Market Roundup
- Japan Dec industrial output -1.4% m/m, -0.3% eyed, fall biggest since May '15, Jan forecast at +7.6% (prev +6.0%), Feb -4.1%.
- Japan Dec nationwide core CPI +0.1% y/y, Tokyo Jan core -0.1%, +0.1% forecast for both, Dec core-core +0.8%, Jan Tokyo overall -0.3%, still up ex-energy -govt.
- Japan Dec household spending +1.0% m/m, +4.4% y/y, fall largest since March '15, +2.0% and -2.4% eyed.
- Japan Dec unemployment 3.3%, jobs applicants raio 1.27, highest since Dec '91 3.3% and 1.26 eyed.
- Japan Dec housing starts -1.3% y/y, +0.5% eyed, construction orders +14.8%.
- Japan Dec auto output -2.3% y/y, auto exports +8.1% - JAMA/Nikkei.
- Australia Dec priv-sector credit +0.5% m/m, housing +0.5%, Nov +0.4%, +0.6%.
- Australia Q4 PPI +0.3% q/q, +1.9% y/y.
- New Zealand Dec new dwelling consents +2.3% m/m, +15.4% y/y, Nov +2.4% m/m.
- BoJ shocks, ease more, adopts negative interest rates, IOER -0.1%, vote 5-4, will cut rate more if needed, to introduce 3-tier rate system, QQE left as is Y80 trln monetary base target too, economic forecasts tweaked, FY '16/17 GDP +1.5% (prev +1.4), core CPI +0.8% (+1.4%), CPI target to be met around H1 FY '17, crude to rebound to $40/brl+.
- FinMin Aso - Data today doesn't mean economy deteriorating - Reuters.
- New EconMin Ishihara - Fundamentals unch, external factors affecting data.
- Reuters poll - Japan fund managers up stock holdings in January to 42.3%.
- Foreign CB US debt holdings +$1.087 bln to $3.267 trln Jan 27 week, Treasury holdings +$4.057 bln to $2.955 trln, agencies -$3.053 bln to $263.951 bln.
- NY Fed - Swaps with foreign CBs $102 mln Jan 27 week, all with ECB.
- Lipper - Investors pull $1.2 bln from stock funds in latest week.
- UK Jan GfK consumer confidence index +4, highest since Aug '15 +7, Dec +2.
- Reuters poll - RBA likely to stand pat on rates in February.
- China PBOC to temporarily up frequency of open market operations - WSJ.
- (0245 ET/0745 GMT) France Jan HICP - flash, +0.4% y/y forecast; last +0.4%.
- (0245 ET/0745 GMT) France Dec consumer spending, +0.5% m/m forecast; last -1.1%.
- (0245 ET/0745 GMT) France Dec producer prices; last +0.1% m/m.
- (0300 ET/0800 GMT) Switzerland Jan KoF indicator, 96.0 forecast; last 96.6.
- (0300 ET/0800 GMT) Spain Q4 GDP estimate, +0.8% q/q, +3.5% y/y; last +0.8%, +3.4%.
- (0300 ET/0800 GMT) Spain Jan HICP - flash, -0.1% y/y forecast; last -0.1%.
- (0330 ET/0830 GMT) Sweden Dec household lending; last +7.3% y/y.
- (0400 ET/0900 GMT) Eurozone Dec money supply M3, +5.2% AR forecast; last +5.1%.
- (0400 ET/0900 GMT) Eurozone Dec loans to households, non-financials; last +1.4%, +0.9%.
- (0400 ET/0900 GMT) Italy Dec producer prices; last -0.5% m/m, -3.3% y/y.
- (0400 ET/0900 GMT) Spain Nov current account balance; last E2.4 bln surplus.
- (0400 ET/0900 GMT) Norway Jan unemployment, 3.4% nsa, 101k sa forecast; last 3.0%, 99.94k.
- (0400 ET/0900 GMT) Norway Dec retail sales ex-autos, -0.3% forecast; last +0.6%.
- (0400 ET/0900 GMT) Norway Dec credit indicator, +5.3% y/y forecast; last +5.4%.
- (0500 ET/1000 GMT) Eurozne Jan inflation-flash/ex-f/e +0.4%, +0.9% y/y forecast; last +0.2%, +0.8%.
- (0830 ET/1330 GMT) United States Q4 GDP - advance, +0.8% q/q forecast; last +2.0%.
- (0830 ET/1330 GMT) United States Q4 PCE prices, core +0.7%, +1.2% q/q forecast; last +1.3%, +1.4%.
- (0830 ET/1330 GMT) United States Q4 GDP deflator, +0.8% q/q forecast; last +1.3%.
- (0830 ET/1330 GMT) United States Q4 employment cost index, +0.6% q/q forecast; last +0.6%.
- (0900 ET/1400 GMT) Belgium Q4 GDP, +0.4% q/q forecast; last +0.2%.
- (0945 ET/1445 GMT) United States Jan Chicago PMI, 45.0 forecast; last 42.9.
- (1000 ET/1500 GMT) United States Jan U.Mich sentiment index - final, 93.0 forecast; prelim 93.3.
- N/A Riksbank DepGov Af Jochnick speech in Stockholm.
- N/A UK GBP1.5/2.0/1.5 bln 1/3/6-month treasury bill auctions.
- (0330 ET/0830 GMT) Prague conference on EUR adoption, various attendees.
- (0400 ET/0900 GMT) Norway February currency operations, January net NOK500 mln sales/day.
