Market Roundup
USD/JPY -0.1%, GBP/USD -0.1%, EUR/USD -0.3%, USD/CHF +0.2%
DXY +0.3%, DAX +0.2%, Brent -0.7%, Gold +0.2%, Copper +1.5%
Political risks weigh on euro
France, Italy bond yield spreads over Germany hit fresh multi-year highs
France's Macron dismisses affair as rival Fillon battles scandal
London copper boils as world's top two mines set to start output cuts
Indian central bank keeps policy rate on hold for 2nd meeting in a row
BOE Feb regional agent survey: Consumer spending as remained resilient but expected to ease
OECD monthly indicators point to growth picking up in the US, Japan, Germany & France
Economic Data Ahead
(0815 ET/1315 GMT) Canadian Mortgage and Housing Corp will report housing starts for the month of January. The indicator is expected to rise at a seasonally adjusted annualized rate of 200,000 after increasing 207,000 in the previous month.
(1100 ET/1600 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending February 3.
(1500 ET/2000 GMT) The Reserve Bank of New Zealand will announce its interest rate decision and release monetary policy statement.
(1645 ET/2145 GMT) The Statistics New Zealand releases building permits seasonally adjusted data for the month of December. The index posted a fall of 9.2 percent in November.
(1850 ET/2350 GMT) Japan's Ministry of Finance will report foreign bond investment for the week ending February 3.
(1850 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic stocks for the week ending February 3.
(1850 ET/2350 GMT) Japan's machinery orders are likely to have increased 3.1 percent for the month of December after posting a decline of 5.1 percent in November.
Key Events Ahead
(0800 ET/1300 GMT) Bank of England Deputy Governor for Financial Stability Sir Jon Cunliffe's speech.
(0945 ET/1445 GMT) FedTrade operation 30-yr Fannie Mae/Freddie Mac (max $1.825 bn)
(1600 ET/2100 GMT) The Reserve Bank of New Zealand Governor gives a press conference.
FX Beat
DXY: The dollar rose to a fresh 1-week low versus the euro, as political uncertainty ahead of European elections prompted investors to sell the euro. The greenback against a basket of currencies traded 0.2 percent up at 100.58, hovering towards a high of 100.72 in the previous session, its strongest since Jan. 30. FxWirePro's Hourly Dollar Strength Index stood at 26.13 (Neutral) by 1100 GMT.
EUR/USD: The euro tumbled below the 1.0650 level, extending losses for a third straight day, as the greenback resumed its recent upside amid concerns around a resurgence in Eurozone's political risk. The European currency traded 0.4 percent lower at 1.0644, having touched a low of 1.0640 earlier, it’s lowest since Jan. 30. FxWirePro's Hourly Euro Strength Index stood at -123.44 (Highly Bearish) by 1000 GMT. On the lower side, 1.05891 will be acting as major support and any break below 1.0585 will drag the pair till 1.0500/1.04500 (Jan 11 low). The major resistance is the top formed at 1.08735 and any violation above confirms short term bullishness and jump till 1.09335 (61.8% retracement of 1.12994 and 1.03402) is possible.
USD/JPY: The dollar declined as investors refrained from taking positions ahead of this week's meeting between Japanese Prime Minister Shinzo Abe and the US President Donald Trump. Moreover, a fresh bout of risk-off market sentiment triggered by political and economic uncertainties in the United States and Europe strengthened the bid tone around the safe-haven Japanese yen. The major trades 0.1 percent down at 112.30, after falling as low as 111.59 on Tuesday, it’s lowest since Nov 29. FxWirePro's Hourly Yen Strength Index stood at 47.53 (Neutral) by 1000 GMT. The major resistance is around 113.20 (10 – day MA) and any break above will take the pair till 114/115.10 (daily Kijun-Sen). On the lower side, minor support is around 111.40 (100- day EMA) and any break below 111.40 will drag the pair till 110.
GBP/USD: Sterling held ground around the 1.2500 handle after Kristin Forbes, an external member of the BoE's Monetary Policy Committee, stated that the Bank of England should hike interest rates soon if the economic growth remained robust and inflation continued to pick up. Investors now await BoE policymaker Jon Cunliffe's speech for further insights on the UK interest rate path. Sterling trades 0.1 percent down at 1.2488, after slumping to a low of 1.2346 in the previous session, it’s weakest since Jan. 20. FxWirePro's Hourly Sterling Strength Index stood at 101.50 (Highly Bullish) by 1000 GMT. The pair upside is capped by 10- day MA and any break above that level will take it till 1.2599 (23.6% retracement of 1.27085 and 1.24274) /1.2680/1.2707. On the lower side, any break below 1.23450 will drag it till 1.2300/1.2200. Against the euro, the pound trades 0.1 percent up at 85.25 pence, having hit a high of 85.09 earlier, it’s highest since Feb. 2.
USD/CHF: The Swiss franc declined, extending losses for the second straight day, as the greenback rebounded amid cautious sentiment around equity markets. The major trades 0.2 percent higher at 0.9992, having touched a high of 1.0006 in the previous session, it’s highest since Jan. 30. FxWirePro's Hourly Swiss Franc Strength Index stood at -96.62 (Slightly Bearish) by 1000 GMT. The near term resistance is around 1.0010 (21- day MA) and any break above will take the pair till 1.00448 (38.2% retracement of 1.03435 and 0.98611). On the lower side, major support is around 0.98600 (200- day MA) and any break below targets 0.9799 (61.8% retracement of 0.95493 and 1.03435)/0.9750.
