Market Roundup
- EUR/USD +0.28%, USD/JPY +0.4%, GBP/USD -0.05%
- DXY -0.2%, DAX +0.70%, Brent +0.5%, Iron +0.3%, Gold -0.3%
- Germany Jan Trade Bal. E18.5 bln vs revised 18.3 bln previous, 18.0 bln expected
- UK Jan Construction O/P 2.0% y/y vs 2.6% previous, 0.2% expected
- UK Jan Industrial O/P +3.2% y/y vs 4.3% previous, 3.3% expected
- UK Jan Manufacturing O/P +2.7% y/y vs revised 4.2% previous, 3.0% expected
- UK Jan Trade Bal. –GBP10.83 bln vs revised -10.91 bln, -11.05 expected
- S. Korean constitutional court removes President Park from office
- China CB governor repeats familiar refrain about keeping the yuan stable in 2017
- EZ and UK bond yields gap higher on Japanese selling after the ECB
- Base metals bounce back a little, equities mainly higher, UST yields also a touch higher
- A second Scottish independence referendum is now looking inevitable
- BoE UK Inflation expectations 2-year horizon 2.9% vs 2.8% in Nov
- Greater profit growth expected for Japan Inc in fiscal ’17 – Nikkei
- Japan - No barriers to auto imports after US fires first trade salvo
- BoJ reduces purchases of 1-3 year JGBs to Y300 bln from Y320 bln
- PBOC/SAFE Pan – China opening up bond market to foreign investors
- PBOC DepGov Yi – Corporate debt levels excessively high
- DepGov Yi – Won’t devalue CNY to stimulate exports – China Economic Daily
- IMF Lagarde – Exit from EUR would make France poorer – Le Parisien
Economic Data Ahead
- (0830 ET/1330 GMT) The U.S. Labor Department releases nonfarm payrolls report for the month of February. The report is likely to show 190,000 jobs were added compared with an increase of 277,000 in January.
- (0830 ET/1330 GMT) The U.S. Bureau of Labor Statistics will release labor force participation rate for the month of February. The indicator stood at 62.9 percent in the previous month.
- (0830 ET/1330 GMT) The U.S. Labor Department is expected to report that unemployment rate edged down to 4.7 percent in February from 4.8 percent in the prior month.
- (0830 ET/1330 GMT) The United States' average hourly earnings are likely to rise 0.3 percent in February after climbing 0.1 percent in the month before.
- (0830 ET/1330 GMT) The Statistics Canada releases employment report for February. The economy is expected to have added 2,500 jobs, compared to a rise of 48,300 jobs in January, while the participation rate stood at 65.9 percent in the same month.
- (0830 ET/1330 GMT) Canada's unemployment rate is expected to remain changed at 6.8 percent in the month of February.
- (1000 ET/1500 GMT) The National Institute of Economic and Social Research (NIESR) will report Britain's GDP estimate in the three months through February. The indicator rose 0.7 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 February. The government posted a surplus of $51 billion in the previous month.
Key Events Ahead
- (1145 ET/1645 GMT) FedTrade ops 30-yr Fannie Mae/Freddie Mac(max $1.90 bln
FX Beat
DXY: The dollar rose to a 7-week high versus the yen as investors eagerly awaited the highly influential U.S. payrolls data which is expected to give the Federal Reserve more reason to raise interest rates next week. The greenback against a basket of currencies traded 0.2 percent down at 101.81, having hit a high of 102.25 in the previous session. FxWirePro's Hourly Dollar Strength Index stood at -8.29 (Neutral) by 1000 GMT.
EUR/USD: The euro rose above the 1.0600 handle as Thursday's hawkish comments from the ECB President Mario Draghi pointed towards a shift in the central bank’s stance away from offering further stimulus. However, the upside remains capped as a continuous upsurge in the U.S. Treasury bond yields strengthened the greenback. The European currency traded 0.3 percent higher at 1.0614, having hit a high of 1.0619 earlier, its highest since Mar. 6. FxWirePro's Hourly Euro Strength Index stood at 83.83 (Slightly Bullish) by 1000 GMT. The near term resistance is around 1.06270 -1.06400 (trend line resistance and 200- 4H MA) and any break above will take the pair till 1.06996 (61.8% retracement of 1.08288 and 1.04936)/1.07140. On the lower side, any weakness can be seen below 1.04900 and break below will drag it till 1.04530/1.03450 (Jan 1 low).
USD/JPY: The dollar rallied to a 7-week high following a continuous upsurge in the U.S. treasury bond yields, in wake of an imminent Fed rate-hike action next week. Investors now await nonfarm payrolls report, which is expected to show an increase of 190,000 jobs in February while employers boosted wages for workers. The major traded 0.4 percent up at 115.36, hovering towards a high of 115.49 hit earlier, its highest since Jan. 19. FxWirePro's Hourly Yen Strength Index stood at -91.75 (Slightly Bearish) by 1000 GMT. Any break above 115 confirms minor bullishness, a jump till 115.94 is likely. On the lower side, minor support is around 113.70 (21- day EMA) and any break below 113.70 will drag the pair till 113/112.
GBP/USD: Sterling steadied after data released earlier showed British factory output witnessed its strongest growth in nearly seven years in late 2016 and early 2017, while exports also grew quickly. Separately, another report indicated the economy's goods trade deficit with the rest of the world narrowed slightly in January to 10.833 billion pounds, versus estimates of a deficit of 11.05 billion pounds. Sterling trades flat at 1.2164, having hit a low of 1.2133 in the previous session, its weakest since Jan. 17. FxWirePro's Hourly Sterling Strength Index stood at 21.97 (Neutral) by 1000 GMT. On the lower side, break below 1.2200 confirms minor weakness, a decline till 1.2080 is likely. The minor intraday bullishness can happen only above 1.2200 and any break above will take the pair till 1.2255 (200- H MA)/ 1.2300 (Mar 3rd high)/ 1.2350. Against the euro, the pound trades 0.3 percent down at 87.23 pence, having hit a fresh 7-week low of 87.30 earlier.
