Market Roundup
- Australia Jan Westpac/MI leading index 97.13, -1.24% from trend, Dec 97.17.
- Dairy prices fall 2.8%, volumes drop at latest NZ Fonterra auction.
- Japan Dec core machinery orders +4.2% m/m, -3.6% y/y, +4.7% and -3.1% forecast , Q1 orders forecast at +8.6% q/q after Q4 +4.3%.
- BAML Feb Fund Manager Survey - Investor cash balances highest since '01.
- US Tsy - Foreigners sell long-term US assets in December, to support currencies, net overall capital flow -$114.0 bln, Nov rev -$1.1 bln, China US Tsy holdings $1.246 trln vs Nov $1.265 trln, Japan $1.123 trln vs $1.145 trln
- Oil producing nations retreat from Korean, Japanese stocks - Reuters.
- China NDRC - Able to keep yuan basically stable - Reuters.
- China CommMin - No signs of capital flight, no basis for CNY to fall - RTRS.
- China VicePrem- Will strengthen efforts to arrest trade deceleration -Xinhua.
- Boston Fed Rosengren - Rate hikes should be unhurried if inflation slower than forecast , more gradual tightening appropriate, future growth less certain, USD rise/oil fall depressing inflation, rate cut possible - Reuters.
- ECB/Austria CB Nowotny -Turbulence driven by EM developments - Cash.ch.
- (0430 ET/0930 GMT) Great Britain Jan claimant count, -3k forecast ; last -4.3k.
- (0430 ET/0930 GMT) Great Britain Dec ILO unemployment, 5.0% forecast ; last 5.1%.
- (0430 ET/0930 GMT) Great Britain Dec avge weekly earnings - 3-mo avge, +1.9% y/y forecast ; last +2.0%.
- (0430 ET/0930 GMT) Great Britain Dec - ex-bonus, +1.8% y/y forecast ; last +1.9%.
- (0500 ET/1000 GMT) Switerland Feb ZEW investor sentiment index; last -3.0.
- (0830 ET/1330 GMT) United States Jan PPI, -0.2% m/m, -0.6% y/y forecast ; last -0.2%, -1.0%.
- (0830 ET/1330 GMT) United States Jan - ex-f/e, +0.1% m/m, +0.4% y/y forecast ; last +0.2%, +0.3%.
- (0830 ET/1330 GMT) United States Jan housing starts, 1.17 mln AR forecast ; last 1.15 mln, -2.5% m/m.
- (0830 ET/1330 GMT) United States Jan building permits, 1.20 mln AR forecast ; last 1.20 mln, -6.1% m/m.
- (0915 ET/1415 GMT) United States Jan industrial output, +0.4% m/m forecast ; last -0.4%.
- (0915 ET/1415 GMT) United States Jan capacity utilization, 76.7% forecast ; last 76.5%.
Key Events Ahead
- N/A Buba Dombret speech in Frankfurt.
- N/A Austria E3.5/1.5 bln 2026/47 bond syndications, oversubscribed.
- N/A Sweden SEK3.5/0.5 bln 2.5/2.25% 2025/32 government bond auctions.
- N/A Norway NOK6 bln 1.5% 2026 government bond auction.
- N/A Portugal -1.0 bln 3/12-month treasury bill auctions.
- (0530 ET/1030 GMT) Germany E5 bln 0.5% 2026 Bund, UK bln 1.5% 2026 Gilt auctions.
- (0830 ET/1330 GMT) Canada Dec international securities transaction data.
- (1030 ET/1530 GMT) BoE LIPRA Bulley speech in London.
- (1400 ET/1900 GMT) FOMC January 26-27 policy meeting minutes.
FX Beat
USD: The dollar lost some ground against the yen on Wednesday as a recent rebound in crude oil prices revived demand for the safe-haven Japanese currency. Against a basket of currencies, the dollar index trades 0.15 percent down at 96.756.
EUR/USD: The euro trades 0.18 percent higher at 1.1161, after dipping about 0.1 percent overnight. The greenback weakened as U.S. February NAHB Housing Market Index declined to 58, against previous print of 61 and Empire State Manufacturing Index for February posted a drop of 16.64 versus markets expectation of 10.00 decline, indicating that the business conditions continued to decline for local manufacturers. The markets now await U.S. housing and industrial production data and the minutes of the Fed's January policy meeting due later in the day for cues. The pair continues to trade higher, hovering towards sessions high of 1.1172. Resistance is seen at 1.1207 (5-DMA), while support is located at 1.1108 (Feb 5 Low).
