Market Roundup
- BoJ Policy Board Kiuchi - Negative rates could destabilize economy, dissented at last meeting on economic view, 2% inflation target difficult - Reuters.
- MoF flow data week-ended Feb 20 - Japanese buy net Y449.2 bln foreign stocks, trln bonds, sell Y96.8 bln bills; foreign investors sell net Y441.0 bln Japanese stocks, buy Y664.1 bln bonds, Y308.1 bln bills.
- Japan Sharp board decides to accept Hon Hai $5.9 bln offer - Nikkei.
- China FinMin Lou - Proposal to devalue CNY not on G20 agenda - China Daily.
- ViceFinMin - CNY managed float to continue, aiming for stability - Reuters.
- PBOC Sheng - China could top budget to over 4% of GDP - Economic Daily.
- PBOC ViceGov Yi - Will maintain delicate balance on reform-stability, put more emphasis on basket regime, strive for more CNY flexibility - Reuters.
- ViceIndMin Zhu - Coordination needed in addition to monetary-fiscal steps to spur world economy, China growth @6% this year, economy facing increasing down pressure - Reuters.
- ViceIndMin Feng - Allocated CNY100 bln to deal with job losses - Reuters.
- China ICBC Chairman Jiang - No basis for continued CNY devaluation - Reuters.
- St Louis Fed Bullard - Reiterates unwise to keep hiking rates given falling inflation expectations, cannot let low expectations get out of hand, CPI hot in January, could be wrong - Reuters.
- Dallas Fed Kaplan - Fed data dependent, wouldn't be surprised to see change predicted path of interest rates at next FOMC - Reuters.
- IMF urges G20 to prepare global economic stimulus plan - reuters.
- Australia Q4 new CAPEX +0.8% q/q, -3% forecast, '15/16 A$124 bln, '16/17 1st est A$82.6 bln.
- New Zealand sees migration gain in January, short-term visitors +13.6% y/y.
- (0200 ET/0700 GMT) Germany Mar GfK consumer sentiment index, 9.3 forecast; last 9.4.
- (0200 ET/0700 GMT) Germany Jan HICP - final, -1.0% m/m forecast; flash -1.0%.
- (0300 ET/0800 GMT) Sweden Feb manufacturing confidence index; last 120.8.
- (0300 ET/0800 GMT) Spain Q4 GDP, +0.8% q/q, +3.5% y/y; prelim +0.8%, +3.5%.
- (0330 ET/0830 GMT) Sweden Jan PPI; last -0.7% m/m, -1.9% y/y.
- (0330 ET/0830 GMT) Sweden Jan household lending; last +7.5% y/y.
- (0400 ET/0900 GMT) Eurozone Jan money supply M3, +4.7% AR forecast; last +4.7%.
- (0400 ET/0900 GMT) Eurozone Jan loans to households, non-financials; last +1.4%, +0.3%.
- (0400 ET/0900 GMT) Italy Feb business confidence index, 102.7 forecast; last 103.2.
- (0400 ET/0900 GMT) Italy Feb consumer confidence index, 117.9 forecast; last 118.9.
- (0430 ET/0930 GMT) Great Britain Q4 GDP - 2nd release, +0.5% q/q, +1.9% y/y; prelim +0.5%, +1.9%.
- (0500 ET/1000 GMT) Eurozone Jan inflation final, -1.4% m/m, +0.4% y/y forecast; flash unch, +0.4%.
- (0500 ET/1000 GMT) Eurozone Jan - ex-food/energy, -1.7% m/m, +1.0% y/y forecast; last +0.3%, +0.9%.
- (0500 ET/1000 GMT) Italy Dec retail sales; last +0.3% m/m, -0.1% y/y.
- (0600 ET/1100 GMT) Italy Jan Trade balance non-EU - flash; last bln surplus.
- (0830 ET/1330 GMT) Unied States w/e initial jobless claims, 270k forecast; last 262k.
- (0830 ET/1330 GMT) Unied States Jan durable goods orders, +2.5% m/m forecast; last -5.0%, ex-def -2.8%.
- (0830 ET/1330 GMT) Unied States Jan - ex-transport, +0.2% m/m forecast; last -1.0%, nondef ex-air -4.3%.
- (0900 ET/1400 GMT) Unied States Dec FHFA monthly home prices; last +0.5% m/m, +5.9% y/y.
- (1100 ET/1600 GMT) Unied States Feb KC Fed manufacturing/composite indices; last -8.0, -9.0.
- N/A Sweden SEK500 mln each 0.125% inflation-linked 2019, 4% 2020 bond sales.
- N/A Italy bln 6-month BOT auction.
- (0815 ET/1315 GMT) Atlanta Fed Lockhart speaks at Atlanta banking conference.
- (1200 ET/1700 GMT) SF Fed Williams speech at New York University.
- (1245 ET/1745 GMT) ECB/Austria CB Nowotny speaks in Bregenz, Austria.
FX Beat
USD: The dollar added about 0.26 percent against its Japanese counterpart to 112.47 yen, well off a 2-week low of 111.04 yen plumbed overnight. Against a basket of currencies, the dollar index trades flat at 97.41.
EUR/USD: The euro trades 0.13 percent higher at 1.1024, drifting away from a 3-week low of 1.0957 against the U.S. dollar hit on Wednesday. The pair boosted after U.S. New Home Sales and Markit Services PMI prelim decreased. U.S. January New Home Sales declined by -9.2% m/m against market consensus of -4.4%, while U.S. markit services PMI dropped to 49.8 in February, from previous 53.2. Looking ahead, markets now await, Eurozone economies data releases, ahead of Euroznes January Consumer Price Index report for further cues on the pair. The pair continues to rise, making fresh session highs. Immediate resistance is located at 1.1042 (5-DMA), while support is seen at 1.0990 (Feb 23 Low).
