Market Roundup
- Japan MoF Asakawa – Markets decide FX, Japan not manipulating, don’t know what Trump was referring to on FX policy, declines comment, Japan monetary policy solely aimed at beating deflation - Reuters.
- FinMin Aso to explain Japan’s FX-monetary policy stance at February 10 meeting with US Pres Trump – Reuters.
- ChiefCabSec Suga – Eyeing FX close with a sense of urgency, policy being conducted in line with G7/20 agreements, will respond appropriately against one-sided moves – Reuters.
- PM advisor Hamada – US border tax would see USD appreciate, Trump arguments destructive to Japan, world economy – Reuters.
- Ex-BoJ Momma – Next BoJ move to up JGB 10-year yield target, BoJ would be concerned if USD/JPY through 100, current level not a problem – Reuters.
- Japan Jan PMI Mfg – final 52.7, flash 52.8, Dec final 52.4, January reading best in almost three years, new export orders 53.1, best in the year.
- China Jan off'l Mfg PMI 51.3, 51.2 eyed, Dec 51.4; services 54.6, Dec 54.5.
- South Korea may tolerate greater FX volatility in wake of Trump – Reuters.
- BoC Gov Poloz – Whatever “normal” we arrive at will be new normal, Canada still some ways behind US economy, higher CAD headwind – Reuters.
- Australia Jan AIG PMI 51.2, December 55.4, still expanding but slower pace.
- Australia Jan CoreLogic home value index +0.7% m/m, +10.7% y/y.
- New Zealand Q4 unemployment 5.2%, employment +0.8% q/q, participation 70.5%, LCI private-sector wages ex-overtime +0.4% q/q, +1.6% y/y, unemployment up from 4.9% in Q3, wage growth low, workers flooding market.
- UK NIESR – Ups ’17 UK growth to +1.7% from +1.4%, ’18 +1.9%, ’17 CPI +3.3%, BoE first rate hike likely in mid-‘19.
- ECB/Irish CB Lane – No “new London” after Brexit – Reuters.
Economic Data Ahead
- (0200 ET/0700 GMT) Greta Britain Jan Nationwide house prices, unch m/m eyed; last +0.8%.
- (0230 ET/0730 GMT) Sweden Jan PMI Mfg, 60.0 eyed; last 60.1.
- (0300 ET/0800 GMT) Norway Jan PMI Mfg, 51.0 eyed; last 51.4.
- (0315 ET/0815 GMT) Spain Jan PMI Mfg, 55.0 eyed; last 55.3.
- (0330 ET/0830 GMT) Switzerland Jan PMI Mfg, 55.8 eyed; last 56.0.
- (0345 ET/0845 GMT) Italy Jan PMI Mfg, 53.2 eyed; last 53.2.
- (0350 ET/0850 GMT) France Jan PMI Mfg – final, 53.4 eyed; flash 53.4.
- (0355 ET/0855 GMT) Germany Jan PMI Mfg – final, 56.5 eyed; flash 56.5.
- (0400 ET/0900 GMT) Eurozone Jan PMI Mfg – final, 55.1 eyed; flash 55.1.
- (0430 ET/0930 GMT) Great Britain Jan PMI Mfg, 55.9 eyed; last 56.1.
- (0815 ET/1315 GMT) United States Jan ADP national employment, 165k eyed; last 153k.
- (0945 ET/1445 GMT) United States Jan Markit PMI Mfg – final; flash 55.1.
- (1000 ET/1500 GMT) United States Jan ISM PMI Mfg, 55.0 eyed; last 54.5.
- (1000 ET/1500 GMT) United States Dec construction spending, +0.2% m/m eyed; last +0.9%.
- (1530 ET/2030 GMT) United States Jan total vehicle sales, 17.55 million AR eyed; last 18.43 million.
Key Events Ahead
- Lunar New Year – China markets closed.
- (0300 ET/0800 GMT) ECB/BdF Villeroy at Paris BdF-organized conference.
- (0500 ET/1000 GMT) Greece E625 mln 26-week treasury bill auction.
- (0530 ET/1030 GMT) Germany E4 bln zero% 2022 Bobl auction
- (1400 ET/1900 GMT) Buba Dombret speaks on policy in Frankfurt.
- (1400 ET/1900 GMT) FOMC policy announcement, no changes eyed.
FX Beat
DXY: The dollar steadied after declining to multi-week lows versus its major peers after the Trump administration accused Germany and Japan of devaluing their currencies to gain a trade advantage. The greenback against a basket of currencies traded 0.18 percent up at 99.73, recovering from a low of 99.43 hit in the previous session, its lowest since Dec. 8. FxWirePro's Hourly Dollar Strength Index stood at -75.34 (Slightly Bearish) by 0500 GMT.
EUR/USD: The euro edged down following a rise to a near 2-month above the 1.0800 handle, after Peter Navarro, the head of the U.S. National Trade Council stated that Germany is using grossly undervalued euro to take advantage of other countries in the European Union and the United States. The European currency traded 0.1 percent down at 1.0789, after rising as high as 1.0812 on Tuesday, it’s lowest since Dec. 8. FxWirePro's Hourly Euro Strength Index stood at 39.07 (Neutral) by 0400 GMT. Investors’ focus now shifts on the Eurozone manufacturing PMI and EU's economic growth estimates, ahead of the U.S. ADP employment change, manufacturing PMI released by Markit and ISM, and Fed interest rate decision for further momentum on the major. Immediate resistance is located at 1.0840 (Nov 14 High), a break above targets 1.0900. On the downside, support is seen at 1.0738 (7-DMA, a break below could drag it lower 1.0700.
