Asia roundup: Kiwi hits 1-week high on RBNZ inflation expectations, Dollar index at 1-week low ahead of U.S. inflation report, Asian shares volatile – Wednesday, February 14th, 2018
- Japan economy grows 8 straight quarters, longest expansion since 1989
- Japan Q4 GDP +0.1% q/q, +0.5% annualized, +0.2% and +0.9% eyed, CAPEX +0.7% q/q
- Japan ChiefCabSec Suga – No comment on FX levels, watching market with urgency
- G7/G20 have agreed excessive FX volatility can harm economy, markets-Suga
- German SPD leader quits in bid to calm party after coalition deal with Merkel
- Australia Feb Consumer sentiment, -2.3% vs 1.8% last-Westpac MI
- New Zealand 2-year inflation expectations jump in Q1
- U.S. Senate Republican leader embraces Trump immigration plan
Economic Data Ahead
- (0200 ET/0700 GMT) Germany Q4 GDP flash qq SA, 0.6% forcast, 0.8% prev
- (0200 ET/0700 GMT) Germany Q4 GDP flash yy SA, 3.0% forecast, 2.8% prev
- (0200 ET/0700 GMT) Germany Jan CPI final, -0.7% m/m, 1.6% y/y eyed; -0.7%, 1.6% prev
- (0200 ET/0700 GMT) Germany Jan HICP final, -1.0% m/m, 1.4% y/y eyed; -1.0%, 1.4% prev
- (0500 ET/1000 GMT) EU Q4 GDP flash estimate, 0.6% m/m, 2.7% y/y eyed; 0.6%, 2.7% prev
- (0500 ET/1000 GMT) EU Dec Industrial production, 0.2% m/m, 4.2% y/y eyed; 1.0%, 3.2% prev
Key Events Ahead
- N/A Bundesbank’s Weidmann and ECB’s Mersch participate in a symposium
- (0330 ET/0830 GMT) Swedish central bank interest rate decision followed by monetary policy report
- (0535 ET/1035 GMT) Portugal E1.9-1.25/E1.9-1.25 bln for 4/10 year auctions
- (0535 ET/1035 GMT) Germany E1.5 bln for 26-year auction
DXY: The dollar index tumbled to a 1-week low ahead of U.S. inflation report, which is expected to show seasonally adjusted U.S. consumer price index at 0.3 percent in January versus 0.1 percent in December. The greenback against a basket of currencies traded 0.3 percent down at 89.51, having touched a high of 90.57 on Thursday, its highest since Jan. 23. FxWirePro’s Hourly Dollar Strength Index stood at -154.87 (Highly Bearish) by 0500 GMT.
EUR/USD: The euro rallied to a 1-week high as markets awaited the release of the Eurozone flash GDP estimate, in the wake of optimistic Eurozone growth outlook. The European currency traded 0.2 percent up at 1.2379, having touched a high of 1.2392 earlier, its highest since Jan. 7. FxWirePro’s Hourly Euro Strength Index stood at 14.77 (Neutral) by 0500 GMT. Investors’ attention will remain on Eurozone preliminary gross domestic product, ahead of U.S. retail sales and consumer price index. Immediate resistance is located at 1.2402 (38.2% retracement of 1.2522 and 1.2205), a break above targets 1.2475. On the downside, support is seen at 1.2314 (Feb 6 Low), a break below could drag it lower 1.2245 (Feb 7 Low).
USD/JPY: The dollar slumped to a 15-month low against the Japanese yen, as investors remained on edge ahead of key U.S. inflation numbers later in the day. The major was trading 0.6 percent down at 107.22, having hit a low of 106.84 earlier, its lowest since Nov. 2016. FxWirePro’s Hourly Yen Strength Index stood at 186.84 (Highly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. retail sales and consumer price index for further momentum. Immediate resistance is located at 107.63 (78.6% retracement of 110.48 and 106.84), a break above targets 108.23 (61.8% retracement). On the downside, support is seen at 106.60, a break below could take it lower 106.30.
GBP/USD: Sterling rose to a 5-day high after data released on Wednesday showed British inflation unexpectedly stayed close to its highest levels in six years in January, firming up investors’ speculations that the Bank of England will raise interest rates again in May. The major traded 0.1 percent up at 1.3898, having hit a low of 1.3764 on Friday, it’s lowest since Jan 17. FxWirePro’s Hourly Sterling Strength Index stood at -76.52 (Slightly Bearish) by 0500 GMT. Investors’ focus will remain on the UK producer price index and consumer price index, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3991 (21-DMA), a break above could take it near 1.4063. On the downside, support is seen at 1.3764 (Feb 9 Low), a break below targets 1.3700. Against the euro, the pound was trading 0.2 percent down at 89.03 pence, having hit a low of 89.10 pence last week, it’s lowest since Jan. 17.
