Market Roundup
- UK/EU talks resume/drag after all night negotiations.
- EUR/USD Looking at 6th straight bear closes- Plays 1.1077-1.1139.
- USD/JPY heavy in a 113.38-112.72 range.
- UK January Retail Sales +5.2% y/y vs 2.3% previous (revised), 3.6% expected.
- UK January PSNCR m/m -bln vs +8.478bln previous.
- UK January PSNB m/m -bln vs +7.490bln.
- Sweden Jan Jobless 7.5% vs 6.7% previous, 7.6% expected.
- Bank of Japan faces a new opponent on negative rates: Main Street - WSJ.
- Japan Fin Min Aso - G20 to discuss China excess capacity, oil price,Fed policy.
- Japan Fin Min Aso - Rapid FX moves undesirable.
- Japan Fin Min Aso - Recent market moves extremely rough.
- PBOC Dep. Gov-Excessive loosening will create asset bubble.
- RBA board Edwards revives fears over AUD strength - DowJones.
- Suspected intervention steadies KRW.
Economic Data Ahead
- (0830 ET/1330 GMT) The U.S. Labor Department's report is expected to show the consumer price index dropped 0.1 percent in January after a similar dip in December. The core CPI, which excludes volatile food and energy, is expected to have risen 0.2 percent in January.
- (0830 ET/1330 GMT) Canada's annual inflation rate is expected to have risen slightly in January to 1.7 percent from 1.6 percent in December. The core inflation rate is estimated at 1.9 percent, same as the previous month.
- (0830 ET/1330 GMT) Canadian retail sales in December are likely to have dropped by 0.6 percent from November.
- (1000 ET/1500 GMT) The European Commission's Consumer Confidence Index for February likely further dropped to a reading of -6.7 from -6.3 in January.
- (1300 ET/1800 GMT) Baker Hughes US Oil Rig Count.
Key Events Ahead
- (0840 ET/1340 GMT) Federal Reserve Bank of Cleveland President Loretta Mester is scheduled to speak on the economic outlook before the Global Interdependence Center Central Banking Series: Sarasota, in Sarasota. Mester will have a chance to weigh in on the year's first jobs report and to stand by, or back off, her expectation of around four rate hikes through 2016.
FX Recap
USD: The dollar was down 0.15 percent against a basket of major currencies, it has made a high of 97.07 yesterday and slightly retreated from that level and was trading around 96.88. It dipped back below 113.00 yen, leaving the Japanese currency 0.3 percent stronger on the day at 112.91.
EUR/USD: The euro was a inch higher at $1.1127 after slipping to a 2-week low of $1.1071 overnight. Traders said a break below those levels in European trade could send the single currency back towards $1.0950. The pair sees major support at 1.1050 (200 day MA and also 1.13% retracement of 1.10865 and 1.13350), on the higher side major resistance is around 1.1150 and break above targets 1.1200/1.12450. Any break below 1.1050 will drag it till 1.100/1.0920.
USD/JPY: The Japanese has retreated after making a high of 114.32 yesterday and was trading around 112.85. The short term trend is slightly weak as long as resistance 113.80 (200 day HMA) holds. On the lower side major support is around 113 and break below targets 111.80/110. The minor resistance is around 115 and break above targets 115.60/117. The yen reached its strongest since June 2013 against the euro at 125.33 as stocks slipped again.
GBP/USD: The robust UK retail sales and strong public finance data were unable to boost sterling amid investors' worries that an ongoing summit between British and European Union leaders might not be able to prevent a British exit from the EU. It hit a day's high of $1.4358, but was trading down 0.2 percent on the day at $1.4312 by 1010 GMT. For the week, it was down 1.3 percent against the dollar, its weakest performance since early January. Against the euro, sterling was flat at 77.47 pence. The minor resistance is at 1.4350 (trend line joining 1.45156 and 1.43937) and major support at 1.4240. On the higher side any break above 1.4350 will take the pair till 1.4420/1.4485. It is facing strong support around 1.4240 and any break below 1.4240 will drag the pair to next level 1.4180/1.4140.
USD/CHF: The pair has recovered after making a low of 0.9900 at the time of writing. The short term trend is slightly bullish as long as support 0.9900 holds. On the lower side major support is around 0.9900 and any break below 0.9760 will drag it down till 0.9850/0.9800. On the higher side minor resistance is around 0.9950 and break above will take the pair till 1.00/1.00350.
