Market Roundup
- EUR/USD -0.1%, USD/JPY +0.3%, GBP/USD +0.1%,
- DXY +0.15%, DAX +0.3%, Brent +1.2%, Gold -0.4%, Copper +1.8%
- US rates widen vs Germany, EZ yields push up vs Germany
- Dollar hits 10-day high before Trump-Abe meeting
- Oil rises on 90 pct compliance on OPEC output deal
- UK Dec Industrial Output +1.1% m/m, +4.3% y/y vs previous 2.0%/2.2% revised 0.2%/3.2% forecast
- UK Dec Manufacturing Output +2.1% m/m, 4.0% y/y vs previous 1.4%/1.7% revised 0.5%/1.8% forecast
- UK Dec Global goods trade balance -10.890bln vs previous -11.555bln revised -11.50bln forecast
- China January exports rise 7.9 pct, beating forecasts
- Euro zone, IMF reach agreement on a common stance on Greece
- EG Dijsselbloem: Greek reforms taking a long time but going in right direction
- ECB Mersch: Subdued inflation will be with us for quite some time
- Ireland asks EU for "invisible" post-Brexit UK border
- M&A news: Reckitt Benckiser to buy Mead Johnson for $16.6 bln
Economic Data Preview
- (0830 ET/1330 GMT) The U.S. Labor Department publishes import and export prices index for the month of January. The import prices are likely to have gained 0.2 percent after rising 0.4 percent in December, while exports are expected to have edged up 0.1 percent after increasing 0.3 percent in the prior month.
- (0830 ET/1330 GMT) Canada's unemployment rate is expected to stay unchanged at 6.9 percent in the month of January.
- (0900 ET/1400 GMT) Mexico will release its industrial output data for the month of December. The economy's industrial production is expected to fall 0.15 percent, while on a year-over-year basis it is likely to decline 0.3 percent.
- (1000 ET/1500 GMT) The University of Michigan is likely to report that U.S. preliminary consumer sentiment index declined to 97.9 in February, after posting a final reading of 98.5 in January.
- (1000 ET/1500 GMT) The National Institute of Economic and Social Research (NIESR) will report Britain's GDP estimate in the three months through January. The indicator rose 0.5 percent in the previous month.
- (1300 ET/1800 GMT) Baker Hughes reports U.S. Oil Rig Count.
- (1400 ET/1900 GMT) The U.S. reports its monthly budget statement for the month of January. The government is likely to show a budget surplus of $40 billion after posting a deficit of $28 billion in the previous month.
Key Events Ahead
- N/A Japanese Prime Minister Shinzo Abe arrives in Washington for a summit with U.S. President Donald Trump.
- (11 45 ET/1645 GMT) FedTrade operation 30-yr Fannie Mae/Freddie Mac (max $1.825 bn)
FX Beat
DXY: The dollar rallied across the board on the back of renewed speculation that Trump's economic policies will boost economic growth and inflation. The greenback against a basket of currencies traded 0.2 percent up at 100.87, having hit a high of 100.89 earlier in the session, it’s strongest since Jan. 30. FxWirePro's Hourly Dollar Strength Index stood at 15.77 (Neutral) by 1100 GMT.
EUR/USD: The euro slumped to a near 2-week low as the dollar strengthened after U.S. President Donald Trump promised to announce within weeks major tax reform plan. The European currency edged down 0.1 percent to 1.0643, having hit an early low of 1.0636, it’s lowest since Jan. 30 and was down 1.2 percent for the week. FxWirePro's Hourly Euro Strength Index stood at -20.69 (Neutral) by 1100 GMT. On the lower side, 1.06400 will be acting as major support and any break below 1.06400 will drag the pair till 1.05850/1.0500/1.04500 (Jan 11 low). The major intraday resistance is at 1.07300 and violation above confirms minor bullishness and jump till 1.0800/1.0873 is possible.
USD/JPY: The dollar rose to a 9-day high against the yen ahead of U.S. President Donald Trump and Japanese Prime Minister Shinzo Abe’s meeting. Moreover, Trump's announcement on tax reforms and risk-on sentiment across global financial markets boosted the dollar across the board. The major trades 0.2 percent higher at 113.50, having hit a high of 113.85 earlier, it’s highest since Feb 1. FxWirePro's Hourly Yen Strength Index stood at -40.72 (Neutral) by 1100 GMT. The major resistance is around 113.95 (Feb 1 high) and any break above will take the pair till 114.42 (Jan 23 High). On the lower side, minor support is around 111.40 (100- day EMA) and any break below 111.40 will drag it till 110.
GBP/USD: Sterling steadied above the 1.2500 handle after data showed UK industrial output rose more than expected in December and the trade deficit narrowed, easing fears of economic slowdown due to the Brexit process. British manufacturing increased by 2.1 percent in December, while the goods trade deficit contracted to 10.89 billion pounds in December, versus forecasts of 11.5 billion pounds. Sterling trades 0.1 percent higher at 1.2507, after rising to a high of 1.2582 on Thursday, it’s strongest since Feb. 2. FxWirePro's Hourly Sterling Strength Index stood at 62.08 (Bullish) by 1100 GMT. The upside remains capped by 100 –day EMA and any break above will take the pair till 1.26750/1.27060 (Feb 2 high). On the lower side, next immediate support is around 1.2450 (30- day EMA) and any break below will drag it down till 1.2430/1.2350 (200- 4H MA). Against the euro, the pound trades 0.2 percent down at 85.43 pence, having hit a high of 84.93 the day before, it’s strongest since Feb. 1.
