Market Roundup
- Japan Feb PMI services 51.2, slowest expansion in 7-mos, Jan 52.4.
- China Feb Caixin PMI services 51.2, Jan 52.4.
- Australia Jan trade deficit A$2.937 bln, better than A$3.1 bln forcast, exports +1% m/m, imports -1%.
- Australia Feb PSI +3.4 pts to 51.8, new orders and sales up.
- Australia Feb VFACTS new vehicle sales +6.7% y/y.
- New Zealand Feb ANZ commodity price index +0.4% m/m, falls prev 3-mos, -17.8% y/y.
- New Zealand Q4 value of residential bldg work +2.8% q/q, most bldg activity recorded.
- BoJ Gov Kuroda - Will adjust policy without hesitation if needed, will strengthen communication with market (in Diet testimony) - Reuters.
- BoJ DepGov Nakaso - Urges government to pursue structural reforms to boost growth, monetary policy to fight deflation, aid Abenomics third arrow to fly higher and faster, QQE-NIRP combo to work, topping up QQE an option, eyes inflation at 2% around H1 FY '17/18, economic fundamentals solid - Reuters.
- Japan official - No talk about JPY at Shanghai G20 - Reuters.
- MoF flow data week-ended Feb 27 - Japanese buy net Y382.3 bln foreign stocks, Y933.8 bln bonds, sell Y10.3 bln bills; foreign investors sell net trln Japanese stocks, buy Y211.8 bln bonds, sell Y707.5 bln bills.
Economic Data Ahead
- (0230 ET/0730 GMT) Sweden Feb PMI services; last 59.3.
- (0315 ET/0815 GMT) Spain Feb PMI services, 54.0 forcast; last 54.6.
- (0345 ET/0845 GMT) Italy Feb PMI services, 53.1 forcast; last 53.6.
- (0350 ET/0850 GMT) France Feb PMI services, 49.8 forcast; flash 49.8.
- (0350 ET/0850 GMT) France Feb PMI composite; last 49.8.
- (0355 ET/0855 GMT) Germany Feb PMI services, 55.1 forcast; flash 55.1.
- (0355 ET/0855 GMT) Germany Feb PMI composite; last 53.8.
- (0400 ET/0900 GMT) Eurozone Feb PMI services, 53.0 forcast; flash 53.0.
- (0400 ET/0900 GMT) Eurozone Feb PMI composite, 52.7 forcast; flash 52.7.
- (0430 ET/0930 GMT) Great Britain Feb PMI services, 55.1 forcast; last 55.6.
- (0500 ET/1000 GMT) Eurozone Feb retail sales, +0.1% m/m, +1.3% y/y forcast; last +0.3%, +1.4%.
- (0500 ET/1000 GMT) Norway Feb housing prices; last +5.2% y/y.
- (0730 ET/1230 GMT) United States Feb Challenger layoffs; last 75.11k.
- (0830 ET/1330 GMT) United States w/e initial jobless claims, 271k forcast; last 272k.
- (0830 ET/1330 GMT) United States Q4 productivity - revised, -3.2% forcast; prelim -3.0%.
- (0830 ET/1330 GMT) United States Q4 unit labor costs - revised, +4.7% forcast; prelim +4.5%.
- (0945 ET/1445 GMT) United States Feb Markit PMI services/composite - final; flash 49.8, 50.1.
- (1000 ET/1500 GMT) United States Jan factory orders, +2.0% m/m forcast; last -2.9%, ex-transport -0.8%.
- (1000 ET/1500 GMT) United States Feb ISM non-mfg PMI, 53.2 forcast; last 53.5.
Key Events Ahead
- N/A Abu Dhabi Global Financial Markets Forum, various speakers (final day).
- N/A BCC annual conference, UK ChancExch Osborne, GerminySchaeuble to speak.
- N/A Buba Thiele, German FinMin Schaeuble speak at LSE event.
- (0430 ET/0930 GMT) Spain E3.5-4.5 bln 0.75% and 1.95% 2021 and 2030 Bono auctions.
- (0430 ET/0930 GMT) Spain E250-750 mln 1.8% 2024 index-linked Bono auction.
- (0450 ET/0950 GMT) France E8-9 bln 1.75/0.5/1.5% 2023/26/31 OAT auctions.
- (1045 ET/1545 GMT) Dallas Fed Kaplan speech at Austin University of Texas event.
- (1100 ET/1600 GMT) German FinMin Schaeuble speaks at London OMFIF conference.
- (1245 ET/1745 GMT) BoE ChiefEcon Haldane speech at Manchester Business School.
- (1400 ET/1900 GMT) Fed Small Business Credit Survey release.
FX Beat
USD: The greenback was back above 114.00 yen and was moving towards the previous session's 2-week high of 114.56. Upbeat U.S. economic data reports have boosted the expectations that the Federal Reserve remains on track to hike U.S. interest rates this year. Against a basket of currencies, the dollar index was 0.10 percent up at 98.281.
EUR/USD: The euro trades 0.10 percent lower at 1.0856 level, however, away from a low of 1.0825 hit in the previous session. The greenback was boosted by the ADP National Employment Report, which suggested a healthy outcome for Friday's non-farm payrolls. Investors remained cautious of buying the euro after European Central Bank policymaker suggested a possible action next week, when the ECB holds its policy review. Executive Board member Benoit Coeure said Eurozone banks will be able to deal with rock bottom interest rates and benefit from the central bank's efforts to support growth and inflation. Eurozone economies Markit Service and Composite PMI are due later in the day. Traders are likely to be bearish on the pair as it continues to hover towards session low. Immediate support is located at 1.0834 (March 1 Low), break below could drag the pair to 1.0825. On the upside, resistance is seen at 1.0878 (5-DMA).
