Market Roundup
- USD/JPY trades 113.20-113.96 range and back at 113.65 open into NY.
- EUR/USD confounding the bears-1.0929 to 1.0986.
- Cable softer at 1.4140-EUR/GBP buildson Thursday'sgains to 0.7772.
- ECB sources- No consensus on deposit rate cut above 10bps or 2-tier.
- ECB Sources - Some concern may not meet market expectations.
- China said to intervene in stocks before annual polcy meeting.
- China Premier Li-Economy faces greater difficulties in 2016.
- Italy Q4 GDP confirmed at 1.0% y/y and 0.1% q/q.
- BoJ Gov Kuroda - Not thinking of lowering rates again now.
- BoJ Gov Kuroda - Strong Yen not main reason core CPI is flat.
- BoJ Gov Kuroda - negative rates to aimed at influencing FX market.
- BoJ Gov Kuroda - but will take steps without hesitation in future if needed.
- Norway makes first withdrawal from oil fund in January.
- RBNZ to hold rates next, to ease soon after - Reuters Survey.
Economic Data Ahead
- (0700 ET/1200 GMT) Industrial output in Brazil is expected to have fallen for an eighth straight month in January. Production likely fell 0.5 percent in January from December.
- (0830 ET/1330 GMT) Brazilian automakers will release data on auto sales in February.
- (0830 ET/1330 GMT) The U.S. Labor Department is expected to report that non-farm payrolls rose by 190,000 jobs in February after rising 151,000 in January. The jobless rate is seen unchanged at an 8-year low of 4.9 percent and average hourly earnings increasing 0.2 percent after a 0.5 percent jump in January.
- (0830 ET/1330 GMT) A report from the Commerce Department will likely show that the U.S. trade deficit widened a bit to $44 billion in January from $43.4 billion in December.
- (0830 ET/1330 GMT) Canada's trade deficit is expected to have widened to C$1.05 billion in January after shrinking sharply the month before. Analysts will watch if the export sector can maintain its momentum, which is key to the Bank of Canada's outlook for the economy.
- (0900 ET/1400 GMT) Mexico's gross fixed investment likely fell 1.5 percent in December from the same month a year earlier.
- (1000 ET/1500 GMT) The pace of the purchasing activity in Canada is likely to have decreased in February. The seasonally adjusted Ivey Purchasing Managers Index probably fell to 59.0 from 66.0 in January.
- (1300 ET/1800 GMT) Baker Hughes US Oil Rig Count.
Key Events Ahead
- (1300 ET/1800 GMT) Federal Reserve Bank of Dallas President Robert Kaplan is scheduled to speak on economic conditions and monetary policy before the North Texas Commission Dallas Regional Chamber/Fort Worth Chamber of Commerce joint event, at DFW Airport, Texas.
- (1600 ET/2100 GMT) International Monetary Fund Managing Director Christine Lagarde speaks at the Massachusetts Institute of Technology.
FX Recap
USD: The dollar was higher again on cautious bets that a good payrolls number later today will support the Fed's case to raise rates again later in the year. The greenback gained 0.2 percent against both the euro and a basket of currencies in Europe after Thursday's 0.8 percent fall, at $1.0941. It is broadly flat on the week, the yen steadied at 113.74.
EUR/USD: The euro moved back to $1.0936 to roughly where it started the week. The pair fails to sustain below key support level at $1.0858 and currently supported above $1.0950 marks. It made intraday high at $1.0973 and low at $1.0928 levels. Short term bias remains bullish till the time pair holds key support level at $1.0858. On the top side, key resistance level is seen at $1.1037 marks. A daily close above key resistance will drag the parity towards $1.1160/$1.1376 marks thereafter. Today Euro zone retail sales rose to 50.1 points in February, after a reading of 48.9 recorded in the January.
USD/JPY: The pair is likely to consolidate below 114.87 marks. Intraday bias remains neutral 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. Today Japan released average cash earning data with positive numbers at 0.4% m/m vs -0.2% m/m recorded in the previous month.
USD/CHF: The short term bias remains bearish for the parity. A current downfall from 1.0037 will take the parity towards key support area around 0.98 and 0.9718 thereafter. Alternatively a daily close above 1.0073 will turn the bias bullish and drag the parity towards major resistance at 1.0256/1.0319 levels in near term.
GBP/USD: The Sterling slipped from 10-day highs against the dollar on Friday ahead of the monthly U.S. jobs report, but was on track for its best week since mid-2015. It dropped to $1.4140, having hit a 10-day high of $1.4194 on Thursday. It lost some ground against the euro, having gained nearly 2 percent this week as the single currency was under pressure on expectations that the ECB is likely to ease policy aggressively next week to boost falling prices and growth. The pair remains well supported below $1.42 levels. Short term bias remains bearish till the time pair holds key resistance at $1.4194 level. On the down side key support falls at $1.3854 level. Alternatively, a daily close above $1.42 will take the parity towards key resistance at $1.4357.