USD/JPY: The dollar rose above the 113.00 handle, reversing some of its previous session losses, ahead of Federal Reserve monetary policy decision, where it is expected to keep interest rates unchanged. However, markets will scrutinize the policy statement for insights on the strong U.S. dollar. Moreover, the pair also strengthened after data showed Japan's Nikkei Manufacturing PMI edged down to 52.7 in January from previous and forecast of 52.8. The major trades 0.4 percent higher at 113.22, after falling as low as 112.08 in the previous session, it’s lowest since Nov 30. FxWirePro's Hourly Yen Strength Index stood at 63.03 (Bullish) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of the U.S. macroeconomic fundamental drivers and Fed policy decision. Immediate resistance is located at 113.65 (7-EMA), a break above targets 114.00. On the downside, support is seen at 112.50, a break below could take it near 112.00.
GBP/USD: Sterling steadied following a rise to 1.2595 in the previous session after the Trump administration accused Germany and Japan of devaluating their currencies to gain a trade advantage, triggering risk-off sentiment. Sterling was little changed at 1.2573, after slumping to a low of 1.2412 on Tuesday, it’s weakest since Dec. 23. FxWirePro's Hourly Sterling Strength Index stood at 10.16 (Neutral) by 0400 GMT. Investors’ now await the UK nationwide housing prices, ahead of the U.S. manufacturing PMI, construction spending, and FOMC decision. Immediate resistance is located at 1.2600, a break above could take it near 1.2670. On the downside, support is seen at 1.2517 (10-DMA), a break below targets 1.2500. Against the euro, the pound trades flat at 85.81 pence, having hit a low of 86.33 the day before, it’s weakest since Jan. 24.
AUD/USD: The Australian dollar eased after rising to a 1-week high above the 0.7600 handle in the previous session, following the release of the downbeat manufacturing index. AiG performance of Manufacturing index fell to 51.2 in January from 55.4 in the previous month, indicating that the manufacturing activity weakened during the same period. The Aussie trades 0.18 percent down at 0.7569, drifting away from a high of 0.7605 hit on Tuesday, it’s strongest since Jan. 24. FxWirePro's Hourly Aussie Strength Index stood at 28.94 (Neutral) by 0500 GMT. Investors will continue to track board based market sentiment, ahead of the U.S. ADP jobs, ISM manufacturing PMI and FOMC policy outcome due later in the day. Immediate support is seen at 0.7547 (7-EMA), a break below could drag it lower 0.7500. On the upside, resistance is located at 0.7600, a break above targets 0.7630.
NZD/USD: The New Zealand dollar tumbled below the 0.7300 handle after data showed the country's jobless rate rose, while wage growth remained sluggish. The economy's unemployment rate edged higher to 5.2 percent in the fourth quarter, beating expectations of 4.8 percent and previous 4.9 percent. The Kiwi trades 0.6 percent down at 0.7269, hovering away from a peak of 0.7350 touched on Tuesday, its strongest since Nov. 9. FxWirePro's Hourly Kiwi Strength Index was at -58.40 (Bearish) by 0500 GMT. Investors will continue to digest New Zealand's unemployment report, ahead of series of U.S. economic data. Immediate resistance is located at 0.7350, a break above could take it near 0.7400. On the downside, support is seen at 0.7250 (10-DMA), a break below could drag it near 0.7200.
Equities Recap
Asian shares eased as Trump administration accusation on Germany and Japan for devaluating their currencies, triggering risk-off sentiment.
MSCI's broadest index of Asia-Pacific shares outside Japan was 0.06 percent lower.
Markets in China and Taiwan were shut for the Lunar New Year holiday.
Tokyo's Nikkei rose 0.58 percent to 19,150.70 points, Australia's S&P/ASX 200 index gained 0.58 percent to 5,650.80 points.
South Korea's KOSPI was trading 0.57 percent up at 2,079.26 points. Hong Kong’s Hang Seng was trading 0.8 percent lower at 23,173.15 points.
Commodities Recap
Crude oil prices declined, dragged down by an ongoing rise in supplies despite an OPEC-led production cut in order to drain increasing oversupply. International benchmark Brent crude was trading 0.4 percent lower at $55.39 per barrel by 0402 GMT, having hit a low of $54.85 on Friday, it’s weakest since Jan. 25. U.S. West Texas Intermediate crude fell 0.2 percent at $52.69 a barrel, after falling to $52.22 in the previous session, its lowest since Jan. 18.
Gold prices steadied after rallying to a one-week high in the previous session, as markets await the U.S. Federal Reserve interest rates decision amid uncertainty over the policies of President Donald Trump. Spot gold was little changed at $1,209.82 an ounce by 0406 GMT, having touched its highest since Jan. 24 at $1,215.20. U.S. gold futures climbed 0.1 percent to $1,209.40.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.4754 percent higher by 0.024 bps, while 5-year yield was up by 0.027 bps at 1.9327 percent.
The Australian bonds slumped ahead of the Federal Reserve’s first monetary policy meeting for 2017 scheduled to be held later in the day. The yield on the benchmark 10-year Treasury note climbed 3 basis points to 2.75 percent, the yield on the 15-year note rose 2 basis points to 3.20 percent and the yield on short-term 2-year moved higher by 1 basis point to 1.80 percent.
The New Zealand government bonds gained at the time of closing as the country’s rate of unemployment unexpectedly rose during the fourth quarter of 2016. The yield on the benchmark 10-year bond fell 1 basis point to 3.38 percent at the time of closing, the yield on 7-year note also dipped nearly 1 basis point to 3.00 percent and the yield on the short-term 2-year note too trickled 1 basis point to 2.32 percent.
Canadian government bond prices were higher across the yield curve as bonds benefited from safe-haven demand. The 2-year rose 4.5 Canadian cents to yield 0.773 percent and the 10-year climbed 21 Canadian cents to yield 1.759 percent.
