Market Roundup
- USD/JPY +0.05%, GBP/USD -0.5%, EUR/USD +0.1%
- DXY +0.03%, DAX +0.1%, Brent -0.03%, Gold +0.3%
- Trump dooms dollar to worst January since 2008
- UK Dec Mortgage approvals 67.898k vs previous 67.461k revised 69k f/c
- UK Dec Mortgage lending 3.798bln vs previous 3.141bln revised 3.3bln expected
- UK Dec BOE Consumer credit 1.039bln vs previous 1.929bln revised 1.7bln f/c
- UK Dec M4 Money supply growth -0.5% m/m vs previous 0.4%
- Foreign investors sold net GBP 2.97 bln gilts in Dec
- Germany Dec Retail sales -1.1% y/y vs revised +3.5% previous
- EZ Jan Inflation, flash 1.8% y/y vs previous 1.1%
- ECB's Villeroy says concerns about rising inflation are "exaggerated"
- EZ Q4 GDP flash prelim 0.5% q/q, 1.8% y/y vs previous 0.4%/1.8% revised 0.5%/1.7% f/c
- EZ Dec Unemployment rate 9.6% vs previous 9.7% revised 9.8% f/c
Economic Data Ahead
- (0830 ET/1330 GMT) The U.S. Labor Department will release its employment cost index for the fourth quarter. The index is expected to remain steady at 0.6 percent.
- (0830 ET/1330 GMT) The Statistics Canada releases its Raw Material Price Index for the month of December. The index posted a decline of 2.0 percent in November.
- (0830 ET/1330 GMT) The Statistics Canada will report its industrial producer prices for the month of December. The indicator rose 0.3 percent in the prior month.
- (0830 ET/1330 GMT) The Statistics Canada is expected to report that gross domestic product increased 0.3 percent in December, offsetting the previous month's decline.
- (0900 ET/1400 GMT) The S&P/Case-Shiller is expected to report that U.S. home price index of 20 metropolitan areas rose at an annualized rate of 5.1 percent in November, after posting similar gains in the previous month.
- (0945 ET/1445 GMT) Chicago Purchasing Managers' Index is likely to show that business conditions rose to 55.0 in January from 54.6 last month.
- (1000 ET/1500 GMT) The U.S. consumer confidence index is expected to have decreased to 112.5 in January from a 15-year high reading of 113.7 recorded in December.
- (1645 ET/2145 GMT) The Statistics New Zealand reports its unemployment rate for the fourth quarter. The indicator stood at 4.9 percent in the third quarter.`
- (1730 ET/2230 GMT) Australian Industry Group (AiG) releases its performance of manufacturing index for the month of January. The index stood at 55.4 in December.
Key Events Ahead
- (0645 ET/1145 GMT) FedTrade operation 30-year year Fannie Mae / Freddie Mac (max $1.625 bn).
- (0800 ET/1300 GMT) The Federal Open Market Committee commences its two-day meeting on interest rate policy.
- N/A Bank of Canada Governor Stephen Poloz will talk on economic modeling and monetary policy.
FX Beat
DXY: The dollar retreated from multi-week lows versus its major peers, supported by rising U.S. Treasury yields. The greenback against a basket of currencies traded 0.05 percent down at 100.32, having hit a high of 101.02 on Monday, its highest since Jan. 20. FxWirePro's Hourly Dollar Strength Index stood at 4.14 (Neutral) by 1100 GMT.
EUR/USD: The euro rose above the 1.0700 handle, retreating from a near 2-week low after data showed Euro zone inflation advanced more than expected in January on a surge in energy prices. The economy's inflation accelerated to 1.8 percent year-on-year, surpassing estimates of 1.5 percent and previous reading of 1.1 percent. Meanwhile, another report showed gross domestic product rose 0.5 percent quarter-on-quarter in the last three months of 2016, and 1.8 percent year-on-year basis. The European currency traded 0.1 percent up at 1.0707, after falling as low as 1.0620 in the previous session, it’s lowest since Jan 19. FxWirePro's Hourly Euro Strength Index stood at 34.96 (Neutral) by 1000 GMT. On the higher side, immediate resistance is around 1.0775 level and any break above will take it till 1.08015/1.08480 level. The support is around 1.0620 (21- day MA) and any violation below will drag it till 1.0578/1.0530/1.04800.
