Market Roundup
- G20 - World needs to look beyond ultra-easy policy for growth, to tell each other in advance about moves that could devalue currencies - Reuters.
- Central banks near policy limits but back in focus post-G20 - Reuters.
- BoJ Gov Kuroda - G20 fully understands Japan's NIRP policy, agrees current market volatility does not reflect global fundamentals - Reuters.
- China Prem Li - To intensify fiscal policies - Reuters.
- PBOC Zhou - G20 needs to improve policy coordination - Reuters.
- China FinMin Lou - Structural reforms key to global growth - Reuters.
- IMF Lagarde sees renewed sense of urgency to act collectively - Reuters.
- US TsySec Lew - World should stop relying on US consumers - Reuters.
- German FinMin Schaeuble - Economy better than volatile market suggests -RTRS.
- UK ChancExch Osborne pushes Brexit onto G20 list of risks - Reuters.
- EU Dijsselbloem plays down volatility in European bank stocks - Reuters.
- Liquidity, kill switches are the talk of the currency universe - Bloomberg.
- More yawn than yuan in China's late-night FX trade - Reuters.
- Trade of decade or value trap? EM debate heats up - Bloomberg.
- CFTC IMM CTA data - Specs cut USD longs for 9th week, lowest since May '14.
- Japan Jan industrial output +3.7% m/m, best m/m rise since Jan '15, +3.3% forecast, -5.2% forecast for February (previous estimate -4.1%), March +3.1%.
- Japan Jan retail sales -0.1% y/y, weak, +0.5% forecast, Dec -1.1%.
- Japan Jan housing starts +0.2% y/y, +0.1% forecast, construction orders -10.5%.
- Japan fund managers trim stock, lift bond allocations in February -RTRS poll.
- Ex-BoE Gov King - Fresh global clash looms - Telegraph.
- ECB/BdF Villeroy - Must acti if oil slide risks long-term effects - FAZ.
- SNB Chair Jordan - Could change exemption level on negative rates -Bloomberg.
- Australia data allows central bank room to wait and watch - Reuters.
- Australia Feb MI inflation -0.2% m/m, +2.1% y/y, underlying -0.1%, +1.7%.
- Australia Jan priv-sector credit +0.5% n/n, housing credit +0.5%.
- Australia Q4 biz inventories -0.4% q/q, co profits -2.8%, +0.2%/-1.8% forecast, pre-tax profits +60.1%.
- NZ Feb ANZ biz confidence index +7.1%, own activity +25.5%, Jan +23%, +34.4%.
- NZ Jan new dwelling consents -8.2% m/m, Dec +2.3%.
Economic Data Ahead
- (0300 ET/0800 GMT) Switzerland Feb KoF indicator, 98.8 forecast; last 100.3.
- (0330 ET/0830 GMT) Sweden Q4 GDP, +0.7% q/q, +3.5% y/y forecast; last +0.8%, +3.9%.
- (0400 ET/0900 GMT) Norway Jan credit indicator, +5.1% y/y forecast; last +5.3%.
- (0400 ET/0900 GMT) Norway Jan retail sales ex-autos, +0.6% forecast; last -1.3%.
- (0400 ET/0900 GMT) Spain Dec current account balance; last bln surplus.
- (0430 ET/0930 GMT) Great Britain Jan mortgage lending, GBP3.6 bln forecast; last GBP3.2 bln.
- (0430 ET/0930 GMT) Great Britain Jan mortgage approvals, 73.6k forecast; last 70.84k.
- (0430 ET/0930 GMT) Great Britain Jan money supply M4; last -0.2%.
- (0430 ET/0930 GMT) Great Britain Jan consumer credit, GBP1.3 bln forecast; last bln.
- (0500 ET/1000 GMT) Eurozone Feb inflation - flash, unch y/y forecast; last +0.3%.
- (0500 ET/1000 GMT) Eurozone Feb - ex-food/energy - flash, +0.9% y/y forecast; last +1.0%.
- (0500 ET/1000 GMT) Italy Feb CPI - prelim, unch m/m, -0.1% y/y forecast; last -0.2%, +0.3%.
- (0500 ET/1000 GMT) Italy Feb HICP - prelim, -0.2% m/m, unch y/y forecast; last -2.2%, +0.4%.
- (0900 ET/1400 GMT) Belgium Q4 GDP - revised; flash +0.3% q/q.
- (0945 ET/1445 GMT) United States Feb Chicago PMI, 53.0 forecast; last 55.6.
- (1000 ET/1500 GMT) United States Jan pending home sales, +0.5% m/m forecast; last +0.1%, index 106.8.
- (1030 ET/1530 GMT) United States Feb Dallas Fed mfg business index; last -34.6.
Key Events Ahead
- N/A France E3.2-3.6/1.2-1.6/1.2-1.6 bln 3/6/12-month BTF note auctions.
- (0400 ET/0900 GMT) Norges Bank March net currency purchases, NOK900 mln sales forecast.
FX Beat
USD: The dollar declined to 112.90 yen as risk aversion driven by global growth concerns -notably towards the Chinese economy- and turbulence in equities markets stoked demand for the safe-haven yen. The dollar index edged down to 97.93, within reach of a 3-week high of 98.260 scaled on Friday.
EUR/USD: The euro trades 0.14 percent up at 1.0910 after declining to a 3-week low of 1.0911 on Friday. The dollar was boosted by strong upbeat U.S. economic data in the previous session as the pair declined to a low of 1.0911 from a high of 1.1068, however, it closed at 1.0924, just above its low. Indicators showed a rise in U.S. consumer spending and the personal consumption expenditures price index, while U.S. GDP growth in the fourth quarter was revised up to 1 percent. The effects of the bullish U.S. fundamentals are seen fading away, as the pair continues to rise from a low of 1.0908, touched earlier in the session. Markets now await Eurozone Consumer Price Index (prelim) data due later in the day. Immediate resistance is located at 1.0981 (5-DMA), while support is seen at 1.0908 (Session Low), break below could drag the pair to a 1-month trough.
