Market Roundup
- USD/JPY trading higher to 113.22 but not convincing.
- GBP/USD back above 1.40 but short lived.
- Swiss Q4 Non-Farm Payrolls 4.897 mln vs 4.244 mln.
- EZ February Business Climate 0.07 vs 0.29 previous, 0.28 expected.
- EZ February Econ Sentiment 103.8 vs 105.00 previous, 104.4 expected.
- EZ February Consumer Confidence -8.8 vs -3.2 previous, -6.7 expected.
- EZ February Consumer inflation expectations 3.7 vs 2.3 previous.
- U.S Treasury Sec- China needs to communicate policies clearly, especially exchange rate.
- Japan Fin Min Aso - Not considering added fiscal stimulus.
- Aso - Wants to reaffirm G20 commitment against deval race.
- Kuroda - BoJ won't deepen negative rates at pre-set timing.
- BoJ Gov Kuroda - QQE/NIRP working but global risk aversion.
- Kuroda- Technically possible to push interest rates more negative.
- PBOC Zhou - China has more room to support economy.
- IMF Lagarde - Policymakers should go bold, go broad, go together.
- OECD calls for G20 structural reforms.
- BoE Gov Carney warns NIRP could prove zero-sum game.
- Jan core CPI unchanged y/y, as expected, core-CPI +0.7%; Tokyo Feb -0.1% vs -0.2%.
- UK Feb GfK consumer conf. index at zero, +3 expected, lowest since Dec '14.
Economic Data Ahead
- (0830 ET/1330 GMT) The U.S. Commerce Department's second estimate of fourth-quarter gross domestic product is expected to show the economy expanded at a 0.4 percent annual rate, compared with the 0.7 percent pace reported last month. The goods trade balance for January likely improved to $-61.1 bln from $-61.50 bln.
- (0900 ET/1400 GMT) Mexico's jobless rate for January is likely to be at 4.4 percent, up from the headline unadjusted rate of 3.96 percent in November. Also, the trade balance data for January will show if factory exports are picking up or not after recent weakness due to uneven U.S. demand.
- (1000 ET/1500 GMT) The U.S. Commerce Department releases its report on consumer spending for January which likely rose 0.3 percent after being flat in December. The report will probably show an uptick in inflation pressures last month. The personal income is expected to have risen 0.4 pct after rising 0.3 pct in December.
- (1000 ET/1500 GMT) The Reuters/Michigan Consumer Sentiment Index for Feb is likely inched higher to 91 from 90.7 in January.
- (1300 ET/1800 GMT) Baker Hughes US Oil Rig Count.
Key Events Ahead
- (1015 ET/1515 GMT) Federal Reserve governors Jerome Powell, San Francisco Fed President John Williams.
- (1145 ET/1645 GMT) Fed Trade ops15-year F.Mae/F.Mac max $575mln.
- (1330 ET/1830 GMT) Lael Brainard and the European Central Bank's Peter Praet will speak on: "Language after Liftoff: Fed Communication Away from the Zero Lower Bound" before the 2016 U.S. Monetary Policy Forum in New York.
FX Recap
USD: The dollar edged down 0.1 percent to 97.368 against a basket of currencies as investors are focusing on a G20 summit of policymakers in Shanghai. It was up about 0.8 percent for the week. The greenback slipped 0.1 percent to 112.90 yen after rising as high as 113.22 and was up about 0.3 percent for the week.
EUR/USD: The euro came under pressure as rising stock markets made investors less inclined to pile into safe-haven and low-yielding currencies, including the yen. It has retreated after making a high of 1.10682 and was trading around 1.10140. The short term trend is weak as long as resistance 1.10880 holds. Any break above 1.10880 will take the pair till 1.1100/1.1155 in short term. The minor resistance is at 1.1070 and on the lower side major support is around 1.0980. Any break below 1.0980 will drag it till 1.0920/1.0890/1.0835.
USD/JPY: The Japanese yen has broken major resistance 112.85 and jumped till 113.22. It was trading around 113.06 and the short term trend is slightly bullish as long as support 112 holds. On the lower side major support is around 112 and break below targets 110.80/110. The minor resistance is around 113.25 and break above targets 113.60 /114.50.
