Market Roundup
- China Jan money supply M2 +14.0% y/y, new CNY loans 2.51 trln, +15.3%, +13.4%, CNY1.8 trln and +14.4% forecast, total social financing trln.
- Australia plans new interbank rate-setting scheme by year-end - Reuters.
- New Zealand Q4 retail sales +1.2% q/q, +5.3% y/y, +1.4%/+5.2% forecast, Q3 +1.5%/+5.7%.
- New Zealand Q1 RBNZ 2-yr inflation expectations fall to 1.63%, 1-year at record low 1.09%, Q4 1.85% and 1.51%.
- RBA Feb 2 meeting minutes - Sticks to guarded optimism on economic outlook, low inflation offers scope to ease if needed, past AUD fall boosting demand, China demand key though, to slow more, drag from mining to lessen in '16/17.
- Oil powers fly to Doha for private pow-wow as $30 crude woes mount, Saudi Arabia-Russia to meet as mood on oil deal shifts - Reuters, Financial Times.
- Japan FinMin Aso - Will coordinate with G7 on recent market moves, monetary policy takes time to impact, not considering additional economic steps after weak Q4 GDP data - Reuters.
- Japan Inc earnings: Record estimates bruised by slowing global econ - Nikkei.
- China Prem Li - Will take decisive action if growth falters - Beijing News.
- Record year expected for China outbound M&A - China Daily.
- (0400 ET/0900 GMT) Italy Dec trade balance - global/EU; last bln, E1.1 bln surpluses.
- (0400 ET/0900 GMT) Norway Q4 GDP - mainland, +0.1% q/q forecast; last +0.2% q/q, +1.8% AR.
- (0430 ET/0930 GMT) Great Britain Jan CPI, -0.7% m/m, +0.3% y/y forecast; last +0.1%, +0.2%.
- (0430 ET/0930 GMT) Great Britain Jan - core, -0.8% m/m, +1.3% y/y forecast; last +0.3%, +1.4%.
- (0430 ET/0930 GMT) Great Britain Jan RPI, -0.6% m/m, +1.4% y/y forecast; last +0.3%, +1.2%.
- (0430 ET/0930 GMT) Great Britain Jan RPIX, +1.4% y/y forecast; last +0.3% m/m, +1.3% y/y.
- (0500 ET/1000 GMT) Germany Feb ZEW economic sentiment index, zero forecast; last 10.2.
- (0500 ET/1000 GMT) Germany Feb ZEW current conditions index, 55.5 forecast; last 59.7.
- (0830 ET/1330 GMT) United States Feb NY Fed Empire State manufacturing index, -10.0 forecast; last -19.37.
- (1000 ET/1500 GMT) United States Feb NAHB housing market index, 60 forecast; last 60.
- N/A ESM E1.5 bln 6-month, Spain E5-6 bln 6/12-month treasury bill auctions.
- N/A Austria 10, potential 30-yr benchmarks via BAML, Erste, GS, HSBC, SocGen.
- (0430 ET/0930 GMT) ECB 7-day refi at fixed 0.05%, E60 bln allotment forecast, last E60.2 bln.
- (0900 ET/1400 GMT) Philly Fed Harker speech in Newark, New Jersey.
- (1030 ET/1530 GMT) Minny Fed Kashkari speech at Brookings Institution in Washington, DC.
- (1600 ET/2100 GMT) United States Tsy Dec capital flows data (TIC report), Nov $3.2 bln net outflow.
USD: The dollar stood tall against the yen and euro on Tuesday as a bounce in equities and crude oil prices tempered global risk aversion that battered the greenback last week. Against a basket of currencies, the dollar index was up 0.7 percent at 96.685.
EUR/USD: The euro, which soared to a 4-month high of 1.1377 last week, was flat at 1.1152 levels after losing 0.9 percent on Monday. The pair was driven lower by remarks from ECB President Mario Draghi that the bank is ready to ease policy further in March, focusing on risks from financial market volatility, a global slowdown in growth, and subdued oil prices. The major is trading between thin range of 1.1146-1.1183. Resistance is located at 1.1211 (10-DMA), while support is around 1.1128 (Previous Session Low), break below could drag the pair to 1.1108 (Feb 5 Low).
