Sample Category Title

Market quiet in post nonfarm payroll price action

Notes/Observations

Germany Dec Factory Orders register biggest monthly advance since July 2014 (5.2% v 0.7%e)

Weekend/Overnight:

Asia:

China Jan Caixin PMI Services saw its 1st sequential decline in 4 months ( 53.1 v 53.4 prior)

Australia Dec Retail Sales registered its 1st MoM decline since Aug 2015 (-0.1% v +0.3%e)

Japan Overall 2016 Real average monthly wages rose by 0.7% for its 1st rise in 5 years and biggest increase since 2010

Radiation at Fukushima plant hits 5-year high. The Japanese nuclear plant has recorded the highest radiation level since the 2011 earthquake

Europe:

Germany Fin Min Schaeuble: Euro exchange rate is too low for German economy's competitive position

Germany Econ Min Gabriel: Europe must not be divided further; need to give Italy, France and Portugal enough time to reduce their deficits as they enact structural reforms

UK Conservative MP Carmichael: Could be faced with prospect of leaving EU by ‘falling off a cliff' (**Note: Comments from Carmichael viewed as a headwind on PM May's Brexit plan as member of her party 'criticized her strategy ahead of a mid-week vote on plan following debate)

France's far-right party presented its Presidential Election Manifesto which vowed to fight globalization. Election to be followed by 6 months of talks with EU to regain 4 sovereign ties (monetary, legal, territorial and economic) and then hold referendum afterwards. Would aim to leave euro and re denominate French debt stock into new currency

New BoE Governor to replace Minouche Shafik will be announced this week by Treasury

Fitch affirmed Portugal sovereign rating at BB+; outlook Stable

Fitch affirmed Austria sovereign rating at AA+; outlook Stable

Americas:

More than 100K visas had been revoked due to Trump administration travel restrictions order on 7 Muslim-majority countries

US Federal Judge in Seattle granted temporary nationwide restraining order on immigration ban (acting on requests from Washington/Minnesota states). Banned 90-day entry suspension of individuals from seven countries

Homeland Security official: Will comply with federal court ruling; have "suspended any and all actions" related to implementing President Trump's immigration ban on 7 Muslim-majority countries

Fed's Williams (moderate, non-voter): March rate hike was on the table, decision remained data-dependent; all FOMC meetings were live

Economic Data

(DE) Germany Dec Factory Orders M/M: 5.2% v 0.7%e; Y/Y: 8.1% v 4.2%e (biggest monthly advance since July 2014)

(NO) Norway Dec Industrial Production M/M: -2.7 v +0.7% prior; Y/Y: -1.4% v +1.3% prior

(NO) Norway Dec Manufacturing Production M/M: 1.1% v 0.3%e; Y/Y: -2.0% v -4.2% prior

(DE) Germany Jan Construction PMI: 52.0 v 54.9 prior

(EU) Euro Zone Feb Sentix Investor Confidence: 17.4 v 16.8e

Fixed Income Issuance:

None seen

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Index snapshot (as of 10:00 GMT)

Indices [Stoxx50 flat at 3,278, FTSE +0.2% at 7,205, DAX flat at 11,656, CAC-40 +0.3% at 4,838, IBEX-35 +0.1% at 9,470, FTSE MIB -0.3% at 19,053, SMI +0.2% at 8,370, S&P 500 Futures +0.1%]

Market Focal Points/Key Themes: European equity indices are trading mixed but generally higher after a positive end to the Asian session; the major banking stocks trading mixed in the Eurostoxx with shares of BNP Paribas, BBVA and Intesa Sanpaolo trading higher, with shares of Deutsche Bank and Banco Santander trading lower; Commodity and mining stocks leading the gains in the FTSE 100 as copper trades higher intraday; homebuilder stocks trading sharply lower in the index, with the major high street retailers Dixons Carphone and Marks & Spencer the notable laggards.