AUD/USD: The Australian dollar edged up, after declining in the previous two sessions as upbeat sentiment surrounding copper prices strengthened the bid tone around the major. However, the upside remained capped as the greenback rose on rising U.S. Treasury yields. The Aussie trades 0.1 percent up at 0.7633, within the sight of a high of 0.7696 hit last week, it’s strongest since Nov. 10. FxWirePro's Hourly Aussie Strength Index stood at -54.44 (Bearish) by 1100 GMT. On the lower side, the minor support stands at 0.76000 (10- day MA) and any break below will drag the pair down till 0.7550 (21- day MA)/0.7500. The minor resistance is around 0.7700 and a break above will take it till 0.7748/0.77783 (Nov 8th high).
NZD/USD: The New Zealand dollar stood around the 0.7300 handle as investors remained cautious ahead of the Reserve Bank of New Zealand's monetary policy decision, where it is widely expected to keep rates at record lows of 1.75 percent. The Kiwi traded flat at 0.7300, having hit a peak of 0.7375 on Tuesday, it’s strongest since Nov. 9. FxWirePro's Hourly Kiwi Strength Index was at 40.53 (Neutral) by 1100 GMT. Immediate resistance is located at 0.7350, a break above could take it near 0.7375 (Previous Session High). On the downside, support is seen at 0.7270 (Jan 31 Low), a break below could drag it lower 0.7250.
Equities Recap
European shares advanced, strengthened by mining and financial stocks, while political uncertainty ahead of European elections weighed on the euro.
The pan-European STOXX 600 index increased 0.41 percent to 364.22 points, while the FTSEurofirst 300 index rallied 0.25 percent to 1,435.58 points.
Britain's FTSE 100 trades advanced 0.03 percent to 7,187.74 points, while mid-cap FTSE 250 climbed 0.24 percent to 18,604.42 points.
Germany's DAX edged up 0.14 percent at 11,565.57 points; France's CAC 40 trades 0.49 percent higher at 4,777.93 points.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.2 percent.
Tokyo's Nikkei gained 0.51 percent to 19,007.60 points, Australia's S&P/ASX 200 index rose 0.51 percent to 5,650.40 points and South Korea's KOSPI fell 0.49 percent to 2,065.08 points.
Shanghai composite index climbed 0.4 percent to 3,166.98 points, while CSI300 index advanced 0.5 percent at 3,383.29 points. Hong Kong’s Hang Seng added 0.7 percent at 23,485.13 points.
Commodities Recap
Crude oil prices slumped, extending losses for the third consecutive day, as an increase in U.S. fuel inventories and a fall in Chinese demand indicated that global crude markets remained oversupplied. International benchmark Brent crude was trading 0.07 percent lower at $54.61 per barrel by 0955 GMT, having hit a low of $54.43 earlier in the session, it’s weakest since Jan. 20. U.S. West Texas Intermediate crude fell 0.1 percent at $51.60 a barrel, after declining to an early low of $51.20, its lowest since Jan. 19.
Gold prices rose, hitting a fresh near 3-month high, as political and economic uncertainty in the United States and Europe fuelled demand for safe-haven assets. Spot gold gained 0.2 percent to $1,235.86 per ounce by 0958 GMT, having hit a high of $1,238.42 earlier, its highest since Nov. 11. U.S. gold futures were little changed at $1,236.30 an ounce.
Treasuries Recap
The U.S. Treasuries remained steady ahead of the 30-year auction, scheduled for Thursday. The yield on the benchmark 10-year Treasury traded flat at 2.38 percent, the super-long 30-year bond yield fell 1 basis point to 3.00 percent while the yield on short-term 2-year note also traded flat at 1.17 percent.
The UK gilts jumped ahead of the 30-year super-long bond auction, scheduled to be held on Thursday. Also, investors will remain focused on the Bank of England (BoE) Governor Philip Lowes’s speech due on February 10. The yield on the benchmark 10-year gilts, plunged nearly 2 basis points to 1.27 percent, the super-long 30-year bond yields also slumped nearly 2 basis points to 1.97 percent and the yield on the medium-term 4-year edged lower by nearly 1/2 basis point to 0.36 percent.
The German government bunds rallied ahead of the 10-year auctions scheduled for later in the day. Also, investors are eyeing the release of December trade balance data, scheduled for February 9. The yield on the benchmark 10-year bond, fell 2 basis points to 0.34 percent, the long-term 30-year bond yields also plunged 2 basis points to 1.13 percent and the yield on short-term 2-year bond slipped 1 basis point to -0.78 percent.
The Japanese government bonds traded modestly lower, following poor buying in the Bank of Japan’s (BoJ) daily bond-buying operations. Also, investors are curiously eyeing the super-long 3-year bond auction, scheduled to be held on February 9. The benchmark 10-year bond yield, rose 1/2 basis point to 0.10 percent, while the long-term 30-year bond yields jumped 1-1/2 basis points to 0.92 percent and the yield on the short-term 2-year note surged nearly 2 basis points to -0.20 percent.
The New Zealand government bonds jumped at the time of closing ahead of the Reserve Bank of New Zealand’s (RBNZ) first monetary policy decision of 2017, scheduled to be held on Thursday. The yield on the benchmark 10-year bond, plunged 5-1/2 basis points to 3.28 percent at the time of closing, the yield on 7-year note also slumped over 5 basis points to 2.90 percent and the yield on short-term 2-year note traded 3-1/2 basis points lower at 2.24 percent.
The Australian government bonds continued to witness gains, following a decline in energy prices amid a silent trading session that witnessed data of little economic significance. However, higher equities limited the stark upside in bonds. The yield on the benchmark 10-year Treasury note, tumbled 1 basis point to 2.70 percent, the yield on 15-year note also fell slightly over 1 basis point to 3.15 percent and the yield on short-term 2-year too fell 1 basis point to 1.80 percent.
The material has been provided by InstaForex Company - www.instaforex.com