USD/JPY: The dollar edged up against the yen after a rebound in oil prices aided to lift global share prices,. On Wednesday, the yen rose as high as 111.04 yen to the dollar, just off its 15-month high of 110.96 yen hit on Feb. 11, but retreated to 112.16 yen. The downside of the pair is limited as improving sentiment on the Japanese stocks remain supportive. Markets will now closely watch U.S. durable goods and Japan's CPI reports, ahead of U.S prelim GDP report, for fresh cues on the US economic outlook. Currently the pair trades at 112.55, hovering towards sessions high of 112.62. Immediate resistance is seen at 113.12 (10-DMA), while support is located at 111.65 (Feb 12 Low), break below could drag the pair to 111.04 (Feb 24 Low).
GBP/USD: The British pound steadied at 1.3936 after declining to a 7-year low of 1.3878 in the previous session, its lowest since early 2009, on heightened fears that a June 23 referendum could lead to a British exit from the European Union. Against the yen, the currency was last at 156.96 yen, having declined to 154.72 in the previous day, its lowest level since October 2013 as a rebound in oil prices helped stem buying in the safe-haven yen. GBP/USD touched a high of 1.3954 before falling down to its current levels. Immediate resistance is located at 1.3954 (Sessions High), while support is seen at 1.3878 (Previous session Low).
AUD/USD: The Australian dollar lost some ground on Thursday after Australian business investment plan for 2016/17 was estimated at A$83 billion, versus expectations of around A$93 billion failed to impress the markets. It declined around a third of a U.S. cent to 0.7158, away from a 7-week peak of 0.7259 touched this week. The Aussie held its gains against the battered pound which stood at A$1.9413. The pound has dropped 3.5 percent this week on mounting fears Britain might leave the European Union. The Reserve Bank of Australia holds its monthly policy meeting next week and is widely expected to keep rates at 2 percent where they have been since May last year. Currently, AUD/USD trades at 0.7176, having gone as low as 0.7156. Immediate support is located at 0.7132 (20-DMA), while resistance is seen at 0.7213 (Previous Session High).
NZD/USD: The New Zealand dollar extended gains following downbeat U.S. New Home Sales and Markit Services PMI prelim data. On Wednesday, it touched a low of 0.6586, before climbing up to 0.6653. Falling oil prices weigh on the kiwi, but soft U.S. data helped put a floor under it. Attention is now shifted towards U.S. durable goods report scheduled later in the day, while New Zealand's trade balance data will be closely watched on Friday. Earlier in the session, the pair made a high of 0.6667 and a low of 0.6642. Currently it trades at 0.6643 levels, hovering towards sessions high of 0.6667. Immediate resistance is located at 0.6673 (Previous session HIgh), while support is seen at 0.6629 (20-DMA), on the downside.
USD/CNY: The yuan was flat against the dollar on Thursday as traders grew cautious ahead of a G20 meeting in Shanghai which is expected to discuss volatile currency and equity markets and signs of economic weakness throughout the world. The PBoC set the midpoint rate at 6.5318 per dollar prior to the market open, weakening it for a third consecutive day back to its pre-Lunar New Year levels, however, only 0.02 percent softer than the previous fix 6.5302. The spot market opened at 6.5335 per dollar and was trading at the same rate by midday, almost flat from the previous close.
Equities Recap
Asian shares declined on Thursday as a soft recovery in volatile crude oil unraveled, reviving anxiety about the health of the global economy. Safe-haven assets, including the Japanese yen, gained across the board.
MSCI's broadest index of Asia-Pacific shares outside Japan gave up early gains and edged down 0.2 percent. Chinese shares extended early losses, with the CSI300 index down 3.4 percent, while the Shanghai Composite Index slumped 3.6 percent. Taiwan Stocks climbed up 1.0 pct at 8,365.86 points.
Australia's S&P/ASX 200 Index edged up 0.25 pct at 4,887.10 points, while Nikkei advanced 1.41 pct at 16,140.34, with Seoul Shares closed up 0.24 pct.
Commodities Recap
Gold reversed early losses on Thursday as volatility in stock markets stoked safe-haven demand, with bullion funds seeing fresh buying from investors. Spot gold rose 0.3 percent to $1,232.90 an ounce by 0322 GMT after earlier falling as much as 0.7 percent. On Wednesday, gold had climbed 2 percent to $1,252.91 as lower oil prices dragged down stocks. Gold is also finding support from increasing expectations that the Fed will not raise U.S. interest rates this year after hiking rates for the first time in nearly a decade in December.
Crude prices dropped on Thursday as strong U.S. gasoline demand failed to counter downward pressure from global overproduction that has left storage facilities swelling with unsold oil. The international Brent crude benchmark was trading at $34.17 per barrel at 0242 GMT, down 24 cents from its last close, hit by global oversupply that sees 1 million to 2 million barrels of crude produced every day above demand. U.S. West Texas Intermediate crude futures were down slightly less, losing 16 cents to $31.99 per barrel, receiving some support from strong gasoline demand.
Treasuries Recap
U.S. 10-Year Treasuries Yield stood at 1.7364 percent down by 0.006.
Australian government bond futures were firm, with the 3-year bond contract up 1 tick at 98.260. The 10-year contract was unchanged at 97.5950, while the 20-year contract lost half a tick to 97.0600.
New Zealand government bonds eased, sending yields 1.5 basis points higher along most of the curve.