Upcoming scheduled US earnings (pre-market) include Boardwalk Pipeline, CBOE Holdings, CNA Financial, Diamond Offshore, Fidelity & Guaranty, Haemonetics, Hasbro, Loews Corp, Mercury General, Newell Brands, Sysco Corp, and Tyson Foods.

Equities (as of 09:50 GMT)

Consumer Discretionary: [Capita CPI.UK +1.1% (staff arrested), Ryanair RYA.UK -1.6% (Q3 results)]

Healthcare: [Ablynx ABLX.BE +1.7% (Submits MAA to the EMA for approval of caplacizumab), Genmab GEN.DK +1.4% (raises FY16 outlook), Innate Pharma IPH.FR -20.2% (top line results from EffiKIR trial)]

Industrials: [Hexagon HEXAB.SE -2.4% (cost savings program, Q4 results, new Chairman), Norwegian Air NAS.NO -2.4% (Jan metrics)]

Technology: [DKSH Holding DKSH.CH +7.8% (FY16 results)]

Telecom: [TDC TDC.DK -0.3% (divests subsidiary TDC Hosting, trims outlook), Telecom Italia TIT.IT +3.4% (Q4 results)]

Speakers

SNB's Maechler reiterated the view that CHF currency (Swiss franc) was overvalued, especially against euro. If interest rates were not negative, franc would be stronger. Expected Swiss job market to improv

German Ifo institute: Gauges for business climate, current assessment and expectations improved in 1Q as euro-area recovery gains momentum

Brazil Fin Min Meirelles noted that a single digit interest rate was depended on inflation slowdown

Russia Dep Foreign Min Ryabkov: Recent Iran missile launch did not violate sanctions agreement. Did not agree with Trump's assessment that Iran was a terrorist State

China said to target Urban Unemployment Rate to be below 5% in period through 2020 (**Note: 2016 urban unemployment rate 4.02%)

Currencies

USD remained in recent ranges against the majors as dealers continue to digest the Friday's jobs report. The headline figure of Friday's nonfarm payrolls report for January showed a greater-than-expected rise in job growth, the unemployment rate edged up and wage growth was disappointing

The 112 area remained key support for the USD/JPY pair. Abenomics received another boost to its credibility after Japan's Overall 2016 Real average monthly wages rose by 0.7% for its 1st rise in 5 years and biggest increase since 2010

EUR/USD hovered around the mid-1.07 area as dealers awaited ECB's Draghi's testimony at the European Parliament for clues on the outlook for the central bank's stimulus program.

Precious Metals- Gold and Silver benefited from technical buying. Copper prices continued its surge as hedge funds made record bets amid supply threats were back in focus

Commodities

Oil – Both WTI and Brent crude oil traded initially higher on a weaker US dollar and concerns that new US sanctions on Iran may affect crude supplies. Metals- Gold and Silver benefited from technical buying. Copper prices continue surge as hedge funds make record bets amid supply threats come back in focus.

Fixed Income:

Bund futures trade at 162.78 up 27 ticks in quieter trade, continuing momentum higher after Friday's US Non Farm Payroll report. Having traded a high of 162.90 further continuation sees 163.01 followed by 163.38. A reversal lower sees support remaining at 161.96, 161.49 then 161.19 followed by 160.80.

Gilt futures trade at 124.65 up 12 ticks reversing earlier losses, despite a rebound in Equities as the Yield curve flattens slightly. Support moves to 124.08 followed by 123.58 , 123.17 with Dec low at 122.08 the eventual target. Resistance lies just above highs at 124.73 followed by 125.19. Short Sterling futures trade flat to 2bp higher with Jun17Jun18 continuing to flatten trading at 21/22bp.

Monday's liquidity report showed Friday's excess liquidity rose to €1.318T up €7B from €1.311T prior. Use of the marginal lending facility rose to €171M from €107M prior.

