Market Review for February 17, 2016

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Market Review for February 17, 2016


During Asian session earlier today the USD lost some ground against the JPY as the oil return to below 30 USD levels, as a result the demand for the safe-haven Japanese currency. General thought USD is trading higher compare to the rest of the majors. In oil front traders were clearly dissatisfied with the deal between Russia, Saudi Arabia, Qatar and Venezuela to freeze production rather than cutting. Now we wait to see what the other producers like Iran and Iraq will do.

JPY was also affected by comment of an adviser to Prime Minister Shinzo Abe, Etsuro Honda. He said that BOJ could deploy extra stimulus “as soon as March”. BoJ negative interest rate decision last month and the impact on markets has been muted and now investor’s interest is turning to the BoJ policy meeting on March 14-15. Additionally, Honda also commended that the government should delay the next sales tax hike by two years to April 2019. He noted that announcing that there would be no tax increase until prices and employment have stabilized would have a large positive effect on household sentiment.

Central banks next actions need to be close monitored as both FED and ECB officials made comments regarding the uncertain global economy growth. Boston Fed president Eric Rosengren said that recent global events may make it less likely to reach the 2% inflation target by the end of the year. He also noted that if inflation is slower to return to target, monetary policy normalization should be unhurried.  He believes that a more gradual approach is an appropriate response to headwinds from abroad that slow exports and financial volatility that raises the cost of funds to many firms. ECB governing council member Ewald Nowotny also made comments that developments in Brazil, Russia and China are not only leading to a dimming of the overall economic situation but also spurring investors in emerging markets – in particular state funds – to sell and that emphasises why measures of the European Central Bank in this phase are of such importance; because the ECB is a certain guarantor that appropriate liquidity backups are possible for Eurozone banks.

In regards to the data release so far Australia Melbourne Institute Leading Index m/m came in at 0%. Japan Core Machinery Orders m/m announced at 4.2%. Important data releases from UK will follow like Average Earnings Index and Claimant Count Change. From US Building Permits and PPI m/m need to be monitored and of course the FOMC Meeting Minutes. Later at night New Zeeland will release Producer Price data.

View our full economic calendar for a daily roundup of major economic events.

Data releases to monitor:

GBP:      Average Earnings Index, Claimant Count Change, Unemployment Rate

EUR:      German 10-y Bond Auction

CHF:       ZEW Economic Expectations

USD:      FOMC Meeting Minutes, Building Permits, PPI m/m, Core PPI m/m, Housing Starts, Industrial Production m/m

NZD:      PPI Input q/q, PPI Output q/q

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