Market Roundup
- CFTC IMM CTA data – Specs cuts USD longs to four-month low, net short JPY positions at two-month low, 51.2k contracts, EUR, GBP and MXN shorts up, AUD and NZD longs up
- Fitch – Japan lifers cautiously increase exposure to foreign bonds.
- Japan Jan trade deficit Y1.086 trln, Y636.8 bln forecast, exports +1.3% y/y, imports +8.5%, +4.7% forecast for both, exports to US -6.6%, China +3.1%, Asia +6.0%, Trump uncertainty, Japan carmakers may have refrained shipments.
- Japan Jan crude oil import volume -3.5% y/y, LNG +14.6%, thermal coal +10.1%.
- Reuters poll – One-third of Japanese firms look to lift CAPEX in coming fiscal year, 57% to maintain levels, 9% to lift US CAPEX, 79% to maintain.
- Cleveland Fed Mester (hawk) – US economy on sound footing, skeptical monetary policy can solve low productivity conundrum, will take time to shed mortgage bonds in Fed portfolio, comfortable with rate rise if economy remains strong – Reuters.
- Brussels focuses on UK’s E60bn exit bill before trade talks, divorce-first approach a setback for Britain’s hopes of fast-track deal – Financial Times.
- German FinMin Schaeuble denies Grexit threat, Greece on right path – Reuters.
- Germany’s SPD moves ahead of Merkel’s party in poll – Reuters.
- EU Commission to warn Italy Wednesday over rising debt – Reuters.
- Italy’s Renzi defies foes, opens way for party leadership battle – Reuters.
- ECB Lautenschlaeger welcomes inflation rise but too soon for rate move
- New Zealand Q4 PPI inputs +1.0% q/q, outputs +1.5%, Q3 +1.5%, +1.0%.
Economic Data Ahead
- (0200 ET/0700 GMT) Germany Jan producer prices, +0.3% m/m, +2.0% y/y forecast; last +0.4%, +1.0%.
- (0600 ET/1100 GMT) Great Britain Feb CBI trends – orders balance, 3.0 forecast; last 5.0.
- (1000 ET/1500 GMT) Eurozone Feb consumer confidence – flash, -4.9 forecast; last -4.9.
Key Events Ahead
- US Presidents Day holiday.
- N/A EuroGroup meeting in Brussels, ECB Pres Draghi, Coeure to attend.
- N/A German FinMin Schaeuble, Belgian FinMin Van Overtveldt speak in Brussels.
- N/A UK DMO 0.125% 2065 index-linked Gilt syndication.
- (0430 ET/0930 GMT) EIB VP Hudak press event in Bratislava.
- (0515 ET/1015 GMT) Slovakia E150 mln each 0.625% and 3.625% 2026 and 2029 SLOVGB auctions.
- (0530 ET/1030 GMT) Netherlands E1-2 bln 3 and 6-month DTC auctions.
- (0600 ET/1100 GMT) Riksbank DepGov Skingsley speaks at Stockholm lunch event.
- (0850 ET/1350 GMT) France E3.1-3.5/1.2-1.6/1.0-1.4 bln 3/6/12-month BTF note auctions.
FX Beat
DXY: The dollar traded within narrow ranges versus its major peers as the U.S. markets remained closed for the Presidents Day holiday. The greenback against a basket of currencies traded flat at 100.92, having hit a low of 100.41 on Thursday, it’s weakest since Feb. 9. FxWirePro's Hourly Dollar Strength Index stood at 33.43 (Neutral) by 0500 GMT.
EUR/USD: The euro edged up after suffering significant losses in the previous session as renewed concerns about the upcoming French elections dampened market sentiment. The European currency traded 0.1 percent up at 1.0615, drifting away from a low of 1.0521 hit on Wednesday, it’s lowest since Jan. 11. FxWirePro's Hourly Euro Strength Index stood at -5.76 (Neutral) by 0500 GMT. Investors’ will closely watch German Producer Price Index, amid a lack of relevant economic data from both the continents. Immediate resistance is located at 1.0638 (38.2 % retracement of 1.0828 and 1.0521), a break above targets 1.0690 (21-DMA). On the downside, support is seen at 1.0593 (23.6 % retracement), a break below could drag it near 1.0550.
USD/JPY: The dollar steadied after declining to a 1-week low in the previous session amid renewed buying interest seen around the dollar against most of its major peers. However, the upside remained capped as negative treasury yields weighed on U.S. dollar bulls sentiments. The pair trades 0.12 percent higher at 113.02, having hit a low of 112.61 the previous day, it’s lowest since Feb 9. FxWirePro's Hourly Yen Strength Index stood at 89.99 (Slightly Bullish) by 0500 GMT. Investors’ will continue to track overall market sentiment, as the U.S. markets remained closed for the Presidents Day holiday. Immediate resistance is located at 113.24 (21-DMA), a break above targets 113.49 (5-DMA). On the downside, support is seen at 112.77, a break below could take it near 112.50.
