Market Roundup
- EUR/USD bid but holds familiar range. Trading in between 1.0883 to 1.0920 levels today.
- GBP/USD gives back Monday's gain. Trading from 1.4436 to 1.4389 but regains 1.44 ahead of NY.
- USD/JPY drops to 120.35 overnight but lifts to 120.80 in Europe.
- Brent down almost 4% on day to $32.79/barrel. $36.25 was Monday's peak.
- Fitch - Russia maintains oil price response, at a cost to growth.
- Russian Foreign Minister - Open to further cooperation to hold meeting on oil if everyone wants.
- Euro zone December Producer Prices -0.8% m/m, -3.0% y/y vs previous -0.2%/-3.2%. -0.6%/-2.8% expected.
- Euro zone January Unemployment Rate 10.4% vs previous 10.5%. 10.5% expected.
- UK January Markit/CIPS Construction PMI 55.0 vs previous 57.8. 57.5 expected.
- Switzerland December Retail Sales -1.6% y/y vs previous -1.7% revised.
- SNB Jordan - CHF remains overvalued, 7-8% against the euro.
Economic Data Ahead
- (0855 ET/1355 GMT) U.S. Redbook Index for the week ending January 29.
- (0945 ET/1445 GMT) NAPM-New York releases its ISM New York Index and Business conditions Index for January.
- (1000 ET/1500 GMT) The IBD's Economic Optimism Index is likely to have risen to 47.8 in February from 47.3 in January.
- (1030 ET/1530 GMT) The financial firm Markit releases the Mexico's Manufacturing PMI for January, the index stood at 52.4 in December.
- (1330 ET/1830 GMT) The total vehicle sales in U.S. likely rose to 17.4 mln in January from 17.37 mln in December. Domestic car sales are expected to stay at 5.5 mln and truck sales probably slipped to 8.2 mln from 8.34 mln.
- (1630 ET/2130 GMT) API Weekly Crude Oil Stock, previous 11.4M.
Key Events Ahead
- (1300 ET/1800 GMT) Fed's George Speech.
FX Recap
USD: The dollar fell 0.3 percent to 120.63 yen, away from a 1-month high of 121.70 yen set on Friday in the wake of BoJ's easing rates into negative territory. The dollar index has once again made a high of 99.82 and started to decline from that level. It was trading around 98.96 with a major support at 98.50 (55 day EMA). Any break below 98.50 will drag it till 97.75/97.15/96.75.
EUR/USD: The euro rose 0.2 percent to $1.0910 within the $1.0711-$1.0985 range it has held since the start of the year. The major resistance is around 1.1000 and break above 1.100 will take the pair to next level around 1.1060/1.1100 in short term. The minor resistance is around 1.0920/1.0950/1.0980. Overall bearish invalidation is only above 1.1000. On the lower side minor support is around 1.0860 (200 day HMA) and break below targets 1.0800/1.07800.
USD/JPY: The Japanese yen climbed as a drop in oil prices and Asian stock markets drove investors in search of traditional safe havens for capital, it was trading around 120.69. The pair should close above 121.45 (200 day MA) for further bullishness. Any break above 121.45 will take it till 122/122.50. The short term trend is slightly bullish as long as support 119.90 holds. The major support is around 119.90 and break below targets 119.50/119.
GBP/USD: The Sterling fell to a day's low against the dollar and the euro, after a survey on UK's construction sector showed growth falling to a 9-month low in January. It was trading at $1.4329, 0.7 percent weaker on the day and down from $1.4365 immediately before the data. The euro was down 0.9 percent at 76.14 pence, having traded at 76.0 pence before the data was released. The major resistance is found at 1.4440 (trend line joining 1.43626 and 1.44074). On the higher side any break above 1.4450 will take the pair to next level around 1.4500/1.4600. The minor resistance is around 1.4400/1.4450 and the support is around 1.4330, a break below targets 1.4300/1.4240.
NZD/USD: The New Zealand dollar edged up to $0.6520, from $0.6500 in early trade, pulling away from a four-month trough touched in January. It was still 4.4 percent weaker so far this year.