USD/JPY: The dollar gained momentum on the back of strong U.S. ADP Employment Change data, further strengthening the prospects of the Fed's interest rate hike. U.S. February ADP employment change grew 214K, versus previous print of 193K and market consensus of 190K. The greenback rose by nearly 0.63 percent at 114.16 yen and continues to climb, drifting near sessions high of 114.24. In the previous session it rose to a 2-week high at 114.55. Further downward pressure on the yen as the extended risk-on rally in the global equities continue to hurt safe-haven yen. Markets attention now remains on series of the U.S. economic data due later today, including the jobless claims, factory orders and ISM non-manufacturing PMI index. Immediate resistance is located at 114.55 (Previous Session High), while support is seen at 113.08 (10-DMA).
AUD/USD: The Australian dollar rose 0.32 percent higher at 0.7321, on strong domestic economic data. The economy's trade deficit was reduced to -2937 millions in January, against market consensus of -3100 millions. This comes in as exports grew by 1% from previous -5%, while imports remained unchanged at -1%. The Aussie was also bolster by AiG Performance of Services Index report, which was at 51.8, suggesting favorable business conditions in the service sector. On Wednesday, the Aussie rallied 1.7 percent, following upbeat Q4 GDP data. Traders are likely to continue previous four session's bullish trend, taking the pair near a peak of 0.7321, a level last seen on Dec 31st. Immediate resistance is located at 0.7321 (Sessions High), break above will take the pair to 0.7327 (Dec 31st High). While support is seen at 0.7209 (5-DMA).
NZD/USD: The New Zealand dollar followed its fellow Antipodean and trades at 0.6682 levels, having touched sessions high of 0.6697. However, it had briefly declined to a low of 0.6655 earlier in the session. The kiwi has made a solid recovery from a low of 0.6564 hit on Feb 29th. Improved risk-sentiment and rallying global equities have underpinned the NZD bulls. Markets now await U.S. economic news for fresh cues in the pair. On the upside, resistance is located at 0.6714 (Feb 23 High), break above could take the pair to 0.6725. While on the downside, support is seen at 0.6653 (10-DMA).
USD/CNY: The yuan was steady against the dollar on Thursday after the central bank set the midpoint rate at 6.5412 per dollar prior to the market open, 0.12 percent firmer than the previous fix of 6.549, ahead of the National People's Congress meeting that will open on Saturday. The spot market opened at 6.5422 per dollar and was trading at 6.5436 at midday, while the offshore yuan was trading 0.02 percent weaker than its onshore counterpart at 6.5448 per dollar. The central bank resumed its easing cycle on Monday, injecting an estimated $100 billion worth of long-term cash into the economy to ease the affects from job layoffs and bankruptcies in industries as a result of overcapacity. Uncertainties surrounding the Chienese economy are likely to weigh on the yuan despite central bank efforts to stabilise the currency.
Equities Recap
Asian shares were bound for a third straight session of gains on Thursday as upbeat data on U.S. jobs and a rally in a range of commodities whetted risk appetites globally.
MSCI's broadest index of Asia-Pacific shares outside Japan added another 0.9 percent to reach a seven-week top, having advanced 2.6 percent on Wednesday. Taiwan stocks climbed up 0.8 pct at 8,611.79 points.
Australia's S&P/ASX 200 index closed up 1.04 pct at 5,073.40 points, while Nikkei advanced 1.28 pct at 16,960.16, with Seoul shares edged up 0.47 pct.
Commodities Recap
Gold edged lower on Thursday as investors returned to risky assets after upbeat U.S. jobs data, lifting equities in Asia to a seven-week high, although strong inflows into gold funds limited losses in the metal. Spot gold was off 0.2 percent at $1,237.65 an ounce by 0143 GMT, after rising 0.7 percent on Wednesday. The metal hit a one-year high of $1,260.60 on Feb. 11 as uncertainty in the global economy sharpened investor demand for safe havens. U.S. gold for April delivery declined 0.3 percent to $1,238.60 an ounce. Spot palladium was down 0.8 percent at $511.22 an ounce while platinum and silver were flat at $931.90 and $14.925, respectively.
Oil prices edged up on Thursday as sentiment spread that a 20-month long market rout may have come to an end as production slows amid strong demand. U.S. West Texas Intermediate crude futures were trading at $34.73 per barrel at 0229 GMT, up 7 cents from their last settlement. WTI has gained over a third in value since Feb. 11, when prices dropped to little more than $26 per barrels, levels not seen since 2003. International Brent futures were up 3 cents at 36.96 a barrel, and up almost a quarter since Feb. 11.
Treasuries Recap
U.S. 10-Year Treasuries Yield stood at 1.8529 percent up by 0.005 bps.
Australian government bond futures declined, with the 3-year bond contract off 6 ticks at 98.120. The 10-year contract dropped 8.5 ticks to 97.4550 in a bearish steepening of the curve, while the 20-year contract lost 6.5 ticks to 96.9250.
New Zealand government bonds eased, sending yields 1.5 basis points higher at the short tend and 3 basis points higher at the long end.
Canadian government bond prices were lower across the maturity curve, with the benchmark 10-year declining 14 Canadian cents to yield 1.251 percent, while the 2-year price down 1 Canadian cent to yield 0.537 percent. The spread between the 2-year and 10-year yields widened by 1 basis point to 71.4 basis points, its widest since Feb. 8.
