Market Roundup
- GBP/USD drops to 1.4244 and then back to 1.4339.
- USD/JPY plays 113.37 to 114.40 towards the high into NY.
- Swiss Feb ZEW Investor sentiment -5.9 vs -3.0 previous.
- UK Jan ILO Jobless rate 5.1% vs 5.1% previous, 5.0% expected.
- UK Dec Average Earnings 1.9% 3m y/y vs 2.0% previous, 1.9% expected.
- UK Chancellor-stats show we are moving towards full employment- Twitter.
- William Hill-1 to 4 on Brexit Referendum being held before end of June vs 1-2 earlier.
- OPEC head- To discuss oil output cap with Iran, Iraq, Venezuela- WSJ sources.
- China NDRC - Able to keep yuan basically stable.
- Boston Fed Rosengren - USD rise/oil fall depressing inflation, rate cut possible.
- China VicePrem- Will strengthens efforts to arrest trade deceleration -Xinhua.
Economic Data Ahead
- (0830 ET/1330 GMT) The U.S. Labor Department's producer price index likely fell 0.2 percent in January, reflecting lower oil prices and a strong dollar, after a similar drop in December.
- (0830 ET/1330 GMT) The Commerce Department is expected to report that housing starts increased to a 1.17 million-unit rate in January from 1.15 million units in December. While building permits likely dropped to 1.200M from 1.204M.
- (0830 ET/1330 GMT) The Statistics Canada will report net worth of foreign investments in Canadian securities and foreign securities bought by Canadian investors in January.
- (0915 ET/1415 GMT) A report from the Federal Reserve is expected to show industrial production rose 0.4 percent in January, the first risein four months, lifted by a rebound in manufacturing and utilities output. Industrial output dropped 0.4 percent in December. The capacity utilization likely to have scaled to 76.7 percent from 76.5 percent.
- (0930 ET/1430 GMT) Brazil's central bank will release the data for forex outflow from the country in the calendar month through Feb. 12.
- (1630 ET/2130 GMT) API is set to report its Weekly Crude Oil Stocks.
Key Events Ahead
- (1300 ET/1800 GMT) FRB Minneapolis's Kashkari in Reuter's interview.
- (1400 ET/1900 GMT) The Federal Open Market Committee will release the minutes from its meeting of Jan. 26-27, where the U.S. Fed stood pat and said it was "closely monitoring" global economic and financial developments.
- (1930 ET/0030 GMT) The Federal Reserve Bank of St. Louis President James Bullard will give a presentation on the U.S. economy and monetary policy before the Fed Forecast Dinner hosted by the CFA Society of St. Louis.
FX Recap
USD: The doubts about the pace of any further rate rises kept the dollar back at 96.720 against a basket of currencies. Against the yen, it fell 0.5 percent to 113.50 yen after reaching 114.875 on Tuesday, the yen's weakest performance in a week.
EUR/USD: The euro gained 0.2 percent to $1.1167, and was trading around 1.11710 at the time of writing. It sees potential reversal zone at 1.1050 (1.13% retracement of 1.10865 and 1.13350). The short term trend is bullish as long as support 1.1050 holds. On the higher side major resistance is around 1.1200 and break above targets 1.1245/1.1280/1.13350. Any break below 1.1050 will it till 1.100/1.0920.
USD/JPY: The yen outperformed as a rebound in oil prices bubbled out, weighing on riskier assets and underpinning demand for the safe-haven Japanese currency. It has recovered from a low of 113.37 and was trading around 114.12. The sort term trend is slightly weak as long as resistance 115.05 (55 day 4 H EMA) holds. On the lower side 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 fell briefly before trimming losses against the dollar and euro after mixed data showed UK wage growth slowed to its weakest since last February while unemployment remained at its lowest since mid-2005. It fell to $1.4265 immediately after the data, from $1.4289 just before its release. It then recovered to trade at $1.4290, leaving it down 0.1 percent on the day. Against the euro, the pound was flat at 77.95 pence. The pair has broken major support 1.4320 and declined till 1.42440. The short term trend is bearish as long as resistance 1.4360 holds. On the lower side major support is around 1.4240 and break below targets 1.4180/1.4140. Any break above 1.4360 will take it till 1.44400/1.4450 level.
