Market Roundup
- China PBOC Gov Xiaochuan plays down FX fears, no basis for continuing renminbi falls - Caixin.
- PBOC sets yuan/USD midpoint sharply higher at 6.5118, last close 6.5755.
- China Jan trade surplus CNY406.2bn.
- Shanghai Composite closed down 0.6%.
- Japan PM Abe: Excessive FX volatility undesirable, ready to takes steps if needed.
- Abe: FX reflects weak USD, hopes G20 takes steps on global woes.
- Japan Econ Min Ishihara: Fundamentals firm, no change in trend, still eyes moderate recovery.
- Japan Q4 GDP -0.4%q/q vs 0.3% previous, -0.3% expected.
- Japan Q4 GDP annualized -1.4%q/q vs 1.0% previous, -1.2% expected.
- Japan Q4 GDP capital expenditure 1.4%q/q vs 0.6% previous, -0.2% expected.
- Japan Dec Industrial output revised -1.7% vs -1.4% previous.
- Nikkei surges to close up 7.16%.
- Australia PM Turnbull losing shine ahead of elections.
- ECB Coeure - Market turmoil could hold back euro zone inflation.
- Euro Zone Dec Eurostat trade NSA, Eur 24.3bn vs 23.6bn previous.
- Buba cuts 2016 German CPI f/c to 0.25% from 1.1% due to falling oil price.
- German FinMin Schaeuble - Will urge monetary policy changes at G20 - Speigel.
- Spain sets confidence vote debate on forming a govtMarch 2.
- 'Brexit' could lead to HSBC moving 1,000 jobs to Paris-Sky.
- Britain's Attorney General may back Brexit - Daily Telegraph.
- Polish central banker: ready to intervene in FX market if needed- Puls Biznesu.
Economic Data Ahead
No major economic data releases scheduled.
(U.S. and Canadian markets are closed on Monday, , for U.S. Presidents' Day and Canada Family Day)
Key Events Ahead
- (0900 ET/1400 GMT) ECB President Draghi's Speech.
FX Recap
USD: The dollar was trading higher at 96.363 against a basket of currencies, having been at its lowest in almost four months. It edged up to 113.75 yen, having touched a 15-month trough just under 111.00 last week.
EUR/USD: The euro was down 0.6 percent at $1.1194, having slipped from a 3-1/2 month peak of $1.1377. The pair has a minor support at 1.1200 and declined till 1.11879. On the downside any break below major support - 1.1178 (55 day 4H EMA) is around 1.1178 and break below targets 1.1130/1.1100. The overall bullish invalidation is only below 1.1050. Any break above the trend line resistance 1.12620 will take the pair till 1.1335/1.1375/1.1430.
USD/JPY: The Japanese yen lost ground against the U.S. dollar. It has broken major resistance 113.65 and jumped till 114.09. It was trading around 113.99; the short term trend is slightly bullish s long as support 113 holds. On the lower side major support is around 113 and break below targets 111.80/110. The minor resistance is around 114.10 and break above targets 115/116.
GBP/USD: The Sterling was flat against the dollar at $1.4495, it is consolidating between narrow range 1.4580 and 1.4380 for the past three trading sessions. The short term trend is weak as long as resistance 1.4580 holds. On the lower side major support is around 1.4480 and any break below targets 1.4450/ 1.4400/1.4350. The major weakness can be seen below 1.4320 and any break above major resistance 1.4580 will take it till 1.4650/1.4680 level. The Sterling was around 0.5 percent stronger against the euro at 77.20 pence, having slumped to a 14-month low of 78.97 pence on Thursday, helped by better appetite for riskier currencies and assets, although lingering concerns about Britain's future in the European Union checked gains.
USD/CHF: The pair has recovered till 0.9845 at the time of writing and was trading around 0.98267. The short term trend is slightly bullish as long as support 0.9760 holds. On the lower side the major support is around 0.9760 and any break below 0.9760 will it down till 0.9690/0.9660. On the higher side minor resistance is around 0.9850 and break above will take the pair till 0.9900/0.9960.
AUD/USD: The Australian dollar gained around half a percent against the dollar. The short term trend is slightly bullish as long as support 0.7100 holds. On the higher side major resistance is around 0.7170 and break above targets 0.7240/0.7300. The major support is around 0.7075 and break below will drag the pair till 0.702/0.6970. The Aussie bounced to 81 yen, from 80.41 in early trade and a four-year trough of 77.57 set last week.
NZD/USD: The New Zealand dollar was trading higher at $0.6670, recovering some of its losses after taking a tumble on Friday as U.S. January retail sales came in better than expected. The kiwi edged up 0.5 percent to 75.42 yen, having touched a 6-month trough of 73.19 last week. It has slumped 3.3 percent so far this week.
Equities Recap
Stocks in Europe and Asia rose on Monday as the PBoC fixed the Yuan at a much stronger rate and oil gains eased worries of global deflation.
European shares were trading higher with a rebound in banking stocks and sharp gains among French telecoms stocks on M&A expectations supporting the market. By 0933 GMT, the pan-European FTSEurofirst 300index rose 2.6 percent, after gaining 3 percent on Friday, while the euro zone's blue chip Eurostoxx 50 index rose by 2.9 percent. Britain's FTSE 100 was up 1.45 pct, France's CAC 40 rose 2.2 pct and Germany's DAX climbed 2.1 pct in the early deals.
The Japan's Nikkei climbed more than 7 percent, its worst week since the depths of the global financial crisis in 2008 quickly behind it. The 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.
China's CSI300 index ended down 0.6 pct at 2,946.71 points, while Shanghai Composite Index closed down 0.6 pct at 2,746.20 points and HK's Hang Seng Index closed up 3.3 pct at 18,918.14 points
Commodities Recap
Oil prices dropped on a stronger dollar and weaker-than-expected Chinese trade data that fuelled concerns about demand in the world's biggest energy consumer. Brent crude futures were down 14 cents at $32.22 a barrel at 0948 GMT, but held on to most of a 10 percent surge from Friday. U.S. futures traded at $29.40 a barrel, almost flat on Friday's close.
Gold dropped more than 2 percent on Monday, moving further away from its highest in a year, as a rebound in stocks and profit-taking from China weighed on the market. Spot gold fell to a session low of $1,211.05, before paring some losses to trade down 1.9 percent at $1,213.60 by 0753 GMT. U.S. gold futures dropped as much as 2.2 percent to $1,212.20. Spot silver and futures fell 3 percent.
Treasuries Recap
U.S. bond markets are closed due to holiday on account of President's Day.
The Japanese government bond prices slipped as Tokyo stocks rebounded after last week's rout, curbing bids for safe-haven debt. The benchmark 10-year JGB yield rose a basis point to 0.085 percent, while the 5-year yield rose 2.5 basis points to minus 0.125 percent, pulling away from an all-time trough of minus 0.265 percent struck on Thursday.
UK Gilts opened 50 ticks lower than the settlement of 121.95, as expected, as core markets reacted to a strong bounce in equity space.
German 10-year Bund yields rose 3 basis points to 0.29 percent as investors shifted to riskier assets such as stocks and higher-yielding debt. Yields on Spanish, Italian and Portuguese yields fell 4 to 7 basis points. 10-year Portuguese yields stood at 3.55 percent, almost a full percentage point below their high last week.
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 dropped fell 5.5 ticks to 97.0050. New Zealand government bonds eased, sending yields 3.5 to 4.5 points higher across the curve.
