Market Roundup
- Australia Jan job ads +1.0% m/m, newspapers -3.2%, internet +1.1%.
- Japan Dec current account surplus Y960.7 bln, Y987.0 bln eyed.
- Japan Jan outstanding bank loans trln, +2.3% y/y, rise steady.
- Japan Dec real wages -0.1% y/y, total cash earnings +0.1%, overtime +0.8% but special payments incl bonuses -0.4%; '15 cash earnings +0.1%, wages -0.9%.
- Specs pare net USD longs to lowest since Oct 20 '15 week, EUR net shorts to 87k contracts, lowest since late Oct, JPY shorts off to 37.2k from 50k.
- MoF Jan flow data - Japanese buy net Y986.2 bln foreign stocks, Y346.1 bln bonds, volume huge, Y313.3 bln bills; foreign investors sell net trln Japanese stocks, volume massive, buy Y754.4 bln bonds, trln bills.
- North Korea launches missile, passed over Japan's southern Okinawa islands into ocean, Japan too no action to shoot down rocket with satellite - NHK.
- PBOC - Will maintain prudent monetary policy, appropriate liquidity increase yuan two-way flexibility - Reuters.
- China end-Jan FX reserves $3.23 trln, $3.20 trln eyed, end-Dec 3.33 trln, $99.5 bln fall to lowest since May '12, second largest monthly drop ever.
- China up close: Battle erupts between Xi Jinping and George Soros - Nikkei.
- Ex-PBOC economist: New US jitters to send cash back to China - Nikkei.
- ECB - EuroSystem financial assets +5%/year since '02.
Economic Data Ahead
- (0300 ET/0800 GMT) Spain Dec industrial output, +4.1% y/y eyed; last +4.2%.
- (0430 ET/0930 GMT) Eurozone Feb Sentix index, 7.6 eyed; last 9.6.
- (1000 ET/1500 GMT) United States Jan employment trends index; last 129.3.
Key Events Ahead
- Lunar New Year, much of Asia/China markets closed, NZ Waitangi Day holiday.
- N/A Germany E3 bln 6-month Bubill auction.
- N/A France E3.1-3.5/1.1-1.5/1.6-2.0 bln 3/6/12-month BTF note auctions.
- N/A BoC DepGov Lane speech in Montreal.
- (1130 ET/1630 GMT) FDIC Gruenberg speech at Los Angeles SF Fed/FDIC/OCC et al conference.
FX Beat
USD: The dollar held onto its post-payrolls gains early on Monday in a sluggish start to the week with Chinese markets closed for the Lunar New Year holiday. The dollar index was 0.20 percent up at 97.16, having advanced 0.6 percent on Friday boosted by an upbeat non-farm payrolls report.
EUR/USD: The euro trades at 1.1131, having retreated from a 3-month peak of 1.1244. Worries about sluggish global growth combined with a loss in U.S. economic momentum in the fourth quarter have convinced many investors that the next hike by the Federal Reserve will be a long time coming. However, markets will need a lot more convincing as the upbeat jobs data might have boosted Fed hike expectations. For the week ahead, Yellen testimony, eurozone economic releases and U.S. retail sales data will be closely watched for further cues. Traders continue to follow previous sessions bearish trend, as the pair hovers towards sessions low of 1.1128. Immediate support is seen at 1.1102 (5-DMA), while resistance is located at 1.1238 (Feb 4 High).
USD/JPY: The greenback rebounded 0.53 percent to 117.41 yen against its Japanese counterpart, from a 2-1/2 week low of 116.29 hit on Friday. However, the dollar still nursed a 3.6-percent drop on the yen last week, recording its biggest weekly drop since July 2009. Traders continue to ride on Friday's upbeat U.S. labour market report, which is likely to keep the prospects for Fed's four rate hike this year intact. U.S.'s January jobless rate dropped 4.9 percent, recording its lowest level since February 2008. As China's markets remain closed for the Lunar New Year holiday until next Monday, thin trade is likely to prevail during the Asian trades. The pair continues to advance, drifting away Friday session's lows. Immediate resistance is located at 117.75 (5- DMA), while on the downside, support is seen at 116.52 (Feb 4 Low).
AUD/USD: The Australian dollar edged up 0.48 percent to 0.7092 levels, after plunging nearly 2 percent against its U.S. counterpart on Friday. The Aussie was strengthened from better than expected Australia's January jobs advertisement data. Australia's total number of job ads increased 1.0% m/m, as compared to December's 0.1% decline. Markets will closely watch for Australia's business confidence report, ahead of RBA Stevens speech and U.S. retail sales report due later this week. Currently the pair trades at 0.7096 levels, hovering towards sessions high of 0.7103. Immediate resistance is seen at 0.7111 (5- DMA), while support is located at 0.7058 (Previous Session Low) on the downside.
NZD/USD: The New Zealand dollars was nursing losses in thin trading on Monday after an upbeat U.S. non-farm payrolls report boosted its U.S. peer. However, the kiwi is seen recovering, reversing its downward trend. Traders await fro New Zealand's Business PMI data and Food Price Index report to provide further cues for the pair's moves. It is currently trading at 0.6632 levels, having touched sessions high of 0.6643. Resistance is located at 0.6643 (Session's High), while support is seen at 0.6590 (Jan 7 Low)
USD/CNY: The PBoC is likely to expand channels for yuan inflows and outflows and also improve the prudential management of cross-border capital flows. The central bank has repeatedly injected money into the banking system via short- and medium-term lending tools and increased the frequency of its open market operations. This week Chinese markets will be closed for the Lunar New Year holidays.
Equities Recap
Asian shares drop in thin holiday trade as many regional markets are closed for the Lunar New Year holidays.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.2 percent, while Australia's S&P/ASX 200 Index edged down 0.02 pct at 4,975.30 points, with Nikkei climbing up 1.10 pct at 17,004.30.
Commodities Recap
Spot gold dropped on Monday from near 3-month high hit in its previous session, after U.S. jobs report increased doubts over prospects for a quicker pace of rate hikes this year and strengthened the dollar. Spot gold edged down 0.6 percent to $1,165.86 an ounce by 0109 GMT, dropping from its highest since Oct. 28 at $1,174.50 hit in the previous session. U.S. gold climbed 0.8 percent to $1,166.60, while platinum and palladium were at $903.74, and $501.30 an ounce respectively.
Crude oil futures were mixed in early Asian trade on Monday after a meeting between OPEC producers Saudi Arabia and Venezuela to discuss coordination on prices ended with few signs there would be steps taken to boost prices. Brent crude futures was down 9 cents at $33.97 at 0039 GMT, while U.S. crude futures were 2 cents down at $30.87.
Treasuries Recap
U.S. 10-Year Treasuries yield stood at 1.861 percent versus previous close of 1.848 percent.
Australian government bond futures dropped, with the 3-year bond contract off 3 ticks at 98.140. The 10-year contract eased 5 ticks to 97.4050, while the 20-year contract dropped 4.5 ticks to 96.8700.
