Market Roundup
- EUR/USD made new high at 1.1184 levels after 1.1069 early Europe pullbacks.
- USD/JPY trading in between 117.34-118.24 and 117.50 into New York.
- GBP/USD trading from 1.4563 to 1.4665 levels, bid holding into New York.
- SSEC closed up 1.55%, Nikkei down 0.85%, DAX currently up 0.6%.
- Brent flat to tiny down in Europe, US Crude up 0.5%.
- ECB Draghi - risk of acting too late outweigh risks of acting too early.
- Goldman Sachs - Sterling could fall as much as 15-20% if Britain votes to leave EU.
- BoJ - Negative interest rates scope seen capped at Y30 trln.
- RBNZ McDermott - price stability remains focus, happy to see lower NZD.
Economic Data Ahead
- (0830 ET/1330 GMT) New applications for U.S. jobless benefits probably inched up to 280,000 last week from 278,000 the prior week, but remained below a level associated with sustained labor market strength. The continuing claims likely fell to 2.240 mln from 2.268 mln. The unit labor cost in fourth quarter is expected to have risen 3.9% from 1.8%.
- (0830 ET/1330 GMT) Data from the U.S. Labor Department is expected to show that non-farm productivity dropped at a 1.8 percent annual pace in the fourth quarter, compared with 2.2 percent growth in the prior quarter.
- (1000 ET/1500 GMT) Data from the U.S. Commerce Department is estimated to show a 2.8 percent drop in factory orders in December after a 0.2 percent dip in November.
- (1000 ET/1500 GMT) EIA reports its natural gas storage change for the week ending Jan 29, which is likely to stay at -158B vs -211B previous week.
Key Events Ahead
- (0830 ET/1330 GMT) Dallas Fed President Robert Kaplan discusses global economic conditions in Dallas.
- (1045 ET/1545 GMT) Fed Trade Operation 15-Yr F./ Fr. max $675mln.
- (1245 ET/1745 GMT) Fed Trade Operation 30-Yr F.Mae /Fr. Mac max $1.950bln.
- (1700 ET/2200 GMT) Cleveland Fed President Loretta Mester speaks on the economic outlook and monetary policy before an event sponsored by Market News International in New York.
FX Recap
USD: The dollar fell 0.5 percent to 96.796 against a basket of currencies, its lowest since early November and was near Wednesday's 14-week low against the euro. Against the yen, it traded 0.1 percent weaker at 117.77 yen.
EUR/USD: The euro hit a 3-1/2 month high of $1.1161, extending its gains from an explosive sell-off a day earlier. The pair has broken major resistance 1.11500 which confirms minor trend reversal , a jump till 1.1180/1.1245/1.1270 is possible. On the lower side major weakness can be seen only below 1.10500. Any beak below targets 1.1000/1.0920 and the minor support is around 1.1100. It is good to buy at dips around 1.1145-1150 with stop-loss around 1.1100 for the target profit of 1.1240/1.1270.
USD/JPY: The pair has broken a major support 119.20 and declined till 117.05, it was trading around 117.52. The short term trend is slightly weak as long as resistance 118.50 holds. On the lower side major support is around 117 and break below targets 116.50/116. The minor resistance is around 118.50 and break above targets 119.30/120.10.
GBP/USD: The Sterling rose 0.40 percent to $1.4654 as investors awaiting a rate decision and economic forecasts from the Bank of England. It gained more than 4 percent from its 7-year low of $1.4080 on Jan. 21. Markets await the BoE'S Super Thursday for further direction. On the lower side minor support is around 1.4600 and any break below targets 1.4545/1.4500/1.4450. Any break above major resistance 1.4690 (55 day MA) will take the pair to next level around 1.4750/1.4795. Against the euro, sterling was flat at 76.10 pence.
USD/CHF: The pair has broken major support 1.0050 and declined till 0.9980, it was trading around 1.0196. The short term trend is slightly weak as long as resistance 1.010 holds. On the lower side the major support is around 0.9980. Any break below 0.9980 will drag the pair down till 0.9950/0.9920. On the higher side resistance is around 1.010 and break above 1.010 will take it till 1.01500/1.0200.