USD/JPY: The dollar trades 0.16 percent higher at 114.72 yen, after it pulled away from a 16-month trough of 110.985 hit last week. The fall came in as a sharp slide in equities worldwide in wake of European banking woes and a decline in crude oil prices to 13-year lows, strengthened demand for safe-haven yen. Improving risk sentiment pushed the equities higher across Asia as oil prices continue to rise. The dollar continues to rise in the session, putting further depreciation pressure on the yen. Immediate resistance is seen at 115.06 (10-DMA), while support is located at 113.64 (5-DMA).
AUD/USD: The Australian dollar touched an 11-day peak following gains in crude oil prices. The Aussie boosted from a pullback in the safe-haven yen as global equity and commodity markets bounced from recent steep falls. The Reserve Bank of Australia in its Feb. 2 meeting minutes, reiterated that very low rates and a weaker local dollar were already underpinning growth. Markets now await Australia's employment figures, scheduled on Thursday for further cues. The pair currently trades at 0.7149 levels, having gone as high as 0.7177 earlier in the session. Immediate resistance is seen at 0.7189 (Feb 3 High), while support is located at 0.7117 (10-DMA).
NZD/USD: The New Zealand dollar trades 0.83 percent lower at 0.6592 after inflation expectations in the country slumped to their lowest on record, piling pressure on policy makers for further cuts in interest rates. The RBNZ's quarterly survey on the economic outlook showed expected inflation to slow to just 1.09 percent on a one-year horizon, down from 1.51 percent three months ago. The central bank has warned that any decline in inflation expectations could warrant further policy action. Markets still await the results of the latest Global Dairy Trade auction. The pair continues to slide, hovering to sessions low of 0.6590. Support is located at 0.6562 (Feb 9 Low), while resistance is located at 0.6675 (Sessions High).
USD/CNY: The yuan eased against the dollar on Tuesday, after the central bank set its official midpoint rate at 6.5130 per dollar prior to the market open on Tuesday, weakening slightly from the previous fixing of 6.5118. The spot market opened at 6.5060 per dollar and was trading at 6.5127 at midday, while the offshore yuan was trading 0.04 percent weaker than the onshore spot at 6.5155 per dollar by midday. Chinese banks extended a record 2.51 trillion yuan ($385.40 billion) of new loans in January, while growth in money supply rose to 14.0 percent as compared to previous 13.3 percent, suggesting Beijing is keeping monetary policy loose to counter a prolonged economic slowdown.
Equities Recap
Asian shares extended their gains on Tuesday as stabilising Chinese markets, a rebound in oil prices and strong U.S. consumption data drove investors to look for bargains after last week's rout.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.6 percent, with Chinese bank shares leading the gains after a surprise jump in China's bank lending data.
Australia's S&P/ASX 200 Index closed up 1.07 pct at 4,895.50 points, while Nikkei edged up 0.20 pct at 16,054.43, with Seoul Shares advanced 1.42 pct.
Commodities Recap
Gold extended losses on Tuesday, from Thursday's one-year peak of $1,262.90 per ounce as a rebound in global equities and the return of risk appetite faded demand for the safe-haven asset. It fell 0.6 percent to $1,203.90, unable to find a floor after 2.2 percent on Monday, which was its biggest fall in almost seven months. Spot gold held steady at $1,208.56 an ounce by 0042 GMT. The metal declined to a session low of $1,201.65 on Monday, before closing the day down 2.3 percent.
Oil prices gained to their highest levels in more than a week, as news of a meeting of top officials from the world's biggest oil producers spurred speculation of an eventual deal to tackle a deep supply glut. Brent crude for April delivery was up $1.21 at $34.60 a barrel. It rose as high as $34.72, the highest level since Feb. 5, after rising 11 percent on Friday. U.S. crude was up $1.43 at $30.87 by 0330 GMT, the contract rose by as much as $1.50 to $30.94, the highest since Feb. 8.
Treasuries Recap
Yields on top-rated government bond rose, as risk sentiment improved, with the 10-year U.S. Treasuries yield rising 4.7 basis points to 1.793 percent from 1.746 percent at the end of the previous week.
Australian government bond futures edged away from multi-month peaks, with the 3-year bond contract off 2 ticks at 98.150. The 10-year contract eased 1 tick to 97.4750, while the 20-year contract shed 2 ticks to 96.9300.
New Zealand government bonds recouped early losses to be mostly flat on the day.