GBP/USD: Sterling rose following a 0.7 percent loss on Friday, after a surprise third monthly fall in British retail sales indicated the weakening of consumer sentiment. Sterling trades 0.162 percent up at 1.2420, pulling further away from a low of 1.2383 hit on Wednesday, its weakest since Feb. 7. FxWirePro's Hourly Sterling Strength Index stood at -48.89(Neutral) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of the UK retail sales figures. Immediate resistance is located at 1.2446 (5-DMA), a break above could take it over 1.2483 (38.2 % retracement of 1.2706 and 1.2346). On the downside, support is seen at 1.2400, a break below targets 1.2346 (Feb 7. Low). Against the euro, the pound trades flat at 85.49 pence, having hit a 10-day low of 85.91 in the previous session.
AUD/USD: The Australian dollar gained, halting its 2-day losing streak as investors cautiously awaited the release of the minutes of the Reserve Bank of Australia's February meeting on Tuesday and Governor Philip Lowe's speech, who is expected to stick to his optimistic tune. The Aussie rose 0.12 percent to 0.7676, drifting closer to a high of 0.7731 hit on Thursday, its highest since Nov. 10. FxWirePro's Hourly Aussie Strength Index stood at -125.25 (Highly Bearish) by 0500 GMT. Markets will continue to track board based market sentiment, in absence of macroeconomic fundamentals from both the economies. Immediate support is seen at 0.7650, a break below could drag it near 0.7625 (21-DMA). On the upside, resistance is located at 0.7688, a break above targets 0.7713.
NZDUSD: The New Zealand dollar eased, extending losses for the fourth consecutive session, as easing expectations of RBNZ rate hike later in 2017 weighed on market sentiment. The Kiwi trades 0.1 percent lower at 0.7175, having hit a high of 0.7242 on Thursday, it’s highest since Feb. 9. FxWirePro's Hourly Kiwi Strength Index was at 33.43 (Neutral) by 0500 GMT. The major is likely to trade in a narrow range due to a public holiday in the United States. Immediate resistance is located at 0.7200, a break above could take it near 0.7254 (50.0 % retracement of 0.7375 and 0.7134). On the downside, support is seen at 0.7150, a break below could drag it till 0.7100.
Equities Recap
Asian shares nudged up, hovering towards a 19-month peak, while the dollar steadied ahead of a busy week for Federal Reserve speakers.
MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.1 percent and back toward a 19-month peak hit last week.
Tokyo's Nikkei advanced 0.1 percent to 19,255.05 points, Australia's S&P/ASX 200 index fell 0.27 percent to 5,790.00 points and South Korea's KOSPI was trading 0.08 percent up at 2,081.09 points.
Shanghai composite index rose 0.75 percent to 3,226.16 points, while CSI300 index was trading 1.06 percent up at 3,457.33 points.
Hong Kong’s Hang Seng was trading 0.34 percent higher at 24,120.19 points. Taiwan shares shed 0.3 percent at 9,753.20 points.
Commodities Recap
Crude oil prices rose after declining over 1-week low in the previous session as investors worried over an increase in U.S. drilling rigs and record stockpiles. International benchmark Brent crude was trading 0.2 percent up at $55.83 per barrel by 0409 GMT, having hit a low of $55.13 hit in the previous session, its weakest since Feb. 8. U.S. West Texas Intermediate crude gained 0.15 percent at $53.42 a barrel, after falling as low as $52.71 on Thursday, its lowest since Feb. 9.
Gold prices steadied after declining from a 1-week high in the previous, as a weaker dollar and lower equities boosted the metal's safe-haven demand, while the U.S. markets remained closed for the Presidents Day holiday. Spot gold was little changed at $1,234.11 per ounce at 0427 GMT, having hit its highest since Feb. 9 at $1,243.69 on Friday. U.S. gold futures were down 0.2 percent, to $1,236.5.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.4200 percent, while 5-year yield was at 1.9048 percent.
The Japanese government bonds gained at the start of the week after the country’s exports registered a worse-than-expected decline during the month of January, following hovering uncertainties over the United States President Donald Trump’s trade policies. The benchmark 10-year bond yield fell 1/2 basis point to 0.08 percent, the long-term 30-year bond yields also slipped 1/2 basis point to 0.92 percent and the yield on the short-term 3-year note traded 1 basis point lower at -0.15 percent.
The Australian government bonds surged at the start of the week on as investors wait to watch the Reserve Bank of Australia’s (RBA) meeting minutes, scheduled to be released early Tuesday. The yield on the benchmark 10-year Treasury note fell 1-1/2 basis points to 2.80 percent, the yield on 15-year note slumped nearly 2 basis points to 3.24 percent and the yield on short-term 2-year also plunged 2 basis points to 1.84 percent.
The New Zealand government bonds jumped at the time of closing, tracking firmness in U.S. Treasuries after the President of the Federal Reserve of Cleveland, Loretta Mester remained hawkish comments over the state of the U.S. economy. The yield on the benchmark 10-year bond jumped 3-1/2 basis points to 3.32 percent at the time of closing, the yield on 7-year note also surged over 3 basis points to 2.89 percent and the yield on short-term 2-year note traded 3-1/2 basis points higher at 2.19 percent.
