Market Roundup

• USD/JPY -0.2%, GBP/USD +0.4%, EUR/USD +0.2%
• DXY -0.3%, DAX +1.0%, Brent -0.7%, Gold -0.5%
• Germany BDI: sees $ surging by 5-10% against major world currencies this year
• BoE Salmon: Expects further flash crashes in core global markets
• ECB Lautenschlaeger: Should soon start discussing exit from stimulus
• Germany Jan IFO Business Climate Index 109.8 vs previous 111.0. 111.3 expected
• Germany Jan IFO Current Conditions Index 116.9 vs previous 116.7 revised. 116.9 expected
• Switzerland Dec UBS Consumption Indicator 1.50 vs previous 1.45 revised.
• Switzerland Jan ZEW Investor Sentiment 18.5 vs previous 12.9
• Great Britain Jan CBI Manufacturing Orders +15 vs previous 0, +2 expected. Highest since April 2015

Economic Data Ahead

• (0900 ET/1400 GMT) The Federal Housing Finance Agency releases its housing price index for the month of November. The index gained 0.4 percent in October.
• (1100 ET/1600 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending January 20.
• (1645 ET/2145 GMT) The Statistics New Zealand is likely to report that consumer price index rose at an annualized rate of 1.2 percent in the fourth quarter, while on a quarterly basis it increased 0.3 percent, after posting a similar gain in the previous quarter.
• (1850 ET/2350 GMT) Japan’s Ministry of Finance will report foreign bond investment for the week ending January 20.
• (1850 ET/2350 GMT) Japan’s Ministry of Finance reports foreign investment in domestic stocks for the week ending January 20.
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Key Events Ahead

• (1430 ET/1930 GMT) FedTrade operation 30-yr Fannie Mae/Freddie Mac (max $1.725 bn)
• (1800 ET/2300 ET) The Reserve Bank of New Zealand Governor Graeme Wheeler’s Speech

FX Beat

DXY: The dollar eased versus its major peers, amid increasing concerns over the U.S. President Trump’s protectionist stance. The greenback against a basket of currencies traded 0.2 percent down at 100.08, hovering towards a low of 99.90 hit on Monday, it’s lowest since Dec. 8. FxWirePro’s Hourly Dollar Strength Index stood at -81.21 (Slightly Bearish) by 1100 GMT.

EUR/USD: The euro rose, reversing most of its previous session losses, as a fresh wave of greenback selling pressure strengthened the bid tone around the major. The pair received an additional boost after data showed German GDP growth projection at 1.4 percent for 2017 and export growth estimate at 2.8 percent from the previous forecast of 2.1 percent. The European currency traded 0.2 percent up at 1.0752, after rising as high as 1.0774 on Tuesday, it’s highest since Dec 8. FxWirePro’s Hourly Euro Strength Index stood at -12.61 (Neutral) by 1000 GMT. On the lower side, any break below 1.7014 (38.2% retracement of 1.07720 and 1.05891) will drag the pair down till 1.0675 (200 –H MA)/1.05891. Potential reversal Zone is around 1.08015 and any break above will take it till 1.08735.

USD/JPY: The dollar declined after better-than-expected Japanese trade balancedata boosted the demand around the safe-haven Japanese yen. Moreover, concerns about U.S. President Donald Trump’s protectionist stance continued to weigh on the major. The pair trades 0.2 percent down at 113.56, after declining as low as 112.52 in the previous session, it’s weakest since Nov 30. FxWirePro’s Hourly Yen Strength Index stood at 6.93 (Neutral) by 1000 GMT. The major resistance is around 114.25 (10- day MA) and any break above will take the pair till 114.85 (38.2% retracement of 118.61 and 112.57)/115.55 (daily Kijun-Sen). On the lower side, minor support is around 111.55 (127.2% retracement of 112.59 and 115.62) and any break below targets 111.10 (100- day EMA)/110.

GBP/USD: Sterling rallied to a 6-week high,  after witnessing a sell-off on Tuesday following the UK Supreme Court ruling that the UK government required a parliamentary approval to trigger the Article 50 by March-end. Moreover, the major was also supported by better-than expected Britain’s CBI Industrial Trends Survey — Orders which came in at 5 in January, surpassing forecasts of 2. Sterling trades 0.5 percent higher at 1.2584, after rising as high as 1.2597 earlier, it’s strongest since Dec. 14. FxWirePro’s Hourly Sterling Strength Index stood at 168.06 (Highly Bullish) by 1000 GMT. The downside remains capped by 60- day- EMA and any break below will drag the pair down till 1.23560/1.2300. The short term support is around 1.24750 level. On the higher side, any break above will take it to next level 1.26265 (161.8% retracement of 1.25447 and 1.24180) and any break above will take it till 1.2725/1.2770. Against the euro, the pound trades 0.2 percent up at 85.47 pence, having hit a peak of 85.29 earlier in the day, it’s strongest since Jan. 6.

USD/CHF: The Swiss franc rose, reversing some of its previous session losses, as the greenback tumbled across the board. The major trades 0.3 percent lower at 0.9981, hovering towards a low of 0.9959 hit in the previous session, it’s lowest since Nov. 15. FxWirePro’s Hourly Swiss Franc Strength Index stood at -36.39 (Neutral) by 1000 GMT. On the lower side, any break below 0.99575 will drag the pair till 0.9925 (200- day EMA)/0.9860 (200- day MA). The resistance is at 1.0030 and any break above targets 1.0065 (10- day MA)/1.01220.

