Market Roundup
- United Staes Jan business borrowing for new equipment -12% at $6 bln, volume -52% m/m.
- Australia Q4 wage price index total hourly pay +0.5% q/q, +2.2% y/y, +0.6% and +2.3% forecast, wage growth slowest on record.
- Australia Q4 construction work done -3.6% q/q, -2% forecast.
- BoJ Gov Kuroda - Won't cut rates without eye on economic impact - Asahi.
- Kuroda - Ready to ease if market rout hurts economy, excessive risk aversion hurting stocks-USD, latter despite NIRP, BoJ doesn't explicitly target FX or stocks (in Diet testimony) - Reuters.
- Japan Jan corp service prices -0.6% m/m, +0.2% y/y, index 102.5.
- FOMC ViceChair Fischer - Market turmoil may pass with little (lasting) economic impact, modest full employment overshoot could help inflation outlook but inflation likely below target longer on energy, market volatility as much to do with China as oil/US banking concerns, no US NIRP plans - RTRS.
- KC Fed George - Not contemplating negative rates, data not pointing to shift in economic outlook, eyes March rate hike debate - Bloomberg radio.
- Fed board: all 12 regional banks request discount rate stay at 1% - MNI.
- JP Morgan - US banks put the squeeze on cash-strapped energy firms, won't wait till spring to discuss revolving credit facilities with energy clients, Q1 trading revenues likely - 20% but CEO Dimon rolls eyes up at gloom, JPM cuts country exposure to UK, Germany - Reuters, IFR, Nikkei.
Economic Data Ahead
- (0200 ET/0700 GMT) Switzerland Jan UBS consumption indicator; last 1.62.
- (0400 ET/0900 GMT) Italy Dec industrial orders/sales; last +1.6% m/m, +12.1% y/y, -1.1%, +0.8%.
- (0400 ET/0900 GMT) Norway Dec labor force survey - unemployment, 4.6% forecast; last 4.6%.
- (0930 ET/0930 GMT) Great Britain Jan BBA mortgage approvals; last 43.98k.
- (0600 ET/1100 GMT) Great Britain Feb CBI Distributive Trades, 12.0 forecast; last 16.0.
- (0945 ET/1445 GMT) United States Feb Markit PMI services - flash, 53.5 forecast; last 53.2.
- (0945 ET/1445 GMT) United States Feb Markit PMI composite - flash; last 53.2.
- (1000 ET/1500 GMT) United States Jan new home sales, 520k AR forecast, -4.4% m/m; last 540k, +10.8%.
Key Events Ahead
- N/A IMF Lagarde, others at Dubai Global Women's Forum (final day).
- N/A Sweden SEK15 bln 82-day treasury bill auction.
- (0400 ET/0900 GMT) Norway oil investment fcst - current year NOK192.8 bln, next NOK171 bln.
- (0430 ET/0930 GMT) ECB 91-day refi, E20 bln allotment forecast, E21.8 bln maturing.
- (0500 ET/1000 GMT) Italy E0.5-1.0 bln 1.25% 2032 index-linked BTP auction.
- (0500 ET/1000 GMT) ECB/Buba Weidmann, Buba Nagel speak at presser on financial statements.
- (0530 ET/1030 GMT) Germany E1 bln 2.5% 2044 Bund auction.
- (0800 ET/1300 GMT) Richmond Fed Lacker lecture at Johns Hopkins University in Baltimore.
- (1000 ET/1500 GMT) United States House hearing on impact of Dodd-Frank/Basel III on fixed income.
- (1200 ET/1700 GMT) EU EBA to begin '16 round of bank stress tests.
- (1230 ET/1730 GMT) BoE DepGov Cunliffe lecture at London South Bank University.
- (1235 ET/1735 GMT) BoC DepGov Schembri speech in Guelph, Ontario.
- (1315 ET/1815 GMT) Dallas Fed Kaplan speech in Dallas.
- (1400 ET/1900 GMT) Belgium CB Gov Smets presents annual report.
FX Beat
USD: The dollar lost against its key peers yen and euro on Wednesday as declining stocks and crude oil drove bids for the safe-haven currency. Against a basket of currencies, the dollar index trades 0.08 percent higher at 97.51.
EUR/USD: The euro trades 0.03 percent flat at 1.1021, away from previous session's low of 1.0990. The currency curbed losses against the dollar following dovish comments from a Federal Reserve official. On Tuesday, the euro hit a 3-week low of 1.0990, after a key index on German business climate showing sentiment among German manufacturers plummeted by its largest amount since the 2008 Recession. Looking head, markets now await Eurozone Consumer Price Index data and U.S. Gross Domestic Product release due later in the week. Earlier in the session, the pair made a high of 1.1026 and a low of 1.1000. Resistance is located at 1.1059 (5-DMA), while support is seen at 1.0990 (Previous Session Low).