- (1530 ET/2030 GMT) SF Fed Williams in San Francisco panel discussion.
- 30th January BoI Gov Visco speech at Turin bankers' conference.
FX Beat
USD: The dollar rose to a high of 121.39 yen against its Japanese counterpart after Bank of Japan announced to adopt negative interest rates at its policy meeting. Against a basket of currencies, the dollar index was 0.34 percent up at 98.92.
EUR/USD: The euro trades 0.11 percent down at 1.0928 against the dollar, after going as low as 1.0882 earlier in the session. Markets shifted their focus on USD/JPY after BOJ announced that they are adopting a negative interest rate of -0.1 percent, which would charge interest for excess reserves financial institutions park with the central bank. Earlier in the session, the pair rose to 1.0948 levels before dropping down to its current levels. Immediate resistance is located at 1.0967 (Previous Day High), while support is seen at 1.0877 (Jan 20 Low) on the downside.
USD/JPY: The pair trades 1.22 percent up at 120.26 levels, having touched sessions high of 121.39, the greenback's highest level in more than a month after BoJ announced it was adopting a negative interest rate of -0.1 percent and is likely to cut interest rates further into negative zone if required. The Japanese central bank's action comes as investors concerns grew over market turmoil amid fears of slow global growth, a collapse in oil prices and weakness in China's economy. Japan's December construction orders posted an increased of 14.8% y/y versus its previous print of 5.7%. The pair faces resistance at 121.50 (Dec 21 High), while support is located at 118.27 (10- DMA).
AUD/USD: The Australian dollar is firm at 0.7128, having rallied nearly 0.52 percent in the session. The Aussie extends gains as the traders are seen bullish in its fourth consecutive session. The Reserve Bank of Australia will be holding its monthly policy meeting on Feb. 2 and it is widely expected to keep rates at a record low of 2.0 percent. The pair continues to trade higher, hovering towards session high of 0.7140. Immediate resistance is located at 0.7140 (Session High), break above will extend gain further. On the downside, support is located 0.7038 (5- DMA).
NZD/USD: The New Zealand dollars held solid gains on Friday as its U.S. counterpart took a knock from soft economic news that reduced the expectations of an aggressive tightening by the Federal Reserve. The kiwi extended its post-RBNZ recovery on the back of increasing oil and iron ore prices. On Thursday, U.S. durable goods and pending home sales data failed to impress the markets and raised concerns over growth figures expected from today's U.S GDP report. Currently the pair trades at 0.6533 levels, hovering towards sessions high of 0.6543, Immediate resistance located at 0.6559 (Jan 21 High), while support is seen at 0.6461 (Sessions Low) on the downside.
USD/CNY: The central bank held the yuan firm at 6.5516 per dollar on Friday, further calming market concerns about an imminent devaluation in the yuan. The PBoC did its part to keep the banking system flush with cash, pumping out a huge 690 billion yuan this week to avoid a liquidity crunch ahead of the Lunar New Year celebrations beginning in early February. The central bank announced it would conduct more liquidity operations than usual between Jan. 29 and Feb. 19 to keep the system awash with cash through the holiday.
Equities Recap
Asian shares advanced on Friday after the Bank of Japan stunned markets by adopting negative interest rates in its boldest step yet to reinflate the long-languishing economy.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 1.3 percent, The Shanghai benchmark climbed 2.0 percent, attempting to bounce from steep losses early in the week, while Taiwan stocks closed up 2.2 pct at 8,080.60 points.
Australia's S&P/ASX 200 Index climbed 0.22 pct at 4,987.20 points, Nikkei gained 2.80 pct at 17,518.30 points, while Seoul edged up 0.05 pct.
Commodities Recap
Gold steadied on Friday after recent gains strengthened the metal to its highest since November, keeping it on track to end January with its strongest monthly climb in a year. Spot gold was little changed at $1,115.20 an ounce by 0316 GMT, while U.S. gold for February delivery was flat at $1,115.90 an ounce. Spot silver was up 0.2 percent at $14.26 an ounce, while Spot platinum edged up 0.4 percent to $863.49 an ounce, with palladium gained 0.5 percent to $491.91.
Global benchmark Brent crude futures gained on Friday, drifting 6.5 percent higher so far this week, advancing higher on the hopes of a deal among oil-producing countries to tackle a growing supply glut. Brent had risen 38 cents to $34.27 a barrel by 0337 GMT, after ending up 79 cents, or 2.4 percent, at $33.89 on Thursday, while U.S. crude advanced 35 cents to $33.57 a barrel, having settled up 92 cents, or 2.9 percent, at $33.22 on Thursday. U.S. crude is also set for a 4.6 percent weekly gain.
Treasuries Recap
U.S. 10-Year Treasuries yield stood at 1.961 percent down by 0.024.
Australian government bond futures gained, with the 3-year bond contract up 2 ticks at 98.100. The 10-year contract was also 2 ticks higher at 97.3300, while the 20-year contract added 1 tick to 96.8150.
New Zealand government bonds eased at the short end and gained at the long end as the yield curve flattened.
Canadian government bond prices were mixed across the maturity curve, with the benchmark 10-year rising 7 Canadian cents to yield 1.239 percent, while the 2-year priced down 1.5 Canadian cents to yield 0.431 percent. The Canada-U.S. 2-year bond spread was 2.1 basis points less negative at -39.4 basis points, while the 10-year spread was 1 basis point less negative at -74.6 basis points as U.S. Treasuries outperformed.
