Macro Events & News
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European Fixed Income Outlook: Asian stock markets traded mixed overnight, with Nikkei and ASX 200 closing in the red, while Chinese shares rallied ahead of key data releases including GDP numbers. FTSE 100 and U.S. stock futures are narrowly mixed, while 10-year JGB and Treasury yields slightly lower on the day, South Korea bonds rallied after the BoK held rates steady and warned of overheating in cryptocurrency markets. EGB yields moved marginally higher on Thursday, with Bunds outperforming after ECB officials tried to calm tightening concerns and keep a lid on the euro. Still, that the ECB is on the way to phase out net asset purchases this year is pretty clear, with the only question whether there will be an abrupt end in October, as the hawks are suggesting, or a gradual taper in Q4. Released overnight, U.K. RICS house price data came in stronger than expected. There are no other key data releases scheduled leaving the focus on the Bundesbank/IMF conference with speakers including Weidmann and Coeure, as well as French and Spanish bond auctions.
FX Update: The dollar edged out fresh recovery highs versus the euro and other currencies. EURUSD logged a four-session low of 1.2165 before recouping to around 1.2200. The move reflected a dollar dynamic, with EURJPY and other euro crosses having held relatively steady today, even though the airing of concerns about the common currency’s ascent by some ECB officials, along with concerns on the German political front, helped catalysed the correction from 37-month highs in EURUSD. USDJPY lifted to a four-session high of 111.48 in Tokyo today, extending the recovery from Wednesday’s four-month low at 110.19. The recovery broke a run of seven consecutive down . Good selling interest into 111.50 capped the advance, however. Equity markets also turned mixed-to-lower in Asia, despite Wall Street ascending to fresh highs, having been lifted by earnings and Apple’s announcement on a large cash repatriation. Elsewhere, USD-CAD has settled at near net unchanged levels relative to levels that were prevailing just ahead of yesterday’s BoC rate hike (which met expectations while be accompanied with cautious guidance). Sterling is the strongest currency on the day, posting a near 0.5% average gain versus the dollar, euro and yen in post-London close trading. Remarks from BoE MPC member Sauders warning that pay growth will accelerate in the UK during 2018 and that unemployment may drop to multi-decade lows under 4.0%, gave Hey Majesty’s currency a boost, reportedly encouraging interbank and near-term speculative accounts to run at sell stops in EUR-GBP.
Charts of the Day
Main Macro Events Today
US Housing Starts & Building Permits – Housing starts should fall to a 1.275 mln pace in December after November’s 3.3% surge to 1.297 mln, while Building permits expected at 1.290M from 1.298M seen on November.
US Jobless Claims – Unemployment claims is seen slightly lower at 250K than 261K last week.
US Crude Oil Inventories
Philadelphia Fed Manufacturing Survey – The Philly Fed index should fall to 25.0 in January from the upwardly revised 27.9 in December. The reading was at 24.1 a year ago, and was as high as 36.4 in 2011.
ECB Cœuré Speech
Support and Resistance Levels
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