Market Roundup
- Japanese inflation gives BoJ buyer’s remorse – Reuters.
- MoF flow data week-ended Jan 21 – Japanese sell net Y19.1 bln foreign stocks, Y539.0 bln bonds, Y13.7 bln bills; foreign investors sell net Y376.1 bln Japan stocks, Y168.5 bln JGBs, park net Y2.2439 trillion in bills.
- Japan December corp service price index +0.1% m/m, +0.4% y/y to 103.4.
- China said to require banks to curb new loans in first quarter - Bloomberg.
- China keeps 3% budget deficit goal for ’17 as debt risks grow – Reuters.
- China SAFE – Dec services trade deficit $26.1 bln, ’16 $260.1 bln, as China tourists splurge abroad.
- China’s shadow banking crusade risks bond market crash – Reuters.
- China Dec industrial profits +2.3% y/y, ’16 +8.5%.
- UK ’16 car output 1.72 mln units, 17-year high, investment down a third to GBP1.66 billion, however, ’15 GBP2.1 bln – SMMT.
- New Zealand Q4 CPI +0.4% q/q, +1.3% y/y, +0.3/+1.2% forecast, non-tradeables +0.6%, +2.4%.
Economic Data Ahead
- (0200 ET/0700 GMT) Switzerland Dec trade balance; last CHF3.636 bln surplus.
- (0200 ET/0700 GMT) Norway NO Nov labor force survey – unemployment, 4.8% forecast; last 4.8%.
- (0200 ET/0700 GMT) Germany Feb GfK consumer sentiment index, 10.0 forecast; last 9.9.
- (0300 ET/0800 GMT) Spain Q4 unemployment, 18.7% forecast; last 18.91%.
- (0330 ET/0830 GMT) Sweden Dec unemployment, 6.3% nsa forecast; last 6.2% nsa, 6.8% sa.
- (0330 ET/0830 GMT) Sweden Dec PPI; last +1.3% m/m, +3.6% y/y.
- (0330 ET/0830 GMT) Sweden Dec trade balance; last SEK1.1 bln deficit.
- (0400 ET/0900 GMT) Italy Nov retail sales, unch m/m forecast; last +1.2% m/m, -0.2% y/y.
- (0430 ET/0930 GMT) Great Britain Q4 GDP * prelim, +0.5% q/q, +2.1% y/y forecast; last +0.6%, +2.2%.
- (0430 ET/0930 GMT) Great Britain Dec BBA mortgage approvals, 41k forecast; last 40.66k.
- (0600 ET/1100 GMT) Great Britain Jan CBI distributive trades – sales index, 22 forecast; last 35.
- (0830 ET/1330 GMT) United States Dec Chicago Fed national activity index, -0.05 forecast; last -0.27.
- (0830 ET/1330 GMT) United States w/e initial jobless claims, 247k forecast; last 234k.
- (0945 ET/1445 GMT) United States Jan Markit PMI services - flash, 54.4 forecast; last 53.9.
- (0945 ET/1445 GMT) United States Jan Markit PMI composite – flash; last 54.1.
- (1000 ET/1500 GMT) United States Dec new home sales, 590k AR, -1.0% m/m forecast; last 590k, +5.2%.
- (1000 ET/1500 GMT) United States Dec leading indicators index; last unch m/m.
- (1100 ET/1600 GMT) United States Jan KC Fed manufacturing, composite indices; last 24, 11.
Key Events Ahead
- Australia Day holiday.
- N/A ADB Nakao brief on Asia in London, BrexitMin Davis parliament testimony.
- (0500 ET/1000 GMT) Sweden 3.5% and 1.5% 2022 and 2023 government bond auctions.
- (0500 ET/1000 GMT) Italy E2.0-2.5 bln zero-coupon 2018 CTZ auction.
- (0500 ET/1000 GMT) Italy E0.5-1.0 bln 1.25% 2032 index-linked BTP auction.
- (0600 ET/1100 GMT) ECB/BdF Villeroy speaks in Munich, ECB Mersch speaks in Luxembourg.
- (0900 ET/1400 GMT) EZ FinMin meeting in Brussels, ECB Coeure to attend.
FX Beat
DXY: The dollar eased across the board, as growing concerns over U.S. President Donald Trump's protectionist policies weighed on market sentiment. The greenback against a basket of currencies traded lower at 99.86, having hit a fresh low of 99.79 earlier, its lowest since Dec. 8. FxWirePro's Hourly Dollar Strength Index stood at -123.03 (Highly Bearish) by 0500 GMT.
EUR/USD: The euro rose, extending previous session gains as the dollar traded near 7-week lows on increasing concerns over U.S. President Donald Trump's protectionist policies. The European currency traded 0.1 percent up at 1.0757, after rising as high as 1.0751 on Tuesday, it’s highest since Dec 8. FxWirePro's Hourly Euro Strength Index stood at -13.89 (Neutral) by 0400 GMT. Investors’ focus remains on the U.S. unemployment benefits data, preliminary Markit Service PMI's and new home sales figures, in absence of relevant economic data from the Eurozone docket. Immediate resistance is located at 1.0768 (Dec 7 High), a break above targets 1.0800. On the downside, support is seen at 1.0771 (7-EMA), a break below could drag it near 1.0665 (10-DMA).
