Market Roundup
- US Q4 GDP rises 0.7% vs 0.8% forecast.
- US Q4 employment costs rise 0.6 as per forecast.
- Chicago PMI beats 55.6 vs forecast.45.0; high estimate WAS 48.5.
- Canada producer prices fall in Dec as cheap energy weighs.
- Fed’s Kaplan: Fed needs time to weigh global risks to U.S. economy, BOJ stimulus will clearly affect USD.
- China set to adopt 6.5-7 percent growth target range for 2016-sources.
- Chile central sees inflation within target range in second half 2016.
- Yen remains weak after BOJ stuns markets with negative rates (for parking excess deposits).
- European shares get lift from BOJ’s negative rate move, banks rally.
- Global funds dump US stocks & bonds amid Jan storm, Cash holdings rise to 6.5%, highest since June ’15
Looking Ahead – Economic Data (GMT)
- 22:30 Australia AIG Manufacturing Index*Jan 51.9-previous
- 01:00 China NBS Non- Manufacturing PMI*Jan 54.4- previous
- 01:00 China NBS Manufacturing PMI* Jan forecast.49.6, 49.7- previous
- 01:45 China Caixin Manufacturing PMI Final* Jan forecast.48, 48.2- previous
- 02:00 Japan Nikkei Manufacturing PMI* Jan 52.4- previous
Looking Ahead – Events, Other Releases (GMT)
- No Significant Events
Currency SummariesEUR/USD is likely to find support at 1.0800 levels and currently trading at 1.0831 levels. The pair has made session high at 1.0871 and hit lows at 1.0809 levels.US dollar edged higher against euro on Friday after the Bank of Japan stunned markets by adopting negative interest rates. The BoJ said it would apply a negative interest rate of minus 0.1 percent on selected current account deposits that financial institutions hold with it, effectively charging banks interest for holding excess deposits at the central bank. Meanwhile, data showed on Friday U.S. GDP grew at a 0.7 percent annual rate in the fourth quarter, after a 2 percent growth in the third, but was near economists’ revised predictions for economic growth and backed the possibility of further interest rate increases by the Federal Reserve. The dollar index rose 1.3 percent to 99.754, and the greenback gains more than 1 percent against the euro, after the GDP figures were released.GBP/USD is supported in the range of 1.4160 levels and currently trading at 1.4244 levels. It reached session high at 1.4245 and dropped to session low at 1.4160 levels. Sterling slipped almost 1.5 percent against US dollar on Friday as investors remained skeptic about chances of a rate cut by Bank of England this year. Dollar strengthen against most of currencies after a shock cut in Japanese interest rates earlier in Asian session sent the yen spinning lower against a raft of other currencies, and the dollar broadly higher. The British pound has declined more than 6 percent against dollar after concerns started that UK interest rates may be delayed this year due to slowing UK economy and also closely fought debate over a “Brexit” from the EU. Sterling fell as low as $1.4150 before recovering to $1.4180. Against the euro it fell 0.2 percent to 76.28 pence.USD/CAD is supported at 1.3900 levels and is trading at 1.3994 levels. It has made session high at 1.4105 and lows at 1.3993 levels. The Canadian dollar rallied against US dollar on Friday after a Bank of Japan rate cut triggered gains for global asset markets, while oil rallied on prospects of a deal between OPEC countries to curb oversupply of crude oil in the market. Canadian dollar was also supported by jump in world shares after the Bank of Japan stunned markets with a surprise move to negative interest rates. Data showed on Friday Canada’s economy grew for the first time in three months in November, rising 0.3 percent on a pickup in wholesale sales and oil and gas extraction, Statistics Canada said on Friday. The growth followed a flat reading in October and a 0.5 percent contraction in September. The Bank of Canada has forecast no growth in the fourth quarter of 2015. The currency’s strongest level of the session was C$1.3968, while its weakest was C$1.4086.AUD/USD is supported around 0.7000 levels and currently trading at 0.7080 levels. It hit session high at 0.7108 and made session lows at 0.7058 levels. The Australian dollar gained against US dollar on Friday as US dollar took a knock from soft economic news that trimmed expectations of an aggressive tightening by the Federal Reserve. The Australian dollar was firm at $0.7093, having rallied nearly 1 percent on Thursday. It briefly popped back above 71 cents and was set to post a rise of 1.1 percent for the week. Australia dollar was strongly supported by jump in oil and iron ore prices. The Aussie, however, was still down 2.7 percent for January, following concerns related to China’s economic woes.The Reserve Bank of Australia holds its monthly policy meeting on Feb. 2 and it is widely expected to keep rates at a record low of 2.0 percent, where they have been since May 2015.Equities RecapEuropean shares recovered to finish slightly higher on Wednesday as a late surge in oil prices helped offset pressure on the broader market from a spate of weak earnings updates.UK’s benchmark FTSE 100 closed up by 0.9 percent, the pan-European FTSEurofirst 300 ended the day up by 0.9 percent, Germany’s Dax ended up by 0.4 percent, France’s CAC finished the day up by 0.3 percent.Wall Street surged nearly 2 percent on Friday after the Bank of Japan unexpectedly cut interest rates and Microsoft led a strong rally in technology shares.Dow Jones closed up by 2.37 percent, S&P 500 ended up by 2.36 percent, Nasdaq finished the day up by 2.28 percent.Treasuries RecapU.S. Treasury yields fell to four-month lows on Friday after the Bank of Japan surprised investors by introducing negative interest rates in a further effort to stimulate the country’s flagging economy.Benchmark 10-year notes were last up 17/32 in price to yield 1.93 percent, after earlier falling to 1.91 percent, the lowest level since Oct. 2.Commodities RecapGold edged higher on Friday after U.S. data showed economic growth slowed down in the fourth quarter and the price of the precious metal was on track for its biggest monthly rise in a year after global economic headwinds hit riskier assets.Spot gold was up 0.2 percent at $1,116.46 an ounce at 2:51 p.m. EST (1951 GMT), while U.S. gold for February delivery settled up 0.1 percent at $1,116.40 an ounce.Oil prices rose on Friday, rebounding more than 25 percent from 12-year lows hit last week and cutting losses for the month, on prospects of a deal between major exporters to cut production and curb one of the biggest supply gluts in history.Brent March futures, which expired on Friday, closed at $34.74 a barrel, 85 cents or 2.5 percent higher. On Jan. 20, it hit $27.10, its lowest since November 2003.U.S. crude settled up 40 cents or 1.2 percent, at$33.62 per barrel, having hit a high of $34.40 in the session.
The material has been provided by InstaForex Company – www.instaforex.com