Asia Recap
NIKKEI
14,225.40
+23.80
0.17%
HANG SENG
23,059.00
-130.62
-0.56%
S&P/ASX 200
5,431.96
+41.43
0.77%
News Events
Actual
Forecast
AUD Cash Rate
2.50%
2.50%
Headlines
Aussie Falls After Stevens Says Currency ‘Uncomfortably High’ — Bloomberg — The Australian dollar fell after Reserve Bank Governor Glenn Stevens said the currency is “uncomfortably high” after he and his board refrained from cutting borrowing costs at a policy meeting today. The Aussie slid versus all of its 16 major counterparts as Stevens made the comment after saying last week that the currency may become “materially lower.” New Zealand’s dollar weakened after Asian stocks reversed earlier gains. “The RBA is still very much in a wait-and-see neutral stance,” said Greg Gibbs, a senior foreign-exchange strategist at Royal Bank of Scotland Group Plc in Singapore. “The currency is responding to comments similar to those made by Stevens last week.”
South Korean Bonds Fall for a Fourth Day on Outflows; Won Gains — Bloomberg — South Korean bonds fell for a fourth day, pushing the 2016 yield to a three-week high, as foreigners sold the nation’s assets amid concern the U.S. will cut stimulus that’s buoyed emerging markets. The won rose. Global funds sold more local bond futures than they bought for the fifth day today and pulled $124 million from stocks this month, exchange data show. Federal Reserve Governor Jerome Powell said yesterday the central bank will probably sustain $85 billion in monthly debt purchases for some time, while Boston Fed President Eric Rosengren said more needs to be done until the U.S. labor market improves.
JGBs Declared Dead by Mizuho as Kuroda Hides Risks: Japan Credit — Bloomberg — Mizuho Securities Co. said Bank of Japan dominance has killed the nation’s sovereign bond market, leaving it unable to reflect either the success of stimulus policies or fiscal risks. Monthly trading of Japanese government bonds among the biggest holders including banks and insurers shrank to 37.9 trillion yen ($385 billion) last quarter, the least on record going back to 2004, according to Japan Securities Dealers Association data. Totan Research Co. and Spiro Sovereign Strategy also said BOJ monetary stimulus is cutting the tie between economic fundamentals and bonds, which yield 0.6 percent for 10 years, the least in the world.
Europe Recap
STOXX 50
3,042.53
-18.65
-0.61%
FTSE 100
6,724.49
-39.13
-0.58%
DAX
8,994.06
-43.17
-0.48%
News Events
Actual
Forecast
EUR Spanish Unemployment Change
87.0K
31.3K
CHF CPI m/m
-0.1%
0.1%
Headlines
Euro Declines Versus Yen Before Draghi; Dollar Down Ahead of ISM — Bloomberg — The euro declined versus the yen before European Central Bank President Mario Draghi speaks today ahead of a policy meeting this week as traders weigh the prospects for monetary stimulus in the region. The yen advanced versus most of its 16 major peers as regional equities erased gains, boosting haven demand. The dollar fell for a second day against Japan’s currency before a report predicted to show an expansion in U.S. services slowed last month, weighing on expectations the Federal Reserve will move to reduce stimulus. The Australian dollar dropped after the Reserve Bank said the currency is “uncomfortably high.”
Rosengren Says Policy Should Be Stimulative for ‘Some Time’ — Bloomberg — Federal Reserve Bank of Boston President Eric Rosengren, a consistent backer of bond buying by the Fed, said the central bank should press on with the easing program until the labor market gains strength. “Monetary policy is likely to need to remain accommodative for some time so that we can achieve full employment within a reasonable forecast horizon,” Rosengren, who votes on monetary policy this year, said today in a speech in Boston.The Fed will still provide stimulus even after it starts tapering $85 billion in monthly bond purchases, he said in the text of prepared remarks. “We will not be restraining the economy — in fact, we will still be adding stimulus to the economy but in smaller increments than before.”
Bernanke Giving Homebuyers Second Chance With Pledge: Mortgages — Bloomberg — This was supposed to be the year that Herb Harrison found a newer, bigger home to replace his current house in Framingham, Massachusetts. Then, in May, mortgage rates began to rise and he put his hunt on hold. “My wife and I looked at each other and said ‘no way,’” said Harrison, who works in information technology. “It was something we thought about when rates were at rock-bottom, but once the rates spiked, we decided to stay where we are.”
Three Fed Policy Voters Signal Prolonged Easing to Stoke Growth — Bloomberg — Three Federal Reserve officials who vote on policy this year signaled the Fed may press on with easing for some time to reduce the jobless rate and push up inflation toward the central bank’s 2 percent target. “Monetary policy in the United States is likely to remain highly accommodative for some time,” Fed Governor Jerome Powell said yesterday in a speech in San Francisco. Boston Fed President Eric Rosengren backed further easing to “achieve full employment within a reasonable forecast horizon,” while James Bullard of the St. Louis Fed said in an interview on CNBC he wants the Fed to “meet our goals,” singling out inflation.
Canada Dollar Weakens as Crude Oil Near Lowest Since June — Bloomberg — Canada’s dollar fell versus most major peers as crude oil, the nation’s biggest export, traded at almost a four-month low and a discount on western Canadian oil increased to the steepest level since January. The currency weakened from the strongest in more than a week against the U.S. dollar as oil from the Alberta province dropped more than competing grades on concern production will be stymied by bottlenecked pipelines. A gauge of consumer confidence rose earlier for the first time since September as opinions about house prices and job security improved.
Today’s Session Highlights
Not a great deal happening today, ISM Non-manufacturing PMI is the highlught this morning and NZD Unemployment late this afternoon. Focus is around GBP, EUR, USD and NZD today. Some focus around JPY and AUD after hours. All news releases as per the table below.
CHF
Forecast
Previous
4:30am
GBP
Services PMI
60.4
60.3
5:00am
EUR
EU Economic Forecasts
10:00am
USD
ISM Non-Manufacturing PMI
54.2
54.4
4:45pm
NZD
Employment Change q/q
0.5%
0.4%
NZD
Unemployment Rate
6.2%
6.4%
6:50pm
JPY
Monetary Policy Meeting Minutes
7:30pm
AUD
Trade Balance
-0.51B
-0.82B