Market Roundup
- Bank of England minutes show MPC voted 9-0 in February to keep interest rates unchanged at 0.5 pct.
- BoE - Wage growth faster than expected but risk low inflation could limit future pay growth; likely that rate increases would still be more gradual and limited than previously; all members viewed it more likely than not that rates would rise over next 3 years.
- BOJ's Kuroda: Monetary policy not targeting currencies; negative real interest rates are having positive impact on investment, economy; as long as currencies move in a stable manner and reflect fundamentals, it would not be a negative for economy.
- IMF Asia Pacific Director says Japan's 2 pct inflation target "impossible" at current consumption levels.
- Greek government confirms Athens to submit loan extend request with creditors on Wednesday.
- Greek PM: at a crucial point for negotiations, hope to overcome difficulties.
- EUR/USD in 1.1378/1.1416 range on Greek debt negotiation uncertainty.
- Sterling rises to day's high of $1.5419 after UK earnings data from $1.5377 beforehand.
- SNB Jordan: CHF still too strong, SNB may intervene.
- United Kingdom Feb BoE MPC Vote unchanged stays flat at 9 (consensus 9.0 ) vs previous 9.
- United Kingdom Dec Avg Earnings (Ex-Bonus) decreases to +1.7% (consensus 1.8 %) vs previous 1.8%.
- United Kingdom Feb BoE MPC vote cut stays flat at 0.
- United Kingdom Feb BoE MPC vote hike stays flat at 0 (consensus 0.0).
- United Kingdom Dec ILO Unemployment Rate decreases to 5.7% (consensus 5.8%) vs previous 5.8%.
- United Kingdom Jan Claimant Count Unemployment Change decreases to -38.6 k (consensus -25.0 k) vs previous -29.7 k.
- Switzerland Feb ZEW investor sentiment -73.0 vs previous -10.8
Economic Data Ahead
- (0830 ET/1330 GMT) US PPI Final Demand (Jan) consensus -0.4% m/m, +0.3% y/y; previous -0.2% m/m, +1.1% y/y
- (0830 ET/1330 GMT) US ex Food/Energy PPI Final Demand (Jan) consensus +0.1% m/m, +2.0% y/y; previous +0.3% m/m, +2.1% y/y
- (0830 ET/1330 GMT) US Housing Starts (Jan) consensus 1.070 mln SAAR, previous 1.089 mln SAAR
- (0830 ET/1330 GMT) US Building Permits (Jan) consensus 1.060 mln SAAR, previous 1.058 mln SAAR
- (0915 ET/1415 GMT) US Industrial Production (Jan) consensus +0.3% m/m, previous -0.1% m/m
- (0915 ET/1415 GMT) US Factory Output (Jan) consensus +0.3% m/m, previous +0.3% m/m
- (0915 ET/1415 GMT) US Capacity Utilization (Jan) consensus 79.9%, previous 79.7%
- (1600 ET/2100 GMT)US Treasury International Capital Statistics (TIC Data) (Dec) (postponed from 17Feb)
Key Events Ahead
- (1145 ET/1645 GMT)Fed Trade operation 15-yr Fannie Mae/Freddie Mac (max $475 mln)
- (1230 ET/1730 GMT)Treasury Chief Economist Dynan speaks on a debt deleveraging panel
- (1400 ET/1900 GMT)FOMC Minutes (from the Jan 27-28 meeting)
- (1700 ET/2200 GMT)Fed Governor Powell on financial institutions, markets and stability
FX Recap
EUR/USD moved south in early European session, wiping out gains from the Asian trading mainly due to strengthening US dollar against its major peers as markets now await the upcoming Fed meeting minutes to be released later in the day. The pair now trades at 1.1390, down 0.18 percent, recovering from fresh session lows at 1.1385 levels. On the topside, next resistance is seen at 1.1449 (Feb 17 High) levels, above which it could extend gains to 1.1488 (Feb 6 High) levels. On the downside, it is likely to find support at 1.1322 (Feb 17 Low) levels, and further below at 1.1300 levels. Option expiries at 1.1300 (2BLN), 1.1350 (500M), 1.1400 (1.95BLN), 1.1430 (471M).
USD/JPY: After a brief bounce in the Asian session, driven by BOJ's statement that it sees no need for further easing to boost the economy, the yen traded firmer in early European trading on Wednesday. Analysts expect the pair to be stuck in the 118.88-119.36 range for longer. USD/JPY traded just over 0.1 percent higher at 119.09 levels by 0825 GMT. Option expiries at 117.90-118.00 (1.9BLN), 118.50 (1.4BLN), 119.00 (828M), 119.50 (2.2BLN).
GBP/USD: Sterling rose 0.6 percent to a high for the day of $1.5437, up from $1.5377 before the data was released and against the euro, it rose to 73.795 pence per euro, closer to a seven-year high of 73.715 pence per euro. According to the latest figures, UK's pay growth exceeded inflation in December and the unemployment rate fell. On the upside, immediate resistance is seen at 1.5441 (Feb 16 high) and further at 1.5486. On the downside, a break below 1.5317 could extend its losses to 1.5312 (10 DMA). Option expiries at 1.5350 (200M).
AUD/USD: The Aussie seems to be losing grip against the dollar on Wednesday, and the pair fell below the 0.7800 handle. The pair is likely to see some action as the markets focus on the FOMC minutes ahead in the session. Moreover, China's holiday will help to reduce volatility in the AUD in the next couple of days. On the downside, next support is seen at 0.7760, ahead of 0.7721 (low ). On the flipside, a break of 0.7842 (high ) would expose 0.7847 (21-d MA) levels. Option expiries at 0.7715 (557M), 0.7815 (240M).
EUR/CHF held steady and made new recovery highs above 1.0700 in London. It traded in 1.0633/1.0702 range so far after breaking key technical levels at 1.0651 and 1.0669 on Tuesday. Same price action was seen in USD/CHF which moved up a new high just shy of 0.9400.
