The markets turned risk-on in the Asian session, over the supportive economic data releases from US and Asia. The US December durable goods orders surprised to the upside (Durable goods: 4.6%, vs. 2.0% exp. & 0.7% prev.; Durable Goods ex-Transportation: 1.3%, vs. 0.8% exp. & 1.6% prev), the Japanese small business confidence increased to 44.3 (from 43.8 prev), Australian NAB Business conditions improved to -4 (from the previous -5), and the business confidence surged to 3 (from -9 prev), while in New Zealand, the December trade balance registered an unexpected surplus, NZD 486M (vs. NZD-105M exp. & NZD-700M prev), amid increasing exports and decreasing imports.
All Asian stock markets rallied overnight on the back of the supportive data. The Nikkei 225 advanced 0.39%, Hang Seng and Shanghai’s Composite added 0.05% and 0.34%, Kospi index consolidated 0.84%, while Taiex and ASX index rallied 1.13% and 1.11% respectively. The US stock futures consolidated session lows, while the European futures ran up, except DAX.
USDJPY saw heavy sell-off from offshore funds, yet remained well supported at 90.40. EURJPY recovered from 121.56, supported by domestic demand, while GBPJPY, AUDJPY and NZDJPY showed similar behavior. AUDUSD consolidated to 1.0460, while NZDUSD tested 0.8370 early in the session.
In Europe ECB policy makers rejected to rescue the Anglo Irish Bank, while Cyprus bailout is still pending. The situation around Cyprus is becoming increasingly challenging and could prove to be the catalyst for renewed European uncertainty. EURUSD traded in a tight range of 1.3440 – 60, yet made a bearish start in the European opening, amid German import prices disappointed in December (import price m/m -0.5%, vs exp -0.1% & 0.0% prev; import price y/y 0.3%, vs. 0.9% exp. And 1.1% prev) and the Spanish retail sales collapsed by 10% y/y. The German consumer confidence survey for February slightly improved, while in France, the consumer confidence indicator remained unchanged at 86.0 in January.
Today, the economic calendar is light: French January Consumer Confidence Indicator, Spanish December Retail Sales y/y, US November S&P/Case-Shiller HPI, US January Consumer Confidence, and US January Dallas Fed Texas services index.