Market Roundup
- EUR/USD trading from 1.1112 to 1.1184 levels.
- USD/JPY remains heavy, trading in between 117.53-116.56 but above Friday's 116.29 low.
- GBP/USD moving from 1.4397 to 1.4545 levels and down on the day.
- Brent erases early 0.7% gains to stand 1.75% lower at 33.48.
- European stocks ugly: DAX off 2.4%, FTSE off 1.56%, CAC down 2.15%.
- Euro zone February Sentix 6.0 vs 9.6 previous, 7.6 expected.
- SNB sight deposits weekly Feb 5: bln vs 472.665bln.
- IFS - Weak UK tax revenue could thwart Osbourne's surplus aim.
- PBOC - Will maintain prudent monetary policy.
- Ex-PBOC economist - New US jitters to send cash back to China.
- Nikkei - China up close: Battle erupts between Xi Jinping and George Soros.
- North Korea launches missile, passed over Japan's southern Okinawa islands.
Economic Data Ahead
- (0830 ET/1330 GMT) The Statistics Canada releases its report on building permits for December, which likely rose 5.6 pct after plunging 19.6 pct in November.
- (1000 ET/1500 GMT) The Conference Board releases its U.S. employment trends index for January, the index stood at 129.3 in December.
Key Events Ahead
- (1145 ET/1645 GMT) Fed Trade Operation 30-Year F.Mae/Fr.Mac max $1.625bln.
- (1150 ET/1650 GMT) Bank of Canada Deputy Governor Tim Lane will speak on "Monetary Policy and Financial Stability - Using the Right Tools," in Montreal. Lane will be watched for clues on further easing by the central bank, considering a renewed downturn in oil prices. The central bank had cut rates twice last year as sinking oil pushed the country into a mild recession.
FX Beat
USD: The dollar index fell 0.2 percent on Monday to 96.841, approaching a trough of 96.259 test last Thursday, its lowest since October. The index is facing major support around 96.25 (trend line joining 92.62 and 93.94) and any break below 96.25 will drag it further down till 95.60/93.80.
EUR/USD: The euro rose 0.2 percent to $1.1179, it is trading around 1.11310 at the time of writing. The short term trend is bullish as long as support 1.0500 holds. Any break below 1.0500 will drag the pair down till 1.1000/1.0920. The minor support is at 1.10900. On the higher side major resistance is around 1.1250 and break above targets 1.1280/1.1350.
USD/JPY: The Japanese yen gained 0.1 percent against the dollar to trade at 116.68. The pair has broken major support 116.70 and declined till 116.55 at the time of writing. 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 traded below a recent 1-month high against the dollar, as investors were cautious on the uncertainty about UK's place in the European Union and diminishing rate hike prospects. It was trading at $1.4496, off the one-month high of $1.4672 it hit last Thursday after BoE chief Mark Carney quashed talk that interest rates could be cut in the coming months, with lower stocks also weighing on sentiment. It was trading around 1.45265 at the time of writing, the short term trend is slightly weak as long as resistance 1.4600 holds. Any break above 1.4600 will take the pair to next level 1.4650/1.4670. Overall bearish invalidation is only above 1.4670. On the lower side major support is around 1.4450 and break below targets 1.4400/1.4380. It is good to sell on rallies around 1.4560 with SL around 1.4600 for the TP of 1.4800/1.4450. The pound was lower against the euro. The single currency was up 0.2 percent at 77.085 pence, not far from a one-year high of 77.56 pence struck on Jan. 20.
USD/CHF: The pair has slightly recovered after making a low of 0.9908. It was trading around 0.9946 and the short term trend is slightly weak as long as resistance 1.000 holds. On the lower side the major support is around 0.9900. Any break below 0.9980 will drag it down till 0.9850/0.9800. On the higher side resistance is around 0.9950 and break above 0.9950 will take the pair till 0.9980/1.000.
AUD/USD: The Aussie dollar was up 0.5 percent against the U.S. dollar by 0943 GMT. It was above 71 U.S. cents, from $0.7063 in early trade, but was still licking its wounds from Friday's nearly 2 percent drop. The short term trend is bearish as long as resistance 0.7150 holds. On the higher side minor resistance is around 0.7150 and break above targets 0.7240/0.7300. The pair's minor support is around 0.7050 and break below will drag it till 0.7000/0.6920. The Aussie was sharply lower against the safe-haven yen at 83.61, from a top of 86.20 set last week.
NZD/USD: The New Zealand dollar rose to $0.6642, from $0.6622. It skidded 1.5 percent on Friday but still managed to be up 2.1 percent for the week in this year's largest gain.
Equities Recap
European shares hit 16-month lows on extending a aggressive sell-off, as investors dropped risky assets on concerns over the global growth.
The pan-European FTSEurofirst 300 fell 2.3 percent to 1,253.33 points, its lowest level since October 2014. MSCI world equity index fell 0.4 percent, taking its losses for the month so far to around 3 percent already.UK's FTSE was down 0.2 pct, Germany's DAX fell 0.3 pct and France's CAC slid 0.7 pct.
MSCI's broadest index of Asia-Pacific shares outside Japan fell down 0.1 percent, but Japan's Nikkei erased early steep losses and ended up 1.1 percent. Australia's S&P/ASX 200 Index closed down 0.02 pct. Singapore, Hong Kong and mainland China were all closed for the new year holiday.
Commodities Recap
Crude oil futures plunged over 2 percent to just over $33 by 1015 GMT, as a meeting between OPEC producers Saudi Arabia and Venezuela offered less hopes that steps would be taken to boost prices.
Spot gold dropped from a 3-month high, hit a session before, after a U.S. jobs report created doubts over prospects for a quicker pace of rate hikes this year and pushed up the dollar. Spot gold fell 0.6 percent to $1,165.52 an ounce by 0515 GMT, as it fell back from its highest since Oct. 28 at $1,174.50 hit in the previous session. U.S. gold climbed 0.8 percent to $1,166.70.
Treasuries Recap
The 10-year U.S. Treasury yield stood at 1.8201, down 28 bps.
Japanese government bond prices dropped after the Bank of Japan skipped its bond buying operation, forcing traders who were counting on the BOJ's bids to sell their position into the market. The 10-year JGB yield rose 1.5 basis points to 0.040 percent. The price of 10-year JGB futures slipped 0.09 point to 151.31. The 2-year yield rose 0.5 basis point to minus 0.190 percent while the 5-year yield rose 1.0 basis point to minus 0.175 percent. The 30-year yield stood flat at 1.070 percent, while the 20-year yield was also unchanged at 0.760 percent.
UK Gilts opened flat to the close of 120.57 as markets remain subdued due to global growth concerns and China New Year celebrations going on all week. Early underlying weakness has been met with more buyers and momentum was gained after 10-year cash yields broke support from Friday's lows of 1.531%.
German bunds have touched new highs, as Yields dropped to record low for 2 year. 2-year bund yield was at -0.51% and similarly 7-year yield fell to -0.135%. The 10-year yield is still a bit far from zero level, trading at 0.25%.
Australian government bond futures fell, with the 3-year bond contract off 3 ticks at 98.140. The 10-year contract eased 5 ticks to 97.4050, while the 20-year contract dropped 4.5 ticks to 96.8700.
