Market Roundup
- Australia Q4 CPI +0.4% q/q, +1.7% y/y, trimmed mean +0.6%, +2.1%, weighted median +0.5%, +1.9%, +0.3/1.6%, +0.5/2.1% and +0.5/2.1% forecast, data stronger than forecast but CPI near RBA band bottom.
- Australia Dec Westpac/MI leading index 97.14, dev from trend -1.03%, Nov 97.46, -0.40%.
- China Dec industrial profits -4.7% y/y, Jan-Dec -2.3%, demand weak, output slowing, highs costs and tight liquidity help.
- So.Korea to explore currency changes to qualify for MSCI advanced market index - Reuters.
Economic Data Ahead
- (0200 ET/0700 GMT) Germany Feb GfK consumer sentiment index, 9.3 forecast; last 9.4.
- (0200 ET/0700 GMT) Great Britain Dec Nationwide house price index, +0.6% m/m forecast; last +0.8%.
- (0200 ET/0700 GMT) Switzerland Dec UBS consumption indicator; last 1.66.
- (0245 ET/0745 GMT) France Jan consumer confidence index, 96 forecast; last 96.
- (0300 ET/0800 GMT) Sweden Jan consumer confidence index, 97.9 forecast; last 98.7.
- (0300 ET/0800 GMT) Sweden Jan manufacturing confidence index; last 114.3.
- (0400 ET/0900 GMT) Italy Jan consumer confidence index, 117.0 forecast; last 117.6.
- (0400 ET/0900 GMT) Italy Jan business confidence index, 103.9 forecast; last 104.1.
- (0430 ET/0930 GMT) Great Britain Dec BBA mortgage approvals, 45.5k forecast; last 44.96k.
- (1000 ET/1500 GMT) United States Dec new home sales, 500k units AR, +2% m/m forecast; last 490k, +4.3%.
Key Events Ahead
- N/A Italy 6-mo BOT, Sweden SEK12.5/5 bln 82/138-day treasury bill auctions.
- (0425 ET/0925 GMT) European Financial Forum in Dublin, various speakers.
- (0430 ET/0930 GMT) ECB 91-day refi, E16 bln allotment forecast, last bln.
- (0500 ET/1000 GMT) Buba Beermann speech in Leipzig.
- (0530 ET/1030 GMT) Germany E1 bln 2.5% 2046 Bund auction.
- (0600 ET/1100 GMT) ECB Mersch speech in Munich.
- (0800 ET/1300 GMT) ECB Lautenschlaeger speaks at ECB-EBI Frankfurt workshop.
- (0815 ET/1315 GMT) BoE Woods lecture in London.
- (1130 ET/1630 GMT) BoE DepGov Shafik speech in London.
- (1400 ET/1900 GMT) FOMC policy announcement, no changes forecast.
- (1500 ET/2000 GMT) RBNZ policy announcement, no change in 2.5% OCR generally forecast.
FX Beat
USD: The dollar struggled to hold ground on Wednesday as the market await for clues on interest rate policy from the Federal Reserve. Against a basket of currencies, the dollar index was 0.02 percent up at 99.061.
EUR/USD: The euro trades flat at 1.0860 levels, hovering away from previous session's low of 1.0818 amid dropping oil prices and sell-off in Chinese stocks. Today's main focus will be the outcome of the Fed's Jan 26-27 policy review, as the central bank is almost certain to keep interest rates unchanged, however, investors are keen to see its latest economic outlook amid global financial markets turmoil. Fed statements might be interpreted as hawkish by the markets as Fed fund futures imply just one rate hike this year. The pair moves within a thin range of 1.0850 - 1.0870 as traders are seen cautious ahead Fed's announcements. Immediate support is seen at 1.0834 (Jan 14 Low), while resistance is located at 1.0876 (Jan 22 High).
USD/JPY: The greenback lost some ground against its Japanese counterpart yen as the mixed sentiment across the financial markets continue to favour the Japanese safe-haven yen. Traders are seen bearish in the session ahead of FOMC announcements as they widely expect the central bank to keep its interest rates unchanged, thus strengthening safe-haven bids for the yen. Market await for U.S. New Homes Sales figures ahead of FOMC statements for fresh cues for the pair. Currently the pair trades flat at 118.35 level, having touched sessions low of 118.04. Immediate support is seen at 117.86 (17- DMA), while on the upside, the pair faces resistance at 118.62 (Previous Session High).