Corporate issuance saw the week ended with $43.3B via 31 tranches, with volume YTD standing at $187.9B. Euro denominated issuance saw €16.7B come to market led by financial firms, with Bank of America's 3 part deal accounting for over half this weeks volume.

Looking Ahead

(IL) Israel Central Bank (BOI) Jan Minutes

05:25 (BR) Brazil Central Bank Weekly Economists Survey

05:30 (EU) ECB's Smets (Belgium) with Bank of International Settlements(BIS) Caruana at Conference in

05:30 (DE) Germany to sell €2.0B in 6-month Bubills

05:30 (NL) Netherlands Debt Agency (DSTA) to sell €2.0-4.0B in 3-month and 6-month Bills

05:30 (PL) Poland to sell Bills - 06:00 (IL) Israel to sell Bonds

06:30 (CL) Chile Dec Economic Activity (Monthly GDP) M/M: 1.0%e v 0.7% prior; Y/Y: 1.0%e v 0.8% prior

06:30 (TR) Turkey Jan Real Effective Exchange Rate (REER): No est v 92.16 prior

06:30 (EU) EU's Juncker with France PM Cazeneuve in Brussels

06:45 (US) Daily Libor Fixing - 07:00 (IN) India announces details of upcoming bond sale (held on Fridays)

08:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming actions in week

08:20 (BR) Brazil Jan Vehicle Production: No est v 200.9K prior; Vehicle Sales: No est v 204.3K prior, Vehicle Exports: No est v 62.9K prior

08:50 (FR) France Debt Agency (AFT) to sell €6.1-7.3B in 3-month, 6-month and 12-month Bills

09:30 (EU) ECB announces Covered-Bond Purchases

09:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender

09:50 (UK) Bank of England Bond Buying Operation (APF Gilt purchase operation between 3-7 years)

10:00 (FR) France Presidential Candidate Fillon

11:30 (US) Treasury to sell 3-Month and 6-Month Bills

16:30 (US Fed's Harker (hawk, voter) speaks about Payment Systems in San Diego

News and Events:

Strong NFP failed to boost USD

Most FX crosses traded sideways on Monday as investors started the week on the back foot amid disappointing data from the world’s largest economy. Even if the NFPs printed substantially stronger than expected, with the US economy creating 227k job during the first month of the year versus 180k median forecast, the weak wage growth figures cast a shadow on the inflationary outlook and the narrative of a faster recovery. Average hourly earnings rose 0.1%m/m in January (0.3% median forecast), while the previous month reading was downwardly revised to 0.2% from 0.4% first estimate. The data suggests a slower path of interest rate increases by the Federal Reserve as the low unemployment rate, according to official data, failed to translate into salary growth which would, in the end, give a boost to inflation. The unemployment rate ticked up to 4.8%, slightly higher than the previous reading and the median forecast of 4.7%, as the participation rate climbed to 62.9% from 62.7%. Similarly, the underemployment rate accelerated to 9.4% in January from 9.2% previously.

December durable goods orders were revised to the downside to -0.5%m/m versus 0.4% first estimate. Excluding transportation, the gauge advanced 0.5% and matched consensus, signalling that the underlying trend in new orders remains solid as US businesses expect the Trump administration to help the manufacturing sector get back on a growth path. On the PMIS side, the Markit gauges came in roughly in line with expectations, while factory orders rose 1.3%m/m versus 0.5% median forecast and -2.3% the previous month.

All in all, we expect the greenback to remain subject to substantial downside, especially due to the emergence of a strong political resistance against some of Donald Trump’s executive orders. Indeed, this lack of broad support along the political forces is a bad omen for the US outlook as it may prove difficult for Trump to pass any key bills that might boost the economy.

SNB total sight deposits increase again

Sight deposits were expected this morning and the release has shown an increase in total sight deposits to CHF 535.2 billion from CHF 532.8billion. We believe that the demand for the Swiss franc as a safe haven remains significant. For the time being, the Helvetic currency is strong and the EURCHF pair lies stalls below 1.0700.