USD/CHF: The Swiss franc declined, extending losses for the second consecutive session, as the U.S. dollar rallied across the board. The major trades 0.1 percent higher at 1.0021, having touched a high of 1.0033 earlier, it’s highest since Jan. 30. FxWirePro's Hourly Swiss Franc Strength Index stood at 25.69 (Neutral) by 1100 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, 1.0450 will be acting as immediate resistance and any break above this level will take it till 1.0070/1.01225 (Jan 19 high).
AUD/USD: The Australian dollar rose following optimistic remarks from the RBA Governor Lowe on the economic outlook and exchange rate level. The major gained 0.24 percent to 0.7642, hovering towards a high of 0.7696 hit last week, it’s strongest since Nov. 10 but was set to end the week 0.5 percent lower. FxWirePro's Hourly Aussie Strength Index stood at 109.04 (Highly Bullish) by 1100 GMT. On the lower side, the minor support stands at 0.7610 (10- day MA) and any break below will drag the pair down till 0.7574 (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 declined, extending losses for the fourth straight session, as the greenback strengthened following Trump's announced to unveil his tax plan in coming weeks. The Kiwi trades lower at 0.7182, having hit a low of 0.717 on Thursday, it’s weakest since Nov. 23. FxWirePro's Hourly Kiwi Strength Index was at -97.64 (Slightly Bearish) by 1100 GMT. Immediate resistance is located at 0.7220 (23.6 % retracement of 0.7375 and 0.7173), a break above could take it near 0.7281 (10-DMA). On the downside, support is seen at 0.7158 (Jan 23 Low) a break below could drag it lower 0.7150.
Equities Recap
European shares rose in early trade and were on track to end the week higher as healthy earnings from the mining sector and corporate deal-making boosted investor sentiment.
The pan-European STOXX 600 index increased 0.05 percent to 366.70 points, while the FTSEurofirst 300 index rallied 0.07 percent to 1,445.90 points.
Britain's FTSE 100 trades 0.2 percent up at 7,243.97 points, while mid-cap FTSE 250 rose 0.35 percent to 18,692.42 points.
Germany's DAX advanced 0.14 percent at 11,659.58 points; France's CAC 40 trades 0.13 percent lower at 4,819.81 points.
Tokyo's Nikkei gained 2.49 percent to 19,378.93 points, Australia's S&P/ASX 200 index rose 0.91 percent to 5,716.30 points and South Korea's KOSPI jumped 0.45 percent to 2,075.08 points.
Shanghai composite index climbed 0.4 percent to 3,196.70 points, while CSI300 index advanced 0.5 percent at 3,413.49 points. Hong Kong’s Hang Seng added 0.2 percent at 23,574.98 points.
Commodities Recap
Crude oil prices rallied by more than 1 percent after the International Energy Agency reported that OPEC made production cuts in January equating to 90 percent of the agreed volumes. International benchmark Brent crude was trading 1.01 percent higher at $56.26 per barrel by 1100 GMT, pulling away from a low of $54.43 hit on Wednesday, its weakest since Jan. 20. U.S. West Texas Intermediate crude rose 0.7 percent at $53.51 a barrel, after falling as low as $51.20 earlier in the week, its lowest since Jan. 19.
Gold prices tumbled to a 4 day low as the dollar strengthened after U.S. President Donald Trump pledged major tax announcement and as upbeat economic data boosted the U.S. rate hike expectations. Spot gold down 0.2 percent at $1,226.25 per ounce by 1104 GMT, having hit a low of $1,221.46, its lowest since Feb. 6. U.S. gold futures dropped as much as over 1 percent to $1,223.30 an ounce.
Treasuries Recap
The U.S. Treasuries continued to slog as investors booked profits amid a subdued trading session that awaits data of little significance. The yield on the benchmark 10-year Treasury rose 1-1/2 basis points to 2.36 percent, the super-long 30-year bond yield traded flat at 3.01 percent while the yield on short-term 2-year note also traded steady at 1.18 percent.
The UK gilts plunged, following the release of higher-than-expected manufacturing and industrial production for the month of December along with an improvement in the country’s December trade balance. The yield on the benchmark 10-year gilts, jumped nearly 2-1/2 basis points to 1.27 percent, the super-long 30-year bond yields also surged 2 basis points to 1.95 percent and the yield on the short-term 2-year edged higher by 1 basis point to 0.11 percent.
The German government bunds traded mixed as investors eye 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 bonds, rose 1 basis point to 0.32 percent, the long-term 30-year bond yields also rose 1-1/2 basis points to 1.08 percent while the yield on short-term 2-year bond moved lower by nearly 1 basis point to -0.78 percent.
The Japanese government bonds traded narrowly mixed as investors remain sidelined in any major trading activity and as market participants await the release of the fourth-quarter gross domestic product (GDP), due on February 13. The benchmark 10-year bond yield, rose nearly 1 basis point to 0.09 percent, while the long-term 30-year bond yields skid nearly 1/2 basis point to 0.87 percent and the yield on the short-term 3-year note rose 1/2 basis point to -0.14 percent.
The New Zealand government bonds snapped a long streak of gains as investors booked in profits on the last trading day amid a subdued session that witnessed data of little economic significance. The yield on the benchmark 10-year bond, jumped 3-1/2 basis points to 3.22 percent at the time of closing, the yield on 7-year note surged 2 basis points to 2.83 percent and the yield on short-term 2-year note traded 21/2 basis points higher at 2.20 percent.
The Australian government bonds snapped rally after the Reserve Bank of Australia (RBA) maintained relatively stable economic outlook in the near-to-medium-term. The yield on the benchmark 10-year Treasury note, bounced 5-1/2 basis points to 2.70 percent, the yield on 15-year note also jumped 5-1/2 basis points to 3.15 percent and the yield on short-term 2-year rebounded 4-1/2 basis points to 1.83 percent.
