US indices rebound slightly
US indices traded higher in Asian markets that were still suffering from holiday-thinned liquidity, with major centres China and Hong Kong still enjoying the Lunar New Year holiday. The rebound is seen as merely a technical one after last night’s weak close, with the news in the coronavirus space still dismal and showing no signs of abating.
Latest numbers from China show total cases now at 4,515 with the death toll rising to 106. Despite the lack of positive news, US indices traded between 0.21% and 0.25% higher in slow morning activity following some of the weakest closes yesterday in almost three weeks.
Currency markets were little changed with no common theme apparent across the spectrum. USD/JPY traded 0.08% higher as equities rose, though EUR/USD only managed a 0.01% advance. The Australian dollar traded softer following some below-forecast data (see below).
USD/JPY looks on track to post the first up-day in six days as the FX pair tumbled about 1.2% from the January 17 high. The pair is nearing the 100-day moving average at 108.70, which has supported prices on a closing basis since January 3.
USD/JPY Daily Chart
Australian confidence indicators weaken
The National Australia Bank’s business conditions index slid to 3 in December from 4 the previous month, while the business confidence index fell a more significant amount to -2 from zero. The confidence index was the lowest since mid-2013 and NAB points out that the survey was conducted before the escalation of the bushfires in New South Wales and Victoria, so there could be a further worsening in the numbers in January’s reading.
The Australian dollar traded negatively after the data, losing as much as 0.2% versus the greenback and 0.27% versus the Japanese yen. AUD/USD hit the lowest level since October 16 and is sitting on the 78.6% Fibonacci retracement of the October-December rally at 0.4748.
AUD/USD Daily Chart
A quiet Europe calendar
There’s not much to report on the European calendar, apart from a speech from ECB’s Lane. The US calendar is populated with December durable goods orders, which probably rose 0.5% in the month following November’s dismal -2.1%, the latest survey of economists shows. The ex-transportation number is seen rising 0.2% after a 0.1% decline the previous month.
The Richmond Fed manufacturing index is expected to rise to 9 this month after a -5 print last December, seemingly at odds with last week’s flash PMI reading from Markit, which showed a deterioration in the same month to 51.7 from 52.4. Weekly crude oil stockpiles data from the American Petroleum Institute to January 24 concludes the session. Last week saw an increase in inventories by 1.6 million barrels.
The full MarketPulse data calendar can be viewed at https://www.marketpulse.com/economic-events/
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