% y/y, index 241.3.
- (1100 ET/1600 GMT) United States Feb KC Fed manufacturing, composite indices; last 20, 9.
Key Events Ahead
- N/A France, Spain, Italy EconMins, EC Dombrovskis speak at Paris conference.
- N/A Sweden 3.5% and 1.5% 2022 and 2023 government bond auctions.
- (0355 ET/0855 GMT) ECB ChiefEcon Praet speaks at London conference/11:00 at MNI roundtable.
- (0400 ET/0900 GMT) ECB/Irish CB Lane speaks in Cork/12:30 at Cork event.
- (0500 ET/1000 GMT) Italy E2.0-2.5 bln 2018 zero coupon CTZ auction.
- (0500 ET/1000 GMT) Italy E0.75-1.25 bln 0.1%/3.1% 2022/26 index-linked BTP auctions.
- (0530 ET/1030 GMT) UK DMO GBP2 bln 1.5% 2026 Gilt auction.
- (0530 ET/1030 GMT) Riksbank DepGov Jansson speaks at Stockholm luncheon.
- (0800 ET/1300 GMT) ECB Praet speaks at London OMFIF meeting.
- (0835 ET/1335 GMT) Atlanta Fed Lockhart speaks at Atlanta Fed conference.
- (1300 ET/1800 GMT) Dallas Fed Kaplan (voter, hawkish) at Fort Worth banking event.
- (1730 ET/2230 GMT) RBA Gov Lowe parliamentary testimony.
FX Beat
DXY: The dollar tumbled versus its major peers as the FOMC minutes failed to deliver anything concrete in terms of timings of a rate hike, raising doubts that the Fed are not in a position to hike as soon as March. The greenback against a basket of currencies traded 0.1 percent down at 101.26, having hit a high of 101.72 the day before, it’s strongest since Feb. 15. FxWirePro's Hourly Dollar Strength Index stood at 36.21 (Neutral) by 0500 GMT.
EUR/USD: The euro edged up, having retreated from a 6-week low in the previous session as the dollar eased following the release of minutes from the last U.S. Federal Reserve meeting, which suggested a cautious approach to interest rate hikes. The European currency traded 0.1 percent up at 1.0566, having hit a low of 1.0493 on Wednesday, it’s lowest since Jan. 11. FxWirePro's Hourly Euro Strength Index stood at -29.22 (Neutral) by 0400 GMT. Investors’ will closely watch German gross domestic product figures, ahead of the U.S. unemployment claims and house price index for further clues on the pair. Immediate resistance is located at 1.0597 (5-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 declined as the impact from the Federal Reserve's policy meeting minutes faded, while policymakers were not as hawkish as some had expected. Moreover, the French elections triggered a stir among investors, creating some risk-off sentiment. The pair trades 0.05 percent lower at 113.24, having hit low of 112.90 in the previous session. FxWirePro's Hourly Yen Strength Index stood at -18.00 (Neutral) by 0400 GMT. Investors’ will continue to track board based market sentiment, ahead of the U.S. unemployment benefit claims, Chicago Fed National Activity Index, house price index and Fed official Lockhart's speech due later in the day. Immediate resistance is located at 113.46 (10-DMA), a break above targets 113.96 (Jan 31 High). On the downside, support is seen at 113.00, a break below could take it near 112.77.
GBP/USD: Sterling nudged down, extending losses for the third consecutive session after data released on Wednesday indicated tougher economic times lie ahead, despite overall growth touching its fastest pace for a year. Sterling trades lower at 1.2443, having hit a high of 1.2507 on Wednesday, its strongest since Feb. 17. FxWirePro's Hourly Sterling Strength Index stood at 28.04 (Neutral) by 0400 GMT. Investors focus will remain on the UK CBI Distributive Trades Survey, ahead of the U.S economic data. Immediate resistance is located at 1.2468 (10-DMA), a break above could take it near 1.2485 (38.2 % 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 0.2 percent lower at 84.87 pence, having hit a 2-month high of 84.02 the day before.