AUD/USD: The Australian dollar stayed near 1-month highs after a sharp fall in the U.S. dollar and a rebound in oil prices revived in risk appetite. It was up at $0.7228, after a 1.8 percent rally overnight saw it punch through major resistance around $0.7140 amid heavy short-covering. The next big chart target is at $0.7330, the 200-day moving average and a top from late December. The short term trend is slightly bullish as long as support 0.7150 holds. On the higher side minor resistance is around 0.7250 and break above targets 0.7300/0.7380. The minor support is around 0.7150 and break below will drag the pair till 0.7100/0.7020. The Aussie recovered some ground against the yen to 84.75 yen, from a low of 83.17 on Wednesday.
NZD/USD: The New Zealand dollar stood firm at $0.6675, not far from a one-month peak around 67 cents. It surged 2.3 percent on Wednesday, the largest one-day percentage increase since March last year.
Equities Recap
Stocks jumped in Europe and Asia on speculation that U.S. interest rates may not rise at all this year and weighed on weaker dollar, while oil posted huge gains.
Commodity-related shares pushed higher in early deals in Europe. The FTSEurofirst 300 index was up 0.6 percent at 1,303.32 points by 0947 GMT after trading in a wide range of 1,290.91-1,310.59 points earlier in the session, a day after the index fell 1.6 percent, while the STOXX Europe 600 Basic Resources Index gained 3.4 percent. Britain's FTSE 100 index climbed 1.2 percent, France's CAC inched higher 0.7 percent and German DAX gained 1.1 percent.
MSCI's broadest index of Asia-Pacific shares outside Japan jumped 2 percent. Australia's resource-rich index rose 2.1 percent. Tokyo's Nikkei ended 0.9 percent, pressured by a stronger yen and by weak earnings forecasts from leading companies. China's CSI Index closed down 1.2 pct at 2,984.76. while Shanghai Composite Index ended up 1.5 pct at 2,781.02.
Commodities Recap
Oil climbed further above $35 a barrel, in addition to the 7 percent gain in previous session, as support from a weaker dollar offset concern about ample supply and record-high U.S. inventories. Brent crude rose 35 cents at $35.39 a barrel at 0949 GMT. U.S. crude was up 40 cents at $32.68.
Gold remained near a 3-month high after posting its best day in two weeks, strengthened by expectations that global economic and financial headwinds could make it hard for the U.S. Fed to raise interest rates in the near term. Spot gold was little changed at $1,142.32 an ounce by 0625 GMT, after rising as high as $1,145.60 on Wednesday. U.S. gold for April delivery rose 0.2 percent at $1,143.30 an ounce.
Treasuries Recap
U.S. 10-year Treasury yield stood at 1.9015, up 0.02 pct, it touched a 1-year low of just under 1.80 percent on Wednesday before surging nearly 10 bps as oil prices rose.
German 10-year yields rose 2 basis points (bps) to 0.29 percent on the day, while most other euro zone yields were up 1-2 bps.
The Japanese government bonds were mostly unchanged in cash trading with the benchmark yield not far above a record low hit in the previous session, while JGB futures firmed in line with weaker equities. The benchmark 10-year JGB yield was flat at 0.060 percent, a day after it touched a record low of 0.045 percent. The 5-year JGB yield inched lower 1 basis point to minus 0.150 percent, a fresh record low. March 10-year JGB futures added 0.15 point to end at 150.92, just 0.01 point shy of a record intraday high hit in the previous session.
UK Gilts opened 21 ticks lower than the settlement of 120.74, as expected, as oil posted a modest bounce. Sellers wasted no time in taking out resistance from recent low yields at 1.557%, and the former low yield at 1.604% is the next cap.
Australian government bond futures edged off multi-month peaks, with the 3-year bond contract down 5 ticks at 98.160. The 10-year contract also lost 5 ticks to 97.4300, having surged to 97.5100, a level last touched last in August. The 20-year contract eased 5.5 ticks to 96.9150. New Zealand government bonds dropped across the curve, sending yields 4 basis points higher.
