HEADLINES – INTERNATIONAL
BOE left rates and QE unchanged, while some policy makers expressed concern over inflation. Mark Carney warned that surprises could still be ahead as the U.K. starts the formal process of leaving the European Union, and the Bank of England is ready to respond accordingly. The BOE also upgraded its economic forecasts for the second time since the Brexit vote Trump blasted a “dumb” refugee resettlement deal with Australia and accusing Japan and Germany of manipulating their currencies. Ties with Mexico have deteriorated to the point its government had to deny reports that Trump told President Enrique Pena Nieto he might send U.S. troops across the southern border.
Gold prices have rebounded about 6 percent this year, helped by a weaker dollar and demand for the metal as a haven, after posting the worst quarterly loss since 2013. The Fed, which kept interest rates steady this week after a two-day meeting, gave little clue on when it might next tighten monetary as officials grapple with the uncertainty created by a new presidential administration.
Greece said to agree with its creditors to cut its tax-free threshold to EU6,000 from EU8,636 according to Skai reports Vancouver benchmark home prices are up 15.6% in Jan. from a year ago, according to the Real Estate Board of Greater Vancouver. The average benchmark selling price of a single-family detached home in the Greater Vancouver Area rose 15.8% y/y to C$1,474,800
MARKETS IN DETAIL
AUD/USD may surge further as Australian Treasury’s coffers are filled by export income that will flow in from December’s record trade surplus, according to Bloomberg strategist Michael G. Wilson.
A key component of the stellar December trade print was exports to China, which jumped 28% m/m to AUD10.1b, highest on record in data going back to Feb 1988 Offshore yuan paired gains thhough remains at highest since Jan. 24, trading at a premium of more than 700pips versus CNY. CNH volumes were above recent averages in NY morning hours. PBOC could set yuan fixing stronger on Friday after most Asian peers including SGD, KRW and TWD have advanced since Jan. 26, when CNY last traded USD/JPY halved its drop for the session, tracking rebound in the 10Y UST yield, which reversed a morning decline to trade little changed.
The dollar’s fixation with UST yields remained intact as it pared losses ahead of January jobs data to be released Friday, with the market looking for fresh trading cues after the “Trump reflation” trade appears to have either run out of steam or run its course.
Treasury market positioning ahead of Friday’s January jobs report is set up for a potential short squeeze, with speculator shorts remaining close to record levels, based on latest CFTC data. Short positioning has potential to exacerbate upside Treasury gains should the jobs report disappoint and limit losses should the data beat expectations Aussie bonds open mixed with a flatter curve. There was heavy turnover in 10-year bond futures overnight in part from investor response to yesterday’s record trade surplus and ahead of U.S. non-farm payroll data tonight. 3-year yield adds 1bp to 1.963%; 10-year steady at 2.770%
Euro stocks fell for the fourth time in five days; the Stoxx Europe 600 Index fell 0.3% US stcoks fell after Trump’s remarks on trade,Dow jones was down 0.13 percent to 19,864, S&P had shed to 2,276.57 Britain FTSE outperformed with a gain of 0.5 after BOE appeared to be in no rush to tighten monetary policy in its latest inflation report ASX 200 fell 0.1% to close 5,645 yesterday, seven of 11 subgroups droups led by utilities and tech. Real estate leads gainers New zealand S&P/ NZX 50 was little changed yesterday at 7,053
America’s East Coast gasoline glut is back and it’s so big that tankers bound for New York are being forced to detour mid-ocean toward other destinations.
WTI drops first time in three days; market weighs OPEC deal against rising U.S. crude inventories.