Market Roundup
- USD/JPY plays 113.40-114.07 (Asia high) to the lows into NY.
- EUR/USD sideways in Asia marked sharply lower in Europe-1.10-1.0945.
- GBP/USD matching EUR/USD fall and EUR/GBP steady as a result.
- Germany January Industrial Orders -0.1% m/m vs -0.2% revised previous, -0.3% expected.
- EZ Mar Sentix 5.5 vs 6.0 previous, 8.0 expected.
- BIS - Market turbulence shows faltering confidence in cbs healing powers.
- Hedge funds' bearish mining bets turn sour - Financial Times.
- SNB Maechler- Money policy limits not reached yet, CHF over-valued.
- BoJ Gov Kuroda - Concerns QQE cannot be expanded unfounded.
- Moody's Japan faces downside risks to growth projection.
- Japan PM Abe - BoJ decided on NIRP on its own, will raise VAT as planned.
- PBOC ViceGov Yi Gang -Fundamentals sound, FX reserves ample.
- China unveils five-year plan, prepares for tough battle, '16 GDP +6.5-7%.
- Moody's puts most oil producing nations on review for possible downgrades.
Economic Data Ahead
- (0900 ET/1400 GMT) Mexico's National Statistics Institute releases consumer confidence data for February.
- (1000 ET/1500 GMT) U.S. Labor Market Conditions Index for Feb is due for release.
- (1500 ET/2000 GMT) U.S. Consumer Credit likely dropped to $16.75B in January from $21.278B in the previous month.
Key Events Ahead
- (1145 ET/1645 GMT) FedTrade 30-year Ginnie Mae max $1.000bln.
- (1230 ET/1730 GMT) Ahead of the Fed's next policy meeting, Federal Reserve Vice Chair Stanley Fischer speaks before the National Association for Business Economics Annual Economic Policy Conference in Washington.
- (1200 ET/1700 GMT) Federal Reserve Board Governor Lael Brainard speaks before the Institute of International Bankers conference in Washington. Brainard's latest comments could give some perspective on whether she thinks conditions in the United States are proving durable enough for the Fed's liftoff to continue.
- (1400 ET/1900 GMT) U.S. Treasury Under Secretary Nathan Sheets will also be speaking at the event.
- (1830/2330 GMT) RBA Deputy Governor Lowe's Speech.
FX Recap
USD: The dollar climbed against most of its peers, except the Japanese yen, as markets priced in a higher chance the U.S. Fed would raise interest rates this year. It rose 0.3 percent against a basket of currencies. The greenback was down 0.2 percent at 113.61 yen after rising briefly to 114.25 on Friday following the employment report release.
EUR/USD: The euro was off 0.5 percent at $1.0946 as investors anticipate the ECB will cut its deposit rate by at least 10 basis points to -0.4 percent and ramp up its 60 billion euros a month asset purchase programme. The single currency fell 0.7 percent against the yen to 124.47 yen. The pair fails to sustain above key resistance level at $1.1043 and currently supported around $1.0950 marks. It made intraday high at $1.0973 and low at $1.0944 levels. Short term bias remains bearish till the time pair holds key resistance level at $1.1050. On the down side, key support level is seen at $1.0825 marks. A daily close above key resistance will drag the parity towards $1.1160/$1.1376 marks thereafter. German factory orders came in at -0.1% in the reported period, up from the previous revised reading of -0.2% booked in the last month of 2015. In addition, Euro zone sentix investor confidence data released with negative numbers at 5.5 vs 6.0 previous releases.
USD/JPY: The Japanese yen bucked the trend and rose 0.2 percent to 113.58 per dollar. The pair is likely to consolidate below 114.87 marks. Intraday bias remains bearish for the moment. A daily close below key support level at 110.98 will drag the parity towards 108.75/107.51 marks thereafter. On the top side, key resistance levels are seen at 114.87/115.96 levels. Alternatively, a sustain close above 114.00 is required to turn the bias bullish again.
USD/CHF: The short term bias remains bullish for the parity. A current rebound from 0.9878 will take the parity towards key resistance area around 1.0073 and 1.0256 thereafter. Alternatively a daily close below 0.9878 will turn the bias bearish and drag the parity towards major support at 0.9662 levels in near term.
