Market Roundup
- Japan end-January foreign reserves +$14.893 bln to $1.2481 trln.
- Foreign CB US debt holdings +$6.422 bln to $3.273 trln Feb 3 week, Treasury holdings +$6.464 bln to $2.962 trln, agencies -$537 mln to $263.414 bln.
- NY Fed - Swaps with foreign CBs $91 mln February 3 week, BoJ $1 mln, rest with ECB.
- Lipper - US-based stock funds post fifth straight week of withdrawals.
- Cleveland Fed Mester - US economy to overcome soft patch, comforted that US rates headed higher, no change in outlook, can read too much into volatility.
- RBA quarterly MPS - Highlights job strength in steady policy, growth outlook, end-'15 GDP +2.5%, end '16 +2.5-3.5%, inflation 2% to June '16, 2-3% to '18, AUD adjusting to lower commodity prices, China key uncertainty.
- Australia December retail sales unchanged m/m, +0.5% eyed; Q4 chain volume retail sales +0.6% q/q, +0.9% eyed.
- Australia January AIG PCI -0.5 pts to 46.3.
Economic Data Ahead
- (0200 ET/0700 GMT) Germany December industrial orders, -0.5% m/m eyed; last +1.5%.
- (0245 ET/0745 GMT) France December trade balance, E4.4 bln deficit eyed; last bln deficit.
- (0245 ET/0745 GMT) France December current account balance; last E1.4 bln deficit.
- (0330 ET/0830 GMT) Sweden December industrial production, +0.3% m/m eyed; last +1.4% m/m, +6.2% y/y.
- (0330 ET/0830 GMT) Sweden December manufacturing new orders; last +15.1% y/y.
- (0400 ET/0900 GMT) Norway December manufacturing output, -0.6% m/m eyed; last +1.0%.
- (0830 ET/1330 GMT) US January non-farm payrolls, +190k eyed; last +292k.
- (0830 ET/1330 GMT) US January unemployment, 5.0% eyed; last 5.0%, participation 62.6%.
- (0830 ET/1330 GMT) US January average earnings/workweek, +0.3% m/m, 34.5 hrs eyed; last unchanged, 34.5.
- (0830 ET/1330 GMT) US December int'l trade balance, $43 bln deficit eyed; last $42.4 bln deficit.
- (1500 ET/2000 GMT) US December consumer credit, $16 bln eyed; last $13.95 bln.
Key Events Ahead
- N/A UK DMO GBP1.5/2.0/2.0 bln 1/3/6-month treasury bill auctions.
- (0630 ET/1130 GMT) ECB Nouy, BoE DepGov Bailey in London EBA conference panel discussion.
- (0700 ET/1200 GMT) ECB VP Constancio speech at Madrid Bank of Spain event.
- (1330 ET/1830 GMT) BIS Caruana speech at LSE
FX Recap
EUR/USD: Euro appreciated against US dollar on Thursday and hit high above $1.1200 handle. Intraday outlook will be slightly bearish below $1.1275 levels. A break of such levels will take the parity above $1.13 handle. On the other side, reversal from yesterday's high may bring short term trend reversal. Pair made intraday high at $1.1216 and low at $1.1187 levels. German factory orders will be main focus for the European session. Later today US will publish NFP job data, which will provide further direction to the parity.
USD/JPY: JPY is continuing adding strength against US dollar and currently trading around 116.75 levels. In a bigger picture, a break of 115.85 levels is required to confirm the more bearish trend. On the other side, a daily close above 119.02 levels is required to confirm the bullish trend. Today in Asian hours, Japan released Leading Indicator data with negative numbers at 102.0% vs 103.5% previous release.
GBP/USD: The British pound declined from the highest point against the US dollar since the beginning of January amid increased volatility induced by the UK's central bank. As widely expected, the BoE left the interest rate unchanged at the record low of 0.50% but more surprisingly based on a unanimous vote, with Ian McCafferty dropping his vote for a rate hike. Sterling erased its earlier gains and currently trading around $1.4552 levels. A break of $1.4668 is required to confirm the bullish bias. Major support levels is seen around $1.4415 levels.
AUD/USD: Pair fell 0.30% to $0.7172 on Friday afternoon in Sydney from $0.7210 at the close of trade in New York on Thursday. Retail sales turnover was flat in December, according to the Australian Bureau of Statistics (ABS), coming in much worse than the market forecast of a 0.5% increase. At the same time on Friday the RBA released its quarterly Statement on Monetary Policy containing its updated economic forecasts. The bank's GDP growth and inflation forecasts were unchanged of its November forecasts but the RBA upgraded employment forecasts. The RBA now estimates that unemployment will continue to decline from its current level of 5.8%, whereas back in November the RBA said it expected the unemployment rate to hold between 6.0-6.25% over the next 12 months. Pair made intraday high at $0.7210 and low at $0.7172 levels.
NZD/USD: Pair hit high at $0.6747 levels on Thursday but fails to sustain above $0.6700 levels. NZD erased its previous gains and currently trading at $0.6683 levels. Short term outlook remains bearish below $0.6747 levels. Mino support levels is seen around $0.6630 and $0.6560 thereafter.
Equities Recap
Asian markets are trading on mix note ahead of this big event.
Japan's benchmark Nikkei 225 index tumbled 1.08% to 16,861.52 points before midday in Tokyo, while Japan's broader Topix gauge fell 1.28% to 1,371.00 points.
Hong Kong's benchmark Hang Seng index advanced 0.81% to 19,339.40 points early Friday, but mainland China's benchmark Shanghai Composite was largely flat at 2,781.18 points at the same time.
Korea's benchmark Kospi index rose 0.22% to 1,920.75 points in Seoul.
The benchmark Australian S&P/ASX 200 index traded 0.70% lower at 4,945.50 points in Sydney, while New Zealand's benchmark S&P/NZX 50 index traded little down at 6,135.71 points in Wellington.
Commodities Recap
Crude oil futures steady in lacklustre trading on Friday as Asian liquidity faded ahead of the Lunar New Year holiday across large parts of the region. International benchmark Brent crude futures were trading at $34.50 per barrel at 0426 GMT, up 4 cents from their last settlement. U.S. crude futures were up 8 cents at 31.80 a barrel.
Gold, trading near its highest since October on Friday, is on track to score its strongest weekly gain in a month as the U.S. dollar is pressured by growing doubts that the Federal Reserve can stick to its interest rate hike campaign. Spot gold was flat at $1,154.20 an ounce by 0019 GMT, after peaking at $1,157.20 on Thursday, it's highest since Oct. 29.
Treasuries Recap
New Zealand government bonds eased, sending yields 2.5 basis points higher at the short end and 2 basis points higher at the long end.
Australian government bond futures were firm, with the three-year bond contract up 1 tick at 98.180. The 10-year contract added 3 ticks to 97.4600, while the 20-year contract was half a tick higher at 96.9200.
