Market Roundup
- Japan Abe aide - JPY rebound must be stopped, mustn't underestimate risk of more gains, BoJ should act at its January 28-29 meeting - DowJones.
- Aide to Japan PM Abe - Conditions for more BoJ easing now in place - Nikkei.
- BoJ Gov Kuroda - Sticks mostly to recent script, no plan to adopt negative interest rates - Reuters.
- PM Abe aide Shibayama - Too early for BoJ to act - Bloomberg.
- MoF flow data week-ended Jan 16 - Japanese buy net Y215.3 bln foreign stocks, sell Y375.2 bln bonds, buy Y202.2 bln bills; foreign investors sell net Y358.3 bln Japanese stocks, Y631.7 bln bonds, trln bills.
- 48% of Japan firms see no escape from deflation this year, 51% call for fresh BoJ stimulus, 49% see no need - Reuters poll.
- Japan index: Inflationary mindset still elusive - Reuters BreakingViews.
- PBOC ChiefEcon Ma Jun - Cash injections could substitute for RRR cut - RTRS
- UK '15 car production +3.9% to 1.59 mln, hits 10-year high - SMMT.
- Australia Nov new home sales -2.7%, detached homes +1.1%, multi-units -15.1%.
- New Zealand Jan ANZ/RM consumer confidence index 121.4, Dec 118.4.
- New Zealand Dec mfg PMI 56.7, Dec 54.9, mfg in expansion since Oct '12.
- New Zealand Dec job ads +1.1% m/m, +2.8% y/y, newspapers +5.1% m/m, internet +0.7%.
Economic Data Ahead
- (0245 ET/0745 GMT) France Jan business climate index, 103.0 forecast; last 103.0.
- (0830 ET/1330 GMT) United States Jan Philly Fed business sentiment index, -5.0 forecast; last -5.9.
- (0830 ET/1330 GMT) United States w/e initial jobless claims, 278k forecast; last 284k.
- (0900 ET/1400 GMT) Belgium Jan consumer confidence index; last -3.0.
- (1000 ET/1500 GMT) Eurozone Jan consumer confidence index - flash, -5.7 forecast; last -5.7.
Key Events Ahead
- N/A Davos World Economic Forum (till January 23).
- N/A IOBE think tank quarterly report on Greek economy.
- (0430 ET/0930 GMT) Spain E3.5-4.5 bln 0.25% and 1.95% 2019 and 2030 Bono auctions.
- (0450 ET/0950 GMT) France E7.5-8.5 bln zero/0.25/2.25% 2019/20/22 BTan auctions.
- (0550 ET/1050 GMT) France E1-1.5 bln 0.1% and 0.7% 2025 and 2030 index-linked OAT auctions.
- (0745 ET/1245 GMT) ECB policy announcement, no change in 0.05% refi, -0.3% depo rates forecast.
- (0830 ET/1330 GMT) ECB Pres Draghi press conference.
FX Beat
USD: The dollar came off a 1-year low against the yen on Thursday as crude oil prices bounced back. It also made impressive gains against the emerging market currencies. The dollar index is down 0.09 percent at 98.98 after touching session's high of 99.23.
EUR/USD: The euro trades at 0.05 percent up at 1.0902, retreating from sessions low of 1.0867. After the recent decline in oil prices and concerns over of China slowdown, the markets attention remains on the ECB monetary policy decision and on Draghi's presser, which is scheduled late in the day. The ECB is likely to keep the interest rates on hold in its policy meet, but is expected to focus on increasing growth and inflation risks, raising the prospect of further policy easing later this year. Currently the pair trades at 1.0900 as the traders await for a policy decision from the ECB for near-term cues. Immediate resistance is located at 1.0913 (Dec 17 High), while support is seen at 1.0867 (Session's Low).
USD/JPY: The dollar is seen steady at 116.73 levels, after falling to a near 1-year low of 115.97 in it previous session. The U.S. data which was out on Wednesday failed to impress the markets as U.S. consumer prices unexpectedly dropped in December, suggesting inflation was more sluggish than the Fed's expected. December housing stats and building permits also declined, which led investors to pare expectations of further interest rate hikes this year. Amid market turmoil and panic, with oil recovery dissipating turning Asian shares negative, traders seek safety assets such as the yen. Currently the pair trades at 116.75 levels, hovering towards session low of 116.63. Earlier in the session it rose to 117.47 before falling to its current level. Immediate support is seen at at 116.50 (Jan 15 Low), while resistance is located at 117.68 (Previous Session High).