USD/JPY: The dollar declined against the yen on Monday following a steep climb on upbeat U.S. data, while reaction to a weekend meeting of G20 policymakers was muted as the outcome produced no major surprises. The pair trades 0.88 percent down at 112.96 yen after rising roughly 0.9 percent to a high of 113.99 on Friday following a positive set of U.S. economic data helped revive prospects of the Federal Reserve hiking interest rates this year. Japan's January Industrial Production came in at 3.7 percent, against previous print of -1.7 percent, further putting downward pressure on the greenback. Later in the day, U.S. Chicago PMI and Japan's unemployment data report will be closely watched by the markets for further cues. The pair continues to trade lower, hovering towards session's low of 113.00. Immediate support is located at 112.85 (5-DMA), while on the upside, resistance is seen at 114.33 (20-DMA).
AUD/USD: The Australian dollar trades 0.28 percent higher at 0.7141 levels, drifting away from a low of 0.7108, touched earlier in the session. On Friday, the Aussie dropped from a high of 0.7256 to a low of 0.7118. The pair boosted following a rebound in oil prices, shrugging-off the poor sentiment on the Asian indices and weak Australian economy data. Australia's February TD Securities Inflation declined to -0.2% m/m from 0.4%, while on yearly basis it edged down to 2.1% from 2.3%. RBA meets on Tuesday and is expected to keep interest rates unchanged. The market will be keen to hear its latest assessment on the global economy. Earlier in the session, the pair made a high of 0.7146 before falling down to its current levels. Immediate resistance is located at 0.7171 (10-DMA), while support is seen at 0.7108 (Session's Low).
NZD/USD: The New Zealand dollar fell on Monday on mounting expectations of an interest rate cut by the Reserve Bank of New Zealand, dragging the Australian dollar a touch lower. Weighing on the kiwi was an 8.2 percent drop in domestic building consents in January and a sharp fall in business confidence. The pair trades at 0.6585 levels, after going as low as 0.6565. On Friday, it dropped from a high of 0.6774 to a low 0.6617. Looking ahead, focus will remain on RBA Rate Statement and U.S Manufacturing PMI and unemployment rate report. Traders are likely to bearish on the pair. Immediate support is seen at 0.6565 (Session low) on the downside, while resistance is located at 0.6639 (10-DMA), on the upside.
USD/CNY: The yuan edged down against the dollar on Monday as the central bank set the midpoint rate at 6.5452 per dollar prior to the market open, the softest in almost a month and 0.17 percent weaker than the previous fix of 6.5338. In the spot market, yuan opened at 6.5470 per dollar and was trading at 6.5481 at midday, easing 0.1 percent from the previous close. The offshore yuan was trading at 6.5502 per dollar by midday, and is moving towards the onshore spot. The spread between those two is less than 25 pipsOn Sunday, the vice-governor of China's central bank deflected concerns over the possibility of an extended fall in the country's foreign exchange reserves and reaffirmed confidence in the strength of the yuan.
Equities Recap
Asian stocks retreated on Monday after a weekend meeting of G20 policymakers ended with no new coordinated action to spur global growth and as solid U.S. data revived expectation of the Federal Reserve further raising rates before year-end.
MSCI's broadest index of Asia-Pacific shares outside Japan edged down 0.4 percent and appeared likely to post its second consecutive month of losses, with a 1.0 percent drop so far this month. Mainland Chinese shares declined sharply with the bluechip CSI 300 Index briefly hitting a 15-month low.
Australia's S&P/ASX 200 Index closed up 0.12 pct at 4,885.90 points, while Nikkei declined 1.00 pct at 16,026.76, with Seoul shares edged down 0.07 pct.
Commodities Recap
Gold steadied near $1,220 an ounce on Monday, nursing losses from the previous session, but was poised to log its best monthly performance in four years as safe-haven demand from stock market turmoil bolstered the metal. Friday data showing a rise in U.S. consumer spending in January and a pick-up in underlying inflation also hurt the metal, as it kept Federal Reserve interest rate prospects on the table this year. Spot gold was little changed at $1,221.36 an ounce by 0044 GMT, after dropping 1 percent on Friday on a stronger dollar and an uptick in stocks.
Crude futures rose in early trading on Monday after gaining over 15 percent last week, with some indicators pointing to the possibility the market could be bottoming out. International Brent futures had advanced around half a dollar, or 1.35 percent, from their last close to $35.57 per barrel at 0338 GMT on Monday. U.S. West Texas Intermediate crude futures were up 14 cents at $32.92 a barrel after gaining over 15 percent the previous week.
Treasuries Recap
U.S. 10-Year Treasuries Yield stood at 1.7382 percent down by 0.026, while the 2-year U.S. Treasuries yield hit a 4-week high of 0.817 percent on Friday and last stood at 0.797 percent versus its Feb 11 low of 0.582 percent.
Australian government bond futures eased, with the 3-year bond contract off 2 ticks at 98.260. The 10-year contract edged 2.5 ticks down to 97.5900, while the 20-year contract was also 2.5 ticks lower to 97. spread between 10- and 3-year government bonds edged up to 68 basis points, from a 10-month low of 63 basis points set last week.
New Zealand government bonds were mixed with yields 1 basis point lower on the short end and 1.5 basis points higher on the long-end.
