Market Roundup
- Oil powers fly to Doha for private pow-wow as $30 crude woes mount.
- Qatar min -We agree to freeze output at Jan levels.
- Doha-Freeze decision made by Qatar, Saudi, Russia and Venezuela.
- EUR/USD mildly corrective after two-day slide-1.1147-1.1193.
- USD/JPY Offered again, Nikkei 0.2% higher-spot 113.65-114.87.
- GBP/USD mid-range despite CPI data-1.4406-1.4515.
- Brent was up over 6% now 2.4% higher after Doha oil meeting.
- UK Jan CPI +0.3% y/y vs 0.2% previous, 0.3% expected.
- UK Jan Core CPI +1.2% y/y vs 1.4% previous, 1.3% expected.
- UK Jan Core Output prices 0.0% y/y vs 0.1% previous, 0.1% expected.
- Germany Feb ZEW Economic Sentiment 1.0 vs 10.2 previous, 0.0 expected.
- Germany Feb ZEW Current Conditions 52.3 vs 59.7 previous, 55.5 expected.
- Japan Fin Min Aso - Will coordinate with G7 on recent market moves.
- RBA Feb 2 meeting minutes- Sticks to guarded optimism on econ outlook.
Economic Data Ahead
- (0830 ET/1330 GMT) The Federal Reserve Bank of New York releases its Empire State Manufacturing Index for February which is likely improved to -10.00 from -19.37 in January.
- (0830 ET/1330 GMT) The Statistics Canada releases its Canadian manufacturing shipments for December, which are expected to have risen 0.8 percent after gaining 1.0 percent in November.
- (1000 ET/1500 GMT) The National Association of U.S. Home Builders' Housing Market Index for February is expected to remain unchanged at 60.
- (1630 ET/2130 GMT) API reports its Weekly Crude Oil Stocks.
Key Events Ahead
- (0900 ET/1400 GMT) The Philadelphia Federal Reserve Bank President Patrick Harker will address the 2016 Economic Forecast panel sponsored by Lyons Companies and the University of Delaware Center for Economic Education & Entrepreneurship, in Newark, Delaware.
- (0945 ET/1445 GMT) FRB Dallas's Kaplan at housing outlook conference.
- (1000 ET/1500 GMT) FRB New York's Dudley discusses trends borrowing/debt NY.
- (1030 ET/1530 GMT) The Federal Reserve Bank of Minneapolis President Neel Kashkari will provide a first peek into his thinking on the economy and monetary policy when he speaks on lessons from the financial crisis before the Brookings Institution in Washington.
- (1930 ET/0030 GMT) The Federal Reserve Bank of Boston President Eric Rosengren is scheduled to speak on the economic outlook at Colby College in Waterville, Maine.
FX Recap
USD: The dollar gained 0.6 percent against a basket of currencies, made a high of 96.88 and started to decline from that level to 96.48. The greenback weakened 0.6 percent against the yen to around 113.87 yen.
EUR/USD: The euro edged up 0.2 percent to $1.1178, down from last week's 4-month high of $1.1377. The minor resistance is found at 1.1170 (trend line joining 1.1375 and 1.13248) and on the lower side minor support is around 1.1140 and break below targets 1.1100/1.1055. Any break above 1.1180 will take the pair to next level 1.125/1.1280.
USD/JPY: The yen rose against the dollar on Tuesday as a recovery in risk appetite fizzled, with European shares and oil prices falling back after earlier gains. Having fallen more than 1 percent on Monday, the yen gained half a percent, trading at 114.08 against the dollar. The short term trend is slightly weak as long as resistance 115.05 (55 day 4 H EMA) holds. On the lower side the major support is around 113 and break below targets 111.80/110. The minor resistance is around 115 and break above targets 115.60/117.
GBP/USD: The Sterling was struggling to post gains after the data showed UK annual inflation inching higher to a 12-month high in January, with appetite for riskier assets declining and dragging down the currency. It fell to $1.4450 by 1010 GMT from around $1.4495 just before the CPI data; it was still up 0.1 percent on the day. The short term trend is weak as long as resistance 1.4580 holds. On the lower side major support is around 1.4400 and any break below targets 1.4350/1.4320. 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.
