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As of Friday midnight, the U.S. government has run out of federal funds for the second time in three weeks. However, that didn’t stop higher-yielding currencies from gaining ground across the board.

  • Australia’s home loans dips by 2.3% vs. 1.1% decline expected, 1.6% growth in November
  • China’s CPI (y/y) rises by 1.5% as expected vs. 1.8% uptick in December
  • China’s PPI (y/y) up by 4.3% vs. 4.4% expected, 4.9% previous
  • Japan’s tertiary industry activity slips by 0.2% vs. 0.2% growth expected, 1.1% previous

Major Events/Reports:

U.S. government officially shuts down

The U.S. federal government technically shut down again at 12:01 am UTC after Congress failed to pass a new spending bill.

If y’all recall, Senator Rand Paul (R-KY) more or less facilitated the shutdown when he withheld his consent for a few hours in frustration over the deficit spending structure of Congress’ latest bill. Under the Senate rules, members can vote by 1:00 AM with or without Paul’s participation.

The Senate is expected to approve the stopgap bill and then toss it to the House of Representatives by Friday.

China’s data releases

Another day, another (sort of) win for China’s reports!

Earlier today we saw China’s CPI report print a six-month low of 1.5% growth in January. This follows a 1.8% gain in December but still met investors’ 1.5% expectations.

Apparently, further declines in food prices and a slowdown in non-food prices dragged on overall consumer prices.

On a monthly basis, prices had risen by 0.6% against expectations of a 0.7% growth and December’s 0.3% gain.

Meanwhile, a separate report showed factory gate prices rising for a 17th straight month, this time by 4.3% from a year earlier in January. This is lower than December’s 4.9% uptick and the expected 4.4% gain for the month.

Turns out, costs slipped for means of production and consumer goods while food production prices remained flat and consumer durable goods prices fell at a faster rate.

On a monthly basis, producer prices shot up by 0.3% after seeing 0.8% growth in December.

Luckily for China’s trade partners, market players mostly ignored the weaker headline numbers since they’re (a) seasonal and (b) still within analysts’ estimates.

Weaker Asian bourses

Asian equities markets mostly took cues from their U.S. counterparts. And as mentioned in the U.S. session recap, it’s been another bloody day for the asset class. Of course, it also didn’t help that the U.S. federal government technically had to shut down again.

  • Nikkei fell by 3.00% to 21,233.5;
  • Shanghai index dropped by 4.11% to 3,127.915;
  • Hang Seng slipped by 3.33% to 29,436.7, but
  • Australia’s A SX 200 survived with a 0.66% gain to 5,811.5.

Crude oil prices also took a small breather after the previous session’s slide:

  • Brent crude oil is up by 0.20% to $64.36 while
  • U.S. crude oil is up by 0.20% to $60.52.

Major Market Mover(s):

JPY and CHF

Interestingly, low-yielding currencies like the yen and franc emerged as the session’s biggest losers despite a lack of fresh catalyst for risk sentiment.

USD/JPY is up by 29 pips (+0.27%) to 109.03;
AUD/JPY is up by 26 pips (+0.30%) to 84.85;
CAD/JPY is up by 30 pips (+0.35%) to 86.58, and
EUR/JPY is up by 46 pips (+0.34%) to 133.64.

USD/CHF is up by 18 pips (+0.19%) to .9378;
AUD/CHF is up by 16 pips (+0.22%) to .7298, and
EUR/CHF is up by 28 pips (+0.24%) to 1.1494.

GBP

With not a lot of fresh data to chew on, Asian session traders caught up to their counterparts and priced in BOE’s hawkish Super Thursday.

GBPUSD is up by 27 pips (+0.19%) to 1.3939;
EUR/GBP is down by 9 pips (-0.10%) to .8793;
GBP/JPY is up by 71 pips (+0.47%) to 151.98, and
GBP/CHF is up by 52 pips (+0.40%) to 1.3072.

Watch Out For:

  • 6:45 am GMT: Switzerland’s unemployment rate to remain at 3.0%?
  • 7:45 am GMT: France’s industrial production (0.1% expected, -0.5% previous)
  • 9:00 am GMT: Italy’s industrial production (0.7% expected, 0.0% previous)
  • 9:30 am GMT: U.K.’s manufacturing production (0.3% expected, 0.4% previous)
  • 9:30 am GMT: U.K.’s goods trade balance (-11.5B GBP expected, -12.2B GBP previous)
  • 9:30 am GMT: U.K. construction output (0.0% expected, 0.4% previous)
  • 9:30 am GMT: U.K.’s industrial production (-0.9% expected, 0.4% previous)