AUD/USD: The Australian dollar declined after a surprisingly sharp drop in the economy's business spending last quarter. Data released earlier showed Australian business investment fell 2.1 percent in the fourth quarter, compared to estimates of a 1 percent drop. The Aussie trades 0.2 percent down at 0.7686, drifting away from a high of 0.7714 hit in the previous session, its highest since Feb.16. FxWirePro's Hourly Aussie Strength Index stood at -25.40 (Neutral) by 0400 GMT. Markets will continue to digest downbeat Australian private capital expenditure figures, ahead of series of U.S. economic data. Immediate support is seen at 0.7650, a break below could drag it near 0.7636 (21-DMA). On the upside, resistance is located at 0.7732 (Feb. 16 High), a break above targets 0.7778 (Nov. 8 High).
NZD/USD: The New Zealand dollar rose above the 0.7200 handle as the U.S. dollar declined after the minutes of the last Federal Reserve meeting seemed to diminish the chance of a U.S. rate hike as early as March. The Kiwi trades 0.2 percent higher at 0.7207, having hit a low of 0.7129 on Tuesday, it’s lowest since Jan. 20. FxWirePro's Hourly Kiwi Strength Index was at 91.03 (Slightly Bullish) by 0500 GMT. Markets will continue to track board based investor sentiment, ahead of the U.S. macroeconomic fundamental drivers. Immediate resistance is located at 0.7223 (38.2 % retracement of 0.7375 and 0.7129), a break above could take it near 0.7252 (50.0 % retracement). On the downside, support is seen at 0.7170 (Session Low), a break below could drag it till 0.7129.
Equities Recap
Asian shares declined from a 19-month high, while the dollar tumbled across the board after Federal Reserve minutes indicated a cautious approach to hike the U.S. interest rates.
MSCI's broadest index of Asia-Pacific shares outside Japan edged down almost 0.1 percent, having touched its highest level since July 2015 on Wednesday.
Tokyo's Nikkei fell 0.28 percent to 19,325.48 points, Australia's S&P/ASX 200 index dropped 0.35 percent to 5,784.60 points and South Korea's KOSPI was trading 0.03 percent up at 2,107.30 points.
Shanghai composite index rose 0.34 percent to 3,250.69 points, while CSI300 index was trading 0.45 percent down at 3,474.30 points.
Hong Kong’s Hang Seng was trading 0.34 percent lower at 24,120.28 points. Taiwan shares shed 0.2 percent at 9,759.21 points.
Commodities Recap
Crude oil prices rose after declining to a 1-week low in the previous session as data released by an industry group showed an unexpected drop in U.S. crude stocks. International benchmark Brent crude was trading 0.4 percent up at $56.31 per barrel by 0356 GMT, having hit a peak of $57.27 on Tuesday, its strongest since Feb. 2. U.S. West Texas Intermediate crude gained 0.37 percent at $54.05 a barrel, after rising as high as $55.08 earlier in the week, its highest since Jan. 3.
Gold prices edged down as the U.S. dollar steadied following overnight losses after the release of the U.S. Federal Reserve last meeting minutes, which indicated a cautious approach to interest rate hikes. Spot gold nudged down to $1,236.83 per ounce at 0402 GMT, having hit its lowest since Feb. 15 at $1,225.93 on Tuesday. U.S. gold futures rose 0.4 percent to $1,237.6.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.4076 percent lower by 0.01 bps, while 5-year yield was down by 0.016 bps at 1.9030 percent.
Australian government bond futures rose, with the 3-year bond contract up 3 ticks at 97.960. The 10-year contract added 4 ticks to 97.1750, while the 20-year contract edged up 3.5 ticks to 96.5500.
New Zealand government bonds gained, sending yields 2.5 basis points lower.
Canadian government bond prices were slightly higher across much of the yield curve in sympathy with U.S. Treasuries after the Fed struck a cautious tone on raising rates. The 2-year edged up 1.5 Canadian cents to yield 0.781 percent and the 10-year rose 5 Canadian cents to yield 1.717 percent.
