Market Roundup
- President Trump signs an executive order on the extreme vetting of refugees/immigration, will bar green card holders from 7 targeted countries from entering the US.
- Trump confirms the importance of Japan-US alliance, economic-investment ties, discussed cars with PM Abe, to hold summit February 10 – Reuters.
- Trump – 20% tax on Mexico imports certainly an option, tips something else could happen which would be much more positive – Reuters.
- CFTC IMM CTA data - Specs cut net long USD bets to lowest since late October.
- Japan Dec retail sales -1.7% m/m, +0.6% y/y, +1.3% y/y forecast.
- Japanese government mulling 60-hour monthly cap on overtime – Kyodo.
- BoI Visco – Government fund has room to recapitalize other banks after Monte Paschi – Reuters.
- New Zealand Dec trade deficit NZ$41 mln, year-to-Dec NZ$3.2 bln deficit, Dec exports NZ$4.38 bln, imports NZ$4.42 bln.
Economic Data Ahead
- (0200 ET/0700 GMT) Norway Q4 industrial confidence index; last -5.0.
- (0200 ET/0700 GMT) Norway Dec retail sales ex-autos, -0.1% forecast; last +0.2%.
- (0300 ET/0800 GMT) Switzerland Jan KoF indicator, 103.3 forecast; last 102.2.
- (0300 ET/0800 GMT) Spain Q4 estimated GDP, +0.7% q/q, +3.0% y/y forecast; last +0.7%, +3.2%.
- (0500 ET/1000 GMT) Eurozone Jan industrial sentiment index, 0.2 forecast; last 0.1.
- (0500 ET/1000 GMT) Eurozone Jan economic sentiment index, 107.7 forecast; last 107.8.
- (0500 ET/1000 GMT) Eurozone Jan business climate index; last 0.79.
- (0500 ET/1000 GMT) Eurozone Jan services sentiment index, 12.6 forecast; last 12.9.
- (0500 ET/1000 GMT) Eurozone Jan consumer confidence index – final, -4.9 forecast; flash -5.1.
- (0800 ET/1300 GMT) Germany Jan HICP – prelim, -0.7% m/m, +2.0% y/y forecast; last +1.0%, +1.7%.
- (0800 ET/1300 GMT) United States Dec personal income, +0.4% m/m forecast; last unch.
- (0800 ET/1300 GMT) United States Dec personal consumption, +0.5% m/m sa forecast; last +0.2% sa, +0.1% nsa.
- (0800 ET/1300 GMT) United States Dec core PCE price index, +0.1% m/m forecast; last unch m/m, +1.6% y/y.
- (0900 ET/1400 GMT) Belgium Q4 GDP; last +0.2% q/q.
- (0900 ET/1400 GMT) United States Dec Dallas Fed PCE; last +1.1%.
- (1000 ET/1500 GMT) United States Dec pending home sales, +1.1% m/m forecast; last -2.5%, index 107.3.
- (1030 ET/1530 GMT) United States Jan Dallas Fed Mfg business index; last 15.5.
Key Events Ahead
- Lunar New Year – China, Taiwan, Hong Kong, Singapore and South Korea markets closed.
- N/A BoJ Policy board begins two-day meeting.
- (0500 ET/1000 GMT) Italy E2.0-2.5/0.5-1.0 bln 0 and 1.25% 2018 and 2032 BTP linker sales.
- (0500 ET/1000 GMT) Italy E2.25-2.75/3.5-4.0 bln 0.35% and 2.2% 2021 and 2027 BTP auctions.
- (0500 ET/1000 GMT) Italy E1.75-2.25 bln 0.287 floating-rate CCT auction.
- (0850 ET/1350 GMT) France E3.0-3.4/1.2-1.6/1.1-1.5 bln 3/6/12-month BTF note auctions.
- (1530 ET/2030 GMT) BoC DepGov Leduc parliamentary testimony.
FX Beat
DXY: The dollar slumped versus its major peers after the U.S. Treasury yields tumbled on data showing the U.S. economy growing more slowly than expected. The greenback against a basket of currencies traded 0.3 percent down at 100.29, having hit a high of 100.82 in the previous session, its highest since Jan. 20. FxWirePro's Hourly Dollar Strength Index stood at 48.07 (Neutral) by 0500 GMT.
EUR/USD: The euro rose above the 1.0700 handle, extending previous session gains, as concerns over U.S. President's Donald Trump's protectionist trade stance weighed on the dollar. The greenback came under intense selling pressure after data released on Friday showed U.S. gross domestic product grew at an annualized pace of 1.9 percent in the fourth quarter, compared with a 3.5 percent rate in the prior quarter. The European currency traded 0.4 percent up at 1.0733, after falling as low as 1.0657 on Thursday, it’s lowest since Jan 2. FxWirePro's Hourly Euro Strength Index stood at -34.96 (Neutral) by 0400 GMT. Investors’ focus remains on Eurozone's Sentiment Survey, ahead of the U.S. personal consumption figures and pending home sales data for further momentum on the major. Immediate resistance is located at 1.0750, a break above targets 1.0800. On the downside, support is seen at 1.0697 (5-DMA), a break below could drag it near 1.0658 (Previous Session Low).