USD/JPY: The dollar edged up, attempting a minor recovery above the 113.00 handle, amid risk-on market profile. Moreover, a bounce bank in the U.S. Treasury yields and rallying global equities supported the major's upside, however, President Trump's protectionism views capped upside. The major trades 0.1 percent up at 113.38, after declining as low as 112.52 on Tuesday, it’s weakest since Nov 30. FxWirePro's Hourly Yen Strength Index stood at 33.93 (Neutral) by 0400 GMT. Investors will continue to track board based market sentiment, ahead of series of U.S. economic data. Immediate resistance is located at 113.73 (7-EMA), a break above targets 114.45 (Jan 16 High). On the downside, support is seen at 113.00, a break below could take it near 112.50
GBP/USD: Sterling rallied to a fresh 6-week high, strengthened by expectations of a trade deal between Britain and the United States. Markets attention will also remain on the UK's fourth quarter preliminary gross domestic product, which is expected to rise 0.5 percent after increasing 0.6 percent in previous quarter. Sterling trades 0.2 percent higher at 1.2656, after rising as high as 1.2662 earlier, it’s strongest since Dec. 14. FxWirePro's Hourly Sterling Strength Index stood at 150.93 (Highly Bullish) by 0400 GMT. Investors’ now await the UK fourth quarter GDP report, ahead of the U.S. macroeconomic fundamental drivers. Immediate resistance is located at 1.2700, a break above could take it near 1.2774 (Dec 6 High). On the downside, support is seen at 1.2542 (5-DMA), a break below targets 1.2500. Against the euro, the pound trades 0.1 percent up at 85.00 pence, having hit a peak of 84.94 earlier in the day, it’s strongest since Jan. 4.
AUD/USD: The Australian dollar fluctuated between narrow range amid subdued trading as Australian markets remained closed in observance of Australia Day holiday. Moreover, a fall in Chinese industrial profits, which rose 2.3 percent y/y in December after advancing 14.5 percent in November hurt investor sentiments. The Aussie trades flat at 0.7571, having touched a high of 0.7609 on Tuesday, it’s strongest since Nov. 11. FxWirePro's Hourly Aussie Strength Index stood at -67.42 (Bearish) by 0500 GMT. Investors will continue to track board based market sentiment, ahead of the U.S. economic data. Immediate support is seen at 0.7538 (9-EMA), a break below could drag it near 0.7500. On the upside, resistance is located at 0.7600, a break above targets 0.7650/ 0.7690.
NZD/USD: The New Zealand dollar rose to an 11-week high after data showed annual inflation rose 1.3 percent in the fourth quarter, beating a forecast of 1.2 percent rise in the fourth quarter. While on quarterly basis CPI rose 0.4 percent versus expected 0.3 percent. However, the major trimmed gains despite easing RBNZ rate cut prospects. The Kiwi trades 0.2 percent lower at 0.7284, having hit a peak of 0.7312 earlier, it’s strongest since Nov. 9. FxWirePro's Hourly Kiwi Strength Index was at 51.99 (Bullish) by 0500 GMT. Investors will continue to digest New Zealand's fourth-quarter consumer price report, ahead of series of the U.S. economic reports. Immediate resistance is located at 0.7340 (Nov 3.), a break above could take it near 0.7400. On the downside, support is seen at 0.7245 (5-DMA), a break below could drag it till 0.7209 (9-EMA).
Equities Recap
Asian shares rallied to 3-1/2 month highs, following overnight gains on the Wall Street, while the dollar eased on concerns about U.S. President Donald Trump's protectionist stance.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.7 percent to its highest since Oct.
Tokyo's Nikkei gained 1.55 percent to 19,353.19 points, South Korea's KOSPI was trading 0.94 percent up at 2,086.68 points.
Shanghai composite index climbed 0.19 percent to 3,155.38 points, while CSI300 index was trading 0.35 percent higher at 3,387.70 points.
Hong Kong’s Hang Seng was trading 1.32 percent higher at 23,354.23 points.
Commodities Recap
Crude oil prices rose, extending previous session gains, strengthened by a weakening dollar and efforts by OPEC and other producers to cut output and balance the market. International benchmark Brent crude was trading 0.4 percent higher at $55.53 per barrel by 0410 GMT, having hit a high of $55.83 on Monday, its highest since Jan. 18. U.S. West Texas Intermediate crude rose 0.4 percent at $53.18 a barrel, after rising to $53.64 on Friday, its highest since Jan. 9.
Gold prices tumbled, having declined to a 1-1/2-week low on Wednesday as renewed expectations that U.S. President Donald Trump will release growth-friendly spending policies boosted market sentiment. Spot gold was down 0.2 percent at $1,198.10 an ounce by 0418GMT after touching a low of $1,193.14 in the previous session, the weakest since Jan. 13, while U.S. gold futures settled down 1.07 percent at $1,197.8 per ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.5229 percent, while 5-year yield was down by 0.005 bps at 1.9871 percent.
The New Zealand government bonds plunged, tracking higher-than-expected consumer price inflation during the fourth quarter of 2016. Also, following this news, the Reserve Bank of New Zealand can be expected to remain sidelined in slashing the official cash rate (OCR) in the near future. The yield on the benchmark 10-year bond jumped near 1-month high by 9-1/2 basis points to 3.39 percent at the time of closing, the yield on 7-year note also surged nearly 8 basis points to 3.03 percent and the yield on short-term 2-year note rose 4 basis points to 2.34 percent.
Canadian government bond prices were lower across a steeper yield curve in sympathy with U.S. Treasuries as record highs on Wall Street reduced demand for safe haven assets. The 2-year fell 5.5 Canadian cents to yield 0.819 percent and the 10-year declined 54 Canadian cents to yield 1.823 percent. The 10-year yield touched its highest intraday since Dec. 22 at 1.830 percent.