USD/CAD: The Canadian dollar trades at 1.4103 levels, after rallying over 1 percent to as high as C$1.4044 per USD on Tuesday. The rally was supported by a recovery in oil prices on hopes that a deal could be reached to address a global crude supply glut. The loonie hit its weakest level since 2003 in the previous week, however, it gained since Wednesday's decision by the Bank of Canada to hold off on cutting rates and as oil prices push back above $30 a barrel. The pair trades flat at 1.4124 levels as investors expect OPEC and non-OPEC producers to reduce output amid one of the biggest supply gluts in decades. Canadian November gross domestic product is scheduled to release on Friday and is expected to reveal a rebound in growth after contraction in October. Immediate resistance is loctated at 1.4178 (5-DMA), while support is seen at 1.4044 (Previous Session Low).
AUD/USD: The Australian dollar rose 0.49 percent to 0.7038 as Australian domestic inflation data came in slightly higher than expected. Australia's CPI increased 0.4 percent over the October-December period, easing from the 0.5 percent in the September quarter, however, higher than forecasts of 0.3 percent. Markets eagerly await for the Fed decision to provide fresh cues for the US dollar moves, while the sentiment continues to be driven by declining oil prices and stocks. Further downward pressure on the Aussie as U.S. crude made a sudden reversal and shed 2.6 percent, underlining the uncertainty of the commodity's outlook. Currently the pair trades at 0.7032, hovering towards session high of 0.7041. Immediate resistance is located at 0.7046 (Jan 22 High), while support is seen at 0.6978 (17- DMA).
NZD/USD: The New Zealand dollar trades at 0.6481 levels, hovering towards sessions low of 0.6472. Investors will closely watch over the FOMC announcements to see how it influences the Reserve Bank of New Zealand's outlook. Markets will await for fresh cues for the pair from the Reserve Bank of New Zealand meet which is scheduled on Thursday. The pair faces resistance at 0.6532 (Jan 25 High), while on the downside support is located at 0.6465.
USD/CNY: China's yuan edged up against the dollar on Wednesday after the central bank set a firmer midpoint rate at 6.5533 per dollar prior to market open, 0.02 percent firmer than the previous fix 6.5548. Ahead of Lunar New Year celebrations beginning in early February, the PBoC has been making plenty of liquidity available to the banking system to avoid any cash squeeze. The spot market opened at 6.5780 per dollar and was trading at 6.5797 at midday, 0.03 percent stronger than the previous close. The offshore yuan was trading 0.50 percent weaker than the onshore spot at 6.6129 per dollar.
Equities Recap
Asian stocks struggled to hold early gains on Wednesday as a relapse in oil prices made sentiment even more fragile ahead of a Federal Reserve policy statement due later.
MSCI's broadest index of Asia-Pacific shares outside Japan was holding near a 4-year low hit last week, with Chinese stocks showing fresh signs of weakness after a 6.4 percent tumble in the previous session, while Taiwan stocks edged up 0.3 pct at 7,849.83 points.
Australia's S&P/ASX 200 Index dropped 1.18 pct at 4,947.60 points, while Nikkei closed up 2.72 pct at 17,163.92, with Seoul shares edging up 1.31 pct.
Commodities Recap
Gold stayed near a 12-week peak on Wednesday, supported by a softer dollar as investors awaited the outcome of the Federal Reserve's first policy meeting of the year. Spot gold was flat at $1,120.51 an ounce by 0310 GMT, while U.S. gold for February delivery was little changed at $1,121.20 per ounce. Spot silver was at $14.50 an ounce, while palladium at $492.56, with platinum at $872.64.
Crude oil futures dropped around 2 percent on Wednesday, heading back towards $30 a barrel as profit-taking wiped out a chunk of the gains notched up in the previous session on hopes for output cuts. Brent crude declined 51 cents to $31.29 a barrel by 0308 GMT, after hitting a session-low of $31.20 a barrel, while U.S. crude dropped 72 cents to $30.73 a barrel, recovering slightly from a session-low of $30.30 a barrel.
Treasuries Recap
U.S. 10-Year Treasuries yield stood at 1.9924 percent down by 0.004
Canadian government bond prices were lower across the maturity curve as the rise in crude oil prices supported the domestic economic outlook. The benchmark 10-year dropped 23 Canadian cents to yield 1.269 percent, while the 2-year price was down 5.5 Canadian cents to yield 0.435 percent. The Canada-U.S. 10-year bond spread was 4.8 basis points less negative at -72.9 basis points as Canadian government bonds underperformed.