USD/JPY: The dollar declined against the Japanese safe-haven yen, as the U.S. Treasury yields fell after data showed that the U.S. economy grew more slowly than expected. Moreover, persisting risk-off environment triggered by the U.S. political turmoil continues to weigh on the greenback. The major trades 0.5 percent down at 114.48, after rising as high as 115.03 on Friday, it’s strongest since Jan. 20. FxWirePro's Hourly Yen Strength Index stood at -83.61 (Slightly Bearish) by 0400 GMT. Investors will continue to track board based market sentiment, ahead of the U.S. macroeconomic fundamental drivers. Immediate resistance is located at 115.00 (21 DMA), a break above targets 115.38 (Jan 20 High). On the downside, support is seen at 114.05 (10-DMA), a break below could take it near 113.50
GBP/USD: Sterling rose towards the 1.2600 handle, as investors set aside Brexit concerns and focused on signs that the British economy is growing robustly. Moreover, weaker sentiments around the greenback boosted the bid tone around the major. Sterling trades 0.2 percent higher at 1.2573, after rising to a high of 1.2672 on Thursday, it’s strongest since Dec. 14. FxWirePro's Hourly Sterling Strength Index stood at 17.81 (Neutral) by 0400 GMT. Investors’ now await U.S. economic data, amid a lack of macroeconomic fundamentals from the UK docket. Immediate resistance is located at 1.2673 (Previous Session High), a break above could take it near 1.2700. On the downside, support is seen at 1.2493 (9-EMA), a break below targets 1.2400. Against the euro, the pound trades 0.1 percent down at 85.31 pence, having hit a peak of 84.70 on Thursday, it’s strongest since Jan. 3.
AUD/USD: The Australian dollar rose as the greenback eased after travel ban executed by the U.S. President on Friday triggered fears over global political turbulence. Moreover, tumbling treasury yields and weak U.S. growth numbers strengthened the bid tone around the major. The Aussie trades 0.1 percent at 0.7551, hovering towards a high of 0.7609 hit last week, it’s strongest since Nov. 11. FxWirePro's Hourly Aussie Strength Index stood at -69.27 (Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of the U.S. economic data. Immediate support is seen at 0.7521, a break below could drag it lower 0.7500. On the upside, resistance is located at 0.7600, a break above targets 0.7650.
NZD/USD: The New Zealand dollar edged up against the U.S. dollar amid holiday-thinned trade, as financial markets in Hong Kong, China and Singapore remained shut for the Lunar New Year holiday. The Kiwi trades flat at 0.7262, having hit a peak of 0.7312 on Thursday, it’s strongest since Nov. 9 and was set for its best monthly gains since early 2016. FxWirePro's Hourly Kiwi Strength Index was at 92.96 (Slightly Bullish) by 0500 GMT. Immediate resistance is located at 0.7300, a break above could take it near 0.7340. On the downside, support is seen at 0.7223 (9-EMA), a break below could drag it lower 0.7200.
Equities Recap
Asian shares tumbled after President Donald Trump introduced immigration restrictions that triggered criticism across the globe, which raised fears that his 'America First' policy may prove destabilizing for the other economies.
Markets in China, Taiwan, Hong Kong, Singapore and South Korea were shut for the Lunar New Year holiday.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.4 percent in holiday-thinned trade.
Tokyo's Nikkei slumped 0.65 percent to 19,340.27 points, Australia's S&P/ASX 200 index declined 0.81 percent to 5,667.70 points.
Commodities Recap
Crude oil prices declined, extending previous session losses, weighed down by signs of increasing output in the United States that could offset production cuts by OPEC and other producers. International benchmark Brent crude was trading 0.4 percent lower at $55.21 per barrel by 0405 GMT, having hit a low of $54.85 in the previous session, its lowest since Jan. 25. U.S. West Texas Intermediate crude fell 0.5 percent at $52.86 a barrel, after rising to $54.05 on Friday, its highest since Jan. 6.
Gold prices edged up, extending previous session gains, supported by a weaker dollar as uncertainty over the U.S. policy outlook under President Donald Trump fuelled safe-haven demand. Spot gold gained 0.2 percent to $1,193.74 per ounce by 0416 GMT, having hit its lowest since Jan. 11 at $1,180.78 on Friday. U.S. gold futures were up 0.45 percent at $1,193.70.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.4789 percent lower by 0.002 bps, while 5-year yield was down by 0.002 bps at 1.9392 percent.
The Australian bonds rebounded at the start of the week, tracking firmness in the U.S. Treasuries and as investors moved away from riskier assets including equities and crude oil. The yield on the benchmark 10-year Treasury note plunged nearly 5 basis points to 2.74 percent, the yield on 15-year note also fell 4-1/2 basis points to 3.19 percent and the yield on short-term 2-year ticked 3 basis points lower to 1.82 percent.
The New Zealand government bonds closed mixed as investors remained sidelined in any major trading activity amid a subdued session that witnessed data of little economic significance. However, markets have largely shrugged off the improvement in the country’s trade balance data. The yield on the benchmark 10-year bond plunged 6 basis points to 3.38 percent at the time of closing, while the yield on 7-year note rose 1/2 basis point to 3.01 percent and the yield on short-term 2-year note fell 5 basis points to 2.34 percent.