GBP/USD: The Sterling retreated from its highest level against the dollar in nearly two weeks on Monday, as the rally ran out of steam. It shed 0.5 percent to trade at $1.4155, having risen to hit $1.4249 on Friday, its highest since Feb 22 and a far cry from the 7-year low of $1.3836 struck on Feb 29. The pound was flat against the euro at 77.35 pence per euro, having gained 1.9 percent last week. The pair remains well supported below $1.42 levels. Short term bias remains bearish till the time pair holds key resistance at $1.4248 level. On the down side key support falls at $1.3835 level. Alternatively, a daily close above $1.42 will take the parity towards key resistance at $1.4357.
AUD/USD: The Australian dollar was trading just under a seven-month peak on Monday, pausing after last week's massive rally in the absence of fresh impetus, while caution ahead of a central bank meeting capped its New Zealand peer. It was last at $0.7413, down 0.4 percent on the day, trimming last week's 4.4 percent gain - its best weekly performance in over four years. A current rebound from $0.6826 is a corrective move. A sustained close above $0.7385 takes the parity towards $0.7427/$0.7482 thereafter. On the downside, a break below $0.7108 support levels will turn bias back to the downside for retesting 0.6826 low. Today Australia's Job advertising fell 1.2% month-on-month in February, following a revised increase of 0.9% in January.
NZD/USD: The kiwi dropped below 68 U.S. cents, recoiling from a 2-month high of $0.6819 set on Friday. It rose a more modest 2.8 percent last week. A daily close below 0.6720 will turn the bias slightly bearish and drag the parity towards key support at 0.6576/ 0.6486 levels.
Equities Recap
European shares failed to follow Asian equities which were at 2-month highs after upbeat U.S. jobs data and as oil prices climbed further. The pan-European FTSEurofirst 300 index opened 0.16 pct lower and turned higher 0.11 pct by 0817 GMT, after rising 0.7 pct on Friday after the U.S. jobs report, Britain's FTSE 100 lost 0.6 percent, Germany's DAX and France's CAC were down 0.59 pct, and 0.55 pct respectively.
Tokyo's Nikkei closed down 0.61 pct at 16,911.32. MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4 percent to its highest since Jan. 4. China's CSI300 Index ended up 0.4 pct at 3,104.84 points and Shanghai Composite Index gained 0.8 pct at 2,897.34 points. HK's Hang Seng Index edged down 0.1 pct at 20,159.72 points.
Commodities Recap
The tightening supply and an improving global outlook drove oil prices higher by more than a third from this year's lows. Front-month Brent crude futures were trading at $39.37 a barrel at 0945 GMT, up 65 cents from their last settlement. U.S. West Texas Intermediate futures fetched $36.57 a barrel, up 65 cents from the last close and 40 percent above February lows.
Gold was trading below last week's 13-month high on Monday, its recent rally drenched by strong U.S. payroll data. Spot gold rose 0.2 percent at $1,262.05 an ounce.
Treasuries Recap
The U.S. 10-year Treasury yields eased on Monday and were last up 0.1 basis points at 1.89 percent.
JGB prices remain marginally mixed in very quiet trading. JGBs in the 2-yr to 5-yr zone opened softer, but then turned modestly firmer in late morning trading on expectations that the BoJ would buy them at higher prices in the near future. The 30s are moving between 0.71% (-0.5bp) and 0.715% (-0.5bp) in extremely thin trading ahead of tomorrow's monthly JPY800bn 30-yr JGB auction. Yields on the current 2-yr JGBs are down 0.5bp from yesterday at -0.205%, while the 5s are down 1bp at -0.195%, vs -0.18% earlier. The 10s are up 0.5bp at -0.035%, vs -0.03% earlier, while the 20s are down 0.5bp at 0.43%, vs 0.435% (flat) earlier. In futures, lead March JGB futures are up 0.05 at 151.92, after fluctuating in a 151.79-151.96 range.
The euro zone bond yields were 3-5 basis points lower as investors expect the ECB would cut its deposit rate on Thursday by at least 10 basis points to minus 0.40 percent and ramp up its 60 billion euros a month asset purchase programme. The German 10-year Bund yields dropped 2.5 basis points to 0.21 percent. While 10-year Portuguese bond yields were down 4.5 basis points at 2.93 percent.
U.K June Gilts opened at 120.36, only 2 ticks higher than their previous 120.34 settlement. They have traded a 120.36-57 range and were at 120.48. The benchmark 10-year bond yield stood at 1.468 pct.
Australian government bond futures dropped, with both the 3-year and 10-year bond contracts 6 ticks lower at 98.030 and 97.385, respectively. New Zealand government bonds inched lower, sending yields as much as 2 basis points higher on the curve.