AUD/USD: The Australian dollar surged to a 1-week high, while investors awaited the U.S. inflation data due later in the day which could reignite fears of faster rate hikes in the world’s largest economy. The Aussie trades 0.3 percent up at 0.7881, having hit a low of 0.7758 on Friday; it’s lowest since Dec. 27. FxWirePro’s Hourly Aussie Strength Index stood at 51.92 (Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7826 (5-DMA), a break below targets 0.7758 (Feb 9 Low). On the upside, resistance is located at 0.7905, a break above could take it near 0.7962 (21-DMA).
NZD/USD: The New Zealand dollar advanced to a 1-week peak after the Reserve Bank of New Zealand’s quarterly survey of expectations showed business managers forecast annual inflation to average 2.11 percent over the coming two years, up from 2.02 percent in the previous survey. The Kiwi trades 0.5 percent up at 0.7311, having touched a low of 0.7176 on Thursday, its lowest level since Jan. 10. FxWirePro’s Hourly Kiwi Strength Index was at 97.98 (Slightly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7350, a break above could take it near 0.7405. On the downside, support is seen at 0.7176 (Feb. 8 Low), a break below could drag it near 0.7100.
Asian shares traded in a volatile market, while the greenback eased to a 1-week low as investors’ nerves were strained ahead of a U.S. inflation report that could provide clues on the pace of future U.S. interest rate increases.
MSCI’s broadest index of Asia-Pacific shares outside Japan surged 0.4 percent.
Tokyo’s Nikkei declined 0.5 percent to 21,131.12 points, Australia’s S&P/ASX 200 index slumped 0.3 percent to 5,841.20 points and South Korea’s KOSPI advanced 0.9 percent to 2,418.17 points.
Shanghai composite index rose 0.3 percent to 3,192.49 points, while CSI300 index was trading 0.5 percent up at 3,954.33 points.
Hong Kong’s Hang Seng was trading 1.3 percent higher at 30,218.38 points.
Crude oil prices rose after falling to multi-week lows in the previous session, supported by healthy economic growth and expectations that a weaker dollar could spur fuel demand. International benchmark Brent crude was trading 0.4 percent up at $62.78 per barrel by 0441 GMT, having hit a low of $61.75 on Tuesday, its lowest since Dec. 7. U.S. West Texas Intermediate was trading 0.4 percent up at $59.16 a barrel, after falling as low as $58.06 on Friday, its weakest since Dec. 22.
Gold prices rose for a third straight session to touch a one-week high, supported by a weaker dollar, while investors awaited U.S. inflation data for clues on the pace of future U.S. interest rate increases. Spot gold was up 0.4 percent at $1,334.44 an ounce by 0444 GMT, after touching its highest level since Feb. 6 at $1,336.82. U.S. gold futures rose 0.4 percent to $1,335 per ounce.
The 10-year U.S Treasury yield stood at 2.816 percent lower by 0.023 bps, while 5-year yield was 0.019 bps down at 2.530 percent.
The Japanese government bonds gained, following weakness in the country’s fourth-quarter gross domestic product (GDP), with the 10-year yield hitting over a month’s low. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slipped 1/2 basis point to 0.06 percent, the yield on the long-term 30-year note fell 1 basis point to 0.79 percent and the yield on short-term 2-year remained tad lower at -0.15 percent.
The Australian bonds jumped during early Asian session, tracking similar movement in the U.S. Treasuries ahead of the employment report for the month of January, scheduled to be released on February 15 by 00:30GMT for further insight into the debt market. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 2-1/2 basis points to 2.83 percent, the yield on the long-term 30-year note plunged 3 basis points to 3.47 percent and the yield on short-term 2-year traded nearly 1-1/2 basis points lower at 1.99 percent.
The New Zealand government bonds surged at the time of closing, tracking overnight movement in the U.S. counterpart ahead of the latter’s consumer price inflation data (CPI) for the month of January, scheduled to be released later today. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 3-1/2 basis points to 2.96 percent, the yield on 20-year plunged 4 basis points to 3.47 percent and the yield on short-term 2-year closed 1/2 basis point lower at 1.87 percent.
The Canadian government bond prices were higher across the yield curve, with the two-year up 0.5 Canadian cent to yield 1.781 percent and the 10-year rising 14 Canadian cents to yield 2.32 percent.
Source: FXWire Media Round Ups