We consider that FX intervention from the SNB is clearly on and should not diminish over the next few months with the elections coming up in France and Germany.

Regarding the economic outlook, swiss fundamental data show that the situation improved. Exports surged in December by 9.9% m/m and inflation is now flat on an annualized basis while it was negative not so long ago.

Nonetheless, the strength of the dollar against the franc has cooled over the last few weeks as Trump mentioned that the dollar may be too strong. A weaker franc against the dollar was a good to trigger further weakness against the euro but it now seems that the trend has reversed and the dollar is weakening, driving the CHF higher.

This year, we consider that the SNB should remain on the edge and willing to intervene. Chairman Thomas Jordan said this weekend in an interview in a German newspaper that the interest rates should remain low in order to keep the differential between major currencies and the franc.

Today's Key Issues (time in GMT):

• Dec Industrial Production MoM, last 0,50%, rev 0,70% NOK / 07:00
• Dec Industrial Production WDA YoY, last 1,30% NOK / 07:00
• Dec Ind Prod Manufacturing MoM, exp 0,30%, last -0,10% NOK / 07:00
• Dec Ind Prod Manufacturing WDA YoY, last -4,20% NOK / 07:00
• Jan New Car Registrations YoY, last -1,10% GBP / 09:00
• 03.févr. Total Sight Deposits CHF, last 5,33E+11 CHF / 09:00
• 03.févr. Domestic Sight Deposits CHF, last 4,67E+11 CHF / 09:00
• Jan Markit Eurozone Retail PMI, last 50,4 EUR / 09:10
• Feb Sentix Investor Confidence, exp 16,8, last 18,2 EUR / 09:30
• 03.févr. Bloomberg Nanos Confidence, last 56,1 CAD / 15:00
• Jan AiG Perf of Construction Index, last 47 AUD / 22:30
• 05.févr. ANZ Roy Morgan Weekly Consumer Confidence Index, last 118,1 AUD / 22:30

The Risk Today:

EUR/USD's momentum has increased sharply. It seems that strong hourly resistance area is given around 1.0800. Hourly support lies at 1.0590 (19/01/2016 low) and 1.0341 (03/01/2017 low). Expected to see continued consolidation. In the longer term, the death cross late October indicated a further bearish bias. The pair has broken key support given at 1.0458 (16/03/2015 low). Key resistance holds at 1.1714 (24/08/2015 high). Expected to head towards parity.

GBP/USD is still trading below resistance given at 1.2771 (05/10/2016 high). The pair keeps on bouncing lower. The technical structure is still anyway showing positive potential. Hourly support is given around 1.2450 (recent lows). Expected to show further bullish move. The long-term technical pattern is even more negative since the Brexit vote has paved the way for further decline. Long-term support given at 1.0520 (01/03/85) represents a decent target. Long-term resistance is given at 1.5018 (24/06/2015) and would indicate a long-term reversal in the negative trend. Yet, it is very unlikely at the moment.

USD/JPY's slowly weakening. Hourly resistance is given at 115.62 (19/01/2016 high). The technical structure suggests further downside momentum. as the break of hourly support given at 112.57 (17/01/2017 low) has confirmed bearish pressures. We favor a long-term bearish bias. Support is now given at 96.57 (10/08/2013 low). A gradual rise towards the major resistance at 135.15 (01/02/2002 high) seems absolutely unlikely. Expected to decline further support at 93.79 (13/06/2013 low).

USD/CHF's momentum is definitely bearish. Key resistance is given at a distance at 1.0344 (15/12/2016 high). Closer resistance is given at 0.9935 (03/02/2016 high). The road is clearly wide-open for further decline. In the long-term, the pair is still trading in range since 2011 despite some turmoil when the SNB unpegged the CHF. Key support can be found 0.8986 (30/01/2015 low). The technical structure favours nonetheless a long term bullish bias since the unpeg in January 2015.