USD/CHF: The pair has slightly declined till 0.9847 after making a high of 0.9888 and was trading around 0.98648. The short term trend is slightly bullish as long as support 0.9770 holds. On the lower side the major support is around 0.9770 and any break below 0.9760 will drag the pair down till 0.9690/0.9660. While on the higher side minor resistance is around 0.9900 and break above will take it till 0.9950/1.0000.
AUD/USD: The Aussie has made a high of 0.7181 and slightly retreated from that level. It was trading around 0.7155. 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. Its major support is around 0.7075 and break below will drag the pair till 0.702/0.6970. The Aussie popped up to 82.19 yen, having recouped four yen since it hit a four-year trough last week. A break of 82.97 yen, the 61.8 percent retracement of this year's fall would target 86.36, the 2016 peak.
NZD/USD: The New Zealand's dollar fell almost 1 percent after two-year inflation expectations fell to their lowest since 1994, fuelling expectations of more easing from the central bank. In the Asian session it sank half a U.S. cent to $0.6617 in a matter of minutes, while the Australian dollar climbed sharply to stand at NZ$1.0815 from $1.0745.
Equities Recap
The European shares dropped on Tuesday after oil prices trimmed up early gains as four producers agreed to freeze but not cut output. The pan-European FTSEurofirst 300 index fell 0.5 percent, after gaining 6 percent in the last two trading days, UK's FTSE climbed 0.3 pct, Germany's DAX rose 0.4 pct and France's CAC was up 1 pct in early deals.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.9 percent, Tokyo's Nikkei index ended with a modest 0.2 percent gain, China's CSI300 Index closed up 3.1 pct at 3,037.04 points, while Shanghai Composite Index ended up 3.3 pct at 2,836.57 points.
U.S. stock index futures were up around 1.2 percent.
Commodities Recap
Brent crude oil futures trimmed gains after Qatar said that four of the world's largest producers agreed to freeze output at January levels, provided that other major exporters followed suit. Brent crude futures gained 81 cents at $34.20 a barrel by 09252 GMT, having fallen from an earlier peak of $35.55, the highest price since Feb. 4. U.S. crude futures rose 63 cents at $30.07, off the day's high of $31.53.
Gold climbed after two days of losses and recovering from an early dive below $1,200 an ounce as stock markets dropped. Spot gold was up 0.2 percent at $1,211.68 an ounce by 1045 GMT, having earlier fallen as low as $1,190.40.
Treasuries Recap
The 10-year US Treasury yielded 1.79 percent, compared with 1.75 percent at the close of Friday's U.S. trading session.
German 10-year bond yields rose 2 basis points to 0.26 percent, having fallen as far as 0.13 percent last week.
JGB prices extended their earlier gains on the back of stronger-than-expected results of today's monthly JPY1.2tn 20-yr JGB auction The lowest accepted price and the average price came in at 103.55 and 103.66, respectively, vs 103.40 for median market expectations. The accepted price (103.55-103.66) was close to the morning close of 103.601. The 20s were trading at their intraday high of 104.226 to yield 0.755%. Yields on the current 5-year JGBs were down 1.5bp from yesterday at -0.14% in negative territory, while the 10s were down 3.5bp at 0.05%, after moving in a 0.045%- 0.085% range. The 30s dropped 7bp at 1.09%, vs 1.15% (-1bp) earlier. The 10-year March JGB futures were up 0.31 at 151.35, after fluctuating in a 151.02-151.42 range.
UK March Gilts inched around 4 to 5 ticks higher on the UK CPI data to 121.41 before settling back to pre-data levels. January CPI came in bang in line with forecasts at 0.3% y/y (previous 0.2%). Prices have moved off former lows as the effects from lower oil prices become less of a factor due to the fact that they are already priced in.
Australian government bond futures edged away from multi-month peaks, with the 3-year bond contract off 2 ticks at 98.150. The 10-year contract eased 1 tick to 97.4750, while the 20-year contract shed 2 ticks to 96.9300. New Zealand government bonds recouped early losses to be mostly flat on the day.
