Market Roundup
- Australia Jan retail sales +0.3% m/m, +0.4% forecast, Dec unch.
- BoJ Gov Kuroda - Not thinking of lowering rates again now but will take appropriate steps without hesitation in future if needed - Reuters.
- Japan FinMin Aso - No change in plan to implement sales tax hike next year, caveats financial crisis or natural disaster - Reuters.
- EconMin Ishihara - Advisory panel on spending not in preparation for sales tax hike delay - Reuters.
- Japan govt nominates int'l finance expert Makoto Sakurai to BoJ Policy Board to replace Shirai this month, Shirai voted against NIRP in January - RTRS.
- Japan govt to nominate Shinsei Bank Takako Masai to BoJ Policy Board, among candidates to replace Ishida in June - Nikkei, Reuters.
- Japan Jan real wages +0.4% y/y, first rise in 3-mos, total cash earnings +0.4%, overtime -1.3%, special payments including winter bonuses +7.1%.
- Japan Inc wants workers to take more time off, Japan aims to double service- sector productivity growth - Nikkei
- JCER - Japan January real GDP -0.4% m/m.
- Japan Sumitomo Life to up investment in US corporate bonds - MNI.
- Foreign CB US debt holdings -$3.214 bln to $3.251 trln Feb 24 week, Treasury holdings -$5.180 bln to $2.935 trln, agencies +$1.769 bln to $266.505 bln.
- Lipper - US-based junk bond inflows highest on record, stock funds post $2.4 bln outflows in week-ended March 2.
- NY Fed swaps with foreign CBs $88 mln Feb 24 week, BoJ $1 mln, rest with ECB.
- Norway makes first withdrawal from oil fund in January - Reuters.
- RBNZ to hold rates next, to ease soon after - Reuters poll.
Economic Data Ahead
- (0330 ET/0830 GMT) Sweden Jan industrial production, +0.5% m/m forecast; last -2.9% m/m, +0.3% y/y.
- (0330 ET/0830 GMT) Sweden Jan new manufacturing orders; last +1.4% y/y.
- (0400 ET/0900 GMT) Italy Q4 GDP - final, +0.1% q/q, +1.0% y/y forecast; prelim +0.1%, +1.0%.
- (0830 ET/1330 GMT) United States Feb non-farm payrolls, +190k forecast; last +151k.
- (0830 ET/1330 GMT) United States Feb unemployment, 4.9% forecast; last 4.9%, participation 62.7%.
- (0830 ET/1330 GMT) United States Feb average earnings, +0.2% m/m forecast; last +0.5%.
- (0830 ET/1330 GMT) United States Jan int'l trade balance, $44 bln deficit forecast; last $43.4 bln deficit.
Key Events Ahead
- N/A UK DMO GBP2/1.5/1.5 bln 1/3/6-month treasury bill auctions.
- (1300 ET/1800 GMT) Dallas Fed Kaplan speech in Dallas-Fort Worth.
- Sunday IIB annual Washington, DC conference, Fed Brainard, BoE Brazier speak.
FX Beat
USD: The dollar was on the defensive against its peers on Friday after soft service sector employment data hurt markets expectation the Fed's would hike interest rates soon. The dollar's index against a basket of six major currencies trades 0.02 percent up at 97.66, after declining 0.6 percent on Thursday.
EUR/USD: The euro trades 0.01 percent up at 1.0955, after having climbed at 1.0972 in the previous session. The overnight spike lifted the pair away from a 1-month low of 1.0825 hit on Wednesday. The greenback weakened as the Institute for Supply Management said on Thursday its employment index declined to 49.7 in February from 52.1 in January, the first contraction in service-sector employment since February 2014. In contrast, ISM non- manufacturing PMI index showed continuous expansion, providing some support for the U.S. dollar. Investors now await the crucial U.S. non farm payrolls data due out later in the day, which is expected to show U.S. employers added 190,000 jobs in February according to economists polled by Reuters. Immediate support is located at 1.0901, while resistance is seen at 1.0972 (Previous Session High).
USD/JPY: The dollar trades around 113.81 yen, away from a low of 113.24 touched earlier in the session. The yen was seen making a recovering from a 2-week low of 114.55 hit on Wednesday's. The effects of weak U.S. economic data are seen fading away, as the pair continues to hover towards session high of 113.88. Global growth concerns, mixed U.S. data and dovish comments from Federal Reserve officials have reduce near-term rate hike prospects this year, with financial markets not expecting the Fed to tighten at its March 15-16 policy meeting. U.S. non farm payroll report will be closely watched for further cues on the pairs move. The pair faces resistance at 114.26, on the upside, while support is located at 113.15 (DMA), on the downside.