Last week we talked a lot about EURGBP, which has a very good looking structure up from January low. We see an A-B-C- bounce in wave 2) that is approaching resistance area at 0.8650-0.8670, which is not far away so be aware of a bearish reversal in the very near future. Ideally market will fall sharply from there with an impulsive manner.

EURGBP, 1H

'The euro was a fraction firmer at $1.0775 while the dollar dipped against a basket of currencies to 95.763 .DXY.' – Wayne Cole (based on Reuters)

Pair's Outlook

Following repeated attempts to claim the upper boundary of the senior ascending channel, EUR/USD failed at the area once more and established the area as a major supply level, meaning that it is unlikely that the pair will push through 1.0796 anytime soon. There is a support lying just below at 1.0744 – a reasonable target for the next couple of hours, but likely to break during the trading session. The ultimate downside target lies at 1.0683, the junior channel bottom trend-line, and will be tested if the rate continues to respect the senior channel boundary and shows no stickiness.

Traders' Sentiment

SWFX traders have entered deeper negative territory regarding the pair, as 57% of open positions are now short. Similarly, 57% of pending orders are to sell the Euro.

'Sterling is stuck in a range. It's very cheap on most measures, but then real yields are very low and the current account deficit is very big.' – Societe Generale (based on PoundSterlingLive)

Pair's Outlook

The Cable closed with a 40-pip loss on Friday, as mixed US fundamentals were unable to cause a breach in the tough demand cluster around 1.2450. Nevertheless, the GBP/USD pair slipped back under the 1.25 major level, now seeking its way to recover with the help of the same demand area. Technical indicators are in favour of the positive outcome, as they keep giving bullish signals in the daily timeframe. However, we should not rule out the possibility of the pair partially breaching the support cluster, as political factors keep pressuring the British Pound.

Traders' Sentiment

There are 59% of traders holding long positions today (previously 60%). Meanwhile, the portion of orders to sell the Pound increased from 53 to 56%.

'The (Japanese) central bank's actions are negative for JGBs and negative for the yen and will be a factor that helps keep dollar/yen supported.' – BK Asset Management (based on Reuters)

Pair's Outlook

A strong US NFP reading on Friday was insufficient for the USD/JPY pair to remain elevated, as weak secondary data weighed on the Buck and caused the support area circa 112.60/50 to be retested. Consequently, this area is expected to provide sufficient support today, causing the US Dollar to close trade in the green zone. The weekly pivot point at 113.19 is the closest resistance, but there is no impetus present today, which has the potential to push the pair that high, excluding external factors of course. Meanwhile, technical indicators are unable to confirm the possibility of the positive outcome.

Traders' Sentiment

There are 58% of traders with a positive outlook towards the US Dollar today, compared to 61% on Friday. At the same time, the share of buy orders inched up from 62 to 61%.

'Gold will climb about 6 percent through the end of the year as investors seek a shelter from rising political risk, according to Independent Strategy Ltd.'s David Roche.' – Ranjeetha Pakiam (Based on Bloomberg)

Pair's Outlook

Gold showed solid demand with a surge above the 1,219.20 level, which is strengthened by the 100-hour SMA and the upper Bollinger Band, and taking into account the significance of the area, a consolidative movement should follow on shorter time-frames. The next target on the upside lies at 1,233.81 and could be tested today, in case XAU/USD delays the correction for the next few sessions. In case the breakout is false, 1,211.01 will serve as a floor when the rate returns below the broken area, but we stand in favour of a firmly rising scenario.

Traders' Sentiment

Traders remain almost neutral on the metal, as 51% of open positions are short on Monday. Meanwhile, 61% of trader set up orders are to buy the bullion.