USD/CHF: The pair has broken major resistance at 0.9900 and jumped till 0.99167. It is currently trading around 0.99088. The short term trend is slightly bullish as long as support 0.9850 holds. On the lower side the major support is around 0.9850. Any break below 0.9760 will drag the pair down till 0.9800/0.9770. On the higher side minor resistance is around 0.9900 and break above will take it till 0.9950/1.00.
AUD/USD: The Australian dollar dropped to 71 cents, from a peak of $0.7182 touched on Tuesday. Dealers cited sellers around $0.7130 and a break above would target $0.7180. Support was found at $0.7060. The short term trend is slightly bullish as long as support 0.7075 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 eased to 81 yen, from a peak of 82.41 on Tuesday, but was still far above a four-year trough of 77.57 set last week.
NZD/USD: The New Zealand dollar was subdued at $0.6566, having shed a cent overnight when a survey showed a marked decline in inflation expectations in New Zealand.
Equities Recap
Stocks gained on Wednesday as investors preferred less volatile trading, after global stocks posted one of their biggest gains in years. European shares rose on the latest corporate earnings reports, the pan-European FTSEurofirst 300 index was up 0.5 percent, Britain's FTSE climbed 0.7 percent and Germany's DAX and France's CAC 40 both rose 0.6 percent.
MSCI's index of world shares was unchanged after rising 2.3 percent on Tuesday, its second-best gain in four years. MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.6 percent, erasing early gains of 0.4 percent, after a 3 percent rise over the previous two sessions. Japan's Nikkei ended down 1.36 pct at 15,836.36, China's CSI300 Index closed up 0.9 pct at 3,063.32 points, while Shanghai Composite Index gained 1.1 pct.
Commodities Recap
Oil prices climbed as efforts led by Russia and Saudi Arabia to freeze production levels and ease a global glut turned to Iran, Brent crude was up 28 cents at $32.46 a barrel by 0904 GMT, after settling down $1.21 in the previous session. U.S. crude rose 16 cents to $29.20 a barrel.
Gold jumped 1 percent to trade above the key $1,200-an-ounce level as Asian shares and the dollar dropped. Spot gold hit a session high of $1,212.20, before paring some gains to trade up 0.9 percent at $1,211.20 by 0757 GMT.
Treasuries Recap
The benchmark 10-year U.S. Treasury yield was down almost 3 basis points at 1.75 percent.
The 10-year German Bund yield dropped nearly 2 basis points at 0.25 percent.
The benchmark 10-year JGB yield rose 1 basis point to 0.050 percent, taking cues from an overnight drop by U.S. Treasuries and on caution ahead of Thursday's 2.5 trillion yen ($21.98 billion) 5-year auction. The rise pulled the benchmark JGB yield slightly away from a record low of minus 0.035 percent struck last week. The 30-year yield dropped 3 basis points to 1.040 percent due to a JGB buying operation by the Bank of Japan, which purchased more than 500 billion yen ($4.40 billion) of debt Wednesday across various maturities.
UK Gilts opened just 4 ticks higher than the settlement of 121.76 as Asian equities suffered on the fact that oil producers failed to address oversupply concerns. 10-year cash yields were confined in a narrow range of 1.413% to 1.433%. March Gilts were around seven ticks lower than just prior to the UK labor data at 121.71.
Australian government bond futures were a touch firmer, with the 3-year bond contract up 1 tick at 98.160. The 10-year contract was also 1 tick higher at 97.4900, while the 20-year contract was steady at 96.9450. New Zealand government bonds were little changed.