AUD/USD: The Australian dropped after the Reserve Bank of Australia kept rates unchanged at it first policy meeting of the year but left the door open to further easing. It initially rallied to $0.7130 after the RBA did not sound as dovish as some bears had been wagering on. It was down about 0.8 percent at $0.7052 in European trading, though it held above its recent 7-year trough of $0.6827. The resistance was found in the $0.7150-70 region, which coincides with 55- and 100-day moving averages and major retracement levels. On the higher side major resistance is around 0.7170 and break above targets 0.7250/0.7300. The pair's minor support is around 0.7020 and break below will drag it till 0.7000/0.6920/0.6820.
USD/CHF: The pair has slightly recovered after making a low of 1.01554 and was trading around 1.02043. The short term trend is bullish as long as support 1.0134 (Tenken-Sen) holds. Any break below 1.01340 will drag the pair down till 1.0100/1.005. On the higher side resistance is around 1.0255 and break above 1.0250 will take it till 1.0300/1.0335.
Equities Recap
Global stocks mostly inched lower as oil extended losses following a 6-percent plunge, driven by the data showing a manufacturing slowdown in the world's two largest economies.
Europe started lower, with Britain's FTSE 100 down 1.2 percent to 5,985.97. Germany's DAX fell 1 percent to 9,656.78 while France's CAC 40 slipped 1.4 percent to 4,331.20. Dow futures fell 0.7 percent and S&P 500 futures declined 0.8 percent.
Japan's Nikkei ended down 0.6 percent as investors locked in profits after two straight days of big gains following the Bank of Japan's decision. MSCI's broadest index of Asia-Pacific shares outside Japan lost 1.2 percent. China's CSI300 Index ended up 2.1 pct at 2,961.33 points, Shanghai Composite Index closed up 2.3 pct at 2,749.57 points.
Commodities Recap
Oil prices dropped on the demand outlook and rising supply worries, and the hopes for a deal between OPEC and Russia on output cuts faded. Brent for April delivery dropped 53 cents to $33.71 a barrel by 0910 GMT, after settling down $1.75, or 4.9 percent, in the previous session. The front-month contract for West Texas Intermediate was down 61 cents at $31.01 after falling $2.00, or 5.9 percent, in the previous session.
Gold climbed to a 3-month high as weak global manufacturing activity pushed investors towards safe-haven assets. Spot gold touched $1,130.11 an ounce, its strongest since Nov. 3, and was trading down 0.3 percent at $1,125.36 by 0634 GMT. U.S. gold for April delivery was off 0.2 percent at $1,126 an ounce.
Treasuries Recap
U.S. 10-year Treasury yield last stood at 1.9225, down 0.043 pct.
UK March Gilts pushed slightly higher at 120.19. January Markit/CIPS Construction PMI came in at 55.0. The market was looking for another robust expansive reading of 57.5 (previous 57.8) as commercial building underpins the sector.
JGB prices remained weaker, with the 5s/30s curve steepening by 4.5bp from yesterday. Super-long JGBs extended their earlier losses modestly, as the BoJ is not expected to buy super-long JGBs tomorrow under its massive JGB purchase program. The results of today's monthly 10-yr JGB auction were moderately weaker than widely expected due to the strong pre-auction rally for the last two sessions. Yields on the current 2-yr JGBs were up 1.5bp at -0.145%, vs -0.15% earlier, while the 5s were up 1bp at -0.10%, the lead 10-yr March JGB futures dropped 0.15 pct at 150.41, after moving in a 150.37-150.61 range.
Euro zone bond yields fell as oil prices plunged and ECB's Chief Draghi confirmed his commitment to review monetary policy in the bloc next month. German 10-year bond yields fell 2 bps to 0.34 percent, recovering from a late surge on Monday to move back towards a 9-month low of 0.24 percent. All other euro zone equivalents were lower between 1 bps and 3 bps.
Australian government bond futures were a touch lower, with the 3-year bond contract off 1 tick at 98.130. The 10-year contract lost half a tick to 97.3750, while the 20-year contract shed 1 tick at 96.8600. New Zealand government bonds gained, sending yields between 0.5 and 3 basis points lower.
