Market Roundup
- Japan Q4 GDP rev -0.3% q/q, -1.1% y/y, -0.4/-1.5% forecast, prelim -0.4/-1.4%, CAPEX +1.5% q/q, +1.2% forecast/prelim +1.4%, domestic demand contribution -0.4%.
- Japan Jan c/account surplus Y520.8 bln, 19th surplus in row, Y719 bln forecast.
- Australia Feb NAB biz conditions index +8, confidence +3, Jan +5, +3.
- New Zealand Q4 manufacturing sales volumes +1.3% q/q, Q3 +3.3%.
- China trade surplus US$32.59bln, $50.15bln forecast, exports -25.4% y/y, imports -13.8%, export drop largests since May '09, crude oil imports new record.
- China local government debt CNY16 trln in '15 - Nikkei.
- Japan Feb outstanding bank loans +2.2% y/y, Jan rev +2.4%, Dec +2.2%.
- New Zealand Fonterra cuts forecast payout for farmers '15/16 to NZ$3.90/k vs NZ$4.15.
- Japan PM Abe, cabinet ministers, BoJ Gov Kuroda to meet March 16-17 to discuss global economy, markets, Joseph Stiglitz invited to speak - Reuters.
- Japan mulls second tax-hike delay as spending falls - Reuters.
- EconMin Ishihara - Impact of next sales tax hike not calculated - Reuters.
- MoF Feb flow data - Japanese buy net trln foreign stocks, trln bonds, Y117.9 bln bills; foreign investors sell net trln Japanese stocks, buy trln bonds, sell trln bills.
- Japan NTT offering $3.5 bln for US Dell's IT services ops - Nikkei.
- Moody's- Fall in oil/China slowdown mean weaker global growth, not recession.
- UK Feb BRC like-for-like retail sales +0.1% y/y, total +1.1%, Jan +2.6/+3.3%.
- ECB monitoring liquidity levels at some Italian banks - Reuters.
- RBA DepGov Lowe - Economy rebalancing successfully, low inflation providing scope for more ease if needed, would welcome slightly lower AUD - Reuters.
- Goldman Sachs - Structural bear market drivers for metals intact - Reuters.
- (0145 ET/0645 GMT) Switzerland Feb unemployment, 3.8% nsa, 3.5% sa forecast; last 3.8%, 3.4%.
- (0200 ET/0700 GMT) Germany Jan industrial output, +0.5% m/m forecast; last -1.2%.
- (0245 ET/0745 GMT) France Jan c/a, budget balances; last E700 mln, E70.5 bln deficits.
- (0245 ET/0745 GMT) France Jan trade balance, E4.1 bln deficit forecast; last bln deficit.
- (0300 ET/0800 GMT) Spain Jan industrial output, +3.7% y/y forecast; last +3.7%.
- (0315 ET/0815 GMT) Switzerland Feb CPI, -0.1% m/m, -1.1% y/y forecast; last -0.4%, -1.3%.
- (0500 ET/1000 GMT) Eurozone Q4 GDP - revised, +0.3% q/q, +1.5% y/y forecast; prelim +0.3%, +1.5%.
- (0600 ET/1100 GMT) United States Feb NFIB business optimism index; last 93.9.
- N/A ESM E1.5 bln 3-mo, Spain 4.5-5.5 bln 6/12-mo treasury bill auctions.
- N/A Belgium E2.2-2.6 bln 3/12-month treasury certificate auctions.
- N/A Spain EUR October 2046 benchmark syndication, BarCap, GS et al leads.
- (0330 ET/0830 GMT) Buba Beermann speech at Cologne conference.
- (0400 ET/0900 GMT) Norway regional network survey, last -0.01.
- (0415 ET/0915 GMT) BoE Gov Carney, DepGov Cunliffe parliamentary testimony on Brexit.
- (0430 ET/0930 GMT) ECB 0.05% 7-day refi, E60 bln allotment forecast, E61.3 bln maturing.
