Market Roundup
- USD/JPY +0.3%, GBP/USD +-0.2%, AUD/USD +0.1%, NZD/USD -0.7%
- DXY -0.1%, DAX +0.2%, Brent +.0%, Gold +0.1%, Copper -0.5%
- Euro headed for worst week since mid-December
- NZD slides after CB kept rates on hold and adopts dovish stance
- New Zealand central bank says may keep rates steady for years, protectionism key risk
- Australia's central bank paints optimistic growth picture
- Hard to say Australian dollar is too high - RBA chief
- Switzerland Jan Unemployment rate unadjusted 3.7% vs previous 3.5%. 3.6% forecast. Adjusted 3.3% vs previous 3.3%. 3.3% forecast
- Germany Dec Trade balance 18.4bln vs previous 21.8bln revised 21.4bln forecast
- World ccy levels will "definitely be discussed" at G20 FinMin meeting in Mar - G20 source
- BOJ doesn't use monetary policy to manipulate FX -Nakaso
- FDP leader Lindner: Greece should quit eurozone, get debt relief
- Polls show France far-right Le Pen winning election first round, but losing knockout
- France Marine Le Pen leads with 24% in round one, Macron 21% and Fillon 20%-Opinionway Poll
- CBT Governor-Will use all tools available in pursuit of price stability
Economic Data Ahead
- (0830 ET/1330 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 4,000 to a seasonally adjusted 250,000 for the week ended Feb. 3 while continuing claims for the week ended Jan. 20 stood at 2.064 m.
- (0830 ET/1330 GMT) The Statistics Canada releases its New Housing Price Index (NHPI) for the month of December. The index rose 0.2 percent in November.
- (1000 ET/1500 GMT) The U.S. Census Bureau is likely to report that wholesale inventories rose 0.7 percent in December after posting a gain of 1.0 percent in the prior month.
- (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending February 3.
Key Events Ahead
- (0910 ET/1410 GMT) Federal Reserve Bank of St. Louis President James Bullard gives a presentation in St Louis financial forum.
- (1135 ET/1635 GMT) Bank of Canada Deputy Governor Lawrence Schembri speaks in London.
- (1145 ET/1645 GMT) FedTrade operation 30-year Ginnie Mae (max $1.225 bn)
- (1310 ET/1810 GMT) Chicago Fed President Charles Evans speaks at Chicago CFA Society event.
- (1330 ET/1830 GMT) Bank of England Governor Mark Carney speaks at London BoE reception.
FX Beat
DXY: The dollar recovered versus its major peers following a fresh wave of up-move in the U.S. Treasury bond yields. The greenback against a basket of currencies traded 0.16 percent up at 100.33, hovering towards a peak of 100.72 hit on Tuesday, it’s strongest since Jan. 30. FxWirePro's Hourly Dollar Strength Index stood at 67.84 (Bullish) by 1100 GMT.
EUR/USD: The euro declined to an intra-day low of 1.0670 as heightened European political woes continued to dampen market sentiment. The European currency traded 0.2 percent lower at 1.0679, having touched a trough of 1.0640 on Wednesday, it’s lowest since Jan. 30. FxWirePro's Hourly Euro Strength Index stood at -109.50 (Highly Bearish) by 1000 GMT. On the lower side, 1.0585 will be acting as major support and any break below will drag the pair till 1.0500/1.04500 (Jan 11 Low). The major resistance is the top formed at 1.08735 and any violation above confirms short term bullishness and jump till 1.0933 (61.8% retracement of 1.12994 and 1.03402).
USD/JPY: The dollar extended its recovery mode above the 112.00 handle amid growing political uncertainty in Europe. However, the gains were limited as investors refrained from taking big positions ahead of Japanese Prime Minister Shinzo Abe’s meeting with the U.S. President Donald Trump on Friday. The pair trades 0.3 percent higher at 112.27, retreating from a low of 111.59 hit on Tuesday, it’s lowest since Nov 29. FxWirePro's Hourly Yen Strength Index stood at 65.08 (Bullish) by 1000 GMT. The major resistance is around 112.55 (7 – day MA) and any break above will take the pair till 113.07 (10- day MA)/113.78 (30- day EMA). On the lower side, minor support is around 111.40 (100- day EMA) and any break below 111.40 will drag the pair till 110.