USD/JPY: The dollar trades 0.27 percent lower at 111.72 yen against its Japanese counterpart, hovering towards an 11-day low of 111.63, hit earlier in the session. The yen gained against key peers like the dollar and euro on Wednesday as declining stocks and crude oil drove bids for the safe-haven currency. The dollar was expected to have an edge over the yen at the start of the year, when the Fed was embarking on a series of interest rate hikes, however, the recent global market volatility in equities and commodities has hurt the U.S. rate hike expectations, strengthening the appeal of the safe-haven yen. The pair continues to decline as traders follow previous sessions bearish trend. Immediate support is located 111.63 (Sessions Low), break below could drag the pair to 110.96 (Feb 11 Low). Resistance is seen at 112.49 (5-DMA).
GBP/USD: The British pound remained on defensive, hitting a 7-year low at 1.3964 in early Asian trade on Wednesday on worries Britons would vote to leave the European Union in a June referendum. Currently the pair trades at 1.3981, hovering towards sessions low. Earlier in the session, it rose to 1.4026 before falling down to its current levels. Markets now await U.K. Gross Domestic Product data release and U.S. jobless claims report and durable goods orders data for further cues on the pair. On the downside, immediate support is located at 1.3964 (Sessions Low), while on the upside, resistance is located at 1.4026 (Sessions High).
AUD/USD: The Australian dollar trades 0.28 percent lower at 0.7181 as the pullback in global risk appetite and sliding oil prices dragged down commodity-linked currencies. The Aussie touched 0.7258 in the previous session, the highest since early January on the back of increasing in iron ore, Australia's key export. Markets now eagerly await Australia's Private Capital Expenditure data due for release tomorrow for fresh direction on the pair. Earlier in the session, the pair touched sessions high of 0.7211 and low of 0.71665. Immediate support is seen at 0.7155 (10-DMA), while resistance is located at 0.7217 (Feb 5 High).
NZD/USD: The New Zealand dollar edged down against its U.S. counterpart as sliding oil prices weighed on risk assets. The kiwi declined to 0.6605, from a high of 0.6714 the previous day, as oil prices and global shares stumbled. Markets will closely watch a series of U.S. data, ahead of New Zealand's Trade report scheduled in the week. The pairs moves will be dominated by weakening risk sentiment. It currently trades at 0.6617, having touched sessions high of 0.6645. Immediate support is located 0.6592 (Feb 8 Low), while resistance is seen at 0.6649 (Feb 17 High).
Equities Recap
Asian shares declined on Wednesday as oil prices dropped after Saudi Arabia effectively ruled out production cuts by major producers anytime soon, sending investors into safe-havens such as the yen.
MSCI's broadest index of Asia-Pacific shares outside Japan extended earlier losses to fall 1.1 percent as of 0246 GMT, declining further from Monday's six-week high. Chinese shares opened higher but surrendered the gains, with the CSI 300 index down 0.1 percent and the Shanghai Composite little changed. Taiwan Stocks edged down 0.6 pct at 8,282.86 points.
Australia's S&P/ASX 200 Index declined 2.19 pct at 4,870.70 points, while Nikkei dropped 0.85 pct at 15,915.79, with Seoul Shares edged down 0.15 pct.
Commodities Recap
Gold retained sharp overnight gains on Wednesday, bolstered along with other safe-haven assets as risk-aversion in the market sent equities tumbling. Spot gold was firm at $1,227.40 an ounce by 0300 GMT, after gaining 1.4 percent in the previous session. Gold has gained 16 percent so far this year, making it one of the best performing assets of the year, on the back of concerns over the global economy and the sell-off in stocks.
Oil prices declined on Wednesday, extending losses from the previous session after top exporter Saudi Arabia ruled out production cuts and industry data showed a further build in U.S. crude stockpiles. U.S. West Texas Intermediate crude futures were trading at $31.12 per barrel at 0354 GMT, down 2.35 percent from their last settlement, while International benchmark Brent futures were down 1.44 percent at $32.79 a barrel. Both contracts dropped more than 5 percent the previous day.
Treasuries Recap
U.S. 10-Year Treasuries Yield stood at 1.7157 percent down by 0.029.
Australian government bond futures were little changed, with the 3-year bond contract firm at 98.230. The 10-year contract was flat at 97.5800, while the 20-year contract was steady at 97.0450. The spread between 10- and 3-year government bonds narrowed further to 63 basis points, the smallest in 10 months.
New Zealand government bonds gained, sending yields 1.5 basis points lower along most of the curve.
Canadian government bond prices were lower across the maturity curve. The benchmark 10-year was down 13 Canadian cents to yield 1.138 percent, while the 2-year price declined 4.5 Canadian cents to yield 0.475 percent.
