Market Roundup
- EUR/USD plays in a tight range from 1.1183 to 1.1216 levels.
- USD/JPY trading from 116.55 to 116.99 levels.
- Brent choppy but positive into NY-Crude up 0.4% to 31.85.
- ECB's Jazbec - Will act in March if necessary.
- Poll - Most accurate 2015 China pollsters see 2016 GD at 6.7%.
- Germany December Industrial Orders -0.7% vs +1.5% previous, -0.5% expected.
- RBA quarterly MPS - Highlights job strength in steady policy.
- Antipodean food producers struggle to meet Lunar NY demand.
- CNB considered cutting rates into negative territory Thursday.
Economic Data Ahead
- (0830 ET/1330 GMT) U.S. job growth likely slowed to 190,000 jobs in January after increasing 292,000 in December as the troubled manufacturing sector shed jobs and the boost from unseasonably mild weather faded. But, a rebound in wages will suggest that the labor market recovery remains intact.
- (0830 ET/1330 GMT) The U.S. unemployment rate is expected to remain steady at a 7-1/2-year low of 5 percent and average hourly earnings are expected to rise 0.3 percent, a March interest rate hike from the Federal Reserve remains on the table.
- (0830 ET/1330 GMT) The Commerce Department is expected to report that the trade deficit was little changed at $43 billion in December,
- (0830 ET/1330 GMT) The Canadian economy is expected to have gained just 5,500 jobs in January, a slowdown from the 22,800 pace seen in the final month of 2015. The modest pace of job growth is expected to keep the unemployment rate unchanged at 7.1 percent in January.
- (0830 ET/1330 GMT) The Canada's trade deficit is expected to have widened to C$2.2 billion in December. Economists will be looking to see whether exports derived any benefit from the depreciation in the Canadian dollar.
- (1000 ET/ 1500 GMT) The Canada's Ivey PMI for Jan is expected to rise slightly to 50.0.
- (1300 ET/1800 GMT) Baker Hughes releases its Oil Rig Count.
- (1500 ET/2000 GMT) U.S. Consumer Credit likely rose to $16.00 bln in December, from $13.95 bln in the previous month.
Key Events Ahead
- (1145 ET/1645 GMT) Fed Trade Operation 30-Year Ginnie Mae max $1.000 bn.
FX Recap
USD: The dollar inched up from a 2-1/2-month low but was on track for its heaviest weekly loss since 2009, as investors await U.S. employment data for justification of the view that the U.S. Federal Reserve will not raise rates in 2016. It has lost almost 3 percent against a basket of major currencies since Monday as rate hike expectations this year faded amid signs of domestic weakness and broader concerns over global growth. It gained just over 0.1 percent on the day against both the euro and yen, to $1.1192 and 116.925 yen respectively. The dollar index was up 0.2 percent by 0830 GMT at 96.651, having traded as low as 96.239 on Thursday; it's weakest since late October.
EUR/USD: The euro edged down 0.2 percent to $1.1190, but for the week was on track for a more than 3 percent gain - it's biggest since October 2011. It was trading around 1.11940 and the intraday trend is bullish as long as minor support 1.1150 holds. Any break below 1.1150 will drag the pair till 1.11350/1.1070 level in short-term. Overall bullish invalidation is only below 1.1050. On the higher side major resistance is around 1.1250 and break above targets 1.1287/1.1350.
USD/JPY: The pair has broken major support 118 and declined till 116. It was trading around 116.78 and the short term trend is slightly weak as long as resistance 117.60 holds. On the lower side major support is around 116 and break below targets 115/113.80. The minor resistance is around 117.60 and break above targets 118.60/119.30.
GBP/USD: The Sterling retreated from a 1-month high against the dollar; pressured by a survey that showed those campaigning for Britain to leave the European Union had taken a 9-point lead, triggering renewed anxiety among investors. It was down 0.6 percent at $1.4507, having hit a 1-month high of $1.4672 on Thursday after BoE Carney's speech. It was trading around 1.45564 at the time of writing. Bank of England cut inflation and growth projections yesterday and this confirmed that central bank is unlikely to hike rates soon. On the lower side minor support is around 1.4520 and any break below targets 1.4480/1.4440/1.43750. Any break above major resistance 1.4675 will take the pair to next level around 1.4750/1.4795. The minor resistance is around 1.4600/1.4650.