AUD/USD: The Australian dollar held near 3-month highs on Friday, on track for the largest weekly gain in nearly five months as rallying iron ore prices and supportive domestic data buoyed risk sentiment. It was up a third of a percent at $0.7374, a level last seen early December. The resistance was found at the December high of $0.7386, then 75 cents, the 50 percent retracement of the May-January move. The Aussie was on track for a weekly gain of 3 percent, and more than 2 percent against the euro and yen. A current rebound from $0.6826 is a corrective move and today touched the strong resistance at $0.7385. 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. Australian retail sales rose a seasonally-adjusted 0.3% month-on-month in January, coming in stronger than December sales which were flat, but slightly below the market forecast of a 0.4% rise in January sales.
NZD/USD: The New Zealand dollar was up at $0.6737 and trying for its fourth session of gains. The Kiwi gained 1.5 percent so far this week, having pulled away from a low of $0.6565. However, it faces a hurdle next week when the Reserve Bank of New Zealand holds a policy review amid great expectations it will signal scope for further easing.
Equities Recap
European shares opened higher, on track to record their third straight week of gains as the world's largest advertiser WPP delivered strong results and investors hope for another European Central Bank stimulus next week. Europe's FTSEurofirst 300 was up 0.4 pct, UK's FTSE, France's CAC and Germany's DAX all rose 0.5 pct in early deals.
The Asian shares recorded the best week in 5 months and the second 6 percent weekly gain in a row in oil prices drove global markets higher ahead of U.S. payrolls data. Tokyo's Nikkei closed up 0.32 pct at 17,014.78, up 5 percent on the week. China's CSI300 Index ended up 1.2 pct at 3,093.89 points, up up 4.9 pct for the week, biggest weekly gain since early November. Shanghai Composite Index gained 0.5 pct at 2,874.15 points, up 3.9 pct for the week, the best weekly gain in 2 1/2 months. HK's Hang Seng Index ended up 1.2 pct at 20,176.70 points.
MSCI's broadest index of Asia-Pacific shares outside Japan was on track to record a 5.5 percent weekly gain at its highest in almost two months. MSCI's 23-country EM index rose 0.4 percent for a sixth day of gains, its longest winning streak and best week since October.
Commodities Recap
Crude oil futures were losing some of the week's gains, as rising stocks and an uncertain production outlook stalled the market's recent rise. Brent futures fell 9 cents to $36.98 a barrel as of 0939 GMT, after settling 14 cents higher in the previous session. The benchmark is set to end the week with a gain of more than 5 percent. U.S. crude futures slipped 2 cents to $34.55 a barrel, having settled down 9 cents in the previous session.
Gold touched its 13-month high ahead of US payrolls data on Friday, extending the previous day's 2 percent rally as oil prices declined and the dollar softened. Spot gold was up 0.7 percent at $1,271.88 an ounce at 1025 GMT, while U.S. gold futures for April delivery were up $14.90 an ounce or 1.2 percent at $1,273.10.
Treasuries Recap
U.S. Treasuries were flat in both the 2- and 10- year space, German Bund yields were up marginally. Portugal's 10-year yields rose 8 basis points to 2.97 percent on Friday, up from near one-month lows of 2.85 percent hit at the end of last week. All other euro zone equivalents were broadly flat ahead of U.S. jobs data due at 1330 GMT on Friday.
Japanese government bonds gained on Friday, with super long yields hitting fresh record lows as the Bank of Japan bought longer JGBs in its asset purchase programme. The central bank offered to purchase 400 billion yen ($3.51 billion) in the 1-year to 3-year zone, 420 billion yen in the 3-year to 5-year zone, 260 billion yen in the 10-year to 25-year zone, and 180 billion yen of JGBs maturing in over 25 years. The 20-year yield dropped 3 bps to 0.435 percent, after earlier plumbing a record low of 0.415 percent. The 30-year yield was down 5 bps at 0.710 percent, after earlier falling to a record low of 0.705 percent. The benchmark 10-year JGB yield slipped 2 basis points to minus 0.040 percent. March 10-year JGB futures added 0.20 point to end at 151.87.
UK Gilts futures opened up 12 ticks at 120.84 and they have continued to push higher to 120.96 currently. In cash terms the 10-year Gilt is the best performing within the European core bond complex as its yield falls 2.5bp compared to a 0.75bp fall in yield for the 10-yr Bund.
Australian government bond futures were quiet after selling off earlier in the week on the upbeat growth data. The 3-year bond contract eased a tick to 98.100. The 10-year contract added 1.5 ticks to 97.4550, while the 20-year contract edged 2 ticks higher to 96.9250. New Zealand government bonds gained, with yields moving 1.5 basis points lower across the curve.