- (0500 ET/1000 GMT) Austria E1.1 bln total 3.5% and 0.75% 2021 and 2026 RAGB auctions.
- (0526 ET/1026 GMT) ECB/Austria CB Nowotny at Vienna event.
- (0530 ET/1030 GMT) Germany E500 mln 0.1% 2026 index-linked Bund auction.
- (0530 ET/1030 GMT) UK DMO bln 3.75% 2052 Gilt auction.
- N/A NABE Washington, DC annual conference, various speakers.
- (1200 ET/1700 GMT) BoE MPC Weale speech at University of Nottingham.
- (1200 ET/1700 GMT) Buba Dombret speech at Frankfurt conference.
FX Beat
USD: The dollar slumped against the yen, hitting a 1-week low of 112.75 yen earlier in the session. Against a basket of currencies, the dollar index trades 0.01 percent flat at 97.09, away from a peak of 98.58 touched on March 2.
EUR/USD: The euro edged up to 1.10286, holding steady after a recent recovery from a 1-month low of 1.0825 hit on March 2, however, it's outlook remains clouded by Thursday's policy review by the European Central Bank. The central bank is widely expected to ease, but investors are uncertain about how far the central bank will go. Euro bears are cautious about positioning for bold action, having been badly hurt before when the ECB disappointed by choosing to take more modest easing steps. In the previous session, downbeat U.S. economic data failed to provide support for the dollar. U.S. labor market conditions index for February declined to -2.4% against previous print of 0.4%, while consumer credit change for January dropped to $10.54 billion as compared to previous $21.38 billions. Later in the day, series of data from Eurozone economies will be released, ahead of Euro zone revised GDP figures. The pair currently trades around 1.1018 levels, just above sessions low of 1.1009. Immediate resistance is located at 1.1055 (20-DMA), while support is seen at 1.0971 (5-DMA).
USD/JPY: The safe-haven yen recorded solid gains against the dollar and the euro in Asian trade on Tuesday as risk appetites decreased, while downbeat Chinese trade data raised concerns about the state of global demand. The dollar trades 0.4 percent lower to 113.15 yen, after hitting a 1-week low of 112.74 yen earlier in the session. The euro dropped about 0.4 percent to 124.47 yen. The currency hardly moved in response to data showing Japan's economy declined an annualized 1.1 percent in the fourth quarter, slightly less than an initial estimate of a 1.4 percent contraction. The yen has strengthened by the extension of the risk-off mode, as the Japanese stocks extended losses. While the U.S. economic calendar remains data-empty, markets attention will continue to remain on the stocks and oil markets for fresh cues on the pair. Immediate support is located at 112.15 (Mar 1 Low), while resistance is seen at 113.52 (Session's High).
AUD/USD: The Australian dollar pulled away from multi-month highs touched on a rally in commodity prices, which faded as investors booked profits. The Aussie eased to 0.7431, from an 8-month high of 0.7484 touched on Monday. Heavy yen buying and disappointing Chinese February trade data, weighed on the the pair's 6-day rally. However, it is up nearly 2 percent this year, having reversed its January losses. Prices of iron ore, Australia's top export earner, advanced nearly 20 percent on Monday. If the rise in the iron ore price is sustained, then it would significantly improve the nation's terms of trade and also reduce the chances of the Reserve Bank of Australia cutting the cash rate. The pair continues to hover towards session's low of 0.7417, as the effects of downbeat Chinese trade data have not faded away. Immediate support is located at 0.7393 (5-DMA), while resistance is seen at 0.7484 (Previous Session High).
