14 February 2017
Asia FX and News -
+ White House is exploring a new plan to discourage China from undervaluing its currency - WSJ.
+ China CPI at 2.5% (mkt 2.4%) was boosted by the Lunar New Year holiday. China PPI rose 6.9% vs 6.5% expected.
+ Dallas Fed's Kaplan: may be room for further job growth without overheating the economy.
+ "I expect discussions on FX and other issues with the US to continue as normal with the next treasury secretary" - , Japan FinMin Aso.
+ US National Security Adviser Flynn resigned amid controversy over contact with Russian officials.
+ AUD provided the interest in the Asia session as it was lifted by the China inflation data. However, it still lacked the impetus to take out offers lined up ahead of .7700 against the USD, leaving the NZD as the whipping boy as AUD/NZD traded just over 1.0690. USD/JPY was eventually weighed by a soft N225, with tight ranges holding elsewhere.
Nikkei and JGBs -
+ N225 closed -1.13% at 19238.98. 10yr JGBs yield 0.095%.
European FX and News -
+ GBP provided the warm-up act as we wait for Fed Chair Yellen, January inflation coming in on the soft side of expectation at 1.8% y/y, still shy of the2% target that has not been seen since Dec'13. GBP inevitably stepped lower, Cable seeing a low at 1.2440 from 1.2530 at the time of the release.
+ EUR/USD popped modestly higher at the European open but ran out of steam at 1.0633. It has managed to hold above 1.06 through the session, a weaker than expected ZEW survey (10.4 vs 15.0 expected) and softer than consensus German GDP both ignored.
+ USD/JPY has extended the Asia session low by a handful of points down to 113.20 but has also seen just light trade.
+ The AUD remains top of the commodity pile, NZD making some inroads as AUD/NZD fell short of 1.0700, while AUD/CAD is back on the 1.00 handle after yesterday's dip below parity.
+ Tight ranges are also in play in EUR/CHF and in Scandinavia, SEK traders already with the long stare on tomorrow's Riksbank policy decision.
Bonds and Equities -
+ Gilts saw a modest bounce on the CPI data after a defensive start, while Bunds were supported even before the soft ZEW survey. BTPs have stretched the post supply recovery, while OATs underperform ahead of Thursday's auction. Equities are very near flat, the FTSE marginally ahead despite Rolls Royce taking a 5% tumble.
+ New Zealand: Food Price (Jan) 2.8% m/m (Prev: -0.8)
+ Australia: NAB Business Confidence (Jan) 10 (Prev: 6)
+ Japan: Capacity Utilisation (Dec) 0.6% m/m (Prev: 3)
+ Japan: Industrial Production (Final) (Dec) 0.7% m/m (Prev: 0.5)
+ Japan: Industrial Production (Final) (Dec) 3.2% y/y (Prev: 3)
+ Germany: The Zew headline economic sentiment indicator fell to 10.4 in February (prev: 16.6), which is weaker than the 15.0 markets expected. The German current situation indicator meanwhile fell to 76.4 (Prev: 77.3, Mkt: 77.0)
+ Eurozone: the economic sentiment index fell to 17.1 (prev: 23.2). Altogether this suggests that the economic outlook in Germany and the Eurozone has deteriorated notably since January.
+ Eurozone: The flash estimate of Q4 GDP shows 0.4%q/q expansion, down from the 0.5%q/q flash and unchanged from 0.4% in Q3. This is below market expectations of 0.5%. The y/y rate is at the same time lower at 1.7%y/y.
+ UK: CPI fell by 0.5%m/m in January (prev: 0.5%m/m), translating to a higher y/y rate of 1.8%y/y (prev: 1.6y/y). However this falls short of market expectations for 1.9%y/y. It is the fastest rate of inflation since April 2014.
+ Portugal: Prelim Q4 GDP up to 0.6% q/q, 1.9% y/y
+ Germany: The preliminary estimate of Q4 GDP shows 0.4%q/q growth (prev: 0.1%q/q, revised from 0.2%q/q) which keeps the y/y rate at 1.7%y/y from Q3. This is slightly weaker than the consensus of 0.5%q/q and 1.8%y/y.
Still To Be Released -
11:00 GMT - US: NFIB Small Business Optimism Index (Jan) 4cast: 105 (Mkt: 104.9 Prev: 105.8)
13:30 GMT - US: PPI (Jan) 4cast: 0.4% m/m (Mkt: 0.3 Prev: 0.2)
13:30 GMT - US: PPI (ex Food & Energy) (Jan) 4cast: 0.2% m/m (Mkt: 0.2 Prev: 0.1)
23:30 GMT - AU: Westpac Consumer Confidence (Feb) (Prev: 97.4)
Events & Auctions:
13:30 GMT - US: Fed's Lacker Speaks in Newark, US
15:00 GMT - US: Fed's Yellen appears before Senate Banking Panel (to 15th)
18:00 GMT - US: Fed's Kaplan Speaks in Houston
18:15 GMT - US: Fed's Lockhart Speaks in Huntsville, US
20:50 GMT - AU: RBA's Heath Speak in Sydney