USD/JPY: The dollar trades 0.22 percent lower at 113.77 yen as Japanese stock markets declined due to volatility in oil market, further boosting the Japanese currency. The greenback dropped to a 16-month low below 111 yen last week as a global rout in equities and commodities as well as reduced expectations for a near-term interest rate hike by the Federal Reserve strengthened demand for safe-haven yen. Earlier in the session, the pair rose to 114.39 before falling down to its current levels. Immediate support is located at 113.27, while resistance is seen at 114.57 (10-DMA) on the upside.
AUD/USD: The Australian dollar was weaker at 0.7090 on Wednesday, pulling away from a 11-day high of 0.7181 touched on Tuesday. The Aussie dropped 0.7081 in the previous session after oil prices declined sharply, and remains vulnerable to more swings in sentiment as the market awaits to see the latest balance of opinion among policy makers on the prospect of further rate hikes by the Fed. Currently the pair trades at 0.7086 levels, making fresh session lows. Support is located at 0.7075 (20-DMA) on the downside, while resistance is located at 0.7128 (Feb 12 High).
NZD/USD: The New Zealand dollar trades flat after more wild swings in oil prices weighed on commodity currencies, as investors were cautious ahead of the minutes of the Federal Reserve's last policy meeting. The New Zealand dollar shed a cent overnight after a survey reflected a marked decline in inflation expectations in New Zealand. A soft overnight dairy auction result weighed on the kiwi, however, milk prices declined less than expected. The pair trades at 0.6579 levels, having touched sessions low of 0.6553. Support is seen at 0.6545 (Previous Session Low), while resistance is located at 0.6627 (5-DMA).
USD/CNY: The yuan dropped against the dollar on Wednesday as dollar demand surged after the central bank set the midpoint rate at 6.5237 per dollar prior to the market open, 0.16 percent weaker than the previous fix of 6.513. The spot market opened at 6.5300 per dollar and was trading at 6.5260 at midday, softening 0.12 percent from the previous close. The offshore yuan was trading 0.04 percent weaker than the onshore spot at 6.5286 per dollar. Since early January, the PBoC has intensified its fight against speculation on yuan depreciation amid a sharp slowdown in the growth of the economy.
Equities Recap
Asian shares edged down on Wednesday after two sessions of solid gains, while oil prices swung higher as the market reconsidered the chances of a meaningful deal to restrict supply later in the year.
MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.2 percent, having climbed 3 percent over the previous two sessions, while Taiwan Stocks closed Flat At 8,214.25 Points.
Australia's S&P/ASX 200 Index closed down 0.71 pct at 4,875.00 points, while Nikkei declined 1.36 pct at 15,836.36, with Seoul Shares edged down 0.28 pct.
Commodities Recap
Gold extended losses to a fourth session on Wednesday as calm in the global stock markets curbed demand for the safe-haven asset that had rallied last week to its highest in a year. Spot gold rose 0.5 percent to $1,205.56 an ounce by 0339 GMT, after earlier dropping to a session low of $1,195.40. It lost 3.7 percent in the previous three sessions.
Crude oil futures rebounded on Wednesday on investor hopes that a deal between Saudi Arabia and Russia to freeze oil output at January levels would lead to a wider pact among producers that could eventually see production cuts to support prices. Brent crude had climbed 45 cents to $32.63 a barrel by 0258 GMT, after settling down $1.21 in the previous session, while U.S. crude was up 29 cents at $29.33 a barrel, having ended the last session down 40 cents.
Treasuries Recap
U.S. 10-Year Treasuries yield stood at 1.7499 down by 0.027.
Australian government bond futures were a touch firmer, with the 3-year bond contract up 1 tick at 98.160. The 10-year contract was also 1 tick higher at 97.4900, while the 20-year contract was steady at 96.9450.
New Zealand government bonds were little changed. On Wednesday, New Zealand's Local Government Funding Agency holds its first tender since December.
