Market Roundup
- Specs slash net USD longs to lowest in 1 ½ years, EUR net shorts lowest since third week of October to 63.3k contracts, JPY net longs up to 43.2k - CFTC.
- Japan PM Abe - Excessive FX volatility undesirable, ready to takes steps if needed, FX reflects weak USD, hopes G20 takes steps on global woes - Reuters.
- EconMin Ishihara - Fundamentals firm, no change in trend, still eyes moderate recovery, CAPEX flat, eyeing market moves closely - Reuters.
- ChiefCabSec Suga - Sales tax hike still on unless another Lehman-type shock.
- Japan Q4 GDP -0.4% q/q, -1.4% AR, -0.3% and -1.2% eyed, private consumption -0.8%, CAPEX +1.4%, -0.6% and -0.2% eyed, external demand contribution +0.1%, domestic demand contribution -0.5%, GDP deflator +1.5% y/y.
- Japan Dec industrial output rev -1.7% m/m, prelim -1.4%, cap util -1.0%.
- Blackrock Koesterich - Japan cheapest and arguably most oversold market, eyes weaker JPY and Japan ex-bank equities strength - CNBC.
- China PBOC Gov Zhou Xiaochuan plays down FX fears, no basis for continuing renminbi depreciation - Caixin, Financial Times.
- PBOC sets yuan/USD midpoint sharply higher at 6.5118, last close 6.5755.
- China Jan trade surplus CNY406.2 bln, exports -6.6% y/y, imports -14.4%, USD-denominated surplus $63.29 bln, exports -11.2%, imports -18.8%, $58.85 bln, 1.9% and -0.8% eyed, downward pressure on exports to ease from Q2.
- China Jan iron ore/copper imports +4.6/5.3% y/y, crude oil/coal - 4.6/9.2%.
- ECB Coeure - Market turmoil could hold back euro zone inflation - Reuters.
- ECB Praet - Extended market volatility could delay inflation rise - MNI.
- German FinMin Schaeuble - Will urge monetary policy changes at G20 - Speigel.
- Italy Tsy - ECB in talks with Italy over buying bundles of bad loans - RTRS.
- UK employers plan to rein in wage increases in '16 - CIPD survey.
- Australia PM Turnbull losing shine ahead of elections - Reuters.
- Australia Jan new motor vehicle sales +0.5% m/m - ABS.
- Non-residents hold 64.7% NZ govt debt in January, Dec 63.8%, year ago 63.6%.
- NZ Jan BNZ/BNZ PSI 55.4, Dec 58.5, long-term trend 53.9.
Economic Data Ahead
- (0330 ET/0830 GMT) Sweden Q4 capacity utilization; last -1.0% q/q.
- (0500 ET/1000 GMT) Eurozone Dec trade balance; last E23.6 bln surplus.
- US Presidents' Day holiday.
- N/A Slovakia 1.5% and 1.375% 2018 and 2027 government bond auctions.
- N/A Netherlands E1-2 bln 3/6-mo DTC, France 3/6/12-mo BTF note auctions.
- (0530 ET/1030 GMT) Ex-ECB Trichet, EU Regling speak at Luxembourg conference.
- (0900 ET/1400 GMT) ECB Pres Draghi Brussels European parliament testimony.
- (1200 ET/1700 GMT) ECB/Austria CB Nowotny at Vienna event.
USD: The greenback rose to 114.09 yen against its Japanese counterpart as Upbeat U.S. data and equity market rally hurt safe-haven demand. Against a basket of currencies, the dollar index is 0.16 percent up at 96.132.
EUR/USD: The euro trades flat at 1.1221 levels, having dropped from a 3-1/2 month peak of 1.1376 hit last week. A bounce in January's U.S. consumer spending suggested that the economy was picking up after slowing down at the end of 2015. The data aided the greenback to regain some ground versus the euro. Markets now await the Eurozone trade data ahead of Draghi's speech for further cues on the pair. The pair moves between a thin range of 1.1212 - 1.1249. Support is located at 1.1194 (10- DMA)) on the downside, while resistance is seen at 1.1274 (5- DMA) on the upside.