"The stronger than expected growth since the Brexit vote has been entirely due to much stronger than expected household consumption growth. It won't last". - Daniel Vernazza, UniCredit

The services sector activity in Britain slowed unexpectedly during the first month of 2017, a private survey revealed on Friday. Markit/CIPS reported its Purchasing Managers' Index for the UK services sector fell to 54.5 points in January after hitting 56.2 in December, the highest level since July 2015, when it climbed to 57.4. Market analysts anticipated a slighter decrease to 55.8 in the reported month. Last month's reading recorded the first slowdown in the UK services industry in four months. However, it remained comfortably above the 50-point level separating expansion from contraction. Britain's service industry is closely monitored, as it accounts for almost 80% of the economy. According to the Markit Services PMI survey, companies expressed greater optimism about the future of the services sector. Nevertheless, businesses once again pointed to rising inflationary pressures due to the sharp fall in the value of the Sterling. The weak domestic currency is likely to push inflation to 2.7% in 2018, above the Central bank's target of 2%, the BoE Governor Mark Carney said on Thursday. Although the Bank said its tolerance for above-target inflation would be limited. After the release, the Pound dropped markedly against other major currencies, trading at 1.1630 against the Euro and 1.2494 against the US Dollar.

'The lack of wage growth suggests further room for tightening in the labor market. So long as that remains true, and with inflation still below target, the Fed will be content to hold off on further interest rate hikes'. - Anthony Nieves, ISM

US companies created more jobs than expected last month, following the disappointing December figure. The Bureau of Labor Statistics revealed on Friday that nonfarm payrolls rose 227,000 in January, compared with the preceding month's upwardly revised 157,000, while market analysts anticipated an increase to 170,000 in the reported month. Meanwhile, the unemployment rate came in at 4.8% last month, up from December's reading of 4.7%. Friday's data also showed that average hourly earnings grew 0.1% in January, following the prior month's downwardly revised 0.2% and falling behind the 0.3% rise market forecast. Earlier this week, the Federal Reserve declined to raise interest rates. However, policymakers maintained their projection of three hikes in 2017. Separately, the Institute of Supply Management reported its Non-Manufacturing Purchasing Managers' Index fell to 56.5 in January from the preceding month's 57.2, whereas analysts penciled in a slight decrease to 57.0 points. Overall, the slight decrease in the headline Index was mainly driven by the weaker New Orders Index, which dropped to 58.6 from 60.7 in the previous month; however, order backlogs held on the same level. Moreover, the ISM said the Employment Index advanced to 54.7, while the Price Index surged to 59.0 from 56.0, representing an increase in inflationary pressures.

'The rise in real sales in the fourth quarter was in line with expectations, but the outright fall in nominal sales in December reveals a worrying lack of momentum heading in to 2017'. - Kate Hickie, Capital Economics

Australian retail sales posted a surprise fall in the last month of 2016, official figures revealed this morning. The Australian Bureau of Statistics reported retail sales dropped 0.1% to $A25.61 billion on a seasonally adjusted basis in December, following the preceding month's downwardly revised gain of 0.1% and missing analysts' expectations for a rise of 0.3% in the reported month. The December figure marked the first contraction since July 2016. In volume terms, sales jumped 0.9% in the Q4, up from the prior quarter's 0.0% and in line with analysts' forecasts. Thus, analysts suggest that consumer spending provided a big positive contribution to economic growth in the Q4 of 2016. In regional terms, retail sales declined 0.4% in Victoria, 0.3% in New South Wales and 0.7% in the Australian Capital Territory. These falls offset gains of 1.2% in South Australia, 0.6% in Western Australia, 1.1% in the Northern Territory and 0.5% in Tasmania. Sales were unchanged in Queensland. The largest drop of 2.3% was recorder in household goods retailing. The ABS said that the fall was mainly driven by a sharp 6.6% decrease in sales of hardware, building and garden supplies. It was the biggest monthly decrease in this category since July 2000. Economists suggested that the following plunge was largely due to the closure of the Masters hardware chain.