- Asian sentiment was mixed as region failed to sustain the momentum from US
- In FX, USD continued to weaken against its major counterparts in which the DXY languished firmly under the 90.00 level
- Looking ahead, highlights include German, EZ GDP, Riksbank Rate Decision, US CPI, Retail Sales and DoEs
Asian sentiment was mixed as region failed to sustain the momentum from US, where stocks continued their rebound and posted a 3rd consecutive gain. ASX 200 (-0.3%) was subdued amid underperformance in its largest weighted financial sector as banks mulled over the Australian Prudential Regulatory Authority’s discussion paper on the application of a future leverage ratio, while Nikkei 225 (-0.5%) underperformed after disappointing Q4 GDP data and as exporters suffered the ill-effects of a firmer currency. Elsewhere, Shanghai Comp. (+0.3%) and Hang Seng (+1.1%) were resilient with Hong Kong propped up by strength amongst financials. Finally, 10yr JGBs were marginally higher amid a risk-averse tone in Japan and alongside overnight gains in USTs, while the 5yr JGB auction results were somewhat inconclusive and failed to impact prices.
PBoC skipped open market operations. (Newswires)
PBoC set CNY mid-point at 6.3428 (Prev. 6.3247)
Japanese GDP (Q4) Q/Q 0.1% vs. Exp. 0.2% (Prev. 0.6%). (Newswires)
Japanese GDP (Q4) Y/Y 0.5% vs. Exp. 1.0% (Prev. 2.5%)
Singapore GDP (Q4) Q/Q 2.1% vs. Exp. 2.0% (Prev. 2.8%). (Newswires)
Singapore GDP (Q4) Y/Y 3.6% vs. Exp. 2.9% (Prev. 3.1%)
SPD’s Schulz said he is quitting his role of party chairman with immediate effect, while Andrea Nahles has been unanimously backed to succeed him. (Newswires)
UK Foreign Secretary Boris Johnson is to warn that it would be “intolerable and undemocratic” for EU laws and regulations to be imposed on Britain after it leaves the European Union. (Telegraph)
USD continued to weaken against its major counterparts in which the DXY languished firmly under the 90.00 level, while NZD/USD was among the outperformers and reclaimed the 0.7300 handle after an increase in New Zealand 2yr inflation expectations. Elsewhere, a risk-averse tone in Japan and disappointing Japanese Q4 GDP figures saw USD/JPY slip through the prior day’s support and briefly below the 107.00 handle to its lowest since late 2016, while SGD was underpinned with GDP numbers also the focal point for price action.
New Zealand RBNZ 2yr Inflation Expectations Survey (Q1) 2.1% (Prev. 2.0%). (Newswires)
Commodities were mixed with gold prices underpinned by a lacklustre greenback, while focus turns to the upcoming CPI figures for further clues on the economy and possible impact on FOMC policy expectations. Elsewhere, copper was uneventful amid the mixed risk tone in the region, and US crude oil prices were rangebound but have recovered from the post-API weakness in which prices briefly slipped below USD 59/bbl after a larger build in headline crude inventories.
US API Weekly Crude Stocks (Feb 9) 3.947M vs. Exp. 2.800M (Prev. -1.05M). (Newswires)
CME raised crude oil future margins to USD 2100 from 1950 per contract for next month. (Newswires)
USTs were mixed, though yields have remained in their recent range, with 10-year lingering around the 2.85% mark. Ahead of tomorrow’s CPI data, the odds of a March hike are just shy of 80%. After January’s nonfarm payroll data showed wage inflation rising above expectations, attention will be on the January CPI data for confirmation of the trend in price pressures. In wake of the NFP data, markets aggressively repriced their expectations for Fed rates hikes in 2018 as real yields rose. Some suggest that a disappointing print raises the potential of a correction of that pricing, while a beat may give credence to the notion that the Fed may lift rates four times this year. 10 year T-note futures settled 3+ ticks higher at 121-00.
Fed’s Mester is reported to be among the candidates for Fed Vice Chair. (WSJ)
US Trade Representative Lighthizer said NAFTA progress is being made especially with Mexico, while there were also comments from Canada’s Chief NAFTA Negotiator who stated they are conscious the US could implement a NAFTA pull out but noted Canada is ready for that. (Newswires)