Market Update

roche futures

Stock markets were quiet in Asia with most the region away for Lunar New Year holiday. Nikkei outperformed post-BoJ appointments
•    In FX, the greenback gave further ground to its major counterparts
•    Looking ahead, highlights include UK retail sales, US building permits, housing of starts Uni. Of Michigan

ASIA

Stock markets were quiet in Asia with most the region away for Lunar New Year holiday, while the few bourses which were open seemed to have joined in on the celebratory tone and initially took impetus from a 5th consecutive win streak on Wall St. As such, ASX 200 (-0.1%) was positive for most the day with earnings in focus, although upside was capped and later reversed amid profit taking in mining-related sectors. Nikkei 225 (+1.3%) continued to defy the recent JPY strength and outperformed as participants widely anticipated the Japanese government nominations for Kuroda to serve a 2nd term and 2 more doves for the Deputy Governor roles, while markets in China, Hong Kong, Taiwan and Singapore were among the mass holiday closures. Finally, 10yr JGBs were higher as Japanese yields retreated across the curve and which also followed the gains in USTs during the prior session, while the enhanced liquidity auction for longer-dated bonds failed to impact prices with the results broadly inline with the prior.
Japan submitted nomination for BoJ Governor Kuroda to stay on for another term, while it also nominated reflationist academic Wakatabe and BoJ’s Amamiya as Deputy Governors. (Newswires)

UK/EU

UK government is reportedly prepared to lay out its post-Brexit vision for the financial services sector. (Newswires)

The UK’s IOD has put forward a bespoke Brexit solution which it believes will protect manufacturers from customs chaos but also allow the UK to strike independent trade deals. (Telegraph)

Norwegian Central Bank Governor Olsen said may hike interest rates this year and that the NOK exchange rate puts limits on how far rates can deviate from other countries. (Newswires)


FX

FX markets were initially uneventful amid the holiday-quietened conditions, until the greenback gave further ground to its major counterparts in which EUR/USD and GBP/USD gained a firmer footing at the 1.2500 and 1.4100 handles respectively. Elsewhere. USD/JPY ignored Kuroda’s nomination for a 2nd term as this was widely expected, and instead saw a fall-out from the USD-weakness as stops were triggered on a break below the 106.00 level for the first time since 2016, which also pressured JPY-crosses in tandem.

COMMODITIES

Commodities saw mild gains overnight as the weakness in the greenback continued to underpin prices, with WTI crude futures edging closer towards a retest of the USD 62/bbl level where it encountered resistance last week. Elsewhere, gold is on course for its best weekly performance since 2016 due to the softer USD and firmer US inflation, while copper also saw marginal upside amid the heightened global risk appetite despite the absence of its largest consumer China.

White House Legislative Director Short said there is no support for a gas tax hike in Congress. (Newswires)


US

US Treasury announcement: USD 51bln in 3-month bills, USD 45bln in 6 month bills, USD 28bln 2yr Notes, USD 35bln 5yr Notes, USD 29bln 7yr Notes, USD 15bln 2yr FRN. (Newswires)

US Treasury Secretary Mnuchin said he is cautiously hopeful that NAFTA will be renegotiated and that the US priority is to renegotiate the deal. In related news, White House confirmed US President Trump will meet Mexico President Pena Nieto, while there were also comments from Mexican NAFTA negotiator who noted 6 to 10 chapters are ready to close but there is still a lot of work to do on autos. (Newswires)

White House urged the House to advance the Goodlatte immigration proposal after 4 bills were defeated in the Senate. (Newswires)

Former Trump campaign adviser Gates is said to be nearing a plea deal with Special Counsel Mueller with negotiations having taken around a month already. (Newswires)]