USD/JPY: The dollar initially declined below the 113.50 handle after the U.S. President Trump signed an executive order on travel ban for the nationals of some Islamic States, triggering risk-off market sentiment. However, a sharp recovery in the European stocks and treasury yields boosted the major towards the 114.00 handle. The pair trades flat at 113.79, after falling as low as 113.25 earlier in the session, it’s weakest since Jan. 26. FxWirePro's Hourly Yen Strength Index stood at 93.38 (Slightly Bullish) by 1000 GMT. The major resistance is around 115.56 (daily Kijun-Sen) and any break above will take the pair till 116.87 (Nov 11th high)/117.50. On the lower side, minor support is around 113.09 (60 –day EMA) and any break below 113.09 will drag it till 112.52/111.30.
GBP/USD: Sterling tumbled to a 1-week low, extending losses for the fourth consecutive session, after data showed British consumers slowed the pace of their borrowing in December. The economy's consumer credit rose by a net 1.0 billion pounds, much less than an increase of 1.7 billion pounds forecast, indicating that households might be reducing their spending amid Brexit worries. Sterling trades 0.4 percent lower at 1.2434, having slumped to a low of 1.2412 earlier in the session, it’s weakest since Dec. 23. FxWirePro's Hourly Sterling Strength Index stood at -184.22 (Highly Bearish) by 1000 GMT. On the lower side, major support is around 1.24180 and any break below 1.24180 will drag the pair down till 1.2340 (21- day MA)/1.2250 (61.8% retracement of 1.19860 and 1.26736). It should break above 1.2680 for further jump till 1.27750 level. Overall bearish invalidation is only above 1.2780. Against the euro, the pound trades 0.6 percent down at 86.13 pence, having hit a low of 86.33 earlier in the day, it’s weakest since Jan. 24.
USD/CHF: The Swiss franc edged down as the dollar attempted a minor recovery across board on the back of rising U.S. Treasury yields. The major trades up at 0.9955, having touched a high of 1.0044 in the previous session, it’s highest since Jan. 20. FxWirePro's Hourly Swiss Franc Strength Index stood at 109.69 (Highly Bullish) by 1000 GMT. The upside is capped by 23.6% fibo at 1.00515 and any break above targets 1.00960 (21- day6 MA)/1.01225. On the lower side, any break below 0.99575 will drag the pair till 0.9925 (200- day EMA)/0.9860 (200- day MA).
AUD/USD: The Australian dollar eased, as it failed to build on early gains following a rise in the greenback. Markets seem to have digested better-than-expected NAB Business Confidence index, while Trump’s move to restrict immigration from seven countries continued to fuel risk-off sentiment. The Aussie trades 0.1 percent down at 0.7547, drifting away from a high of 0.7609 hit last week, it’s strongest since Nov. 11. FxWirePro's Hourly Aussie Strength Index stood at 7.06 (Neutral) by 1100 GMT. On the lower side, the pair should close below 0.7493 (200- day MA) for further weakness and any break below will take it down till 0.7461 (100- day EMA)/0.7435. The minor resistance is around 0.7609 (Jan 24 high) and break above will take it till 0.7649/0.7680.
NZD/USD: The New Zealand dollar nudged down as a modest greenback recovery contributed to the pair retracement from session high. The Kiwi trades 0.1 percent down at 0.7275, hovering away from a peak of 0.7312 touched on Thursday, it’s strongest since Nov. 9. FxWirePro's Hourly Kiwi Strength Index was at 4.01 (Neutral) by 1100 GMT. Immediate resistance is located at 0.7300, a break above could take it near 0.7340. On the downside, support is seen at 0.7237 (7-EMA), a break below could drag it near 0.7200.
Equities Recap
European shares advanced, and were on course for their third straight month of gains, while the dollar recovered across the board on the back of rising U.S. Treasury yields.
MSCI's gauge of the world's 46 stock markets edged down 0.1 percent, while MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.6 percent.
The pan-European STOXX 600 index increased 0.28 percent to 363.40 points, while the FTSEurofirst 300 index climbed 0.21 percent to 1,436.12 points.
Britain's FTSE 100 trades 0.5 percent up at 7,154.57 points, while mid-cap FTSE 250 advanced 0.32 percent to 18,140.32 points.