USD/JPY: The yen nursed losses early on Monday, having retreated from its highest in over a year as a rally in European and U.S. stocks late last week faded the demand for the safe-haven currency. The dollar gained around 0.67 percent at 113.93 yen, having pulled away from a 15-month low of 110.96 hit last week. The greenback is trading higher as Japan's GDP data for Q4 came in weaker than expected at -0.4% q/q against markets expectation of -0.2%. Further downward pressure on the yen as Japan's Industrial production decreased to -1.7 percent as compared to previous -1.4 percent, while Capacity Utility Index declined to -1.0 percent versus previous -0.1 percent. The pair continues to rise, hovering towsrds session's high of 114.09. Resistance is seen at 114.37, while support is located at 113.27 (Session's Low).
AUD/USD: The Australian dollar was firm against its U.S. counterpart, having disappointing trade figures out of China, Australia's key export market. China's trade balance for January 2016 came in at 63.3 billions against markets expectation of 58.85 billions as exports declined 11.2 percent, while imports dropped 18.8 percent. However, the Aussie was strengthened by upbeat Australia's New Motor Vehicle Sales data as it grew by 5.1 percent versus previous 2.4 percent. Currently the pair trades at 0.7167 levels, hovering towards session's high of 0.7171. Immediate resistance is seen at 0.7189 (Feb 3 High), while support at 0.7063 (Previous Session's Low).
NZD/USD: The New Zealand dollar was trading higher at 0.6658, recovering some of its losses after it tumbled on Friday as U.S. January retail sales came in better than expected. Markets await New Zealand's quarterly retail sales data and Global Dairy Trade auction scheduled later in this week for further cues on the pairs move. Traders are seen bullish in the session as the pair continues to trade higher nearing sessions high of 0.6667. On the upside, resistance is located at 0.6694 (Feb 10 High), while on the downside, support is seen at 0.6585 (Feb 11 Low).
USD/CNY: Yuan opened trade at 6.5300 per dollar on Monday, strengthening 0.7 percent from its previous close of 6.5755 before the long Chinese Lunar New year holiday. The central bank set the midpoint rate at 6.5118 per dollar prior to market open, 0.3 percent firmer than the previous fix 6.5314. The spot market opened at 6.5300 per dollar, while the offshore yuan was trading 0.04 percent weaker than the onshore spot at 6.5045 per dollar. China's exports dropped 11.2 percent in January from a year earlier and imports declined 18.8 percent, putting pressure on policymakers to take further action over slowing activity. Slowdown in the economy and dollar's appreciation against non-dollar currencies over the past several months has put further depreciation pressure on the Chinese currency.
Equities Recap
Asian shares bounced on Monday as a strong fix for China's yuan eased devaluation concerns and Shanghai stocks returned from the Lunar New Year holidays with only modest losses.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 2.3 percent, after losing 10 percent of its value so far this year. The Shanghai Composite Index eased 2.2 percent in its first session since Feb. 5, while Taiwan Stocks closed flat at 8,066.51 points.
Australia's S&P/ASX 200 Index closed up 1.39 pct at 4,831.60 points, while Nikkei advanced 7.16 pct at 16,022.58, with Seoul Shares edged up 1.50 pct.
Commodities Recap
Gold dropped 1 percent on Monday, after hitting its highest in a year last week, as fears over the global economy eased and stock markets rebounded. Spot gold dropped to a session low of $1,221.40, before paring some losses to trade down 1 percent at $1,223.79 by 0311 GMT, while U.S. gold futures declined as much as 1.4 percent to $1,222.20.
Brent and U.S. crude futures edged down on Monday as a strong dollar weighed on prices, paring gains from a more than 10-percent jump late last week that came amid renewed talk that OPEC might finally agree to cut output to reduce a world glut. London Brent crude for April delivery was down 45 cents at $32.91 a barrel by 0032 GMT. It jumped $3.30 on Friday after the United Arab Emirates' energy minister was quoted as saying that OPEC members are ready to cooperate on an output cut.
Treasuries Recap
U.S. 10-Year Treasuries yield stood at 1.7464.
Australian government bond futures retreated from multi-month peaks, with the 3-year bond contract down 6 ticks at 98.190. The 10-year contract shed 6.5 ticks to 97.5200, while the 20-year contract declined 5.5 ticks to 97.0050.
New Zealand government bonds eased, sending yields 3.5 to 4.5 points higher across the curve.