AUD/USD: The Australian dollar trades flat against its U.S counterpart. Amid ongoing extreme volatility in global markets, uncertainty about China's growth and declining commodity prices, the outlook remains unsteady. The Aussie trades at 0.6902 levels, having touched sessions high of 0.6958 levels. The traders are seem to be bearish as the pair continues to drift towards sessions low of 0.6886. Immediate support is seen at 0.6838 (Jan 19 Low), while on the upside, resistance is located at 0.6958 (Session's High). Against the safe-heaven yen, the Aussie rallied to 81.64 before pulling back to 80.54.
NZD/USD: The New Zealand dollars reclaimed some ground on Thursday after a late rebound on Wall Street and oil markets brightened the bearish mood. The kiwi rose to 0.6476, after Wall Street pared losses toward the end of the U.S. session. It touched a 4-month low of 0.6347 on Wednesday. Traders are seen bullish in the early trade after New Zealand posted upbeat manufacturing data. The pair currently trades at 0.6432, after making sessions high of 0.6476. Immediate resistance is located at 0.6479 (10- DMA), while support is seen at 0.6418 (Jan 14 Low) on the the downside.
USD/CNY: The People's Bank of China kept the yuan steady, setting the currency's midpoint fix at 6.5585 per dollar prior to market open, almost unchanged from the previous fix. The central bank has acted aggressively to discourage speculators from shorting the yuan, which has dropped about 5 percent since August. The central bank injected a net 315 billion yuan ($48 billion) into the banking system for the week, ahead of the Lunar New Year holiday. It stated on Wednesday that it would improve policy coordination to promote economic growth and curb financial risks, however, it did not provide any details on steps or timing.
Equities Recap
Asian shares retreated as battered crude oil prices bounced back from their lows on Thursday. Gains built on Wall Street's consolidation overnight in which major indexes
finished with declines of more than 1 percent, but well off the 3 percent plus they plumbed in the previous session..
MSCI's broadest index of Asia-Pacific shares outside Japan extended early gains and was up 1.4 percent while Taiwan stocks edged down 0.5 pct at 7,664.01 points.
Australia's S&P/ASX 200 Index edged up 0.45 pct at 4,863.20 points, while Nikkei closed down 2.43 pct at 16,017.26, with Seoul Shares edged down 0.17 pct.
Commodities Recap
Gold was steady near a 1-1/2-week high on Thursday in Asia, amid investor caution that a recovery in equities and oil prices could be fleeting. Spot gold was little changed at $1,099.26 an ounce by 0256 GMT. It touched $1,109.20 on Wednesday, its highest since Jan. 8. U.S. gold for February delivery dropped 0.6 percent to $1,099.60 an ounce. Spot platinum was flat at $822 an ounce after falling to a fresh 2008 low of $809.85 on Wednesday. Palladium gained 0.3 percent to $494 per ounce, while silver edged down 0.2 percent to $14.14.
Oil prices were stable on Thursday after hitting fresh 2003 lows in its previous session. The front-month West Texas Intermediate crude futures was trading at $28.66 per barrel at 0155 GMT, up 31 cents from its previous close, while International benchmark Brent was up 37 cents at $28.25. U.S. oil futures dropped below $27 dollars a barrel on Wednesday for the first time since 2003, amid broad slump across world financial markets as traders worried that a huge oversupply in crude was coinciding with an economic slowdown.
Treasuries Recap
U.S. 10-Year Treasuries yield stood at 2.0067 up by 0.025
Australian government bond futures eased, with the 3-year bond contract off 2 ticks at 98.110. The 10-year contract dropped 2 to 97.3250, but the 20-year contract gained half a tick to 96.8400.
New Zealand government bonds eased slightly, pushing yields up 1.5 basis points across the curve.
The Canadian 10-year benchmark rose 8 Canadian cents to yield 1.169 percent, after hitting a fresh record low at 1.094 percent, while the 2-year price was down 21 Canadian cents to yield 0.392 percent as the rate decision weighed on the front-end. The Canada-U.S. 2-year bond spread was 13.8 basis points less negative at -43.7 basis points, while the 10-year spread was 3.2 basis points less negative at -82.6 basis points as Canadian government bonds underperformed.