AUD/USD: The Australian dollar tumbled, extending worse-than-expected CPI-led losses, as markets speculate that the RBA might ease monetary policy further. Moreover, diverging monetary policies outlook between the U.S. Federal Reserve and the RBA continued to weigh on the major. The Aussie trades 0.4 percent lower at 0.7549, having touched a high of 0.7609 in the previous session, it’s strongest since Nov. 11. FxWirePro’s Hourly Aussie Strength Index stood at -55.53 (Slightly Bearish) by 1100 GMT. On the higher side, the pair should close above 0.7600 for further bullishness. Any break above will take it till 0.7645/0.7700. The minor support is around 0.7510 (60- 4H EMA) and break below will drag it till 0.7475 (89- 4H EMA)/0.74350

NZD/USD: The New Zealand dollar edged up, extending gains for the third consecutive session, as the U.S. dollar eased across the board. The Kiwi trades 0.1 percent higher at 0.7252, having hit a peak of 0.7277 on Tuesday, it’s strongest since Nov. 10. FxWirePro’s Hourly Kiwi Strength Index was at 84.54 (Slightly Bullish) by 1100 GMT. Immediate resistance is located at 0.7277 (Previous Session High), a break above could take it near 0.7300. On the downside, support is seen at 0.7217 (5-DMA), a break below could drag it till 0.7200 (7-EMA).

Equities Recap

World stocks hit a 19-month high, while European shares rallied nearly 1 percent on the back of stellar European company earnings and strong Japanese trade data.

MSCI’s global share index rose 0.2 percent to 433.59 points, its highest since June 2015, while MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.1 percent to its highest levels in 3-months.

The pan-European STOXX 600 index increased 0.97 percent to 365.42 points, while the FTSEurofirst 300 index rose 1.0 percent to 1,443.51 points.

Britain’s FTSE 100 trades 0.27 percent up at 7,169.80 points, while mid-cap FTSE 250 advanced 0.29 percent to 18,153.78 points.

Germany’s DAX jumped 1.17 percent at 11,570.16 points; France’s CAC 40 trades 0.9 percent higher at 4,877.66 points.

Tokyo’s Nikkei rallied 1.43 percent to 19,057.50 points, Australia’s S&P/ASX 200 index rose 0.42 percent to 5,673.80 points and South Korea’s KOSPI shed 0.01 percent to 2,065.76 points.

Shanghai composite index gained 0.2 percent to 3,149.55 points, while CSI300 index climbed 0.3 percent to 3,375.90 points. Hong Kong’s Hang Seng rose 0.4 percent at 23,049.12 points.

Commodities Recap

Crude oil prices declined, extending losses for the third consecutive session, as an increase in the U.S. inventories, offset production cuts by OPEC and other producers. International benchmark Brent crude was trading 0.2 percent lower at $55.08 per barrel by 1012 GMT, having hit a high of $55.83 on Tuesday, it’s highest since Jan. 18. U.S. West Texas Intermediate crude fell 0.2 percent at $52.79 a barrel, after rising to $53.64 on Friday, its highest since Jan. 9.

Gold prices tumbled after touching a two-month high earlier in the week, as some analysts cautioned on further declines due to a technical correction. Spot gold fell 0.4 percent to $1,203.20 per ounce by 1020 GMT, having hit its strongest since Nov. 22 at $1,220.01. U.S. gold futures shed 0.7 percent to $1,202.90.

Treasuries Recap

The U.S. Treasuries saw downward pressure across the curve, alongside a rebound in equities during a relatively quiet session light on significant economic data. The yield on the benchmark 10-year Treasury jumped nearly 3 basis points to 2.42 percent, the super-long 30-year bond yield also rose nearly 2 basis points to 3.01 percent and the yield on short-term 2-year note moved higher by nearly 2 basis points to 1.16 percent.

The UK gilts sunk ahead of the Bank of England (BoE) Governor Mark Carney’s speech later in the day. Also, investors are now curiously eyeing the fourth quarter gross domestic product (GDP), scheduled to be released late today. The yield on the benchmark 10-year gilts, jumped nearly 4 basis points to 1.44 percent, the super-long 30-year bond yields also moved higher by 4-1/2 basis points to 2.07 percent and the yield on short-term 3-year remained lower by 1/2 basis point to 0.27 percent.

The 10-year German government bunds slumped, ahead of the super long 30-year bund auction, scheduled to be held later in the day. Also, markets are awaiting the German Bundesbank President Weidmann’s speech late today. The yield on the benchmark 10-year bond, rose 3 basis points to 0.44 percent, the long-term 30-year bond yields also jumped nearly 5 basis points to 1.21 percent and the yield on short-term 2-year bond traded 1/2 basis point higher at -0.66 percent

The Japanese government bonds snapped rally after the Bank of Japan skipped short-term bond buying in its daily market operations (OMOs). Also, investors are eyeing the release of December consumer price inflation on Friday. The benchmark 10-year bond yield, edged up 2-1/2 basis points to 0.07 percent, while the long-term 30-year bond yields rose 2 basis points to 0.82 percent and the yield on the short-term 2-year note remained surged nearly 3 basis points to -0.22 percent.

The New Zealand government bonds witnessed mild selling along the curve as investors remain keen to watch the fourth quarter consumer price inflation (CPI) data, due to be released Thursday. The yield on the benchmark 10-year bond, jumped 5-1/2 basis points to 3.30 percent at the time of closing, the yield on 7-year note also ended 4 basis points higher at 2.95 percent and the yield on short-term 2-year note rose 1-1/2 basis point to 2.30 percent.

The Australian bonds plunged in early trading session as underlying inflation appeared to have stabilized in the December quarter, suggesting that the sharp disinflationary forces that have been weighing on prices are abating. The yield on the benchmark 10-year Treasury note, jumped nearly 3 basis points to 2.74 percent, the yield on 15-year note also rose 3-1/2 basis points to 3.18 percent and the yield on medium-term 5-year edged 1/2 basis point higher to 2.28 percent.