USD/CHF: The Swiss franc edged up as markets remained cautious ahead of the crucial U.S. payrolls report. The major traded 0.6 percent down at 1.0116, having hit a low of 1.0091 in the previous session, its weakest since Mar. 6. FxWirePro's Hourly Swiss Franc Strength Index stood at 69.78 (Bullish) by 1000 GMT. The pair should break above the weekly high of 1.01700 for further jump till 1.0200/1.02480. On the lower side, 1.0090 will be acting as immediate support and any break below will drag it down till 1.00690 (Mar 3 low)/1.000.
AUD/USD: The Australian dollar gained, reversing most of its previous session losses, as a risk-on rally in the equities market boosted the bid tone around the major. The major trades 0.23 percent up at 0.7520, having touched a low of 0.7491 in the previous session, it’s lowest since Jan. 17. FxWirePro's Hourly Aussie Strength Index stood at -21.09 (Neutral) by 1000 GMT. On the lower side, the next immediate support stands at 0.74450 and any break below will drag the pair down till 0.7380 (61.8% retracement of 0.71599 and 0.77406). The major resistance is around 0.7530 (200- day EMA) and a break above will take it till 0.75869/0.7617 (21 – day EMA).
Equities Recap
European shares gained in early trade following a rally among energy stocks, while the dollar stood firm ahead of the highly influential U.S. payrolls data which is expected to reinforce expectations of a Federal Reserve interest rate hike next week.
The pan-European STOXX 600 index rallied 0.38 percent to 374.30 points, while the FTSEurofirst 300 index rose 0.42 percent to 1,464.84 points.
Britain's FTSE 100 trades 0.45 percent up at 7,348.21 points, while mid-cap FTSE 250 added 0.18 percent to 18,925.84 points.
Germany's DAX edged up 0.57 percent at 12,046.84 points; France's CAC 40 trades 0.55 percent higher at 5,008.78 points.
Tokyo's Nikkei rose 1.48 percent to 19,604.61 points, Australia's S&P/ASX 200 index jumped 0.54 percent to 5,772.20 points and South Korea's KOSPI gained 0.3 percent to 2,097.35 points.
Shanghai composite index dropped 0.1 percent to 3,212.76 points, while CSI300 index edged up 0.03 percent to 3,427.89 points. Hong Kong’s Hang Seng added 0.3 percent to 23,568.67 points.
Commodities Recap
Crude prices edged up after tumbling to their lowest in more than three months the day before on concerns that a global supply glut is growing persistently. International benchmark Brent crude was trading 0.04 percent up at $52.47 per barrel by 0923 GMT, having hit a low of $51.49 on Thursday, its lowest since Dec. 1. U.S. West Texas Intermediate crude trades 0.1 percent up at $49.64 a barrel, after falling to a trough of $48.58 the day before, its weakest since Nov. 15.
Gold slumped to a 5-week low below the key level of $1,200 an ounce and was on track for its worst week in four months, as the dollar rose across the board ahead of the closely-watched U.S. non-farm payrolls report due later in the day. Spot gold was down 0.3 percent at $1,197.13 per ounce at 0926 GMT, after hitting a low of $1,194.93 earlier in the session, its weakest since Jan. 31. U.S. gold futures fell 0.6 percent to $1,196.1.
Treasuries Recap
The U.S. Treasuries plunged on expectations of a fall in the country’s February unemployment rate, scheduled to be released later in the day. The yield on the benchmark 10-year Treasury rose 1 basis point to 2.60 percent, the super-long 30-year bond yield also rose nearly 1 basis point to 3.19 percent and the yield on the short-term 2-year note too traded 1 basis point higher at 1.38 percent.
The UK gilts plunged, tracking improvement in the country’s trade balance during the month of January. However, investors have largely defied the worse-than-expected manufacturing production during the same month. The yield on the benchmark 10-year gilts, jumped nearly 2-1/2 basis points to 1.25 percent, the super-long 30-year bond yields climbed nearly 2 basis points to 1.83 percent and the yield on the short-term 2-year traded 1-1/2 basis points higher at 0.12 percent.
The German 10-year government bund yields climbed to 5-week high ahead of the Eurogroup Summit scheduled to be held later in the day. Also, a hawkish stance by the European Central Bank (ECB) in its monetary policy meeting held yesterday, drove prices lower. The yield on the benchmark 10-year bond, jumped 2-1/2 basis points to 0.44 percent, the long-term 30-year bond yields surged 3 basis points to 1.26 percent and the yield on the short-term 2-year bond traded 2 basis points higher at -0.84 percent.
The New Zealand government bonds closed flat as investors remained sidelined in a mild trading session that witnessed data of little economic significance. The yield on the benchmark 10-year bond, fell 1 basis point to 3.42 percent at the time of closing, the yield on 7-year note also slipped nearly 1 basis point to 2.97 percent while the yield on short-term 5-year note traded 1 basis point higher at 2.23 percent.
The Australian bonds dived as investors cashed in profits amid a mild rise in equities. Further, the Federal Reserve Chair Janet Yellen’s recent comments, hinting at a possible hike this month, added to the move. The yield on the benchmark 10-year Treasury note, jumped 4 basis points to 2.98 percent, the yield on the 15-year note climbed 3-1/2 basis points to 3.37 percent and the yield on short-term 3-year traded 1-1/2 basis points higher at 2.14 percent.