AUD/USD: The Australian dollar trades 0.18 percent higher at 0.7365, holding on to a near 3-month high of 0.7373 hit on Thursday, a level last seen early December. It's on track for a weekly gain of 3.2 percent, the most in five months. A recent rebound in prices of commodities such as crude oil and iron ore and supportive domestic data have reduced expectations of a future interest rate cut by the Reserve Bank of Australia. The Aussie has been strengthened by strong domestic data which showed the country's economic growth accelerated to 3 percent in the last quarter of 2015, well above market expectations. With no domestic data scheduled for the day, attention will be on U.S. NFP data due later in the day. Traders are likely to continue the bullish trend as the pair continues to rise, hovering towards sessions high of 0.7376. Immediate resistance is located at 0.7385 (Dec 4 High), while support is seen at 0.7265 (5-DMA).
NZD/USD: The New Zealand dollar trades higher at 0.6754, set for its fourth session of gains. It has gained 1.5 percent so far this week, having pulled away from a low of 0.6565, hit on Monday. The kiwi benefited from a weaker greenback following a soft reading on the U.S. services sector and cautious comments from Dallas Fed President Robert Kaplan. However, it faces a hurdle next week when the Reserve Bank of New Zealand holds a policy review amid great expectations for scope of further easing. Traders are likely to be bullish on the pair as it continues to make fresh session highs. Immediate resistance is located at 0.6774 (Feb 26 High), break above could take the pair to 0.6825. On the downside, support is located at 0.6672 (5-DMA).
USD/CNY: The yuan firmed against the dollar for a fourth day after the central bank set the midpoint rate at 6.5284 per dollar prior to market open, 0.20 percent firmer than the previous fix 6.5412, reflecting the dollar's weakness in global markets. Spot yuan opened at 6.5280 per dollar and hit an intraday high of 6.5099 around 0330 GMT, apparently supported by state-bank dollar sales. Offshore yuan was trading 0.12 percent weaker than the onshore spot at 6.5078 per dollar. The yuan is expected to weaken some 3.5 percent against the U.S. dollar over the coming year, but analysts also said they do not expect the central bank to sharply devalue the currency in coming months. In addition to the U.S. jobs data, markets will also focus on China's National People's Congress annual meeting scheduled on Saturday.
Equities Recap
Asian shares looked set on Friday to post their strongest week in five months as global investors returned to riskier assets after a string of positive U.S. economic data and a bounce in oil and commodity prices.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4 percent to the highest in almost two months. That put in on track for a 5.4 percent gain for the week, the its strongest weekly performance since October. However, Chinese shares failed to gain from the optimism, with the Shanghai Composite index down 0.5 percent, while the CSI 300 was little changed. Taiwan stocks close up 0.4 pct at 8,643.55 points.
Australia's S&P/ASX 200 index climbed 0.35 pct at 5,099.10 points, while Nikkei gained 0.32 pct at 17,014.78, with Seoul shares edged down 0.12 pct.
Commodities Recap
Gold edged lower on Friday, but was not far off a 13-month peak reached in the prior session when a weaker dollar strengthened the bullion in two weeks. Spot gold was down 0.3 percent at $1,259.50 an ounce by 0032 GMT, after rallying nearly 2 percent on Thursday when it hit $1,267.06, its strongest since Feb. 6, 2015. U.S. gold for April delivery rose 0.2 percent to $1,260.50 an ounce.
Crude futures gained in Asian trade on Friday, buoyed by renewed optimism prices may have bottomed out after official U.S. data showed oil production fell to its lowest level since November 2014. Brent futures had advanced 15 cents to $37.22 a barrel as of 0354 GMT, on track for a gain of 6 percent this week. The crude benchmark is set to end the week with a gain of more than 5 percent. U.S. crude futures had climbed 25 cents to $34.82 a barrel, having settled down 9 cents in the previous session.
Treasuries Recap
U.S. 10-Year Treasuries Yield stood at 1.8338 percent up by 0.004 bps.
Australian government bond futures were subdued after selling off earlier in the week on the upbeat growth data. The 3-year bond contract eased a tick to 98.100, while the 10-year contract added 1.5 ticks to 97.4550, with the 20-year contract edged 2 ticks higher to 96.9250.
New Zealand government bonds gained, with yields moving 1.5 basis points lower across the curve.
Canadian government bond prices were higher across the maturity curve, with the benchmark 10 -year rising 25 Canadian cents to yield 1.222 percent, while the 2-year price up 3 Canadian cents to yield 0.518 percent. On Wednesday, the 10-year yield touched its highest since Jan. 28 at 1.302 percent.