GBP/USD: Sterling advanced, hitting a fresh 1-week high after upbeat British housing data helped to ease concerns over economic growth and the parliament passed the Brexit bill without changes, allowing PM Theresa May to start negotiations to leave the EU under her terms. Data released earlier showed that RICS housing price index rose 25 percent in January, beating forecasts of 22 percent and previous 23 percent. Sterling trades 0.2 percent higher at 1.2566, after rising to an early high of 1.2580, it’s strongest since Feb. 2. FxWirePro's Hourly Sterling Strength Index stood at 111.03 (Highly Bullish) by 1000 GMT. Immediate support is around 1.2475 (89- 4H EMA) and any break below will drag the pair down till 1.2430/1.2350 (200- 4H MA). On the upside, any break above 1.2550 will take it till 1.2600/1.2675 (Jan 26 High)/1.2706 (Feb 2 High). Against the euro, the pound trades 0.2 percent higher at 85.10 pence, having hit an early high of 84.95, it’s strongest since Feb. 1.
USD/CHF: The Swiss franc edged down, reversing some of its previous session gains as the dollar rebounded from a recent slide. The major trades 0.2 percent higher at 0.9964, having touched a high of 1.0006 on Tuesday, it’s highest since Jan. 30. FxWirePro's Hourly Swiss Franc Strength Index stood at 14.59 (Neutral) by 1000 GMT. The minor weakness can be seen below 0.9900 and any break below will drag the pair till 0.9860 (200- day MA)/0.9790. On the higher side, 21- day MA will be acting as immediate resistance and any break above this level will take it till 1.00450/1.0070 level. The short-term weakness is only below 0.98600 level.
AUD/USD: The Australian dollar rose, retreating from session’s low of 0.7610 following optimistic remarks from the RBA Governor Lowe on the economic outlook and exchange rate level. Moreover, the major was also supported by a steady recovery seen in the Australian 10-year government bond yields. The Aussie trades flat at 0.7645, hovering towards a high of 0.7696 hit last week, it’s strongest since Nov. 10. FxWirePro's Hourly Aussie Strength Index stood at 57.25 (Bullish) by 1100 GMT. On the lower side, the minor support stands at 0.76000 (10- day MA) and any break below will drag the pair down till 0.7565 (21- day MA)/0.7500. The minor resistance is around 0.7700 and a break above will take it till 0.7748/0.77783 (Nov 8 High).
NZD/USD: The New Zealand dollar slumped below the 0.7200 handle, extending losses for the third consecutive session after the Reserve Bank of New Zealand released dovish monetary policy statement. The Kiwi trades 0.8 percent down at 0.7205, having hit a low of 0.7191 earlier, it’s weakest since Nov. 23. FxWirePro's Hourly Kiwi Strength Index was at -89.36 (Slightly Bearish) by 1100 GMT. Immediate resistance is located at 0.7234 (23.6 % retracement of 0.7375 and 0.7191), a break above could take it near 0.7282 (10-DMA). On the downside, support is seen at 0.7191 (Session Low) a break below could drag it till 0.7150.
Equities Recap
European shares rallied, extending gains for a third straight day as better-than-expected earnings reports from banking and oil companies boosted market sentiment.
The pan-European STOXX 600 index increased 0.22 percent to 364.74 points, while the FTSEurofirst 300 index rallied 0.26 percent to 1,437.89 points.
Britain's FTSE 100 trades 0.03 percent at 7,190.80 points, while mid-cap FTSE 250 slumped 0.22 percent to 18,564.53 points.
Germany's DAX advanced 0.26 percent at 11,572.82 points; France's CAC 40 trades 0.46 percent higher at 4,788.40 points.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.3 percent to their highest since July 2015.