GBP/USD: The Sterling rose 0.5 percent to $1.4035, moving away from a 7-year low of $1.3878 hit on Wednesday but on track to post its biggest weekly fall of 2.7 percent since 2010. It has broken minor resistance 1.4020 and jumped till 1.40423. The short term trend is still weak as long as resistance 1.40850 holds. On the lower side major support is around 1.3950 and any break below targets 1.3900/1.3880/1.3825 level. The major resistance is around 1.4020 and break above targets 1.4085/1.4195. The short term bearish invalidation will be only above 1.4200. Some sellers are targeting $1.35 and below, levels last seen when the pound sank towards parity with the dollar in the mid-1980s. The euro was down 0.6 percent at 78.45, having hit a 14-month high of 79.28 pence on Thursday.
USD/CHF: The pair has retreated after making a high of 0.99517 yesterday, it was trading around 0.99198. On the higher side it is facing resistance around 0.9960 and break above targets 1.000/1.0035/1.00729. The short term trend is slightly bullish as long as support 0.9850 holds. Any break below 0.9850 will drag it till 0.9800/0.9720.
AUD/USD: The Australian dollar held near this year's highest levels following the upbeat data and improving risk sentiment, putting them on track for hefty weekly gains. It was trading around 0.72135 and the short term trend is slightly bullish as long as support 0.7150 holds. On the higher side major resistance is around 0.7260 and break above targets 0.7300/0.7380. The major support is around 0.7150 and break below will drag the pair till 0.7100/0.7075. The Aussie was on track for a weekly increase of 1.3 percent, its third week of gains, having bounced from a 7-year trough of $0.6827. The pound dropped to its lowest since May at A$1.9249 and is down around 10 cents so far this year.
NZD/USD: The New Zealand dollar powered up 0.6 percent and hit an 8-week peak of $0.6775. It looked set to test the December high of $0.6881. It has bounced 3 cents this month, and if sustained, it would be the largest increase since October. The kiwi sent the already soggy pound to fresh 10-month lows at NZ$2.0617.
Equities Recap
Shares gained for the third consecutive day as G20 policymakers mulling of ways to revive struggling global economy amid renewed financial and political risks.
Europe's FTSEurofirst 300 rose 0.8 pct, Britain's FTSE 100 was up 0.9 pct, France's CAC climbed 1.1 pct and Germany's DAX gained 1.5 pct in early deals.
Tokyo's Nikkei closed up 0.30 pct at 16,188.41, MSCI's broadest index of Asia-Pacific shares outside Japan rose over 1 percent. China's CSI300 Index ended up 1.0 pct at 2,948.03 points, gained 3.4 pct for the week, while Shanghai Composite Index closed up 0.9 pct at 2,767.21 points, gained 3.2 pct for the week. HK's Hang Seng Index rose 2.5 pct at 19,364.15 points.
Commodities Recap
Crude oil prices reversed losses on Friday as traders closed short positions and strong U.S. gasoline demand supported the market. Brent crude futures were trading at $35.44 per barrel at 0816 GMT, up 15 cents from their last close and an intra-day low of $34.73 a barrel. U.S. West Texas Intermediate (WTI) crude futures rose 26 cents at $33.33 a barrel and up from a low of $32.76.
Gold inched higher on Friday despite a recovery in stocks, underscoring support from bullish technical and money flows into exchange traded funds. Spot gold gained 0.3 percent to $1,237.30 an ounce by 0744 GMT.
Treasuries Recap
The 10-year Treasury yield stood at 1.7330, up 36 bps, while the benchmark German 10-year bund yield was little changed at 0.14 percent. Spanish 10-year bond yield was little changed at 1.60 percent, having declined 10 basis points in the previous four days.
The Japanese government bonds recorded a mixed performance with prices in the super long zone edging down as investors locked in profits after yields touched record lows this week. The 20-year yield rose one bp to 0.550 percent, after it fell to a record low 0.540 percent on Thursday. The 30-year yield added 2.5 bps to 0.860 percent, a day after plumbing a record low of 0.840 percent. The benchmark 10-year JGB yield gained half a basis point to minus 0.070 percent, after hitting a fresh all-time low of minus 0.075 percent. March 10-year JGB futures added 0.06 point to end at 152.09.
UK Gilts opened 9 ticks lower than the settlement of 121.61 as core markets went risk on due to a solid Asian equity session. Early sellers have respected yesterday's highs on 10-year cash yields at 1.41% with a day high of 1.401%.
Australian government bond futures were a tad firmer, with the 3-year bond contract up 1 tick to 98.270. The 10-year contract was edged up 1 tick to 97.6100, while the 20-year contract was steady at 97.0750. New Zealand government bonds gained, sending yields 2 bps lower along most of the curve.