NZD/USD: The New Zealand dollar edged down to 0.6763, from a peak of 0.6818, after Fonterra cut its forecast dairy payout. Fonterra Co-operative Group on Tuesday morning lowered its forecast payout for its farmer shareholders, adding pressure on New Zealand's worried dairy sector. Investors now look ahead to the Reserve Bank of New Zealand's monetary policy decision due out on Thursday, however, markets expect a dovish statement to accompany a no-change decision. This kept the kiwi from joining the overnight rally in commodity currencies. The pair continues to trade lower, hovering towards session's low of 0.67604. Earlier in the session it touched a high of 0.6801, before falling down to its current levels. On the downside, immediate support is located at 0.6753, while resistance is seen at 0.6815 (Previous Session High).
USD/CNY: The yuan strengthened against the dollar on Tuesday after the central bank set the midpoint rate at 6.5041 per dollar prior to the market open, 0.11 percent stronger than the previous fix of 6.5113. In the spot market, yuan opened at 6.5088 per dollar and was trading at 6.5068 at midday, strengthening 0.17 percent from the previous close. The offshore yuan was trading at 6.5085 per dollar by midday and was moving toward the onshore yuan rate. China's February trade performance failed to impress the market, as exports declined 25.4 percent from a year earlier, while imports decreased 13.8 percent. On Monday, the economy's foreign exchange reserves dropped $28.57 billion in February, suggesting pressure on the yuan is easing as capital outflows slows, allowing the central bank to scale back its interventions to support the currency.
Equities Recap
Asian shares declined on Tuesday as investors took profits after a month-long rally and investors grew wary of the market's near-term prospects ahead of major central bank meetings.
MSCI's broadest index of Asia-Pacific shares outside Japan declined more than a percent. Taiwan stocks edged up 0.1 pct at 8,664.31 points.
Australia's S&P/ASX 200 index closed down 0.54 pct at 5,114.80 points, while Nikkei declined 0.76 pct at 16,783.15, with Seoul shares dropped 0.68 pct.
Commodities Recap
Gold advanced to trade near a 13-month high on Tuesday, supported by a struggling dollar and hopes the U.S. Federal Reserve will not raise interest rates as soon as next week's meeting. Spot gold was up 0.3 percent at $1,270.76 an ounce by 0200 GMT, not far from Friday's peak of $1,279.60, its highest since Feb. 3, 2015. U.S. gold for April delivery gained 0.6 percent to $1,270.90 an ounce. Spot silver edged up 0.3 percent to $15.697 an ounce. Spot platinum and palladium were steady at $1,000.76 and $574.06 respectively.
Brent crude oil declined early on Tuesday, but remained over $40 a barrel after advancing to the highest this year in the previous session as more producers announced talks to support the market and as investors opened new bets on further price rises. International benchmark Brent crude futures managed to defend $40 per barrel on Tuesday, trading at $40.26 at 0302 GMT, down 58 cents from their last settlement. On Monday, the contract had surged over 5.5 percent in intra-day trading and has gained 49 percent from its 2016 lows on Jan. 20. U.S. West Texas Intermediate crude futures were at $37.37 a barrel, down 53 cents from their last close but 43 percent up from their 2016 low on Feb. 11.
Treasuries Recap
U.S. 10-Year Treasuries Yield stood at 1.8777 percent up by 0.026 bps.
Australian government bond futures hovered near multi-week lows, with the 3-year bond contract off 3 ticks at 98.020. The 10-year contract eased 1.5 ticks to 97.4000, while the 20-year contract was steady at 96.8700. The spread between the 10-year and 3-year government bond dropped to 62 basis points, its lowest in nearly one year.
New Zealand government bonds eased, sending yields 3.5 basis points higher at the long end of the curve. The spread between New Zealand and Australia's two-year bonds declined to 29 basis points, the lowest in 18 months.
Canadian government bond prices were lower across the maturity curve, with the benchmark 10-year dropping 24 Canadian cents to yield 1.277 percent while the 2-year price down 2.5 Canadian cents to yield 0.537 percent. The spread between the 2-year and 10-year yields widened by 1.4 basis points to 74 basis points, its widest since Feb. 5.