USD/CHF: The pair has broken major support 1.0050 and declined till 0.9980. It was trading around 1.0196 and the short term trend is slightly weak as long as resistance 1.010 holds. On the lower side major support is around 0.9980. Any break below 0.9980 will drag the pair down till 0.9950/0.9920. On the higher side resistance is around 1.010 and break above 1.010 will take it till 1.01500/1.0200.
AUD/USD: The Australian dollar edged lower to $0.7187 after retail sales data came below forecasts, but within spitting distance of a one-month peak of $0.7242., but remained well on track to end the week with hefty gains. It remained 1.6 percent higher for the week largely due to a sharp drop in the U.S. dollar. The short term trend is slightly bullish as long as support 0.7150 holds. On the higher side minor resistance is around 0.7250 and break above targets 0.7300/0.7380. The pair's minor support is around 0.7150 and break below will drag it till 0.7100/0.7020.
NZD/USD: The New Zealand dollar eased to $0.6692, having touched a 1-month peak of $0.6747 on Thursday. It has leapt 3.2 percent this week and away from a January low of $0.6348.
Equities Recap
The stocks were mixed in Asia and Europe as investors are waiting for U.S. monthly payrolls data and oil prices fell by 0.5 to 1 percent. Europe's FTurofirst 300 opened down 0.14 pct to 1,291.81 points, but later turned higher, trading up 0.35 pct. Britain's FTSE 100 was up 0.07 pct, Germany's DAX fell 0.3 pct and France's CAC 40 rose 0.09 pct in early deals.
In Asia, Tokyo's Nikkei fell 2.04 pct, China's CSI300 Index closed down 0.7 pct at 2,963.79 points, Shanghai Composite Index ended down 0.6 pct at 2,763.49 points. Australia's S&P/ASX 200 Index fell 0.11 pct at 4,975.00 points, while Hong Kong's Hang Seng rose 0.6 percent and Malaysian and Singapore stocks also gained.
Commodities Recap
Crude oil futures were firm after earlier losses, as bearish fundamentals weighed on markets at the end of a volatile week, the prices fluctuated over 10 percent within a day. International benchmark Brent crude futures were trading at $34.37 per barrel at 0917 GMT, down 9 cents from their last settlement after dipping below $34 earlier in the session. U.S. West Texas Intermediate crude futures were up 8 cents at $31.80 a barrel.
Gold was hovering near its highest since October on Friday, on track to post its strongest weekly gain in a month as the dollar was weakened by growing doubts the US Fed can stick to its interest rate hike campaign. Spot gold was flat at $1,154.50 an ounce by 0629 GMT, after peaking at $1,157.20 on Thursday, its highest since Oct. 29. U.S. gold for April delivery eased 0.2 percent to $1,155.20 an ounce.
Treasuries Recap
US 10-year Treasury yield stood at 1.8546, down 9 bps. German bund futures opened 28 ticks higher at 163.8.
UK Gilts opened 12 ticks higher than the settlement of 120.35, as expected, as core fixed income markets remain elevated ahead of U.S. payrolls. Buyers have respected recent lows on 10-year cash yields at 1.533% in what is a low volume low risk session.
Japanese government bond prices soared on Friday, with the benchmark 10-year yield edging near zero percent after Japanese share prices plunged on rising yen, undermining any benefits from the Bank of Japan's negative interest rates. The 10-year yield fell 3.0 basis points to 0.025 percent. The 5-year yield fell 3.5 basis points to minus 0.185 percent, while the 2-year yield fell to as low as minus 0.200 percent. The 10-year JGB futures rose 0.48 point to 151.40 2.
Australian government bond futures were firm, with the 3-year bond contract up 1 tick at 98.180. The 10-year contract added 3 ticks to 97.4600, while the 20-year contract was half a tick higher at 96.9200. New Zealand government bonds eased, sending yields 2.5 basis points higher at the short end and 2 basis points higher at the long end.