Germany's DAX rose 0.41 percent at 11,728.76 points; France's CAC 40 trades 0.53 percent higher at 4,809.99 points.
Tokyo's Nikkei slumped 1.69 percent to 19,041.34 points, Australia's S&P/ASX 200 index fell 0.55 percent to 5,630.50 points and South Korea's KOSPI declined 0.77 percent to 2,067.57 points.
Commodities Recap
Crude oil prices tumbled, extending losses for the third straight day as an increase in the U.S. drilling activity weakened efforts by OPEC and other producers to cut output in order to drain rising oversupply. International benchmark Brent crude was trading 0.1 percent lower at $55.22 per barrel by 1002 GMT, having hit a low of $54.85 on Friday, its lowest since Jan. 25. U.S. West Texas Intermediate crude fell 0.2 percent at $52.41 a barrel, after rising to $54.05 last week, its highest since Jan. 6.
Gold prices rose, hitting their highest in about a week, as the demand for safe-haven strengthened after U.S. President Donald Trump triggered uncertainty in global markets with his stance on immigration. Spot gold gained 0.2 percent to $1,197.76 per ounce at 1006 GMT, having touched its highest since Jan. 25 at $1,202.89. U.S. gold futures climbed 0.53 percent, to $1,200.1.
Treasuries Recap
The U.S. Treasuries witnessed mixed performance as equities remained relatively weaker, highlighted by the Dow breaking back below the 20k as markets begin to question recent moves by the Trump administration. The yield on the benchmark 10-year Treasury rose 1 basis point to 2.49 percent, the super-long 30-year bond yield also rose 1 basis point to 3.08 percent while the yield on short-term 2-year note moved lower by 1/2 basis point to 1.20 percent.
The Eurozone periphery bonds weakened following signs of economic recovery, post the release of upbeat consumer price inflation and slight recovery in the country’s gross domestic product (GDP) for the last quarter of the year. The French 10-year bond yields traded at 1.04 percent, Irish 10-year bonds yield at 1.17 percent, Italian equivalent traded at 2.27 percent, Netherlands 10-year bonds yields ticked higher at 0.60 percent, Portuguese equivalent at 4.14 percent and the Spanish 10-year bonds yields traded at 1.60 percent.
The UK gilts slumped ahead of the Bank of England’s (BoE) monetary policy decision, scheduled to be held on February 2. Markets will the, focus on the comments delivered by BoE Governor Mark Carney post the meeting minutes. The yield on the benchmark 10-year gilts, jumped nearly 2 basis points to 1.46 percent, the super-long 30-year bond yields also rose 1-1/2 basis points to 2.09 percent and the yield on short-term 2-year moved 1 basis point higher to 0.15 percent.
The German government bunds plunged after the country’s rate of unemployment fell to an all-time low during the month of January. However, markets largely shrugged off weaker-than-expected retail sales data. The yield on the benchmark 10-year bond, jumped 3-1/2 basis points to 0.48 percent, the long-term 30-year bond yields also surged 3 basis points to 1.20 percent and the yield on short-term 2-year bond rose 1/2 basis point at -0.67 percent.
The Japanese government bonds traded narrowly mixed, after the Bank of Japan (BoJ) maintained its benchmark interest rate at the 2-day monetary policy meeting that concluded today. The benchmark 10-year bond yield, hovered around 0.08 percent, while the long-term 30-year bond yields fell 1/2 basis point to 0.83 percent while the yield on the short-term 2-year note rose nearly 1/2 basis point to -0.20 percent.
The New Zealand government bonds closed flat as investors remained barely active amid a subdued trading session, following lack of significant economic data. The yield on the benchmark 10-year bond, hovered around 3.38 percent at the time of closing, the yield on 7-year note also traded around 3.01 percent and the yield on short-term 2-year note remained flat at 2.34 percent.
The Australian bonds rallied, following weak risk sentiments that prevailed among investors, tracking U.S. debt market, as protests continued in response to President Donald Trump’s stricter travel ban policy. The yield on the benchmark 10-year Treasury note, moved lower by 1-1/2 basis points to 2.72 percent, the yield on 15-year note fell 1 basis point to 3.18 percent and the yield on short-term 2-year plunged nearly 2 basis points to 1.80 percent