Tokyo's Nikkei fell 0.53 percent to 18,907.67 points, Australia's S&P/ASX 200 index rose 0.17 percent to 5,660.80 points and South Korea's KOSPI gained 0.04 percent to 2,065.88 points.
Shanghai composite index climbed 0.5 percent to 3,183.18 points, while CSI300 index advanced 0.4 percent at 3,396.29 points. Hong Kong’s Hang Seng added 0.2 percent at 23,525.14 points.
Commodities Recap
Crude oil prices rose, extending gains from the previous session, as an unexpected draw in U.S. gasoline inventories boosted market sentiment. International benchmark Brent crude was trading 0.7 percent higher at $55.58 per barrel by 0937 GMT, having hit a low of $54.43 the prior day, it’s weakest since Jan. 20. U.S. West Texas Intermediate crude rose 0.8 percent at $52.77 a barrel, after falling to a low of $51.20 on Wednesday, its lowest since Jan. 19.
Gold prices hovered near 3-month highs as concerns over U.S. President Donald Trump's policies and political risks from elections in Europe boosted the safe haven metals demand. Spot gold rose 0.1 percent to $1,242.76 per ounce at 0953 GMT, having hit its highest since Nov. 11 at $1,244.56 in the previous session. U.S. gold futures rose 0.2 percent to $1,241.30 an ounce.
Treasuries Recap
The U.S. Treasuries slogged ahead of the 30-year auction, scheduled for later in the day. The yield on the benchmark 10-year Treasury rose 1 basis point to 2.36 percent, the super-long 30-year bond yield jumped 2-1/2 basis points to 2.98 percent while the yield on short-term 3-year note also traded higher by nearly 1 basis point at 1.42 percent.
The UK gilts slumped ahead of the 30-year super-long bond auction, scheduled to be held on Thursday. Also, investors will remain focused on the Bank of England (BoE) Governor Philip Lowes’s speech due on February 10. The yield on the benchmark 10-year gilts, jumped nearly 2-1/2 basis points to 1.24 percent, the super-long 30-year bond yields also surged nearly 3 basis points to 1.93 percent and the yield on the short-term 2-year edged higher by 2-1/2 basis points to 0.10 percent.
The German government bunds snapped gains after investors shrugged off worse-than-expected trade balance data for the month of December. Also, investors are eyeing the release of the fourth-quarter gross domestic product (GDP) and consumer price inflation data, scheduled to be released on February 14. The yield on the benchmark 10-year bond, rose 1 basis point to 0.30 percent, the long-term 30-year bond yields also rose nearly 1 basis point to 1.08 percent and the yield on short-term 2-year bond moved higher by 1 basis point to -0.78 percent.
The Japanese government bonds traded modestly higher after a considerable amount of buying was observed at the super-long 30-year auction conducted by Japan’s Ministry of Finance (MoF) earlier today. The benchmark 10-year bond yield, fell nearly 1 basis point to 0.09 percent, while the long-term 20-year bond yields skid slightly over 1 basis point to 0.70 percent and the yield on the short-term 3-year note slipped to -0.14 percent.
The New Zealand government bonds traded modestly higher after the Reserve Bank of New Zealand (RBNZ) maintained a neutral bias in its monetary policy meeting held late Wednesday. The yield on the benchmark 10-year bond, fell 1 basis point to 3.18 percent at the time of closing, the yield on 7-year note also slipped nearly 1 basis point to 2.80 percent and the yield on short-term 2-year note traded 1 basis point lower at 2.16 percent.
The Australian government bonds witnessed sharp rally for the third straight day, following firmness in the U.S. Treasuries. Also, investors are eyeing the Reserve Bank of Australia (RBA) Governor Philip Lowe’s speech scheduled to be held later in the day. The yield on the benchmark 10-year Treasury note, plunged 5 basis points to 2.64 percent, the yield on 15-year note also slumped 6-1/2 basis points to 3.09 percent and the yield on short-term 2-year fell 2-1/2 basis points to 1.78 percent.