AUD/USD: The Australian dollar fell after a downbeat session for oil prices and Asian stock markets underlined nerves over global growth and finances. It fell 0.6 percent to $0.7114 from $0.7158 early, away from a peak of $0.7187 touched on Wednesday. It was poised to end the week where it started and still well above a 7-year trough of $0.6828 last month. It was trading around 0.7105 and the short term trend is slightly bearish as long as support 0.7185 holds. On the higher side major resistance is around 0.7185 and break above targets 0.7240/0.7300. The major support is around 0.7075 and break below will drag the pair till 0.702/0.6970. The Aussie dropped 0.8 percent on the day to 80.37 yen, having erased all this week's gains.
NZD/USD: The New Zealand dollar was down half a percent to $0.6615. It fell to 74.80 and was set to post its third consecutive week of losses.
Equities Recap
A pause in oil rally drove global stocks lower as concerns about the global economic outlook stay behind. The pan-European FTSEurofirst 300 was down 0.38 percent at 1,289.03 points in early deals, but was on track for its best week since January 2015. By 0906 GMT, it had risen 0.02 percent to 1,294 points. Britain's FTSE 100 was down 0.1 percent and Germany's DAX fell 0.42 percent.
Tokyo's Nikkei closed down 1.42 pct at 15,967.17, MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5 pct. On the week, they were up about 4 pct and 7 pct, respectively. China's CSI300 Index closed down 0.1 pct at 3,051.59 points and gained 3 pct for the week, biggest weekly gain in 2 months, while Shanghai Composite Index ended down 0.1 pct at 2,860.02 points and rose 3.5 pct for the week. HK's Hang Seng Index lost 0.4 pct at 19,285.50 points.
Commodities Recap
Oil futures dropped on Friday as a record build in U.S. crude stocks strengthened concerns about global oversupply, outweighing moves by oil producers including Saudi Arabia and Russia to cap oil output. Brent futures were down 35 cents at $33.93 a barrel by 0957 GMT, with U.S. crude slipping by 36 cents to $30.41.
Gold pared some of its overnight gains on Friday, but trading above $1,200 an ounce as a drop in equities fuelled fresh safe-haven demand for the metal. Spot gold was down 0.9 percent at $1,221.42 an ounce at 1032 GMT, while U.S. gold futures for April delivery were down 0.3 percent at $1,222.30.
Treasuries Recap
The 10-year U.S. T-note yields fell 2 basis points, to 1.74 percent.
The Japanese government bond prices gained on Friday, supported by weakness in domestic equities and strong results of the Bank of Japan's bond buying operation. The 10-year Japanese government bond yield fell 2.0 bps to minus 0.005 percent, slipping into the negative for the first time since Feb. 10. The 20-year yield fell 1.5 bps to 0.705 percent. The BOJ's purchase of bonds totalling 1.27 trillion yen also produced solid prices, underlining the scarcity of JGBs. The 10-year JGB futures rose 0.19 point in price to 151.57.
The UK Gilts opened 37 ticks higher than the settlement of 121.68 as core markets were elevated by a slide in crude prices. Early buyers broke support from former lows at 1.41% on 10-year cash yields, but stalled at support below that at 1.39%. Gilts are around 10 ticks lower on the UK retail sales data at 121.88.
The Euro zone bond yields slid as a bigger-than-expected drop in German producer prices fuelled expectations for ECB monetary easing next month to boost low inflation and growth. Germany's 10-year Bund yield fell 2 bps to 0.19 percent, heading back towards last week's 9 1/2-month low of 0.13 pct. The 2-year yields were about 1 basis point lower at minus 0.51 percent. The yield gap between 10-year British government bonds and their German peers was about 120 bps, close to its widest level in two weeks.
The Australian government bond futures climbed, with the 3-year bond contract 6 ticks higher at 98.220. The 10-year contract leapt 10.5 ticks to 97.5650, while the 20-year contract also added 10.5 ticks to 97.0350. The New Zealand government bonds gained slightly, sending yields 4 bps higher across most of the curve. The spread between 10- and 3-year government bonds shrunk to 65 basis points, near 64 basis points.
